Argo Blockchain Reports Record Third Quarter 2021 Operating Results

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LONDON–(COMMERCIAL THREAD) – Argo Blockchain plc (LSE: ARB; NASDAQ: ARBK), (“Argo” or the “Company”), a global leader in sustainable cryptocurrency and blockchain mining, announced today its financial results for the three months ended September 30, 2021 All dollar amounts are in United States dollars (“USD”) and all sterling amounts are in British pounds (“GBP”), unless otherwise indicated.

Argo generated record revenue, net income and EBITDA of $ 26.0 million, $ 17.3 million and $ 28.2 million, respectively, for the third quarter of 2021 (£ 19.3 million sterling, £ 12.9 million and £ 21.0 million, respectively). For the nine months ended September 30, 2021, the Company’s revenue, net income and EBITDA were $ 67.9 million, $ 27.1 million and $ 49.8 million, respectively (£ 50.4million, £ 20.1million and £ 36.9million, respectively).

“From the grand opening of our sustainable cryptocurrency mining facility in Dickens County, Texas, to our public listing on the Nasdaq in the United States, this quarter has been pivotal as Argo continues to grow, ”said said Peter Wall, CEO of Argo Blockchain. “I am proud of the growth we experienced during the quarter and believe Argo is strategically positioned to continue this momentum as we build our Helios plant in Texas.

Texas mining facility update

In July 2021, Argo inaugurated its 200 megawatt (MW) renewable energy-focused cryptocurrency mining facility in Dickens County, Texas. The new Helios facility will boost Argo’s mining capacity and is expected to create at least 20 new full-time jobs in Dickens County. The site gives Argo access to up to 800 MW of electrical power and has garnered enthusiasm and support from local community members and government officials.

Bitcoin mining

During the third quarter, Argo mined 597 Bitcoin and Bitcoin Equivalent (together, BTC), bringing Argo’s BTC holding to 1,836 as of September 30, 2021. Argo was able to achieve these results while maintaining a gross margin of 120 % and an industry -85% mining margin with an average direct cost per BTC mined of $ 6,293 (£ 4,673). On September 30, 2021, Argo signed a purchase agreement for 20,000 Bitmain Antminer S19J Pro machines for the mining facility it is building in Texas. The machines are expected to ship from Q2 2022 and will increase our total hash capacity to around 3.7 Exahash from 1.075 at the end of Q3 2021.

(1) Due to favorable changes in the fair value of Bitcoin and Bitcoin equivalents in the third quarter of 2021, gross margin and EBITDA exceeded sales for the period.

Public listing of the United States on the Nasdaq

Among the many milestones achieved during the quarter, Argo completed its ADR listing on Nasdaq on September 23, 2021. The company has been listed on the London Stock Exchange since August 2018 and is now listed in both jurisdictions.

Earnings conference call

Argo will host a conference call to discuss its results at 08:00 ET / 12:00 GMT tomorrow, Tuesday, November 2, 2021. The live webcast of the conference call is available through the Investor Meet Company platform.

Investors can sign up for free to Investor Meet Company and add Argo Blockchain through the following link: https://www.investormeetcompany.com/argo-blockchain-plc/register-investor

Investors who are already following Argo Blockchain on the Investor Meet Company platform will be invited automatically.

Forward-looking information

This press release contains forward-looking statements within the meaning of applicable securities laws with respect to our cryptocurrency mining facility in Texas. All statements, other than statements of historical fact, included in this press release that deal with activities, events or developments that the Company expects, believes or anticipates will occur or may occur in the future are statements prospective. Without limiting the generality of the foregoing, the forward-looking statements contained in this press release specifically include the expectations of the Company’s plans, strategies, objectives and anticipated financial and operational results, including hash rates, the mining program of the Company, delivery schedules, future hashrates and other particulars included in this press release. These statements are based on certain assumptions made by the Company based on management’s experience and perception of historical trends, current conditions, anticipated future developments and other factors deemed appropriate. These statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the Company, which may cause actual results to differ materially from those suggested or expressed by forward-looking statements. Actual results could differ from those described here for a variety of reasons, including unforeseen delays in delivery of machines due to component shortages or other reasons, or disruptions to the Company’s current mining fleet that could reduce chopping. future. For a more complete discussion of factors that could cause our actual results to differ from those described in this announcement, please refer to documents filed from time to time by the Company with the United States Securities and Exchange Commission and the UK Financial Conduct Authority, including the section titled “Risk Factors” in the company registration statement on Form F-1.

Non-IFRS measures

Bitcoin and Bitcoin Equivalent Mining Margin and EBITDA are non-IFRS financial measures. We believe that Bitcoin and Bitcoin Equivalent Mining Margin and EBITDA have limitations as analytical tools. In particular, Bitcoin and Bitcoin Equivalent Mining Margin excludes the depreciation of mining equipment and therefore does not reflect the full cost of our mining operations, and it also excludes the effects of fluctuations in the value of digital currencies and realized losses on the sale of digital assets, which affect our IFRS gross margin. In addition, EBITDA excludes interest income (expense), taxes, depreciation and amortization, which are significant components of our IFRS net income / (loss). These measures should not be viewed as an alternative to gross profit or net income / (loss), as the case may be, determined in accordance with IFRS or other IFRS measures. These metrics are not necessarily comparable to metrics with the same name used by other companies. Therefore, you should not view these measures in isolation or in lieu of our gross margin or our net profit / (loss), as applicable, as determined in accordance with IFRS.

Operational and financial overview

Three months ended

September 30, 2021

Nine months ended

September 30, 2021

Figures in thousands except per share and BTC mined

$

£

$

£

Operating results

Bitcoin mined

597

597

1,480

1,480

Income statement

Income

$ 25,979

£ 19,287

$ 67,852

£ 50,372

Direct costs

(3 757)

(2,790)

(11 322)

(8,404)

Depreciation of mining equipment

(3,249)

(2.412)

(9,646)

(7,161)

Change in fair value of digital currencies

11 725

8,705

3 094

2 297

Gain realized on the sale of digital currencies

512

380

807

599

Gross profit

$ 31,210

£ 23,170

$ 50,785

£ 37,703

Operating costs and expenses

Consultation fees

(812)

(602)

(1,222)

(907)

Professional fees

(307)

(228)

(866)

(643)

general and administrative

(555)

(412)

(2.675)

(1 986)

Share-based payment

(1,734)

(1,287)

(3,845)

(2,855)

Exchange

(1,963)

(1,458)

(1374)

(1,020)

Operating result

$ 25,839

£ 19,183

$ 40,803

£ 30,292

Loss on the sale of an investment

(1,010)

(750)

(1,010)

(750)

Interest charges

(273)

(203)

(826)

(613)

Interest income

pre-tax profit

$ 24,556

£ 18,230

$ 38,967

£ 28,929

Income tax expense

(7,212)

(5,354)

(11,905)

(8 838)

Profit after tax

$ 17,344

£ 12,876

$ 27,062

£ 20,091

Other comprehensive income

(138)

(102)

(624)

(463)

Total comprehensive income attributable to shareholders of the company

$ 17,206

£ 12,774

$ 26,438

£ 19,628

Earnings per share attributable to shareholders

Basic earnings per share

$ 0.04

£ 0.03

$ 0.06

£ 0.04

Diluted earnings per share

$ 0.04

£ 0.03

$ 0.05

£ 0.04

The following table shows a reconciliation of Bitcoin and Bitcoin mining margin equivalent to gross margin, the most directly comparable IFRS measure, for the three months ended September 30, 2021 and the nine months ended September 30, 2021.

Three months ended

September 30, 2021

Nine months ended

September 30, 2021

Figures in thousands except per share

$

£

$

£

Gross profit

$ 31,210

£ 23,170

$ 50,785

£ 37,703

Gross margin

120%

120%

75%

75%

Depreciation of mining equipment

3,249

2,412

9 646

7,161

Change in fair value of digital currencies

(11 725)

(8,705)

(3,094)

(2,297)

Gain realized on the sale of digital currencies

(512)

(380)

(807)

(599)

Cryptocurrency management fees

(710)

(527)

(2 257)

(1,675)

Mining profit

$ 21,512

£ 15,970

$ 54,273

£ 40,293

Bitcoin and equivalent Bitcoin mining margin

85%

85%

83%

83%

The following table presents a reconciliation of EBITDA to net income, the most directly comparable IFRS measure, for the three months ended September 30, 2021 and the nine months ended September 30, 2021.

Three months ended

September 30, 2021

Nine months ended

September 30, 2021

Figures in thousands except per share

$

£

$

£

pre-tax profit

$ 17,344

£ 12,876

$ 27,062

£ 20,091

Interest charges

273

203

826

613

Income tax expense

7,212

5 354

11,905

8 838

Depreciation and amortization

3 418

2,537

9 964

7 398

EBITDA

$ 28,247

£ 20,970

$ 49,757

£ 36,940

(1) Due to favorable changes in the fair value of Bitcoin and Bitcoin equivalents in the third quarter of 2021, gross margin and EBITDA exceeded sales for the period.

* Dollar values ​​converted from British pound to US dollars at the rate of £ 1.00 to $ 1.347, which was the noon buy rate of the Federal Reserve Bank of New York on September 30, 2021.

This press release contains inside information.

About Argo:

Argo Blockchain plc is a global leader in cryptocurrency mining with one of the largest and most efficient operations powered by clean energy. The Company is headquartered in London, United Kingdom and its shares are listed on the main market of the London Stock Exchange under the symbol: ARB and on the Nasdaq Global Select Market in the United States under the symbol: ARBK.


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