Member Info for JAMESY1980

Hexam - thought projections were'nt a million miles away from 0.5 EH per month and we have the presumed decrease in curtailments.

I don't prescribe to the FUD around Texas grid. Curtailments are very annoying, but mining loads are great for Ercot. They run 24/7 but can be switched off at the drop of a heartbeat. This in manna for the electricity companies and likely why RIOT appear to have negotiated such a good contract. Most renewable energy is switched off most of the time as you need to resource for peaks and electricity is too difficult/expensive to store. Crypto loads are a constand significnat load so could be seen as storing electricity in $. The downside is clearly that to be effective they need to be interruptable. I do worry that in apparently not having negotiated the curtailment contracts whilst we are already reliant on Ercot they have more cards, but they still need the revenue and flexibility that we offer them. Presumably all these magawats running 24/7 will help them invest in capacity going forward as well to play against capacity issues.

Markets often take some time to absorb and process news. I remain confident that on balance this represents solid progress towards what I want to see around the end of the calendar year. To be honest I am surprised at the market reaction so far. If we could increase haul by 22% month on month we'd exceed 500 coins/month by December.

Genuine question - why did Arb not give more detail around time curtailed rather than a vague statement about some afternoons? Hiding a significant proportion of downtime or using the lack of clarity to cover up efficiency that remains below par. If the downtime was equivalent to RIOT at 28% it could suggest that underlying efficency was up there with the leaders.

Chris. Fair point, but difference in Hodl accounts for less than 13% of RIOT Mcap at current prices.

So in July RIOT had around 200% of ARB EH/s and lower efficiency producing 140% of ARBs haul but it’s Mcap is over 400% of ARBs and the market reacted well to their July update. I know their power cost detail were good but they aren’t going to see that every month. What am I missing?

A mixture of good and bad in there, but overall I think it will be received reasonably well.

Good
1. Significant improvement in production
2. Did above with significant curtailments.
3. Efficiency sorted, particularly with curtailments considered.
4. Debt significantly reduced.
5. Expansion plans continue.
6. Reported in a more competitive timeframe

Bad
1. Wrote off a chunk of Eh/s
2. Less detail than Riot around percentage of time curtailed
3. Electricity prices up.
4. Margin down even though Bitcoin is up on June, likely an indicator of level of electricity price.
5. Hodl reduced- well utilised, but reduced nonetheless.

Overall, I’m happy. It is a great platform for future months. Answered a few questions but we need to negotiate electricity contract.

Nasdaq ARBK @ $5.23.
43P ARB equivalent...

Hexam - As always your point is valid and I don't think our views are far apart. I genuinely don't disagree that efficiency is very important, but I think that the focus on EH/s and coins per EH take emphasis off many traditional metrics like EV. ARB is the best value miner today IMO even accounting for and assuming some carry forward of the poor efficiency.

If Bitcoin really takes off again few will care about efficiency because everyone will be rolling in it!

Riot's MCap is more than 4x Argo!

Correct BC - I believe that Riot are also at the lower end of the efficiency league, although not quite as poor as us presently. I'm not hung up on efficiency - I prefer to stick to more traditional metrics like Mcap, revenue, variable costs, overheads and balance sheet as I believe it is possible to be at the top of the efficiency league but to have lower net margins proportionally. Riot's energy contract appears to be a potential example of a factor which helps offset costs and improve financial performance without being wholely reliant on production per EH/s.

I haven't done the analysis for some time, but I suspect that Argo's Enterprise Value per EH (Particularly looking forward) will take account of efficiency issues and can therefore still represent value.

We don't base Tesla's performance on the number of robots they have, but their revenue and profit. Efficiency is allways good, but not the be all.

Wow. Riot are better off being Curtailed than in production! That doesn't seem right, but is impressive if true. If you take this at face value I would worry that the media could get hold of it as not being in customer bill interests and fuel anti mining agenda, particularly as energy costs soar...

Why does it say that the $9.5m will effectively offset their power costs in the month? Unless it cost more in energy to generate the 318 bitcoins than their value then the energy cost would be negative by a significant margin??

Hexam - Thanks for the response. I'd be happy with my conservative projection and think the market would react ok to something in that ballpark. Anything on top would be a bonus. Although you state that it could be around break even point I see my investment as crypto exposure in the form I see the most future potential. Anything approaching or bettering break even in this crypto market whist adding significantly to the balance sheet would be great in my eyes. Also worth remembering that some appreciation of whatever is left of the Hodl should benefit from appreciation in addition to the mining revenue.

Like most, I'm hoping for decent numbers this month to reflect continued expansion and possibly efficiency improvements, but I'm generally looking at a longer window than most appear to be. We should have 3.3 EH/s by November. I can't see any reason why we won't be competitive on efficiency by then so allowing for some difficulty increase lets say 110 coins per EH. With a $30k Bitcoin that would equate to annualised revenue over $130m with significant further potential in Q4 around the continued EH expansion with intel machines. Call me a fan boy, rose tinted glasses, etc... but tell me which of these metrics are unrealistic - I think this is reasonably modest expectation.

In terms of the power curtailments - they are clearly a PITA, but I can't envisage a worst case scenario beyond 10% of downtime for 3 months a year which would equate to 2.5% across the year - it's also worth remembering that this isn't a straight forward loss in revenue as there will be variable cost savings and there was talk of some form of compensation. I hope we have structured our contract with ERCOT to incentivise minimising downtime effectively.

All the miners seem to have had a good day on the NASDAQ against fairly tepid bitcoin movements. ARBK with around 42p after hours.

I agree that there will be power curtailments in July based on media and the comms you mention. The one thing I don't get is why they should be significant. I'm not aware of the daily power profile for Texas, but imagine that like the UK they will have a small morning peak and larger evening peak. To my mind Crypto mining should be dynamic enough to power down to accomodate the largest peaks alone. Every electricity grid in the world is likely to have significant surplus due the large variance between peak and average demand and the minimal efficient ways to store electricity. If we had to power down for half a dozen 3hr peaks in a month this would only equate to 2.5% of available hours in the month given mining should run 24/7. I would like to know more about how the curtailment works in practice as I'm not sure whether Argo and the other miners like to use the lack of clarity for their own wiggle room rather than full transparity.

I agree that 190 would be very disappointing, however it feels like the market isn't expecting much from Argo based on price movements compared to some of the competition. Patience for realisation from the expansion work and efficiency improvements is clearly wearing thin so I'm hoping for a pleasant surprise. In all honesty I am likely to hold even with poor numbers as the 'Potential' to 'MCap' will still skew my preference towards an underperforming Argo, but we all have limits.

Whilst the big focus will rightly be on production this month, there are other metrics which will be interesting. Hodl reduction, further debt drawdown, efficiency plans/explanation, power shutdowns, (Cut price?) machine purchases, etc... A 20% increase in Bitcoin closing price for the month will help the bottom line so if we could get a decent haul and a few nice words around progress it could be a nice. It'd also be nice if we could start reporting a bit earlier as most of the competition do. Anthony Power often carries out some analysis before Argo reports which is frustrating. GLA

Hexam. From memory Argo were the joint top investment held in Valkyrie’s fund which we were lauding at the time and the reason I picked them out. Probably didn’t make my point clearly but I had intended to point out that they would have been well aware of the dual role at the time they made Argo a headliner. If they had concerns around corporate governance I’m sure they’d have reflected this in their portfolio.

I get the risk, but I'm not losing sleep and there may be benefits beyond the cost saving of a role. From memory Mr Wall was taking a relatively modest salary in Bitcoin.

It is surprising with hyndsight that the dual role wasn't a concern for the Valkyrie ETF.

Stnz - Agree that improving efficiency is important, but I'll let them off the hook if they make up for it with capacity this month. I'm guessing some efficiency challenges will carry through the installation phase, but any improvement would be welocome.

Agree'd Max. Expansion continues at a rate, Bitcoin making some effort and efficiency surely can't get worse. If the bookies were taking odds on which Miner who would increase their haul from June to October I'm sure ARB would be odd's on...

ARBK is pushing 43p on Nasdaq.