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Argo Blockchain Plc(ARBK) - 2024 Q1 - Earnings Call Transcript
ARBKArgo Blockchain Plc(ARBK)2024-05-23 23:58

Financial Data and Key Metrics Changes - In Q1 2024, the company generated approximately 17millioninrevenue,a417 million in revenue, a 4% increase from Q4 2023, primarily due to elevated hash prices [6][9] - Cash in hand at the end of Q1 2024 was 12.4 million, up from 7.4millionattheendof2023[6]−TheminingmarginpercentageforQ12024was387.4 million at the end of 2023 [6] - The mining margin percentage for Q1 2024 was 38%, an increase from 34% in Q4 2023 [9] - Adjusted EBITDA for Q1 2024 was 3.8 million, nearly doubling from the previous year [9] Business Line Data and Key Metrics Changes - The company mined 319 Bitcoin in Q1 2024, with an average direct cost per Bitcoin mined of approximately 32,000[9]−ThesaleoftheMirabelfacilityfor32,000 [9] - The sale of the Mirabel facility for 6.1 million allowed for a reduction in operational expenses by about 700,000annually[7][39]MarketDataandKeyMetricsChanges−TheBitcoinblocksubsidydecreasedfrom6.25to3.8Bitcoinfollowingtherecenthalving[4]−Thenetworkhashratepeakedat654exahashbeforethehalvingbutdroppedto580exahashshortlyafter[5]CompanyStrategyandDevelopmentDirection−Thecompanyisfocusedonfinancialdiscipline,operationalexcellence,andstrategicpartnershipsaspartofitsR3priorities[3]−Thereisanemphasisontransitioningtocleanenergyandintegratingoperationalcapabilitieswithenergycompanies[12]−Thecompanyaimstoleverageitssizetotargetsmallersiteswithuniquepowercostcharacteristics[19][29]Management′sCommentsonOperatingEnvironmentandFutureOutlook−Managementexpressedoptimismaboutgrowthopportunitiesdespitethechallengesposedbytherecenthalvingandmarketvolatility[3][4]−Thecompanyplanstocontinuepracticingeconomiccurtailmentduringhighpowerpricestomaintainminingmargins[14][15]−Managementhighlightedtheimportanceofmaintainingastrongfiscalpositionwhileexploringgrowthopportunities[21][31]OtherImportantInformation−Thecompanyexecutedanequityraiseofnearly700,000 annually [7][39] Market Data and Key Metrics Changes - The Bitcoin block subsidy decreased from 6.25 to 3.8 Bitcoin following the recent halving [4] - The network hash rate peaked at 654 exahash before the halving but dropped to 580 exahash shortly after [5] Company Strategy and Development Direction - The company is focused on financial discipline, operational excellence, and strategic partnerships as part of its R3 priorities [3] - There is an emphasis on transitioning to clean energy and integrating operational capabilities with energy companies [12] - The company aims to leverage its size to target smaller sites with unique power cost characteristics [19][29] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about growth opportunities despite the challenges posed by the recent halving and market volatility [3][4] - The company plans to continue practicing economic curtailment during high power prices to maintain mining margins [14][15] - Management highlighted the importance of maintaining a strong fiscal position while exploring growth opportunities [21][31] Other Important Information - The company executed an equity raise of nearly 10 million in January 2024 and used proceeds from the Mirabel sale to reduce debt [6][9] - The company has reduced its Galaxy debt significantly, from 35milliontoapproximately35 million to approximately 12.8 million [31] Q&A Session Summary Question: Can you elaborate on the Galaxy relationship and mining during summer months? - The company can curtail operations during high power prices, generating power credits that reduce mining costs [14][15] Question: Will Argo invest in infrastructure again or only focus on machines? - The company is open to both hosted machines and infrastructure investments, evaluating opportunities on a case-by-case basis [17] Question: What growth opportunities is Argo seeking? - The company is looking for smaller sites with unique power characteristics but cannot disclose specific details at this time [19] Question: How does Argo plan to return to growth while balancing debt obligations? - The company aims to optimize operational efficiency and leverage strategic partnerships while maintaining fiscal responsibility [21] Question: Can you speak to power prices for the second quarter? - Power prices are expected to be volatile, influenced by summer demand, and the company will remain agile to capitalize on economic curtailment [23][24] Question: Does Argo have plans to branch into AI data centers? - The company has explored the possibility but remains focused on Bitcoin mining operations for now [26] Question: How is management approaching capital allocation strategy? - The company will balance expense management with fleet upgrades, considering hash price and energy costs [28][29] Question: What are your plans for increasing efficiency and reducing downtime? - The company is focused on maintaining uptime and improving operational efficiency, with a 5% increase in daily Bitcoin production noted [34] Question: What is the current hash rate across all facilities? - The hash rate capacity at Baie Comeau is about 300 petahash, while Helios has approximately 2.4 exahash [36] Question: What was the thought process around selling the Mirabel facility? - The sale price was favorable, and it allowed for operational consolidation, reducing overhead and maintaining hash rate capacity [38][39]