Argo Blockchain plc Q3 FY2024 earnings call

• Argo remains focused on three key pillars: financial discipline, operational excellence, and growth through strategic partnerships.
• Macro environment: Impacted by Bitcoin block reward halving in April 2024, leading to decreased block issuance revenue and strained mining profit margins. Fed rate cuts in September affected risk assets like Bitcoin but created a more stable environment for miners.
• Q3 highlights: Mined 123 Bitcoin, generated $7.5M revenue; nine months revenue $36.7M. Reduced debt by $12.4M, including repaying Galaxy loan. Dismissed class action lawsuit. Entered non-binding LOI with BE Group for HPC expansion at Baie-Comeau. Hosting agreement with Galaxy at Helios ends December 2024; exploring options for the fleet.

In Q3 2024, Argo Blockchain mined 123 Bitcoin, generating $7.5 million in revenue. For the nine months ended September 30, 2024, revenue totaled $36.7 million. The mining margin for Q3 was 8% compared to 58% in the same period last year, and for the nine months, it was 33% versus 47% in the prior year. The company reported a net loss of $6.3 million for Q3 and $39.2 million for the nine months ended September 30, 2024. Adjusted EBITDA was negative $2.1 million for Q3 and positive $3.9 million for the nine months compared to prior year periods.

• Optimistic about non-binding LOI with BE Group to explore HPC expansion at Baie-Comeau, aiming for go-live in April 2025 to diversify revenue streams. - Focus on growth initiatives including HPC expansion to support shareholder value.

• Impact of Bitcoin block reward halving, leading to decreased block issuance revenue and strained mining profit margins. - Mining difficulty and hash price fluctuations. - Energy market volatility. - Regulatory uncertainties surrounding Bitcoin mining.

Q: Have you made any further decisions regarding the 2.4 exahash fleets at Helios after year-end? Additionally, how should you think of Argo's hash rate trajectory heading into next year?

A: Thanks, Markella, and thanks, Kevin, following up with this. As noted previously, we're actively exploring options for the 2.4 exahash fleet currently at Helios. Since Galaxy notified us that they will not renew the hosting agreement beyond December of '24, we've been evaluating various pathways to ensure the continued operation of fleet, including alternative hosting arrangements, strategic opportunities or potential asset sale. At this stage we have not made a final decision, but our focus remains on identifying the option that provides the best balance of operational efficiency and financial flexibility. Regarding the second part of your question, hash rate outlook for next year, it will largely depend on the chosen path for the Helios fleet and our broader growth initiatives including the potential HPC expansion just discussed. These initiatives aim to diversify and strengthen our operations which we think will support you know shareholder value. But thanks Kevin. Appreciate the question.

Q: The big issue is always capital allocation. What are Argo's priorities in this regard? Quebec site development, alternative site acquisitions, ring purchases. What are the company's priorities? And what progress has been made securing inroads in the HPC ecosystem with JPU's customer financing? What is the timeline of execution investors might set as milestones in monitoring Argo's performance here?

A: Yeah. Thanks, Kevin. Yeah, our capital allocation focuses on initiatives that we've mentioned that will drive sustainable growth and diversification. We signed this non-binding LOI with the BE Group, which outlines, our plans to repurpose, 12 megawatts of our existing infrastructure for HPC and also the possible expansion for an additional 11 megawatts. This aligns with our strategy to leverage current assets while capitalizing on the growing demand for HPC services. In parallel, we are advancing our position in each HPC ecosystem with the goal of bringing operations online in the first half of 2025. Regarding our Bitcoin mining operations, decisions around redeploying or potentially selling the 2.4 exahash fleet from Helios will be guided by market dynamics and long-term value consideration. We're committed to keeping investors informed on our progress as we achieve key milestones across both HPC and Bitcoin mining. Thank you.