Argo Blockchain Share Discussion Threads

[jaknife] 28/4/2024 14:32

Here’s a quick journey through ARB’s finals that were released last week:

1. P&L
* Revenues are down 14% at $50.6m, the company says ”driven primarily by a significant increase in the global hashrate and associated network difficulty level.” Note that these are for the year ending 31 Dec 2023 and so don’t include the effect of the recent halving from just over a week ago.
* Gross profit is $3.8m, noticeably there is little movement in the fair value of crypto assets as ARB no longer hold significant crypto on balance sheet. “Digital assets” at year-end were just $385k, which is significantly lower than the $109.0m that ARB held going into 2022, during which it sold nearly all of its crypto.
* ARB highlight the depreciation that makes up the gross profit line ($18.7m), which is a helpful reminder of this non-cash item.
* After operating expenses of $19.3m and (non-cash) remuneration paid by shares of $4.0m there’s an operating loss of $19.4m
* And then finance charges and other costs bring the P&L to a loss after tax of $35.0m

The P&L basically shows a loss-making company further weighed down by the burden of interest.


2. Balance Sheet
* The main asset in the balance sheet is property, plant and equipment ($59.7m), cash is down from $20.1m at the start of the year and is now just $7.4m
* On the other side loans and bonds total $62.5m of which $14.3m is current (ie due within 12 months of the balance sheet date). Note 25 explains that the “Galaxy loan” is repayable on an amortising schedule.
* Net equity has declined from $24.6m to a mere $158k


3. Cash Flow
* The business does generate a small amount of cash from its operating activities ($3.8m in 2023) but once you factor in interest at $10.7m and loan repayments of $14.1m it’s cash burn city! And if you half the "Revenue from digital assets" then you can get a glimpse what the cash flow will look like from April 2024 onwards.


4. Conclusion/Forecast
ARB wasn’t profitable in 2023 and it will get even worse in 2024 following the recent bit coin halving. If you look at the numbers for 2023 then you could imagine a mildly profitable company *IF* the bonds were converted to equity.

However allowing for the bitcoin halving, even if the bonds were converted to equity, then ARB would still make a stonking loss in 2004. And the big thing is that ARB’s bitminers are rapidly becoming inefficient and obsolete but ARB isn’t generating enough cash to replace those bitminers!

ARB’s equity is ultimately worthless, the business will never generate adequate cash to provide a return to equity, if it generates any sort of cash then all of that cash is going to go to service the debt. They could look to recapitalise the business by converting the debt to equity, at a price that wipes out current equity, but even then the business isn’t going to generate a profit without a substantial slashing of expenses.

Regardless, something needs to happen soon as ARB must be running on fumes!

JakNife

[jaknife] 28/4/2024 14:08

^^ The chart for ARB's bond, which trades under the ticker ARBKL and (confusingly) has a nominal of $25!

[one_frankel] 28/4/2024 11:54

Not that I follow EW folks but it seems BtC maybe heading lower in the short-term before that much anticipated x'plosion!

...

[tenapen] 27/4/2024 19:49

And yet the share price stays strong.



Off topic but interesting ! If your interested!

[zydecoco] 27/4/2024 10:08

You seem to love your Lemming & Mushroom diet KC.

[porky9] 27/4/2024 03:40

Having carried out further research i just think something really has to give in relation to mining costs, they are absolutely obscene and getting worse.

The halving events, lets not forget another one in four years unless they change this rule will result in the downfall of Bitcoin. Totally killing off mining. its just not sustainable.

On average Bitcoin miners are paying something like $105 K to produce a bitcoin and sell them for $63K.

Meanwhile, Gold miners pay about $1200 to produce a gold coin and sell them for $2300
There is now a total loss of perspective for production as i see it, not sure if it can be fixed.

[broomrigg] 26/4/2024 17:08

Thanks for proving my point for me tenapen....Ken didn't mention May, you did.

[r9505571] 26/4/2024 09:29

Full year 2023 earnings releasedFull year 2023 results:Revenue: US$50.6m (down 12% from FY 2022).Net loss: US$35.0m (loss narrowed 85% from FY 2022).Revenue is forecast to grow 31% p.a. on average during the next 3 years, compared to a 10% growth forecast for the Software industry in the United Kingdom.Over the last 3 years on average, the company's share price growth rate has exceeded its earnings growth rate by 60 percentage points per year, which is a significant difference in performance.

[ih_818120] 26/4/2024 08:37

Ken Chung - 14 Apr 2024 - 07:33:26 - 34061 of 34153
Bitcoin just $64,557.
Will ARB go bust after the halving next week?
Lemmings and mushrooms only.

Ken Chung - 14 Apr 2024 - 00:17:44 - 34060 of 34153
Bitcoin just $65,164.
Will ARB go bust after the halving next week?
Lemmings and mushrooms only.

Ken Chung - 12 Apr 2024 - 22:32:40 - 34057 of 34153
Bitcoin just $66,848.

Will ARB go bust after the halving next week?

------
I gave him the benefit of the doubt and a few weeks wiggle room on his predictions.

-------

Ker chung

[broomrigg] 26/4/2024 07:54

Ken never mentioned May, you did.

[ih_818120] 26/4/2024 07:39

chung,
Losing money is a long way from your earlier prediction that ARB wouldn't see the month of May out.

[ken chung] 25/4/2024 16:02

If their average direct cost per bitcoin mined was $31k last year when the reward was 6 bitcoins per block, and that reward halved last weekend to 3 bitcoins per block, that would make their current average direct cost per bitcoin mined $62k, or higher as the network difficulty is increasing all the time. Then add admin costs, costs of updating mining machines, interest payments, rising energy costs, etc., etc. and it's losing money.

Lemmings and mushrooms only.

[owenga] 25/4/2024 10:17

Wow, direct cost to mine Bitcoin 31k. I thought it was more like 15. After halving it's going to be 62k. So won't be making any gross profit based on current btc price. Company completely under water now.

[broomrigg] 25/4/2024 09:40

ARB numbers (and prospects) are dire. If bitcoin goes much lower it will make better financial sense for them to switch off their machines.A pure gamble.

[zydecoco] 25/4/2024 09:35

GBP 63,000 Buy now showing here

[robo21] 25/4/2024 08:48

Solid set of results

[zydecoco] 25/4/2024 08:32

Better than expected results and outlook today:Q1 Preliminary results:Average direct cost per Bitcoin mined was approximately $31,000.Year results:Adjusted EBITDA of $8.3 million, compared to negative Adjusted EBITDA of $(46.7) million in 2022.(Net loss of $35.0 million, compared to a net loss of $229.0 million in 2022.).

[ken chung] 25/4/2024 07:24

Net loss = £35m, since when the mining reward has halved.Worthless. Lemmings and mushrooms only.

[broomrigg] 25/4/2024 07:11

Awful financial report just released.

[ih_818120] 25/4/2024 01:49

Hahahaha

Arb looking strong, chung my boy.

Time tell all.

[trad3m3] 24/4/2024 18:35

It's all good news, until May's RNS that is... May will reveal all, if BTC not 100k in May then... GLA!