REG - Argo Blockchain PLC - May 2022 Operational Update

Argo BlockchainAnnouncement

07/06/2022 07:00

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RNS Number : 9086N  Argo Blockchain PLC  07 June 2022

Press Release

7 June 2022

Argo Blockchain PLC

("Argo" or "the Company")

May 2022 Operational Update

 

Operational Update

Argo Blockchain plc, a global leader in cryptocurrency mining (LSE: ARB;
NASDAQ: ARBK), is pleased to provide the following operational update for May
2022.

During the month of May, Argo mined 124 Bitcoin or Bitcoin Equivalents
(together, BTC) compared to 166 BTC in April 2022. The reduction in BTC mined
is attributable to several factors:

•  The Bitcoin network experienced an increase in difficulty, leading to
fewer BTC mined.

•  The Company's hashrate on Terra Pool produced substantially lower
Bitcoin than in previous months, primarily due to short-term probabilistic
outcomes. The Company continues to explore all options to optimize its
hashrate across alternative pools.

•  High temperatures in Texas led to increased energy demand and higher
electricity prices, to which the Company responded by voluntarily curtailing
mining operations and reducing its energy usage at Helios.

•  The Company faced some limited instances of unplanned downtime at Helios
while bringing the new facility online.

Based on daily foreign exchange rates and cryptocurrency prices during the
month, mining revenue in May amounted to £3.07 million [$3.89 million*]
(April 2022: to £5.52 million [$6.83 million*]).

Argo generated this income at a Bitcoin and Bitcoin Equivalent Mining Margin
of 62% for the month of May (April 2022: 75%). This reduction in mining margin
was driven primarily by lower Bitcoin price and fewer BTC mined.

As of May 31 2022, the Company held 2,379 Bitcoin, of which 187 were BTC
Equivalents.

Helios Update

May 2022 marked the official commencement of mining operations at
Helios. During this month, the Company installed 2,500 S19J Pro machines
received as part of the machine swap agreement with Core Scientific which was
announced in March 2022. Additionally, the Company began receiving and
installing the S19J Pro machines that it purchased from Bitmain, as announced
in September 2021, which increases the Company's mining fleet by approximately
3,000 machines per month. By the end of May, the Company had increased its
hashrate capacity by 300 PH/s to 1.9 EH/s. Argo Blockchain is pleased to
confirm that the installation of the 20,000 miners purchased from Bitmain is
anticipated to be completed by October 2022.

ePIC Blockchain Technologies Partnership Update

The Company is also pleased to provide the following update on its
collaboration with ePIC. Argo has executed a purchase agreement for 6,600
custom mining machines, with a right to place additional orders for up to
23,400 machines. The machines will utilize the Intel ASIC Blockscale chips,
for which the Company previously signed a supply agreement with Intel (as
announced in the Company's February 2022 Monthly Operational Update). The
custom machines will be designed to Argo's specifications to optimize mining
performance and efficiency for use at the Helios facility, which uses
immersion cooling to seek to prolong the life of the machines and increase
operating performance.

"We have officially commenced mining at our new facility, Helios, ahead of
schedule, bringing to fruition months of hard work and planning," said Peter
Wall, Chief Executive Officer of Argo. "The team expected minor issues and
downtime as we brought systems online, but we've completed 25% of the machine
swap with Core Scientific and installed an additional 300 PH/s, increasing our
total hashrate capacity to 1.9 EH/s. Moreover, we're delighted to continue
working with ePIC to develop custom rigs for use at Helios. We share their
passion for innovation and are always looking at how we can better improve our
operational performance for the benefit of our shareholders. In making use of
the most advanced mining equipment, Argo continues to cement its position as
one of the most innovative, ambitious, and sustainable cryptocurrency miners."

"We are proud of our collaboration with Argo," said Jim Seto, CEO of ePIC
Blockchain. "We have worked closely with Argo's technical team on their
innovative immersion solution and with Intel engineers to design an advanced
customized Bitcoin miner with an eye to performance and efficient management
of the mining fleet."

Non-IFRS Measures

Bitcoin and Bitcoin Equivalent Mining Margin is a financial measure not
defined by IFRS. We believe Bitcoin and Bitcoin Equivalent Mining Margin has
limitations as an analytical tool. In particular, Bitcoin and Bitcoin
Equivalent Mining Margin excludes the depreciation of mining equipment and so
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 profit. This
measure should not be considered as an alternative to gross margin determined
in accordance with IFRS, or other IFRS measures. This measure is not
necessarily comparable to similarly titled measures used by other companies.
As a result, you should not consider this measure in isolation from, or as a
substitute analysis for, our gross margin as determined in accordance with
IFRS.

The following table shows a reconciliation of gross margin to Bitcoin and
Bitcoin Equivalent Mining Margin, the most directly comparable IFRS measure,
for the months of March 2022 and April 2022.

 

                                                     Month Ended 30 April 2022     Month Ended 31 May 2022
                                                     £              $              £             $
 Gross (loss)¹                                       (12,810,339)   (17,300,281)   (11,719,569)  (14,650,191)
 Gross Margin                                        (253%)         (253%)         (377%)        (377%)
 Depreciation of mining equipment                    1,295,290      1,749,281      2,012,575     2,515,844
 Charge in fair value of digital currencies          14,649,214     19,783,670     11,031,576    13,790,157
 Realized loss/(gain) on sale of digital currencies  657,423        887,846        601,801       752,289

 Mining Profit                                       3,791,588      5,120,517      1,926,383     2,408,099
 Bitcoin and Bitcoin Equivalent Mining Margin        75%            75%            62%           62%

(1) Due to unfavourable changes in the fair value of Bitcoin and Bitcoin
Equivalents in April 2022 and May 2022 there was a loss on change in fair
value of digital currencies.

* Dollar values translated from pound sterling into U.S. dollars using the
noon buying rate of the Federal Reserve Bank of New York as at the applicable
dates.

 

Inside Information and Forward-Looking Statements

This announcement contains inside information and includes forward-looking
statements which reflect the Company's or, as appropriate, the Directors'
current views, interpretations, beliefs or expectations with respect to the
Company's financial performance, business strategy and plans and objectives of
management for future operations. These statements include forward-looking
statements both with respect to the Company and the sector and industry in
which the Company operates. Statements which include the words "expects",
"intends", "plans", "believes", "projects", "anticipates", "will", "targets",
"aims", "may", "would", "could", "continue", "estimate", "future",
"opportunity", "potential" or, in each case, their negatives, and similar
statements of a future or forward-looking nature identify forward-looking
statements. All forward-looking statements address matters that involve risks
and uncertainties because they relate to events that may or may not occur in
the future. Forward-looking statements are not guarantees of future
performance. Accordingly, there are or will be important factors that could
cause the Company's actual results, prospects and performance to differ
materially from those indicated in these statements. In addition, even if the
Company's actual results, prospects and performance are consistent with the
forward-looking statements contained in this document, those results may not
be indicative of results in subsequent periods. These forward-looking
statements speak only as of the date of this announcement. Subject to any
obligations under the Prospectus Regulation Rules, the Market Abuse
Regulation, the Listing Rules and the Disclosure and Transparency Rules and
except as required by the FCA, the London Stock Exchange, the City Code or
applicable law and regulations, the Company undertakes no obligation publicly
to update or review any forward-looking statement, whether as a result of new
information, future developments or otherwise. For a more complete discussion
of factors that could cause our actual results to differ from those described
in this announcement, please refer to the filings that Company makes from time
to time with the United States Securities and Exchange Commission and the
United Kingdom Financial Conduct Authority, including the section entitled
"Risk Factors" in the Company's Registration Statement on Form F-1.

 

For further information please contact:

 

 Argo Blockchain
 Peter Wall                          via Tancredi +44 203 434 2334

 Chief Executive
 finnCap Ltd
 Corporate Finance                   +44 207 220 0500

 Jonny Franklin-Adams

 Tim Harper

 Joint Corporate Broker

 Sunila de Silva
 Tennyson Securities
 Joint Corporate Broker              +44 207 186 9030

 Peter Krens
 OTC Markets
 Jonathan Dickson                    +44 204 526 4581

 jonathan@otcmarkets.com             +44 7731 815 896
 Tancredi Intelligent Communication

 UK & Europe Media Relations
 Emma Valgimigli                     +44 7727 180 873

 Fabio Galloni-Roversi Monaco        +44 7888 672 701

 Nasser Al-Sayed                     +44 7915 033 739

 argoblock@tancredigroup.com

 

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, UK and its shares are listed on the Main Market of
the London Stock Exchange under the ticker: ARB and on the Nasdaq Global
Select Market in the United States under the ticker: ARBK.

 

 

 

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