Argo Blockchain Plc(ARBK) - 2022 Q2 - Quarterly Report

Mining Operations - Total Bitcoin and Bitcoin Equivalent ("BTC") mined during H1 2022 was 939, a 6% increase over H1 2021[5] - Mining margin decreased to 71% in H1 2022 from 81% in H1 2021, attributed to lower Bitcoin prices and increased network difficulty[5] - The Group expects to achieve a total hashrate capacity of 3.2 EH/s by the end of 2022 and increase it to 4.1 EH/s in Q1 2023[7] - The Group completed a strategic pivot to a self-hosted business model, operating 100% of its owned machines with no third-party hosting arrangements[17] - The Group's mining operations in Texas and Quebec are powered predominantly by renewable energy sources, contributing to sustainability efforts[22] Financial Performance - Revenues for H1 2022 were £26.7 million ($32.5 million), a decrease of 14% from H1 2021, primarily due to a decrease in Bitcoin price and increased network difficulty[5] - Adjusted EBITDA for H1 2022 was £17.1 million ($20.9 million), a decrease of 28% from H1 2021[5] - Direct costs increased significantly to £18,716,000 from £10,365,000, resulting in a gross loss of £34,413,000 compared to a profit of £14,533,000 in the previous year[31] - The company reported a loss after taxation of £30,504,000 for the period, compared to a profit of £7,214,000 in the same period of 2021[35] - Operating costs and expenses rose to £9,846,000 from £2,293,000, contributing to an operating loss of £36,810,000 compared to a profit of £11,109,000 in the previous year[33] - The total comprehensive income attributable to equity holders for the period was a loss of £43,649,000, compared to a profit of £6,853,000 in the prior year[37] - The company reported a net loss before taxation of £36,890,000 for the period ended 30 June 2022, compared to a profit of £10,698,000 for the same period in 2021[43] - Total revenue decreased to £26,700,000 in the first half of 2022, down from £31,085,000 in the same period of 2021, primarily due to a decline in cryptocurrency mining revenue[53] Cash Flow and Liquidity - The company generated net cash flow from operating activities of £24,594,000 for the period, a significant increase from £2,372,000 in the prior year[43] - Cash and cash equivalents at the end of the period were £9,210,000, down from £16,048,000 at the end of June 2021[44] - The company raised £66,331,000 from borrowings during the period, compared to £14,375,000 in the previous year, indicating a strategy to bolster liquidity[44] Asset Management - Total assets as of June 30, 2022, amounted to £303,665,000, up from £287,699,000 at the end of 2021[38] - The company incurred depreciation/amortization expenses of £11,718,000, up from £4,870,000 in the previous year, indicating increased investment in fixed assets[43] - The total trade and other receivables rose to £99,448,000 as of June 30, 2022, compared to £63,359,000 at the end of 2021, reflecting increased operational activity[73] - The company reported total loans and borrowings of £72,881,000 as of June 30, 2022, an increase from £30,299,000 at the end of 2021, indicating a significant rise in financing[85] Sustainability and Environmental Impact - Argo aims to achieve net-zero carbon emissions by 2030 and has maintained climate positive status by offsetting more emissions than it produced in 2020 and 2021[21] - The company is committed to sustainability and has published its 2021 sustainability report, highlighting its climate-positive status[24] Market and Investment Strategy - The company has adjusted its treasury management strategy in response to market challenges, including selling Bitcoin steadily to manage cash flow[27] - The average realized price of Bitcoin sold in Q2 2022 was approximately $28,500, with hedge gains exceeding $1,500 per Bitcoin[27] - The company is focused on completing Phase 1 of the Helios facility and exploring long-term fixed price power purchase agreements to optimize operations[25] Digital Assets and Fair Value - As of June 30, 2022, the company held digital assets valued at £3,431,000, with significant holdings in Polkadot (DOT) at £693,000 and Ethereum (ETH) at £526,000[70] - The company experienced a fair value loss of £45,298,000 on crypto assets held at the period end, reflecting market volatility[79] - The company reported a total comprehensive income loss of £35,721,000, driven by significant other comprehensive losses of £33,736,000[66] Shareholder and Management Information - The company reported a share of loss from associates amounting to £490,000, with no prior year comparison available[43] - The basic earnings per share for continuing operations was reported at (6.5) pence, compared to 1.9 pence in the prior year, reflecting the company's financial challenges[56] - Total director fees and remuneration amounted to £313,000, up from £221,000, representing a 41.6% increase[94] - Key management compensation for the period totaled £20,000 for POMA Enterprises Limited and £142,000 for Vernon Blockchain Inc[93]