Among the operational and financial results of the past fiscal year shared by Argo Blockchain CEO Peter Wall on the firm’s 2021 earnings call last week were several key achievements in what Wall described as “a great year for us, a transformational year for Argo.”
Wall emphasized the establishment and rapid ramp-up of the firm’s Helios mining facility in Dickens County.
“The 20,000 machines that we ordered following the IPO back in September,” he said, “are starting to be installed at Helios next month”—referencing this first week of May, with the facility energizing the first of its mining equipment onsite and, today, May 5, hosting a grand opening for the public.
• Significant in Argo’s competitive edge, said Wall, was a supply agreement with Intel Corporation to purchase their new ASIC Blockscale chips. Swapping out a portion of Argo’s current mining rigs a bit at a time, he said, will minimize downtime in the coming months as Argo customizes its machines.
• Argo executed an agreement to swap approximately 10,000 S19 machines being hosted at Core Scientific facilities for the equivalent hashrate of brand new S19J Pro machines to be delivered to the Helios facility in Texas. Upon completion of this swap, Wall said, Argo will no longer have any machines hosted at third party facilities.
• The firm launched Argo Labs, an in-house innovation arm focused on strategic diversification and network participation in the broader web3 ecosystem. As Wall explained, this effort will allow the company to explore applications of blockchain technology outside the financial sector.
• Argo Blockchain raised $26.7 million in debt from New York Digital Investment Group which is secured by electrical infrastructure equipment at Helios.
Operations. An hour-long webinar on the Investor Meet Company portal April 28 emphasized these operating highlights:
• Acquired the Helios project in Dickens County, Texas, which has an interconnection agreement for up to 800MW of power capacity; Phase 1 (initial 200MW), expected to be operational in May 2022;
• Acquired two data centres in Quebec (Mirabel and Baie Comeau) from GPUone with a combined total of 20MW of power capacity;
• Purchased 20,000 Bitmain S19J Pro mining machines with delivery and installation expected to occur in batches from May to October 2022;
• Expanded Bitcoin mining capacity from 0.6 Exahash per second (“EH/s”) to 1.6 EH/s.
Wall cited key financial metrics for the company, which was founded in 2017:
• Revenue increased by 291% to $100.1 million, up from $25.6 million in 2020, driven by a significant increase in Argo’s hashrate, the temporary drop in difficulty on the Bitcoin network, and higher Bitcoin prices in 2021.
• Mining margin was 84% (compared to 41% for 2020), driven largely by an increase in the price of Bitcoin throughout 2021 and the drop in global hashrate following the Chinese ban on Bitcoin mining in May 2021.
• The company achieved EBITDA (earnings before interest, taxes, depreciation, and amortization) of $71.4 million in 2021 compared with $10.3 million in 2020, a 594% increase.
• Argo delivered net income of $41.5 million, a 2,033% increase over the prior year ($1.9 million in 2020).
• Cash and digital assets held as at 31 December 2021 amounted to $124.9 million based on the Bitcoin price at that time.
• Total number of Bitcoin mined was 2,045 in 2021, 17% lower than in 2020, a decrease largely attributable to the halving event that occurred in May 2020 which reduced the block award from 12.5 to 6.25 Bitcoin per block.
• As of 31 March 2022, the Group held 2,700 Bitcoin and Bitcoin Equivalents valued at $122.9 million based on the Bitcoin price at that time.
Wall also pointed to several highlights in the company’s financing plans.
• In Q1, Argo raised $66.4 million in new equity via private placement for investment in mining rigs, Texas development, blockchain/fintech ventures including a significant equity investment in Pluto Digital Assets plc, and working capital.
• In Q3, Argo raised $127.9 million in new equity via a public offering on the Nasdaq Global Select Market, which significantly expanded our investor reach by expanding access to the US capital markets.
• In Q4, Argo raised $40.0 million in unsecured debt through the issuance of senior notes traded on the Nasdaq Global Select Market.
In his outlook for 2022 and beyond, Wall focused on its Dickens County Helios plant as a key to growth and profit.
• Mining operations are scheduled to begin at Helios in May 2022.
• Argo expects to achieve 5.5 EH/s of hashrate capacity by the end of 2022. This increase is driven by the installation of the Bitmain S19J Pro machines and the deployment of custom-designed mining machines utilizing Intel's state-of-the-art ASIC Blockscale chips.
• Additional capital spending to complete Helios Phase 1 is expected to be in the range of $125 million to $135 million, which will be financed primarily through debt and proceeds from selling a portion of the company’s Bitcoin mined each month (non-dilutive to existing Argo shareholders).
• Beyond 2022, the hashrate is expected to grow significantly to more than 20 EH/s over the next few years as the additional 600 MW of capacity at Helios is fully developed.
Wall said that “2021 was truly a year of transformation for Argo” as the firm positions itself “for long-term success through the acquisition of the Helios project and our dual listing on Nasdaq.”
Wall, whose warmth and authenticity is equal to his confidence in presenting complex information, is bullish on the company’s Dickens County decisions.
“The acquisition of Helios provided us with the opportunity to build a best-in-class, vertically-integrated facility with access to low-cost and sustainable electricity, which is unmatched by our peers,” Wall said. “With our mining operations at Helios expected to commence in May, along with the development of custom mining machines using Intel's next-generation Blockscale ASIC chips, Argo is well positioned to continue its growth with a focus on delivering for our shareholders. Onwards and upwards.”
ARGO ARGOT
If some of the technical terms in this piece have your head spinning faster than a hashrate, hold on for our next week’s coverage of Argo Blockchain’s Helios facility grand opening in Dickens County, slated to take place May 5 as the current issue hits your mailbox.
The speed with which we’ve built this (Helios) facility has been amazing. And just even on the ground in Dickens County, people are saying they've never seen anything like it. So it’s pretty awesome what our team has done. —Peter Wall, Argo CEO
I think everyone knows we’re very focused . . . on sustainability. . . . We were the first bitcoin miner to be 100% carbon neutral last year. . . . A big reason we were able to achieve that carbon neutrality is being located in certain regions. First of all, in Quebec, using hydroelectric power, we're following the same strategy by setting up in West Texas, where there's an enormous amount of renewable power. 85% of the power in the West load zone where we are in West Texas is coming from renewables, primarily wind. —Peter Wall
The third quarter saw us list on the Nasdaq in the U.S.—it was a huge moment for the company. —Peter Wall
During the construction phase at Helios, we created about 130 construction jobs. We have 40 full time jobs that we’ve created for phase one of the facility. Most of the hiring has taken place in Dickens County. Some of it is from from the neighboring region . . . And we’ve got another 20 part time staff or temporary staff that are helping in the last push to get the facility up, up and running. We also have made a contribution back to the community to refurbish the community pool, and that’s been closed since 2009. That project is underway, and we’re working with the community to get that completed as quickly as we can. —Peter Wall
So a really pleasing year, and one we're really proud of. And as I say, we're wellpositioned to continue on the growth phase and continue a very profitable level. —Alex Appleton, Argo CFO
Find a full transcript of Argo Blockchain’s 2021 earnings call at The Motley Fool Transcsripts, and a presentation of the slide deck at InvestorMeet Company.com
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