Member Info for Hexam

Hi JTF, I'm well thanks - just suffering from a nasty rash of trolls at the moment but my doctor (not THAT doctor) says it should get better soon. Apparently there's no treatment for them but if you just ignore them they just go away by themselves.

ATB H

In profit and loss terms the breakeven BTC value is actually around $15-$20k (NOT $6k, or, sorry JTF, $10k) - but still a fair way to go yet before costs aren't covered. These operational costs are around £2m per month (£1m mining costs, £0.5m depreciation on existing rigs, £0.3m leasing costs for the 4500 rigs recently installed and £0.2m other costs such as salaries).

At 160 coins mined this equates to around $17k per coin though this figure should drop a bit given reduced difficulty in July. Dynamics will change with Texas expansion but if anything the breakeven point should go down in future.

Cash flow is far harder to assess. All the above holds (except depreciation) but the main call on cash will be the Texas expansion (the land itself was purchased with shares). Hopefully though much of this can be met from the £49m raised in Q1 though some of this has been spent on the second Pluto investment and the 172 BTC purchased in January. As JTF points out there is also the loan facility available to draw on.

So in short - nothing to worry much about in the financials (provided BTC stops falling at some point of course)!

At the risk of being one of those that "don't know what they are talking about" ARB will mine more BTC in June because the average difficulty is lower than in May (by over 10%). I agree that revenues in June are likely to be down though as any increase in numbers mined will probably be offset by the drop in average value of each coin - not to mention the impact from the reduction in value on the HODL.

However, IF the value of BTC later recovers then ARB will be in a better position than if the value of BTC and hahrate had remained flat and this is why I think people are calling the reduction in difficulty a good thing and this seems hard to argue with?

Personally though I would rather see BTC steadily rising than this pain today for the possibility of a little extra jam tomorrow.

My £50m estimate allows for all overheads (currently around £1m pm). Yes there will be an increase in depreciation from the added rigs but the increase in revenue should more than offset this.

I agree that a PE ratio of around 10 for a young vibrant company means something is amiss - ie that it is significantly undervalued. This is precisely why I’m invested - the financials are fantastic even before all the additional things lined up this year and before any increase in BTC is allowed for.

You are correct pensionpot - ARB is currently trading at a PE ratio of about 10 which does, as WoW says, translate to a profit of £50m but this around what ARB is heading for in 2021 assuming no change in BTC value.

To an extent. Its revenues are currently linked directly to the value of BTC (though it does mine a small amount of other coins). In the future as it continues to diversify (it is a blockchain company not a mining company) the sources of revenue will expand.

Its revenue though is also increasing due to the expansion in operations (largely via Texas) as well as the increasing share of coins mined (due to China etc and covered in other threads today) though this may be temporary. So revenue should increase faster than BTC price.

It is also a company so its share price will depend on lots of other things and not just BTC value (it's own actions/strategies, market sentiment, different macro factors, published results etc. etc.).

At the end of the day the demand for buying/selling shares will determine the sp and there will be lots of things influencing this beyond just the value of BTC though that (at the moment) is a big influence.

It looks the difficulty for June will be more than 10% lower than the previous couple of months so there should be a noticeable increase in coins mined all else being equal. Agree though that BTC price is the main drag on performance at the moment.

Thanks Mike for posting. This should translate into a reasonable jump in June’s mining figures - not double obviously but at least enough to make them very interesting. Good timing too as it is the last month counting for half year financial reporting. All we need now is a nice rally in BTC before the end of the month to further boost the half-yearly profits reported. GLA

Actually their current margin allowing for all costs (not just direct mining costs) is around 60%. This still gives a very attractive PE ratio though as first, as you point out, the HODL isn't allowed for and any increase in BTC will add to profits (of course BTC could also fall but anybody that expects that long term shouldn't be invested here in the first place). Second though, this is still a fast growing company (Texas expansion, DeFi investment etc.) so a current PE anywhere close to 10 indicates very, very good value to me.

Gladly AB. Charts accurately plot the past but they are only a tool, like any other, in predicting the future. Even if a "death cross" does occur it is just two lines crossing on a chart which may mean something, or just as likely nothing. All predictions are just guesses (whatever their basis) and I tend to ignore all of them, along with daily movements, and just focus on the fundamentals of the business. These still appear as sound as they did yesterday, last week, last month and somewhat better than last year.

So as long as BTC is not in a death spiral am happy to watch all the predictions come and go (and usually be wrong) and instead see the profits continue to grow and in time the share price too.

Auto - I agree that on the graph you can pick points which show that since that point BTC has outperformed ARB significantly but equally can choose other points since when ARB has outperformed BTC significantly.

That is exactly my point - and as FireAnt put more succinctly - the two are correlated but not 100% and the graph illustrates this.

Personally I believe ARB will outperform BTC in the long term but that's just my view. In the meantime there will certainly be more (shorter) spells where it does and others where it doesn't. I just get frustrated over all the transitory hype or angst depending on which it is.

ARB and BTC prices are not joined at the hip. BTC is one thing that affects ARB's price - it's not the only thing. Sometimes ARB goes up (or down) more, sometimes it goes up (or down) less and sometimes it moves in a different direction altogether. Over time they do generally trend in the same direction (as Blubay's graphs show) but I don't understand why people think that just because BTC goes up 3.9816% or whatever in a day that ARB should go up 3.9816% or whatever too.

I hate it when people mix up their and there! I blame my fingers :(

I think the odds aren’t probably too far out actually but the article is very misleading as it only shows one side. What are their odds of BTC being over $50k or $100k sometime this year - probably a lot shorter i.e. much more likely than going down to $10k at some point in the same period.

This just highlights the volatility and nothing else but that’s something all newbies should be aware of. I believe ARB is a great investment that in the long run will yield fantastic returns but their will no doubt be more big ups and downs along the way. So any new investor should be aware of and happy with that volatility before they part with their money - or else on the first sign of trouble they could easily become one of the panic sellers the excellent video you posted earlier talked about.

At this stage would personally rather see them reinvest profits for growth than pay any out as dividends though would certainly give a bump to the sp in the future if they did as many (UK) investors love a dividend.

Think this could get to 200p without any news as this share does crazy things - just look at the last month's ups and downs. Besides I think the financials (with a little more confidence in BTC) are good enough to justify 200p+ anyway. Agree though, just wishing it there won't make it happen and good news will always help.

Yep it did touch 95p and has touched around 170p since. With this sort of volatility there’s no knowing where it will be next week or the week after, which is why I tend to zoom out as I am much more confident where it is going longer term than I am in any day to day movement.

Actually looked at wrong graph which wasn't a 24hr one. We're actually a bit better than BTC over last day. My bad. Agree, last night's fall was strange and can't think of a good reason for it.

I think that's a fair shout Herdie as over the last 24 hours we're still down a bit more than BTC so even now we haven't quite caught up. In any case, can't read too much in daily fluctuations, the trend over the longer term is more important and there I think we come out pretty well - as evidenced by the useful comparison charts that Blubay regularly posts.

Hi RC - agree there is little to worry about in terms of covering costs but I think these are closer to £2m pm.

The mining revenue is already in £ so doesn’t need converting plus there is another £0.3m pm since year end from the leasing costs of the 4500 machines that were recently installed.

Sorry for the pedantry!