Argo Blockchain Share Discussion Threads

[parsons4] 07/4/2020 07:40

Some great analysis on here unlike many other threads !!

[mnomis] 07/4/2020 00:59

Hi Orm5, great analysis thanks. I will run through myself a bit later, but makes sense.
My expectation is that the market is cautious to see what the business looks like post halving and then I expect a re-rating. Likely off the back of demonstrating a continued ability to generate margin post halving through combo of other miners dropping out, lower difficulty and / or higher pricing.
The margin achieved in March gives me confidence.

[orm5] 06/4/2020 20:20

The cash balance must start to underpin the share price at some point....Assuming we can maintain the Q1 performance I.e. £2.5m operating profit for the remainder of the year, that puts us at just a little over 1x current market cap! Surely something has to give at some point

[mcfly79] 06/4/2020 19:55

The market cap is currently only about £11m. So £6m-£8m in cash covers a large part of it.

BTC price heading higher this evening too.

[mcfly79] 06/4/2020 19:48

Thanks orm,

I think our figures broadly agree.

I don't have 31 March 2019 figures, but at 31 Dec 2018 the company had £2.2m of receivable and £0.2m of payable, in addition to the cash. Adding this on to your £6.05m gets to my £8m number.

I think the £3m of BTC assets mainly accrued after 31 March 2019 (with the machines starting to come online in Q2 2019). Therefore this shouldn't impact your figures.

[orm5] 06/4/2020 18:35

17th April 2019 was the final results RNS which stated: Cash of GBP15m as of 31(st) March 2019 Should really be £15m @ 31st March 19, but I don't believe there was any investment until the 18th April 19, hence assuming still £15m on the 17th April.

[mcfly79] 06/4/2020 18:07

Thanks orm - that's very useful.

Where are you picking up the 17 April 2019 cash figure from?

[orm5] 06/4/2020 17:10

I've tried to review the spend (as I was loosing track) along with income from mining. This assumes all BTC are converted to cash. There was also circa £3m of BTC on the balance sheet which is not included in the below - not sure what they have done with that. Dates are taken from RNS release.Welcome your views. Starting point17 April 2019: £15m Cash Hardware Investments18 April 2019: £1.3m, 1000 Z11's8th May 2019: £1.7m, 1000 S17's13th May 2019: £1.2m, 783 S17's3rd June 2019: £2.85m, 2500 ??30 Oct 2019: £7.61m, 10000 T17's (amended order)4th Mar 202: £1.17m, 1000 S17+2019 Total: £14.66m2020 Total: £1.17mTotal since Starting Point: £15.83 IncomeH1, Q3, Q4, Q1Revenue. £2.93m, £3.63m, £2.66m, £6.0mGross Profit. £1.57m, £2.65m, £1.38m, £2.81mAdmin. £0.63m, £0.3m, £0.3m, £0.3mOperating Profit. £0.94m, £2.35m, £1.08m, £2.51m Cash flow (Starting Cash Balance – Investments + Operating Profit)2019: £15m - £14.66 + £4.372m = £4.71m2020 End of Q1: £4.71 - £1.17m + £2.51 = £6.05m

[parsons4] 06/4/2020 15:26

Lots of interesting posts here I hope the more BTC canny ones are right as this does look terribly undervalued. It is one of the hardest investments to keep holding but I am still here with a big holding (for me). The full year report will help big time.

[topazfrenzy] 06/4/2020 14:40

ONLY the raving mad sell this now

[topazfrenzy] 06/4/2020 14:37

Grabbed some more ...

Bitcoin to $100,000 yes it's coming

[mcfly79] 06/4/2020 14:16

To be clear, as at 30 June 2019 they had current assets (cash, crypto assets and receivables) of £13.6m.

As at 30 June 2019 they had payables of £13.1m. They had ordered all of the machines at this point. Account note 14 of the interim accounts makes clear that the £13.1m figure include the order of 5000 S17s (which were subsequently changed to 10,000 T17s taking us to the current 17,000 machines).

Therefore, even if they hadn't traded since 30 June 2019, they could have collected their receivables, paid for the machines and been left with £0.5m in cash and 17,000 machines. Actually they saved £2.9m by switching the machines to T17s, so cash would have been £3.4m.

On top of this I've estimated the following movements in net current assets in the 9 months.

£6.9m – mining margin made in 9 months to 31 March 2020
(£1.0m) – admin expenses for 9 months
(£1.2m) – extra 1,000 s17+ machines ordered

This gets to my £8.1m total net current assets as at 31 March 2020.

[mcfly79] 06/4/2020 13:59

I have sunnyside,

Included within my 30 June 2019 starting balance of £0.5m was a £13.5m payable figure. At that point point they had ordered all the machines to take them to the current 17,000 machines installed base.

[jordz79] 06/4/2020 13:47

Argo......the only stock that goes down by value as the asset they mine increases in price!

[sunnysideup1] 06/4/2020 13:27

McFly - Surely you need to deduct the money they have to pay for the new machines from the cash they held? There is a lag between ordering the kit and paying for it.

[orm5] 06/4/2020 13:17

20th Jan 2020 RNS: Argo will report its audited results for 2019 in April.

[sunnysideup1] 06/4/2020 13:04

PlatHunter

Argo are not late with filings...so what are you implying?

Due to coronavirus the LSE has allowed companies to delay reporting of their results and many companies have already decided to do so.

so far Argo has not announced any such delay.

[mcfly79] 06/4/2020 12:59

Last year the results were announced in April. The date the company files it's accounts with companies house is irrelevant (provided it's done by 30 June).

[jordz79] 06/4/2020 12:45

UK Companies house state that 'Next accounts made up to 31 December 2019
due by 30 June 2020'

I have no idea where investors are getting these reports will be submitted by April.

Can anyone confirm?

[jordz79] 06/4/2020 12:43

Why does everyone think the end year results will be out this month?

The previosu years company accounts were not submiited until June 2019.

Therefore should we not be expecting the accounts to be submitted in June 2020 instead of April?

[mcfly79] 06/4/2020 12:16

I’ve also tried to estimate the net current asset position, starting with the last reported position as at 30 June 2019. As at 30 June 2019 the company has £0.5m of net current assets (cash £5.6m, crypto assets £3m, receivables £4.9m, payables (£13.1m)).

I believe the £13.5m payables include the order for 5,000 S17s (subsequently changed to 10,000 T17s) that has taken the company to the current 17,000 installed base.


Movement in last 9 months:


£0.5m - 30 June 2019 net current assets

£6.9m – mining margin made in 9 months to 31 March 2020
(£1.0m) – admin expenses for 9 months
£2.9m – reduction in GBP amount payable for machines (switch from 5,000 S17s to 10,000 T17s)
(£1.2m) – extra 1,000 s17+ machines ordered

£8.1m – 31 March 2020 net current assets


Therefore the company may currently have c.£8m of net current assets, which I expect is mainly cash.

I think little or no corporate tax will have been payable due to tax losses brought forward and capex.


At some point the company did convert a £1.4m deposit with GPU.one into an investment. I still need to do some more digging around the timing and accounting on this and therefore net current assets may be around £6.5m rather than £8m.

[mcfly79] 06/4/2020 12:02

I became a shareholder last week.

My thoughts on current profitability are as follows:

Figures I’m using:

*Current capacity is 665 petahash (rising to 730 petahash shortly).
*32 MW of power being used for 665 PH
*All-in power and housing costs of USD 0.055/kWh

The above figures give results for March very similar to those announced this morning.

Based on the current BTC price of $7k and the current mining Difficulty, I think the company will make about $1m per month profit until the halving in May.

After the halving, if nothing changes then the company will be making a very small profit at the current BTC price and mining Difficulty. However, I expect the BTC price to increase substantially or the mining Difficulty to drop substantially, following the halving.

The recent drop in the BTC price to $5000 gives some indication of what we might expect. The Network Hashrate dropped from c.123TH/s to c.94TH/s leading to a 16% reduction in the mining Difficulty at the fortnightly reset.

The halving will effectively be a reduction of 50% in the BTC price for miners and if there is no corresponding increase in the BTC price I think there will be further significant decreases in the Network Hashrate, and therefore the mining Difficulty.


Details


32Mw of power:

I had been trying to calculate total power consumption based on individual machine rates and optimisation by Argo. However, I’ve now noticed that Argo helpfully give the figures on their homepage. They state that they are using 30MW of energy for the 665 petahash of capacity. They also have a chart showing how they are more efficient compared to peers with a petahash per watt ratio of 21 (this actually equates to 31.7MW for the 665 PH capacity). I’ve rounded up to 32 MW for my calculations.


USD 0.055/kWh

This figure was given in the Align Research Note from 8 Aug 2019 and is the only figure I can find. Figures for just the power have been released and are perhaps CAD 0.03/kWh but no figures for housing costs have been given. Therefore the USD 0.055/kWh figure is what I’m using.

[topazfrenzy] 06/4/2020 11:24

I said $50K (USD)