Argo Blockchain plc Q4 FY2023 earnings call

• Focused on financial discipline, deleveraging, operational excellence, and growth/strategic partnerships. - Full year 2023 highlights: Mined 1,760 Bitcoin, generated over $50 million revenue, mining margin 43%, adjusted EBITDA $8.3 million, reduced Galaxy debt by $12 million, ended 2023 with $7.4 million cash. - Q1 2024 events: Raised nearly $10 million via equity placing, sold Mirabel facility for $6.1 million, used proceeds to pay down debt. - Quebec operations: Consolidated fleet at Baie Comeau, sold Mirabel facility, decommissioned older machines, reducing hashrate capacity from 2.8EH to 2.7EH. - Strategic growth: Focus on integrating Bitcoin mining with energy grids, exploring demand response opportunities with energy companies.

Argo Blockchain's main segment is Bitcoin mining. In 2023, the company mined 1,760 Bitcoin and generated over $50 million in revenue. Revenue in 2023 was down 14% from 2022 due to increased global hash rate and network difficulty. The mining margin was 43% with an average direct cost per Bitcoin mined of $16,363. Adjusted EBITDA in 2023 was $8.3 million, a significant improvement from the prior year's negative $47 million. The power purchase agreement at Helios allowed for economic curtailment, generating $7.2 million in power credits, which directly reduced mining costs. The average all-in power and hosting costs across all three sites for 2023 was just under $0.05 per kilowatt hour.

• Expect to provide additional commentary on Q1 2024 earnings call. - Continue focus on debt reduction and balance sheet strengthening. - Evaluate fleet upgrades based on hash price, rig availability, and energy cost opportunities. - Target sites and opportunities suitable for Argo's size that might not appeal to larger miners.

• Market volatility affecting Bitcoin price and hash rate. - Regulatory changes impacting mining operations. - Impact of halving on block rewards, hash price, and overall revenue. - Dependence on power purchase agreements and economic curtailment opportunities.

Q: Can you speak to the current appetite for a fleet upgrade and the growth strategy in the post-halving environment?

A: Argo has a strong fleet, and will evaluate hash price, rig availability, and energy cost when considering fleet upgrades. Looks to target sites and opportunities suitable for its size.

Q: From a capital allocation standpoint, can you walk us through your ongoing strategy to pay down the remaining $54 million of debt following the sale of the Quebec data center?

A: Currently have $12 million cash on hand, focus on debt reduction and balance sheet strengthening, with ongoing efforts to pay down debt.

Q: Can you give an update on where hashrate currently is in Quebec after the sale of Mirabel?

A: Post sale, Mirabel fleet moved to Baie Comeau, currently up and running at Baie Comeau is approximately 300 petahash.

Q: Does the Q1 31,000 direct cost per Bitcoin include depreciation?

A: Yes, the figure includes power and hosting costs at Helios and Quebec sites, but not depreciation.

Q: Can you please provide some color as to how expense management is progressing in Q1 and Q2?

A: Non-mining operating expenses run rate is approximately $1 million per month, with focus on cost management.

Q: Could you give an update on the shareholder lawsuit?

A: Filed a motion to dismiss, awaiting judge's ruling, and will issue RNS when there's an update.

Q: Will Argo invest into infrastructure again or only focus on investing in machines?

A: Evaluate on an individual basis, considering market evolution, may invest in infrastructure or machines as opportunities arise.

Q: Does Argo have any plans to branch into AI or HPC data centers?

A: Not currently focused on branching into AI or HPC, as it's a different business than Bitcoin mining.

Q: Are there any plans to start paying a dividend?

A: No current plans to pay a dividend, excess cash used for debt reduction and future growth.

Q: How do you think about M&A in the post-halving environment?

A: Evaluate M&A opportunities that create value for shareholders, considering market opportunities.

Q: What was the thought process around selling the Mirabel facility?

A: Achieved a good sales price, consolidated operations to Baie Comeau for cost savings, minimal impact on hash rate/revenue.

Q: Can you talk a little bit more about the power price you achieved in Texas?

A: Power costs across all sites in 2023 were just under $0.05 per kilowatt hour, and Texas generated $7.2 million in power credits from economic curtailment.