Argo Blockchain Reports Q2 2024 Earnings: Navigating Challenges and Pursuing Growth

Argo Blockchain plc (ARBKF) Q2 2024 Earnings Call Transcript

[Technical Difficulty] PLC investor presentation. Throughout this recorded meeting, investors will be in listen-only mode. [Operator Instructions] And I'd now like to hand it over to the management team from Argo Blockchain plc, Markella, good afternoon. Markella Zarifi Good afternoon, Lily. Thank you very much. Before we begin, I'd like to remind everyone that today's presentation and remarks may contain forward-looking statements. Please see our Form 20-F filed with the Securities and Exchange Commission for our full risk disclosure. With us today for our discussion of Q2 2024 results are Thomas Chippas, Argo's Chief Executive Officer, and Jim MacCallum, Argo's Chief Financial Officer. And now I'll turn it over to Thomas for some introductory remarks. Thomas Chippas Thanks, Markella. And thank you to everyone for joining us today. I'm excited to update you on our progress so far this quarter and over the first half of the year. Financial discipline into leveraging, operational excellence, and growth continue to remain Argo's three priorities and guide us on a daily basis for the sustainable future of this company. By concentrating on these goals, we are increasingly positioning the company to take advantage of opportunities for growth and development. Our clear objective is delivering enhanced shareholder value and I'm thrilled to continue the great work that the team has been doing and tell you more about what we have accomplished. First, a few comments on the macro environment. In second quarter of 2024, the macroeconomic environment significantly influenced the Bitcoin mining sector. Central banks, particularly the US Federal Reserve, have, until recently, indicated a potential pause in interest rate hikes, providing some respite to risk assets like Bitcoin. The shift in policy created a more stable environment for miners as borrowing costs for infrastructure expansion and energy pricing became less volatile. Inflation pressures, although moderating in certain regions, remain a concern. Energy prices driven by both geopolitical instability and lingering supply chain disruptions continue to affect operational costs for Bitcoin miners. In regions like North America and Europe, where energy costs make up a substantial portion of mining expenses, miners have had to adjust their strategies to maintain profitability amidst fluctuating electricity rates. Bitcoin's post-ETF surge in the first half of the year did provide short-term relief to miners. However, as market conditions corrected and the price settled, miners faced narrow profit margins. Despite these pressures, we've observed growth in total network hashrate as the industry continues to deploy new, more efficient rigs, leading to lower post-halving hash prices. Network hashrate and difficulty both rebounded from the post-halving drop while hash price continued to trend lower, even hitting record lows. Overall, the Q2 mining and macroeconomic conditions have introduced both opportunities and headwinds for Bitcoin miners, with energy markets and monetary policy playing critical roles in shaping the sector's trajectory for the rest of the year. Now let's turn to our key highlights for the second quarter of 2024. In Q2, we mined 188 Bitcoin or about two Bitcoin per day and generated a revenue of $12.4 million and $0.8 million in power credits from economic curtailment in Texas. Our mining profit this quarter was $5 million with a margin mining margin of 41% and an average direct cost per Bitcoin mine of $38,989. Additionally, we reduced our debt by $7.2 million and fully repaid Galaxy during our post-quarter period. We ended the quarter with $4 million in cash and completed an $8.3 million equity raise post quarter. Let's now move to the next slide, and Jim can discuss the comparison of our quarterly results and lend some comments on our capital structure. Over to you, Jim. Jim MacCallum Thank you, Tom. Our revenue for Q2 was $12.4 million, a decrease compared to $16.8 million in Q1 2024, and consistent with the $12.6 million achieved in Q2 2023. The main driver compared to Q1 was the Bitcoin halving, which occurred in April 2024. This resulted in 41% lower Bitcoin production. Offsetting this lower production was higher realized Bitcoin prices resulting in an overall revenue decline in Q2 of 26% compared to Q1. Despite the revenue decrease, we were able to realize a higher mining margin percentage in Q2 versus Q1 as a result of lower power prices in the quarter primarily at the Helios facility. Our mining margin was 41% in Q2 compared to 38% in Q1. Because of the lower revenue in Q2, our overall mining profit decreased from $6.4 million in Q1 2024 to $5.1 million in Q2 2024. We are expecting lower mining profits and a lower mining margin percentage in Q3 as a result of the lower hash price realized so far in the quarter. Mining economics continue to be challenging for Bitcoin miners, and as a result, the company recorded a $22 million non-cash impairment charge on its mining machines, and updated its going concern disclosure and its financial statements to reflect current conditions. Our non-mining operating expense trended lower in Q2 as compared to Q1. This 14% reduction was a result of our focus on reducing costs and streamlining operations. For the quarter, our adjusted EBITDA was $2.6 million as compared to $3.8 million in Q1 2024, and $1.6 million in Q2 of 2023. As Tom mentioned, we ended the quarter with $4.0 million in cash, and we will dive into more detail on our Galaxy debt in the following slide. Since I joined Argo in April 2023, we've had a strong focus on repaying our Galaxy debt. We were proud to announce a full repayment of this $35 million loan earlier this month. This was achieved primarily through a combination of non-core asset sales, including our Mirabel site in Q1 of this year, equity raises and cash flow from operations. Repayment of this loan reduces our interest expense and the $1.1 million of monthly amortization payments. We completed the repayment of the Galaxy loan ahead of schedule and with no reduction in our overall hashrate. Thomas Chippas I'd like to add a few comments regarding the Galaxy debt as well. The focus for Argo in 2023 in the first half of '24 has been to reduce its debt obligations and strengthen its balance sheet. The $35 million debt owed to Galaxy began amortizing, as Jim said, at $1.1 million per month in May of '23. As Jim noted, I am pleased to report that Argo has repaid the full amount of this loan to Galaxy as announced by the Company on August 12th. The Galaxy debt was repaid over four months ahead of the current schedule, and nearly 18 months ahead of the original repayment schedule. The early repayment reflects Argo's focus on strengthening the balance sheet, reducing our financial liabilities and freeing up capacity to focus on operational excellence. Repayment was made possible by using cash flow generated from operations, cash generated from equity raises and cash generated through the sale of non-core assets without any meaningful impact to Argo's hashrate. Repaying the Galaxy loan is a significant milestone for Argo, and I cannot emphasize enough how well the Argo team executed this feat. They have my thanks for all their efforts and I couldn't be more pleased with the outcome. Thank you, Tom. Our cash balance at end of Q2 2024 was $4 million. This was supplemented by the $8.3 million equity raise in July of 2024, a large portion of which went to repay the Galaxy loan. Remaining debt obligations for Argo include the $40 million baby bonds, which mature in November, 2026 and the $1 million mortgage on our bank home loan facility. With the Galaxy debt behind us, we have a number of growth opportunities that we can turn our attention to. As discussed on our Q1 call, the sale of the Mirabel facility was completed with no meaningful loss to Argo's hashrate. The significant reduction in operating expenses in the first half of 2024 compared to 2022 and 2023 and the strong mining margin percentage, despite the Bitcoin halving, are indications of Argo's strong performance. The Mirabel sale enabled the company to de-lever the balance sheet with minimal impact to the company's hashrate. Following the sale, Argo relocated the majority of the mining machines at Mirabel to its Baie Comeau facility and sold certain prior generation machines representing approximately 140 petahash. The sale allowed the company to streamline its operations by locating all self-binding machines at its Baie Comeau facility. Additionally, the sale of Mirabel reduces the company's non-mining operating expenses by $700,000 annually. Argo has taken aggressive action on its cost structure and non-mining operating expenses. As compared to the second half of fiscal '22, the company has reduced its operating expenses by over 70% to $5.8 million. As compared to the first half of 2023 the Company has reduced its operating expenses by over 25%. Thanks, Jim. So, I'm excited to talk about some growth opportunity, specifically at our Baie Comeau site in Quebec. So this slide shows our potential growth opportunity at Baie Comeau and its impact on our -- potential impact on our overall hashrate. Baie Comeau currently has 15 megawatts of power, but there's an opportunity to expand that to 23 megawatts. This would increase the hashrate capacity of Baie Comeau by up to 0.7 exahash. And should we energize the new 8 megawatts with the latest generation of miners, Baie Comeau's fleet efficiency would improve to 24 joules per terahash. Alternatively, should we choose to refresh the entire fleet and energize the new 8 megawatts at Baie Comeau with the latest generation of miners, that would increase the hashrate capacity at Baie Comeau to 1.4 exahash and improve its fleet efficiency to about 15 joules per terahash. This is an exciting opportunity that we're analyzing, and to be clear, we're analyzing it right now. We'll have additional updates on it in the future, but obviously it's exciting to have something like this in hand at a facility that we own, that we operate, and a facility that has shown good performance over time. So, looking forward to digging into this and sharing more as information becomes available. Turning to other thoughts on growth. The strength in balance sheet and repayment of the Galaxy debt gives Argo more flexibility to pursue strategic opportunities moving forward. We continue to explore opportunities where mining can be paired with stranded or wasted energy. There's tremendous potential for energy generators to utilize mining as a balancing and optimization tool, particularly in energy transition where limitations currently exist in the ability to store or transmit renewable energy. We're evaluating some novel opportunities with power generators and utilities to really help capture the full economic value of stranded energy. Overall, our focus remains on access to low cost and reliable power. The ongoing transition to clean energy requires substantial investment in the power grid as well as demand response technology. Bitcoin mining as I'm sure many people listening know, plays a crucial role in this shift. Miners are exceptionally agile, making them ideal for grid load balancing. What's more, mining operations can be seamlessly integrated [Technical Difficulty] generation and grid operations. For the remainder of '24, Argo will continue to focus on our three pillars, financial discipline, operational excellence, and growth and strategic partnerships. On behalf of Argo, I truly would like to thank all of our shareholders and stakeholders and the team. We remain committed to optimizing our capital structure and driving long-term value for our shareholders. With that, I'll pass it back to Markella for any questions. Thank you. Thomas, Jim, thank you very much for your presentation this afternoon. Ladies and gentlemen, please do continue to submit your questions. [Operator Instructions] Markella, if I could just hand over to you to share the Q&A and I'll pick up from you at the end. Markella Zarifi Thank you, Lily. I will start with a question from Kevin Dede from H.C. Wainwright for Jim. Argo still has debt overhang, so curious about an update there and fleet expansion given the network cost rate continues to scale up as much as it has? Jim MacCallum Thank you, Kevin. Regarding our debt situation, as we mentioned on the call here, we've paid off the Galaxy debt and now our main outstanding debt is the baby bonds, which are non-amortizing and mature in November 2026. We're committed to improving our balance sheet and we'll continue to provide to updates as we have them. As for fleet expansion, you're right, that the network cash rate continues to grow despite the current hash price. We're focused on efficiency rather than raw growth and are engaged in testing on the more energy efficient models at the moment. Thank you. Markella Zarifi Thank you, Jim. Another question by Kevin Dede at H.C. Wainwright, and this is directed to Thomas. Obviously, you guys should have great things to talk about with regard to operations in Q2 on staying on point. But for investors, it's always what have you done for me lately? Anything you can add about expanding operations in Quebec, new site selection, partnerships, perhaps with private companies that no longer have access to capital. Anything that offers a view to the future of the company. Maybe there's something Argo can do that's a unique derivative of Thomas's vast experience in trading. Thomas Chippas Thanks for that question, Kevin. Look, we're always looking for opportunities to grow and improve. Certainly, we just shared some of the possibilities and what they are at Baie Comeau. We're still considering how we might go about doing that and there'll be more to say on that later. But we recognize that investors want to see growth. Hopefully with the Galaxy debt in the rear-view mirror, it sets us up for growth and that's why we share the Baie Comeau opportunity today. We're confident that our approach will continue to deliver value to investors even as the mining landscape evolves. And I think that I appreciate the kudos on my previous experiences. We're open-minded about where growth can come from and we'll continue to share information as and when it makes sense to do so. Markella Zarifi This is a pre-submitted question directed to Jim. Please, can you elaborate on the impairment charge that you have reported? Jim MacCallum Sure, thanks. Yeah, the main factors here are the decreases in the fair market values of the mining equipment, and also the changes in the mining economics, especially since the Bitcoin halving in April 2024. When we assessed the value of our mining and computer equipment, we looked at estimated future cash flows over the machines useful life using a pre-tax discount rate of approximately 14% for our calculations. And so based on this analysis, we came up with an impairment charge of $22 million. This reflects the current market conditions and their impact on our equipment's value. It's part of our regular process to ensure our financial statements accurately represent our assets value. Thank you. Markella Zarifi Another pre-submitted question, again directed to Jim. Congratulations on paying off the Galaxy debt. When can we expect to get some more color on when this financial discipline will begin to contribute to revenue and earnings? Jim MacCallum Yeah, thank you. Yeah, we're pleased about paying off the Galaxy debt obviously. The strength in balance sheet and repayment of the Galaxy debt gives Argo more flexibility to pursue strategic opportunities moving forward and start contributing to our revenue and earnings in the coming quarters. As we continue to optimize our operations and improve our cost structure, those gains flow through to the bottom line as we see in our EBITDA, reduce debt service, cost to Galaxy, are important for our ongoing cash flow. We remain focused on balancing near-term profitability with strategic investments for long-term growth. Thank you. Markella Zarifi Another pre-submitted question, this time directed to Thomas. A number of your peers are talking about kind of using gigawatts megawatts to host GPUs. What does Argo think about this? Thomas Chippas Yes, most certainly. Many of our peers are looking to leverage their large-scale power and infrastructure capabilities to host GPU-based workloads and utilize that power for things beyond just Bitcoin mining. At Argo, we're closely evaluating these opportunities. Obviously, our priority is to ensure we're maximizing the efficiency and profitability of our core Bitcoin mining operations first. I think it's important that we want to be sure that we have the right foundation in place before exploring additional diversification, but certainly this will continue to be an area of interest in the industry and Argo. Markella Zarifi Thank you, Thomas. Another pre-submitted question again directed to you. Do you have a view on energy pricing going into Q3? Thomas Chippas Well, looking ahead to the third quarter with respect to Baie Comeau, just given where it's located, temperatures will be cooling down. So, we expect good uptime coupled with stable power at Baie Comeau that's powered by hydroelectric power. As far as at Helios, as people know, Helios is located in Load Zone West in ERCOT. And if you look at the power prices over the period we're discussing, I think you'll see we've seen much lower average power prices than in previous years. So hard to extrapolate ahead and determine whether or not that trend would continue, but certainly it's been positive over this period we've been looking at on the call. So hopefully that trend continues into Q3. Markella Zarifi Thank you, Thomas. Another pre-submitted question, this time directed to Jim. Congratulations on the recent Galaxy debt payoff. I was just hoping you'd be able to share your outlook for Bitcoin mining economics over the near to medium term. Jim MacCallum Thank you. Yeah, the recent payoff of our $35 million Galaxy debt obligation is an important milestone for the company. It strengthens our balance sheet and as mentioned gives us financial flexibility. In terms of Bitcoin mining and economics, yeah, we remain cautiously optimistic about Bitcoin mining economics as we believe the fundamentals of the network and the asset itself remains strong. Thank you. Markella Zarifi Thank you, Jim. Another pre-submitted question directed to Thomas. Can you speak about M&A pipeline or existing growth opportunities? Thomas Chippas Sure. I think we've been asked this question before and in the latest quarter there certainly has been quite a lot of activity in the mining space with respect to M&A, driven both by the search for power assets to fuel HPC growth desires and by firms that find themselves challenged one way or another, and are looking to link up with other firms and grow in size. Argo continues to keep an open mind in these regards and we engage in conversations that make sense. And then as far as other growth, we talked about Baie Comeau and we do have our eyes on some other opportunities that are very early right now. But certainly, I would expect that M&A continues to be an active discussion in the mining sector in the coming months. Markella Zarifi Thank you, Thomas. And another pre-submitted question directed to you. Do you see a world where the HPC AI stuff starts to become a competitive pressure to Bitcoin mining? Thomas Chippas Well, the competition is probably really more about energy and energy resources. So, what we're seeing in the market is that, those who are providing HPC services are willing to pay top dollar for access to energy. Now whether this economic opportunity is attractive to miners, depends on their cost and their views on where the hash price might be heading long term. For Bitcoin miners, this is actually an opportunity to diversify their revenue streams. They can choose between sticking with traditional mining and to the extent their energy and facilities are appropriate, selling their energy access or compute power to these HPC providers, or perhaps as we're seeing in some instances a mixture of both. So again, this'll be an ongoing thread of conversation for the entire industry and we're certainly analyzing opportunities in the space as well. Markella Zarifi Thank you, Thomas. The pre-submitted question, but from the chat and this time directed to Jim. Are there any plans to start paying a dividend? Jim MacCallum No. We have no plans at this time to start paying a dividend. Any excess cash will be used either to pay down debt or to invest in future growth of the company. Markella Zarifi Thank you, Jim. And I think with the next question, we'll be drawing the Q&A to a close. So, another pre-submitted question directed to Jim as a final. Could you give an update on the lawsuit? Jim MacCallum Sure. Regarding the shareholder lawsuit, we filed our motion to dismiss back in March of this year, and we are currently awaiting a ruling from the court on this. Thank you for answering all those questions. Just before we close this session, Thomas, could I please ask you for a few closing comments? Thomas Chippas Certainly, so appreciate everyone's interests and ongoing interest in Argo, and all that we've been doing. We appreciate your questions and look forward to updating everyone on our next call. Thank you once again for updating investors today. Can I please ask investors not to close this session as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations. This will only take a few moments to complete and I'm sure be greatly valued by the company. On behalf of the management team of Argo Blockchain plc, we'd like to thank you for attending today's presentation.

Earnings call: Argo Blockchain Q2 2024 results and strategic growth By Investing.com

Argo Blockchain plc (LSE: ARB), a leader in cryptocurrency mining, has reported its financial results for the second quarter of 2024. The company mined 188 Bitcoin, generating $12.4 million in revenue and securing $0.8 million in power credits. Despite a 26% revenue decline from the previous quarter due to the Bitcoin halving, Argo has made significant strides in reducing debt by $7.2 million and repaying Galaxy in full. The company also raised $8.3 million in equity after the quarter ended and is actively exploring growth opportunities, including in Quebec and potential energy sector partnerships. In the second quarter of 2024, Argo Blockchain plc has navigated a challenging market environment marked by the Bitcoin halving event, which has affected its revenue stream. However, the company's strategic decisions to minimize debt, cut costs, and explore new growth opportunities signal a proactive approach to adapting to industry changes and optimizing shareholder value. Argo's focus on energy efficiency and potential partnerships in the energy sector align with global trends toward sustainable and innovative energy solutions. As Argo Blockchain evaluates its strategic options and awaits legal proceedings, investors and stakeholders anticipate further updates on its progress in the coming quarters. Argo Blockchain plc (LSE: ARB) has shown resilience in a volatile market, as evidenced by its recent financial results. According to InvestingPro, the company boasts a high shareholder yield, indicating that it may be returning a significant amount of capital to shareholders relative to its share price. Moreover, the valuation suggests a strong free cash flow yield, which could signal that the company is generating ample cash relative to its share value. InvestingPro Data reveals a market capitalization of $83.16 million, which situates Argo Blockchain among the smaller players in the industry. The company's Price to Book (P/B) ratio stands at 10.84 as of the last twelve months, reflecting a premium market valuation compared to its book value. Despite a challenging quarter, the company has managed to achieve a revenue growth of 11.53% over the last twelve months, showing its ability to expand its income streams in the face of adversity. InvestingPro Tips for Argo Blockchain highlight some areas of concern and opportunity. For instance, the company's short-term obligations exceed its liquid assets, which may require careful financial management. Additionally, analysts do not expect the company to be profitable this year, and the stock has experienced significant declines over the last month and six months, with a 14.5% drop in the past month alone. For investors seeking more comprehensive analysis, there are additional InvestingPro Tips available at https://www.investing.com/pro/ARBKF, offering deeper insights into Argo Blockchain's financial health and market performance. Operator: [Technical Difficulty] PLC investor presentation. Throughout this recorded meeting, investors will be in listen-only mode. [Operator Instructions] And I'd now like to hand it over to the management team from Argo Blockchain plc, Markella, good afternoon. Markella Zarifi: Good afternoon, Lily. Thank you very much. Before we begin, I'd like to remind everyone that today's presentation and remarks may contain forward-looking statements. Please see our Form 20-F filed with the Securities and Exchange Commission for our full risk disclosure. With us today for our discussion of Q2 2024 results are Thomas Chippas, Argo's Chief Executive Officer, and Jim MacCallum, Argo's Chief Financial Officer. And now I'll turn it over to Thomas for some introductory remarks. Thomas Chippas: Thanks, Markella. And thank you to everyone for joining us today. I'm excited to update you on our progress so far this quarter and over the first half of the year. Financial discipline into leveraging, operational excellence, and growth continue to remain Argo's three priorities and guide us on a daily basis for the sustainable future of this company. By concentrating on these goals, we are increasingly positioning the company to take advantage of opportunities for growth and development. Our clear objective is delivering enhanced shareholder value and I'm thrilled to continue the great work that the team has been doing and tell you more about what we have accomplished. First, a few comments on the macro environment. In second quarter of 2024, the macroeconomic environment significantly influenced the Bitcoin mining sector. Central banks, particularly the US Federal Reserve, have, until recently, indicated a potential pause in interest rate hikes, providing some respite to risk assets like Bitcoin. The shift in policy created a more stable environment for miners as borrowing costs for infrastructure expansion and energy pricing became less volatile. Inflation pressures, although moderating in certain regions, remain a concern. Energy prices driven by both geopolitical instability and lingering supply chain disruptions continue to affect operational costs for Bitcoin miners. In regions like North America and Europe, where energy costs make up a substantial portion of mining expenses, miners have had to adjust their strategies to maintain profitability amidst fluctuating electricity rates. Bitcoin's post-ETF surge in the first half of the year did provide short-term relief to miners. However, as market conditions corrected and the price settled, miners faced narrow profit margins. Despite these pressures, we've observed growth in total network hashrate as the industry continues to deploy new, more efficient rigs, leading to lower post-halving hash prices. Network (LON:NETW) hashrate and difficulty both rebounded from the post-halving drop while hash price continued to trend lower, even hitting record lows. Overall, the Q2 mining and macroeconomic conditions have introduced both opportunities and headwinds for Bitcoin miners, with energy markets and monetary policy playing critical roles in shaping the sector's trajectory for the rest of the year. Now let's turn to our key highlights for the second quarter of 2024. In Q2, we mined 188 Bitcoin or about two Bitcoin per day and generated a revenue of $12.4 million and $0.8 million in power credits from economic curtailment in Texas. Our mining profit this quarter was $5 million with a margin mining margin of 41% and an average direct cost per Bitcoin mine of $38,989. Additionally, we reduced our debt by $7.2 million and fully repaid Galaxy during our post-quarter period. We ended the quarter with $4 million in cash and completed an $8.3 million equity raise post quarter. Let's now move to the next slide, and Jim can discuss the comparison of our quarterly results and lend some comments on our capital structure. Over to you, Jim. Jim MacCallum: Thank you, Tom. Our revenue for Q2 was $12.4 million, a decrease compared to $16.8 million in Q1 2024, and consistent with the $12.6 million achieved in Q2 2023. The main driver compared to Q1 was the Bitcoin halving, which occurred in April 2024. This resulted in 41% lower Bitcoin production. Offsetting this lower production was higher realized Bitcoin prices resulting in an overall revenue decline in Q2 of 26% compared to Q1. Despite the revenue decrease, we were able to realize a higher mining margin percentage in Q2 versus Q1 as a result of lower power prices in the quarter primarily at the Helios facility. Our mining margin was 41% in Q2 compared to 38% in Q1. Because of the lower revenue in Q2, our overall mining profit decreased from $6.4 million in Q1 2024 to $5.1 million in Q2 2024. We are expecting lower mining profits and a lower mining margin percentage in Q3 as a result of the lower hash price realized so far in the quarter. Mining economics continue to be challenging for Bitcoin miners, and as a result, the company recorded a $22 million non-cash impairment charge on its mining machines, and updated its going concern disclosure and its financial statements to reflect current conditions. Our non-mining operating expense trended lower in Q2 as compared to Q1. This 14% reduction was a result of our focus on reducing costs and streamlining operations. For the quarter, our adjusted EBITDA was $2.6 million as compared to $3.8 million in Q1 2024, and $1.6 million in Q2 of 2023. As Tom mentioned, we ended the quarter with $4.0 million in cash, and we will dive into more detail on our Galaxy debt in the following slide. Since I joined Argo in April 2023, we've had a strong focus on repaying our Galaxy debt. We were proud to announce a full repayment of this $35 million loan earlier this month. This was achieved primarily through a combination of non-core asset sales, including our Mirabel site in Q1 of this year, equity raises and cash flow from operations. Repayment of this loan reduces our interest expense and the $1.1 million of monthly amortization payments. We completed the repayment of the Galaxy loan ahead of schedule and with no reduction in our overall hashrate. Thomas Chippas: I'd like to add a few comments regarding the Galaxy debt as well. The focus for Argo in 2023 in the first half of '24 has been to reduce its debt obligations and strengthen its balance sheet. The $35 million debt owed to Galaxy began amortizing, as Jim said, at $1.1 million per month in May of '23. As Jim noted, I am pleased to report that Argo has repaid the full amount of this loan to Galaxy as announced by the Company on August 12th. The Galaxy debt was repaid over four months ahead of the current schedule, and nearly 18 months ahead of the original repayment schedule. The early repayment reflects Argo's focus on strengthening the balance sheet, reducing our financial liabilities and freeing up capacity to focus on operational excellence. Repayment was made possible by using cash flow generated from operations, cash generated from equity raises and cash generated through the sale of non-core assets without any meaningful impact to Argo's hashrate. Repaying the Galaxy loan is a significant milestone for Argo, and I cannot emphasize enough how well the Argo team executed this feat. They have my thanks for all their efforts and I couldn't be more pleased with the outcome. Back to you, Jim. Jim MacCallum: Thank you, Tom. Our cash balance at end of Q2 2024 was $4 million. This was supplemented by the $8.3 million equity raise in July of 2024, a large portion of which went to repay the Galaxy loan. Remaining debt obligations for Argo include the $40 million baby bonds, which mature in November, 2026 and the $1 million mortgage on our bank home loan facility. With the Galaxy debt behind us, we have a number of growth opportunities that we can turn our attention to. As discussed on our Q1 call, the sale of the Mirabel facility was completed with no meaningful loss to Argo's hashrate. The significant reduction in operating expenses in the first half of 2024 compared to 2022 and 2023 and the strong mining margin percentage, despite the Bitcoin halving, are indications of Argo's strong performance. The Mirabel sale enabled the company to de-lever the balance sheet with minimal impact to the company's hashrate. Following the sale, Argo relocated the majority of the mining machines at Mirabel to its Baie Comeau facility and sold certain prior generation machines representing approximately 140 petahash. The sale allowed the company to streamline its operations by locating all self-binding machines at its Baie Comeau facility. Additionally, the sale of Mirabel reduces the company's non-mining operating expenses by $700,000 annually. Argo has taken aggressive action on its cost structure and non-mining operating expenses. As compared to the second half of fiscal '22, the company has reduced its operating expenses by over 70% to $5.8 million. As compared to the first half of 2023 the Company has reduced its operating expenses by over 25%. With that, I'll pass it back to Tom. Thomas Chippas: Thanks, Jim. So, I'm excited to talk about some growth opportunity, specifically at our Baie Comeau site in Quebec. So this slide shows our potential growth opportunity at Baie Comeau and its impact on our -- potential impact on our overall hashrate. Baie Comeau currently has 15 megawatts of power, but there's an opportunity to expand that to 23 megawatts. This would increase the hashrate capacity of Baie Comeau by up to 0.7 exahash. And should we energize the new 8 megawatts with the latest generation of miners, Baie Comeau's fleet efficiency would improve to 24 joules per terahash. Alternatively, should we choose to refresh the entire fleet and energize the new 8 megawatts at Baie Comeau with the latest generation of miners, that would increase the hashrate capacity at Baie Comeau to 1.4 exahash and improve its fleet efficiency to about 15 joules per terahash. This is an exciting opportunity that we're analyzing, and to be clear, we're analyzing it right now. We'll have additional updates on it in the future, but obviously it's exciting to have something like this in hand at a facility that we own, that we operate, and a facility that has shown good performance over time. So, looking forward to digging into this and sharing more as information becomes available. Turning to other thoughts on growth. The strength in balance sheet and repayment of the Galaxy debt gives Argo more flexibility to pursue strategic opportunities moving forward. We continue to explore opportunities where mining can be paired with stranded or wasted energy. There's tremendous potential for energy generators to utilize mining as a balancing and optimization tool, particularly in energy transition where limitations currently exist in the ability to store or transmit renewable energy. We're evaluating some novel opportunities with power generators and utilities to really help capture the full economic value of stranded energy. Overall, our focus remains on access to low cost and reliable power. The ongoing transition to clean energy requires substantial investment in the power grid as well as demand response technology. Bitcoin mining as I'm sure many people listening know, plays a crucial role in this shift. Miners are exceptionally agile, making them ideal for grid load balancing. What's more, mining operations can be seamlessly integrated [Technical Difficulty] generation and grid operations. For the remainder of '24, Argo will continue to focus on our three pillars, financial discipline, operational excellence, and growth and strategic partnerships. On behalf of Argo, I truly would like to thank all of our shareholders and stakeholders and the team. We remain committed to optimizing our capital structure and driving long-term value for our shareholders. With that, I'll pass it back to Markella for any questions. Thank you. Operator: Thomas, Jim, thank you very much for your presentation this afternoon. Ladies and gentlemen, please do continue to submit your questions. [Operator Instructions] Markella, if I could just hand over to you to share the Q&A and I'll pick up from you at the end. Markella Zarifi: Thank you, Lily. I will start with a question from Kevin Dede from H.C. Wainwright for Jim. Argo still has debt overhang, so curious about an update there and fleet expansion given the network cost rate continues to scale up as much as it has? Jim MacCallum: Thank you, Kevin. Regarding our debt situation, as we mentioned on the call here, we've paid off the Galaxy debt and now our main outstanding debt is the baby bonds, which are non-amortizing and mature in November 2026. We're committed to improving our balance sheet and we'll continue to provide to updates as we have them. As for fleet expansion, you're right, that the network cash rate continues to grow despite the current hash price. We're focused on efficiency rather than raw growth and are engaged in testing on the more energy efficient models at the moment. Thank you. Markella Zarifi: Thank you, Jim. Another question by Kevin Dede at H.C. Wainwright, and this is directed to Thomas. Obviously, you guys should have great things to talk about with regard to operations in Q2 on staying on point. But for investors, it's always what have you done for me lately? Anything you can add about expanding operations in Quebec, new site selection, partnerships, perhaps with private companies that no longer have access to capital. Anything that offers a view to the future of the company. Maybe there's something Argo can do that's a unique derivative of Thomas's vast experience in trading. Thomas Chippas: Thanks for that question, Kevin. Look, we're always looking for opportunities to grow and improve. Certainly, we just shared some of the possibilities and what they are at Baie Comeau. We're still considering how we might go about doing that and there'll be more to say on that later. But we recognize that investors want to see growth. Hopefully with the Galaxy debt in the rear-view mirror, it sets us up for growth and that's why we share the Baie Comeau opportunity today. We're confident that our approach will continue to deliver value to investors even as the mining landscape evolves. And I think that I appreciate the kudos on my previous experiences. We're open-minded about where growth can come from and we'll continue to share information as and when it makes sense to do so. Markella Zarifi: This is a pre-submitted question directed to Jim. Please, can you elaborate on the impairment charge that you have reported? Jim MacCallum: Sure, thanks. Yeah, the main factors here are the decreases in the fair market values of the mining equipment, and also the changes in the mining economics, especially since the Bitcoin halving in April 2024. When we assessed the value of our mining and computer equipment, we looked at estimated future cash flows over the machines useful life using a pre-tax discount rate of approximately 14% for our calculations. And so based on this analysis, we came up with an impairment charge of $22 million. This reflects the current market conditions and their impact on our equipment's value. It's part of our regular process to ensure our financial statements accurately represent our assets value. Thank you. Markella Zarifi: Another pre-submitted question, again directed to Jim. Congratulations on paying off the Galaxy debt. When can we expect to get some more color on when this financial discipline will begin to contribute to revenue and earnings? Jim MacCallum: Yeah, thank you. Yeah, we're pleased about paying off the Galaxy debt obviously. The strength in balance sheet and repayment of the Galaxy debt gives Argo more flexibility to pursue strategic opportunities moving forward and start contributing to our revenue and earnings in the coming quarters. As we continue to optimize our operations and improve our cost structure, those gains flow through to the bottom line as we see in our EBITDA, reduce debt service, cost to Galaxy, are important for our ongoing cash flow. We remain focused on balancing near-term profitability with strategic investments for long-term growth. Thank you. Markella Zarifi: Another pre-submitted question, this time directed to Thomas. A number of your peers are talking about kind of using gigawatts megawatts to host GPUs. What does Argo think about this? Thomas Chippas: Yes, most certainly. Many of our peers are looking to leverage their large-scale power and infrastructure capabilities to host GPU-based workloads and utilize that power for things beyond just Bitcoin mining. At Argo, we're closely evaluating these opportunities. Obviously, our priority is to ensure we're maximizing the efficiency and profitability of our core Bitcoin mining operations first. I think it's important that we want to be sure that we have the right foundation in place before exploring additional diversification, but certainly this will continue to be an area of interest in the industry and Argo. Markella Zarifi: Thank you, Thomas. Another pre-submitted question again directed to you. Do you have a view on energy pricing going into Q3? Thomas Chippas: Well, looking ahead to the third quarter with respect to Baie Comeau, just given where it's located, temperatures will be cooling down. So, we expect good uptime coupled with stable power at Baie Comeau that's powered by hydroelectric power. As far as at Helios, as people know, Helios is located in Load Zone West in ERCOT. And if you look at the power prices over the period we're discussing, I think you'll see we've seen much lower average power prices than in previous years. So hard to extrapolate ahead and determine whether or not that trend would continue, but certainly it's been positive over this period we've been looking at on the call. So hopefully that trend continues into Q3. Markella Zarifi: Thank you, Thomas. Another pre-submitted question, this time directed to Jim. Congratulations on the recent Galaxy debt payoff. I was just hoping you'd be able to share your outlook for Bitcoin mining economics over the near to medium term. Jim MacCallum: Thank you. Yeah, the recent payoff of our $35 million Galaxy debt obligation is an important milestone for the company. It strengthens our balance sheet and as mentioned gives us financial flexibility. In terms of Bitcoin mining and economics, yeah, we remain cautiously optimistic about Bitcoin mining economics as we believe the fundamentals of the network and the asset itself remains strong. Thank you. Markella Zarifi: Thank you, Jim. Another pre-submitted question directed to Thomas. Can you speak about M&A pipeline or existing growth opportunities? Thomas Chippas: Sure. I think we've been asked this question before and in the latest quarter there certainly has been quite a lot of activity in the mining space with respect to M&A, driven both by the search for power assets to fuel HPC growth desires and by firms that find themselves challenged one way or another, and are looking to link up with other firms and grow in size. Argo continues to keep an open mind in these regards and we engage in conversations that make sense. And then as far as other growth, we talked about Baie Comeau and we do have our eyes on some other opportunities that are very early right now. But certainly, I would expect that M&A continues to be an active discussion in the mining sector in the coming months. Markella Zarifi: Thank you, Thomas. And another pre-submitted question directed to you. Do you see a world where the HPC AI stuff starts to become a competitive pressure to Bitcoin mining? Thomas Chippas: Well, the competition is probably really more about energy and energy resources. So, what we're seeing in the market is that, those who are providing HPC services are willing to pay top dollar for access to energy. Now whether this economic opportunity is attractive to miners, depends on their cost and their views on where the hash price might be heading long term. For Bitcoin miners, this is actually an opportunity to diversify their revenue streams. They can choose between sticking with traditional mining and to the extent their energy and facilities are appropriate, selling their energy access or compute power to these HPC providers, or perhaps as we're seeing in some instances a mixture of both. So again, this'll be an ongoing thread of conversation for the entire industry and we're certainly analyzing opportunities in the space as well. Markella Zarifi: Thank you, Thomas. The pre-submitted question, but from the chat and this time directed to Jim. Are there any plans to start paying a dividend? Jim MacCallum: No. We have no plans at this time to start paying a dividend. Any excess cash will be used either to pay down debt or to invest in future growth of the company. Markella Zarifi: Thank you, Jim. And I think with the next question, we'll be drawing the Q&A to a close. So, another pre-submitted question directed to Jim as a final. Could you give an update on the lawsuit? Jim MacCallum: Sure. Regarding the shareholder lawsuit, we filed our motion to dismiss back in March of this year, and we are currently awaiting a ruling from the court on this. Operator: Thank you for answering all those questions. Just before we close this session, Thomas, could I please ask you for a few closing comments? Thomas Chippas: Certainly, so appreciate everyone's interests and ongoing interest in Argo, and all that we've been doing. We appreciate your questions and look forward to updating everyone on our next call. Operator: Thank you once again for updating investors today. Can I please ask investors not to close this session as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations. This will only take a few moments to complete and I'm sure be greatly valued by the company. On behalf of the management team of Argo Blockchain plc, we'd like to thank you for attending today's presentation.

Argo Blockchain plc (ARBK) Q2 2024 Earnings Call Transcript

Markella Zarifi - Financial Communications Representative Thomas Chippas - Chief Executive Officer Jim MacCallum - Chief Financial Officer Argo Blockchain plc Investor Presentation. Throughout this recorded meeting, investors will be in a listen-only mode. Questions are encouraged and can be submitted at any time by the Q&A tab situated on the right-hand corner of your screen. Simply type in your questions and press send. The Company may not be in a position to answer every question it received during the meeting itself, however, the Company can review all questions submitted today. Before we begin, I'd like to submit the following poll. I'd now like to hand to the management team from Argo Blockchain plc. Markella, good afternoon. Markella Zarifi Good afternoon, Lily. Thank you very much. Before we begin, I would like to remind everyone that today's presentation remarks may contain forward looking statements. Please see our Form 20-F filed with the Securities and Exchange Commission for our full risk disclosures. With us today for our discussion of Q2 2024 results are Thomas Chippas, Argo's Chief Executive Officer; and Jim MacCallum, Argo's Chief Financial Officer. And now, I'll turn now over to Thomas for some introductory remarks. Thomas Chippas Thanks, Markella. And thank you to everyone for joining us today. I'm excited to update you on our progress so far this quarter and over the first half of the year. Financial discipline and to leveraging operational excellence and growth continue to remain Argo's three priorities and guide us on a daily basis for the sustainable future of this company, while concentrating on these goals, we are increasingly positioning the Company to take advantage of opportunities for growth and development. Our clear objective is delivering enhanced shareholder value, and I'm thrilled to continue the great work that the team has been doing and tell you more about what we have accomplished. First, a few comments on the macro environment. In second quarter of 2024, the macroeconomic environment significantly influenced the Bitcoin mining sector. Central banks, particularly, the U.S. Federal Reserve have until recently, indicated a potential pause in interest rate hikes, providing some respite to risk assets like Bitcoin. The shift in policy created a more stable environment for miners as borrowing costs for infrastructure expansion and energy pricing became less volatile. Inflation pressures, although moderating in certain regions remain a concern. Energy prices driven by both geopolitical instability and lingering supply chain disruptions continue to affect operational costs for Bitcoin miners. In regions like North America and Europe where energy costs make up a substantial portion of mining expenses, miners have had to adjust their strategies to maintain profitability amidst fluctuating electricity rates. Bitcoin's post-ETF surge in the first half of the year did provide short-term relief to miners. However, as market conditions corrected and the price settled, miners faced narrow profit margins. Despite these pressures, we've observed growth in total network cash rate as the industry continues to deploy new, more efficient rigs, leading to lower post having hash prices. Network hash rate and difficulty both rebounded from the post having dropped, while hash price continued to trend lower even hitting record lows. Overall, the Q2 mining and macroeconomic conditions have introduced both opportunities and headwinds for Bitcoin miners with energy markets and monetary policy playing critical roles in shaping the sector's trajectory for the rest of the year. Now let's turn to our key highlights for the second quarter of 2024. In Q2, we mined 188 Bitcoin or about 2 Bitcoin per day and generate a revenue of $12.4 million and $0.8 million in power credits from economic curtailment in Texas. Our mining profit this quarter was $5 million with a margin mining margin of 41% and an average direct cost per Bitcoin mine of $38,989. Additionally, we reduced our debt by $7.2 million and fully repaid Galaxy during our post quarter period. We ended the quarter with $4 million in cash and completed an $8.3 million equity raise post quarter. Let's now move to the next slide, and Jim can discuss the comparison of our quarterly results and lend some comments on our capital structure. Over to you, Jim. Jim MacCallum Thank you, Tom. Our revenue for Q2 was $12.4 million, a decrease compared to $16.8 million in Q1 2024, and consistent with the $12.6 million achieved in Q2 2023. The main driver compared to Q1 was the Bitcoin having, which occurred in April 2024. This resulted in 41% lower Bitcoin production. Offsetting this lower production was higher realized Bitcoin prices resulting in an overall revenue decline in Q2 of 26% compared to Q1. Despite the revenue decrease, we were able to realize a higher mining margin percentage in Q2 versus Q1 as a result of lower power prices in the quarter primarily at the Helios facility. Our mining margin was 41% in Q2 compared to 38% in Q1. Because of the lower revenue in Q2, our overall mining profit decreased from $6.4 million in Q1 2024 to $5.1 million in Q2 2024. We are expecting lower mining profits and a lower mining margin percentage in Q3 as a result of the lower hash price realized so far in the quarter. Mining economics continue to be challenging for Bitcoin miners, and as a result, the Company recorded a $22 million non-cash impairment charge on its mining machines, and updated its going concern disclosure and its financial statements to reflect current conditions. Our non-mining operating expense trended lower in Q2 as compared to Q1. This 14% reduction was a result of our focus on reducing costs and streamlining operations. For the quarter, our adjusted EBITDA was $2.6 million as compared to $3.8 million in Q1 2024, and $1.6 million in Q2 of 2023. As Tom mentioned, we ended the quarter with $4.0 million in cash, and we will dive into more detail on our Galaxy debt in the following slide. Since I joined Argo in April 2023, we've had a strong focus on repaying our Galaxy debt. We were proud to announce a full repayment of this $35 million loan earlier this month. This was achieved primarily through a combination of non-core asset sales, including our Mirabel site in Q1 of this year. Equity raises and cash flow from operations. Repayment of this loan reduces our interest expense and the $1.1 million of monthly amortization payments. We completed the repayment of the Galaxy loan ahead of schedule and with no reduction in our overall hash rate. Thomas Chippas I'd like to add a few comments regarding the Galaxy debt as well. The focus for Argo in 2023 in the first half of '24 has been to reduce this debt obligations and strengthen its balance sheet. The $35 million debt owed to Galaxy began amortizing, as Jim said, at $1.1 million per month in May of '23. As Jim noted, I am pleased to report that Argo has repaid the full amount of this loan to Galaxy as announced by the Company on August 12th. The Galaxy debt was repaid over four months ahead of the current schedule, and nearly 18 months ahead of the original repayment schedule. The early repayment reflects Argo's focus on strengthening the balance sheet, reducing our financial liabilities and freeing up capacity to focus on operational excellence. Repayment was made possible by using cash flow generated from operations, cash generated from equity raises and cash generated through the sale of non-core assets without any meaningful impact to Argo's hash rate. Repaying the Galaxy loan is a significant milestone for Argo, and I cannot emphasize enough how well the Argo team executed this feat. They have my thanks for all their efforts and I couldn't be more pleased with the outcome. Thank you, Tom. Our cash balance at end of Q2 2024 was $4 million. This was supplemented by the $8.3 million equity raise in July of 2024, a large portion of which went to repay the Galaxy loan. Remaining debt obligations for Argo include the $40 million baby bonds, which mature in November, 2026 and the $1 million mortgage on our bank home loan facility. With the Galaxy debt behind us, we have a number of growth opportunities that we can turn our attention to. As discussed on our Q1 call, the sale of the Mirabel facility was completed with no meaningful loss to Argo's hash rate. The significant reduction in operating expenses in the first half of 2024 compared to 2022 and 2023 and the strong mining margin percentage, despite the Bitcoin halving are indications of Argo's strong performance. The Mirabel sale enabled the Company to de-lever the balance sheet with minimal impact to the Company's hash rate. Following the sale, Argo relocated the majority of the mining machines at Mirabel to its Baie-Comeau facility and sold certain prior generation machines representing approximately 140 petahash. The sale allowed the Company to streamline its operations by locating all self-binding machines at its Baie-Comeau facility. Additionally, the sale of Mirabel reduces the Company's non-mining operating expenses by $700,000 annually. Argo has taken aggressive action on its cost structure and non-mining operating expenses. As compared to the second half of fiscal '22, the Company has reduced its operating expenses by over 70% to 5.8 million. As compared to the first half of 2023 the Company has reduced its operating expenses by over 25%. Thanks, Jim. So, I'm excited to talk about some growth opportunity, specifically at our Baie-Comeau site in Quebec. So, this slide shows our potential growth opportunity at Baie-Comeau and its impact on our -- potential impact on our overall hash rate. Baie-Comeau currently has 15 megawatts of power, but there's an opportunity to expand that to 23 megawatts. This would increase the hash rate capacity of Baie-Comeau by up to 0.7 exahash. And should we energize the new 8 megawatts with the latest generation of miners, Baie-Comeau's fleet efficiency would improve to 24 joules per terahash. Alternatively, should we choose to refresh the entire fleet and energize the new 8 megawatts at Baie-Comeau with the latest generation of miners, that would increase the hash rate capacity at Baie-Comeau to 1.4 exahash and improve its fleet efficiency to about 15 joules per terahash. This is an exciting opportunity that we're analyzing, and to be clear, we're analyzing it right now. We'll have additional updates on it in the future, but obviously it's exciting to have something like this in hand at a facility that we own, that we operate, and a facility that has shown good performance over time. So, looking forward to digging into this and sharing more as information becomes available. Turning to other thoughts on growth. The strength and balance sheet and repayment of the Galaxy debt gives Argo more flexibility to pursue strategic opportunities moving forward. We continue to explore opportunities where mining can be paired with stranded or wasted energy. There's tremendous potential for energy generators to utilize mining as a balancing and optimization tool, particularly in the energy transition, where limitations currently exist in the ability to store or transmit renewable energy. We're evaluating some novel opportunities with power generators and utilities to really help capture the full economic value of surrounded energy. Overall, our focus remains on access to low cost and reliable power. The ongoing transition to clean energy requires substantial investment in the power grid as well as demand response technology. Bitcoin mining as I'm sure many people listening know, plays a crucial role in this shift. Miners are exceptionally agile, making them ideal for grid low balancing, and what's more mining operations can be seamlessly integrated generation and grid operations. For the remainder of '24, Argo will continue to focus on our three pillars, financial discipline, operational excellence, and growth and strategic partnerships. On behalf of our goal, I truly would like to thank all of our shareholders and stakeholders and the team. We remain committed to optimizing our capital structure and driving long-term value for our shareholders. With that, I'll pass it back to Markella for any questions. Thank you. Thomas, Jim, thank you very much for your presentation this afternoon. Ladies and gentlemen, please do continue to submit your questions. Just suppose in the Q&A tab, situated on the top right-hand corner of your screen, as you can see if we have received a number of questions throughout today's presentation. Markella, if I could just hand over to you to share the Q&A and I'll pick up from you at the end. Markella Zarifi Thank you, Lily. I will start with a question from Kevin Dede from H.C. Wainwright for Jim. Argo still has debt overhang, so curious about an update there and fleet expansion given the network cost rate continues to scale up as much as it has? Jim MacCallum Thank you, Kevin. Regarding our debt situation, as we mentioned on the call here, we've paid off the Galaxy debt and now our main outstanding debt is the baby bonds, which are non-amortizing and mature in November 2026. We're committed to improving our balance sheet and we'll continue to provide to updates as we have them. As for fleet expansion, you're right that the network cash rate continues to grow despite the current hash price. We're focused on efficiency rather than raw growth and are engaged in testing on the more energy efficient models at the moment. Thank you. Markella Zarifi Thank you, Jim. Another question by Kevin Dede at H.C. Wainwright, and this is directed to Thomas. Obviously, you guys should have great things to talk about with regard to operations in Q2 on staying on point. But for investors, it's always what have you done for me lately? Anything you can add about expanding operations in Quebec, new site selection, partnerships, perhaps with private companies that no longer have access to capital. Anything that offers a view to the future of the Company. Maybe there's something Argo can do that's a unique derivative of Thomas's vast experience in trading. Thomas Chippas Thanks for that question, Kevin. Look, we're always looking for opportunities to grow and improve. Certainly, we just shared some of the possibilities and what they are at Bake Homo. We're still considering how we might go about doing that and there'll be more to say on that later. But we recognize that investors want to see growth. Hopefully with the Galaxy debt in the rear-view mirror, it sets us up for growth and that's why we share the big home opportunity today. We're confident that our approach will continue to deliver value to investors even as the mining landscape evolves. And I think that I appreciate the kudos on my previous experiences. We're open-minded about where growth can come from and we'll continue to share information as I want. It makes sense to do so. This is a pre-submitted question directed to Jim. Please, can you elaborate on the impairment charge that you have reported? Jim MacCallum Sure. Yes, the main factors here are the decreases in the fair market values of the mining equipment, and also the changes in the mining economics, especially since the Bitcoin having in April 2024. When we assessed the value of our mining and computer equipment, we looked at estimated future cash flows over the machines useful life using a pre-tax discount rate of approximately 14% for our calculations. And so based on this analysis, we came up with an impairment charge of 22 million. This reflects the current market conditions and their impact on our equipment's value. It's part of our regular process to ensure our financial statements accurately represent our assets value. Another pre-submitted question, again directed to Jim. Congratulations on paying off the Galaxy debt. When can we expect to get some more caller on when this financial discipline will begin to contribute to revenue and earnings? Jim MacCallum We're pleased about paying off the Galaxy debt obviously. The strength and balance sheet and repayment of the Galaxy debt gives Argo more flexibility to pursue strategic opportunities moving forward and start contributing to our revenue and earnings in the coming quarters. As we continue to optimize our operations and improve our cost structure, those gains flow through to the bottom line as we see in our EBITDA, reduce debt service, cost to Galaxy, are important for our ongoing cash flow. We remain focused on balancing near term profitability with strategic investments for long-term growth. Another pre-submitted question this time directed to Thomas. A number of your peers are talking about kind of using gigawatts megawatts to host GPUs. What does Argo think about this? Thomas Chippas Yes, most certainly. Many of our peers are looking to leverage their large-scale power and infrastructure capabilities to host GPU-based workloads and utilize that power for things beyond just Bitcoin mining. At Argo, we're closely evaluating these opportunities. Obviously, our priority is to ensure we're maximizing the efficiency and profitability of our core Bitcoin mining operations first. I think it's important that we want to be sure that we have the right foundation in place before exploring additional diversification, but certainly this will continue to be an area of interest in the industry and Argo. Another pre-submitted question again directed to you. Do you have a view on energy pricing going into Q3? Thomas Chippas Looking ahead to the third quarter with respect to Bake Homo, just given where it's located, temperatures will be cooling down. So, we expect good uptime coupled with stable power at Bake Homo that's powered by hydroelectric power. As far as at Helios, as people know, Helios is located in Load Zone West in ERCOT. And if you look at the power prices over the period we're discussing, I think you'll see we've seen much lower average power prices than in previous years. So hard to extrapolate ahead and determine whether or not that trend would continue, but certainly it's been positive over this period we've been looking at on the call. So hopefully that trend continues into Q3. Thank you, Thomas. Another pre-submitted question. This time directed to Jim. Congratulations on the recent Galaxy debt payoff. I was just hoping you'd be able to share your outlook for Bitcoin mining economics over the near to medium term. Jim MacCallum Thank you. Yes, the recent payoff of our $35 million Galaxy debt obligation is an important milestone for the Company. It strengthens our balance sheet and as mentioned gives us financial flexibility. In terms of Bitcoin mining and economics. Yes, we remain cautiously optimistic about Bitcoin mining economics as we believe the fundamentals of the network and the asset itself remains strong. Thank you. Thank you, Jim. Another pre-submitted question directed to Thomas. Can you speak about M&A pipeline or existing growth opportunities? Thomas Chippas Sure. I think we've been asked this question before and in the latest quarter there certainly has been quite a lot of activity in the mining space with respect to M&A, driven both by the search for power assets to fuel HPC growth desires and by firms that find themselves challenged one way or another, and are looking to link up with other firms and grow in size. Argo continues to keep an open mind in these regards and we engage in conversations that make sense. And then as far as other growth, we talked about Baie-Comeau and we do have our eyes on some other opportunities that are very early right now. But certainly, I would expect that M&A continues to be an active discussion in the mining sector in the coming months. Thank you, Thomas. And another pre-submitted question directed to you. Do you see a world where the HPC AI stuff starts to become a competitive pressure to Bitcoin mining? Thomas Chippas Well, the competition is probably really more about energy and energy resources. So, what we're seeing in the market is that, those who are providing HPC services are willing to pay top dollar for access to energy. Now whether this economic opportunity is attractive to miners, depends on their cost and their views on where the hash price might be heading long term. For Bitcoin miners, this is actually an opportunity to diversify their revenue streams. They can choose between sticking with traditional mining and to the extent their energy and facilities are appropriate, selling their energy access or compute power to these HPC providers, or perhaps as we're seeing in some instances a mixture of both. So again, this'll be an ongoing thread of conversation for the entire industry and we're certainly analyzing opportunities in the space as well. Thank you, Thomas. The pre-submitted question, but from the chat and this time directed to Jim. Are there any plans to start paying a dividend? Jim MacCallum No. We have no plans at this time to start paying a dividend. Any excess cash will be used either to pay down debt or to invest in future growth of the Company. Thank you, Jim. And I think with the next question, we'll be drawing the Q&A to a close. So, another pre-submitted question directed to Jim as a final. Could you give an update on the lawsuit? Jim MacCallum Sure. Regarding the shareholder lawsuit, we filed our motion to dismiss back in March of this year, and we are currently awaiting a ruling from the court on this. Thank you for answering all those questions. Just before we close this session, Thomas, could I please ask you for a few closing comments? Thomas Chippas Certainly, so appreciate everyone's interests and ongoing interest in Argo, and all that we've been doing. We appreciate your questions and look forward to updating everyone on our next call. Thank you once again for updating investors today. Can I please ask investors not to close this session as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations. This will only take a few moments to complete and I'm sure be greatly valued by the Company. On behalf of the management team of Argo Blockchain plc, we'd like to thank you for attending today's presentation and good afternoon to you all.

Earnings call: Argo Blockchain outlines growth amid challenging market By Investing.com

During the second quarter of 2024 earnings call, Argo Blockchain (ARBK), a leader in the Bitcoin mining industry, discussed its financial performance and strategic plans amidst a challenging macroeconomic environment. The company reported mining 188 Bitcoin, generating $12.4 million in revenue, and significantly reducing its debt by $7.2 million. Argo's CEO Thomas Chippas highlighted the company's commitment to financial discipline and operational excellence while exploring growth opportunities in energy-efficient mining and high-performance computing (HPC). In conclusion, Argo Blockchain's Q2 2024 earnings call revealed the company's resilience and adaptability in the face of economic headwinds. By repaying debt and focusing on strategic growth opportunities, Argo is positioning itself to capitalize on the evolving dynamics of the Bitcoin mining and HPC sectors. The company's leadership remains optimistic about its ability to navigate the challenges and continue delivering value to its shareholders. Argo Blockchain's recent performance and strategic decisions reflect a company that is navigating a complex financial landscape with a focus on operational efficiency and growth opportunities. Here are some insights based on real-time data from InvestingPro that may provide additional context for investors: - Financial Health: InvestingPro Data indicates that Argo Blockchain has a market capitalization of $83.16 million, with a high Price / Book multiple of 10.84. This could signal that the market values the company's assets quite highly, which may be due to its technological capabilities or potential growth prospects in the Bitcoin mining sector. - InvestingPro Tips: One key tip for Argo Blockchain is the high shareholder yield, which could attract investors looking for companies that return value to shareholders. However, it's important to note that Argo does not pay dividends, as the company is prioritizing debt repayment and growth. Additionally, analysts do not anticipate the company will be profitable this year, which aligns with the company's focus on investing in its growth rather than immediate profitability. For investors seeking a deeper dive into Argo Blockchain's financial metrics and strategic outlook, there are additional InvestingPro Tips available at https://www.investing.com/pro/ARBK, providing a comprehensive analysis of the company's financial health and market position. Operator: Argo Blockchain plc Investor Presentation. Throughout this recorded meeting, investors will be in a listen-only mode. Questions are encouraged and can be submitted at any time by the Q&A tab situated on the right-hand corner of your screen. Simply type in your questions and press send. The Company may not be in a position to answer every question it received during the meeting itself, however, the Company can review all questions submitted today. Before we begin, I'd like to submit the following poll. I'd now like to hand to the management team from Argo Blockchain plc. Markella, good afternoon. Markella Zarifi: Good afternoon, Lily. Thank you very much. Before we begin, I would like to remind everyone that today's presentation remarks may contain forward looking statements. Please see our Form 20-F filed with the Securities and Exchange Commission for our full risk disclosures. With us today for our discussion of Q2 2024 results are Thomas Chippas, Argo's Chief Executive Officer; and Jim MacCallum, Argo's Chief Financial Officer. And now, I'll turn now over to Thomas for some introductory remarks. Thomas Chippas: Thanks, Markella. And thank you to everyone for joining us today. I'm excited to update you on our progress so far this quarter and over the first half of the year. Financial discipline and to leveraging operational excellence and growth continue to remain Argo's three priorities and guide us on a daily basis for the sustainable future of this company, while concentrating on these goals, we are increasingly positioning the Company to take advantage of opportunities for growth and development. Our clear objective is delivering enhanced shareholder value, and I'm thrilled to continue the great work that the team has been doing and tell you more about what we have accomplished. First, a few comments on the macro environment. In second quarter of 2024, the macroeconomic environment significantly influenced the Bitcoin mining sector. Central banks, particularly, the U.S. Federal Reserve have until recently, indicated a potential pause in interest rate hikes, providing some respite to risk assets like Bitcoin. The shift in policy created a more stable environment for miners as borrowing costs for infrastructure expansion and energy pricing became less volatile. Inflation pressures, although moderating in certain regions remain a concern. Energy prices driven by both geopolitical instability and lingering supply chain disruptions continue to affect operational costs for Bitcoin miners. In regions like North America and Europe where energy costs make up a substantial portion of mining expenses, miners have had to adjust their strategies to maintain profitability amidst fluctuating electricity rates. Bitcoin's post-ETF surge in the first half of the year did provide short-term relief to miners. However, as market conditions corrected and the price settled, miners faced narrow profit margins. Despite these pressures, we've observed growth in total network cash rate as the industry continues to deploy new, more efficient rigs, leading to lower post having hash prices. Network (LON:NETW) hash rate and difficulty both rebounded from the post having dropped, while hash price continued to trend lower even hitting record lows. Overall, the Q2 mining and macroeconomic conditions have introduced both opportunities and headwinds for Bitcoin miners with energy markets and monetary policy playing critical roles in shaping the sector's trajectory for the rest of the year. Now let's turn to our key highlights for the second quarter of 2024. In Q2, we mined 188 Bitcoin or about 2 Bitcoin per day and generate a revenue of $12.4 million and $0.8 million in power credits from economic curtailment in Texas. Our mining profit this quarter was $5 million with a margin mining margin of 41% and an average direct cost per Bitcoin mine of $38,989. Additionally, we reduced our debt by $7.2 million and fully repaid Galaxy during our post quarter period. We ended the quarter with $4 million in cash and completed an $8.3 million equity raise post quarter. Let's now move to the next slide, and Jim can discuss the comparison of our quarterly results and lend some comments on our capital structure. Over to you, Jim. Jim MacCallum: Thank you, Tom. Our revenue for Q2 was $12.4 million, a decrease compared to $16.8 million in Q1 2024, and consistent with the $12.6 million achieved in Q2 2023. The main driver compared to Q1 was the Bitcoin having, which occurred in April 2024. This resulted in 41% lower Bitcoin production. Offsetting this lower production was higher realized Bitcoin prices resulting in an overall revenue decline in Q2 of 26% compared to Q1. Despite the revenue decrease, we were able to realize a higher mining margin percentage in Q2 versus Q1 as a result of lower power prices in the quarter primarily at the Helios facility. Our mining margin was 41% in Q2 compared to 38% in Q1. Because of the lower revenue in Q2, our overall mining profit decreased from $6.4 million in Q1 2024 to $5.1 million in Q2 2024. We are expecting lower mining profits and a lower mining margin percentage in Q3 as a result of the lower hash price realized so far in the quarter. Mining economics continue to be challenging for Bitcoin miners, and as a result, the Company recorded a $22 million non-cash impairment charge on its mining machines, and updated its going concern disclosure and its financial statements to reflect current conditions. Our non-mining operating expense trended lower in Q2 as compared to Q1. This 14% reduction was a result of our focus on reducing costs and streamlining operations. For the quarter, our adjusted EBITDA was $2.6 million as compared to $3.8 million in Q1 2024, and $1.6 million in Q2 of 2023. As Tom mentioned, we ended the quarter with $4.0 million in cash, and we will dive into more detail on our Galaxy debt in the following slide. Since I joined Argo in April 2023, we've had a strong focus on repaying our Galaxy debt. We were proud to announce a full repayment of this $35 million loan earlier this month. This was achieved primarily through a combination of non-core asset sales, including our Mirabel site in Q1 of this year. Equity raises and cash flow from operations. Repayment of this loan reduces our interest expense and the $1.1 million of monthly amortization payments. We completed the repayment of the Galaxy loan ahead of schedule and with no reduction in our overall hash rate. Thomas Chippas: I'd like to add a few comments regarding the Galaxy debt as well. The focus for Argo in 2023 in the first half of '24 has been to reduce this debt obligations and strengthen its balance sheet. The $35 million debt owed to Galaxy began amortizing, as Jim said, at $1.1 million per month in May of '23. As Jim noted, I am pleased to report that Argo has repaid the full amount of this loan to Galaxy as announced by the Company on August 12th. The Galaxy debt was repaid over four months ahead of the current schedule, and nearly 18 months ahead of the original repayment schedule. The early repayment reflects Argo's focus on strengthening the balance sheet, reducing our financial liabilities and freeing up capacity to focus on operational excellence. Repayment was made possible by using cash flow generated from operations, cash generated from equity raises and cash generated through the sale of non-core assets without any meaningful impact to Argo's hash rate. Repaying the Galaxy loan is a significant milestone for Argo, and I cannot emphasize enough how well the Argo team executed this feat. They have my thanks for all their efforts and I couldn't be more pleased with the outcome. Back to you, Jim. Jim MacCallum: Thank you, Tom. Our cash balance at end of Q2 2024 was $4 million. This was supplemented by the $8.3 million equity raise in July of 2024, a large portion of which went to repay the Galaxy loan. Remaining debt obligations for Argo include the $40 million baby bonds, which mature in November, 2026 and the $1 million mortgage on our bank home loan facility. With the Galaxy debt behind us, we have a number of growth opportunities that we can turn our attention to. As discussed on our Q1 call, the sale of the Mirabel facility was completed with no meaningful loss to Argo's hash rate. The significant reduction in operating expenses in the first half of 2024 compared to 2022 and 2023 and the strong mining margin percentage, despite the Bitcoin halving are indications of Argo's strong performance. The Mirabel sale enabled the Company to de-lever the balance sheet with minimal impact to the Company's hash rate. Following the sale, Argo relocated the majority of the mining machines at Mirabel to its Baie-Comeau facility and sold certain prior generation machines representing approximately 140 petahash. The sale allowed the Company to streamline its operations by locating all self-binding machines at its Baie-Comeau facility. Additionally, the sale of Mirabel reduces the Company's non-mining operating expenses by $700,000 annually. Argo has taken aggressive action on its cost structure and non-mining operating expenses. As compared to the second half of fiscal '22, the Company has reduced its operating expenses by over 70% to 5.8 million. As compared to the first half of 2023 the Company has reduced its operating expenses by over 25%. With that, I'll pass it back to Tom. Thomas Chippas: Thanks, Jim. So, I'm excited to talk about some growth opportunity, specifically at our Baie-Comeau site in Quebec. So, this slide shows our potential growth opportunity at Baie-Comeau and its impact on our -- potential impact on our overall hash rate. Baie-Comeau currently has 15 megawatts of power, but there's an opportunity to expand that to 23 megawatts. This would increase the hash rate capacity of Baie-Comeau by up to 0.7 exahash. And should we energize the new 8 megawatts with the latest generation of miners, Baie-Comeau's fleet efficiency would improve to 24 joules per terahash. Alternatively, should we choose to refresh the entire fleet and energize the new 8 megawatts at Baie-Comeau with the latest generation of miners, that would increase the hash rate capacity at Baie-Comeau to 1.4 exahash and improve its fleet efficiency to about 15 joules per terahash. This is an exciting opportunity that we're analyzing, and to be clear, we're analyzing it right now. We'll have additional updates on it in the future, but obviously it's exciting to have something like this in hand at a facility that we own, that we operate, and a facility that has shown good performance over time. So, looking forward to digging into this and sharing more as information becomes available. Turning to other thoughts on growth. The strength and balance sheet and repayment of the Galaxy debt gives Argo more flexibility to pursue strategic opportunities moving forward. We continue to explore opportunities where mining can be paired with stranded or wasted energy. There's tremendous potential for energy generators to utilize mining as a balancing and optimization tool, particularly in the energy transition, where limitations currently exist in the ability to store or transmit renewable energy. We're evaluating some novel opportunities with power generators and utilities to really help capture the full economic value of surrounded energy. Overall, our focus remains on access to low cost and reliable power. The ongoing transition to clean energy requires substantial investment in the power grid as well as demand response technology. Bitcoin mining as I'm sure many people listening know, plays a crucial role in this shift. Miners are exceptionally agile, making them ideal for grid low balancing, and what's more mining operations can be seamlessly integrated generation and grid operations. For the remainder of '24, Argo will continue to focus on our three pillars, financial discipline, operational excellence, and growth and strategic partnerships. On behalf of our goal, I truly would like to thank all of our shareholders and stakeholders and the team. We remain committed to optimizing our capital structure and driving long-term value for our shareholders. With that, I'll pass it back to Markella for any questions. Thank you. Operator: Thomas, Jim, thank you very much for your presentation this afternoon. Ladies and gentlemen, please do continue to submit your questions. Just suppose in the Q&A tab, situated on the top right-hand corner of your screen, as you can see if we have received a number of questions throughout today's presentation. Markella, if I could just hand over to you to share the Q&A and I'll pick up from you at the end. Markella Zarifi: Thank you, Lily. I will start with a question from Kevin Dede from H.C. Wainwright for Jim. Argo still has debt overhang, so curious about an update there and fleet expansion given the network cost rate continues to scale up as much as it has? Jim MacCallum: Thank you, Kevin. Regarding our debt situation, as we mentioned on the call here, we've paid off the Galaxy debt and now our main outstanding debt is the baby bonds, which are non-amortizing and mature in November 2026. We're committed to improving our balance sheet and we'll continue to provide to updates as we have them. As for fleet expansion, you're right that the network cash rate continues to grow despite the current hash price. We're focused on efficiency rather than raw growth and are engaged in testing on the more energy efficient models at the moment. Thank you. Markella Zarifi: Thank you, Jim. Another question by Kevin Dede at H.C. Wainwright, and this is directed to Thomas. Obviously, you guys should have great things to talk about with regard to operations in Q2 on staying on point. But for investors, it's always what have you done for me lately? Anything you can add about expanding operations in Quebec, new site selection, partnerships, perhaps with private companies that no longer have access to capital. Anything that offers a view to the future of the Company. Maybe there's something Argo can do that's a unique derivative of Thomas's vast experience in trading. Thomas Chippas: Thanks for that question, Kevin. Look, we're always looking for opportunities to grow and improve. Certainly, we just shared some of the possibilities and what they are at Bake Homo. We're still considering how we might go about doing that and there'll be more to say on that later. But we recognize that investors want to see growth. Hopefully with the Galaxy debt in the rear-view mirror, it sets us up for growth and that's why we share the big home opportunity today. We're confident that our approach will continue to deliver value to investors even as the mining landscape evolves. And I think that I appreciate the kudos on my previous experiences. We're open-minded about where growth can come from and we'll continue to share information as I want. It makes sense to do so. Operator: This is a pre-submitted question directed to Jim. Please, can you elaborate on the impairment charge that you have reported? Jim MacCallum: Sure. Yes, the main factors here are the decreases in the fair market values of the mining equipment, and also the changes in the mining economics, especially since the Bitcoin having in April 2024. When we assessed the value of our mining and computer equipment, we looked at estimated future cash flows over the machines useful life using a pre-tax discount rate of approximately 14% for our calculations. And so based on this analysis, we came up with an impairment charge of 22 million. This reflects the current market conditions and their impact on our equipment's value. It's part of our regular process to ensure our financial statements accurately represent our assets value. Operator: Another pre-submitted question, again directed to Jim. Congratulations on paying off the Galaxy debt. When can we expect to get some more caller on when this financial discipline will begin to contribute to revenue and earnings? Jim MacCallum: We're pleased about paying off the Galaxy debt obviously. The strength and balance sheet and repayment of the Galaxy debt gives Argo more flexibility to pursue strategic opportunities moving forward and start contributing to our revenue and earnings in the coming quarters. As we continue to optimize our operations and improve our cost structure, those gains flow through to the bottom line as we see in our EBITDA, reduce debt service, cost to Galaxy, are important for our ongoing cash flow. We remain focused on balancing near term profitability with strategic investments for long-term growth. Operator: Another pre-submitted question this time directed to Thomas. A number of your peers are talking about kind of using gigawatts megawatts to host GPUs. What does Argo think about this? Thomas Chippas: Yes, most certainly. Many of our peers are looking to leverage their large-scale power and infrastructure capabilities to host GPU-based workloads and utilize that power for things beyond just Bitcoin mining. At Argo, we're closely evaluating these opportunities. Obviously, our priority is to ensure we're maximizing the efficiency and profitability of our core Bitcoin mining operations first. I think it's important that we want to be sure that we have the right foundation in place before exploring additional diversification, but certainly this will continue to be an area of interest in the industry and Argo. Operator: Another pre-submitted question again directed to you. Do you have a view on energy pricing going into Q3? Thomas Chippas: Looking ahead to the third quarter with respect to Bake Homo, just given where it's located, temperatures will be cooling down. So, we expect good uptime coupled with stable power at Bake Homo that's powered by hydroelectric power. As far as at Helios, as people know, Helios is located in Load Zone West in ERCOT. And if you look at the power prices over the period we're discussing, I think you'll see we've seen much lower average power prices than in previous years. So hard to extrapolate ahead and determine whether or not that trend would continue, but certainly it's been positive over this period we've been looking at on the call. So hopefully that trend continues into Q3. Operator: Thank you, Thomas. Another pre-submitted question. This time directed to Jim. Congratulations on the recent Galaxy debt payoff. I was just hoping you'd be able to share your outlook for Bitcoin mining economics over the near to medium term. Jim MacCallum: Thank you. Yes, the recent payoff of our $35 million Galaxy debt obligation is an important milestone for the Company. It strengthens our balance sheet and as mentioned gives us financial flexibility. In terms of Bitcoin mining and economics. Yes, we remain cautiously optimistic about Bitcoin mining economics as we believe the fundamentals of the network and the asset itself remains strong. Thank you. Operator: Thank you, Jim. Another pre-submitted question directed to Thomas. Can you speak about M&A pipeline or existing growth opportunities? Thomas Chippas: Sure. I think we've been asked this question before and in the latest quarter there certainly has been quite a lot of activity in the mining space with respect to M&A, driven both by the search for power assets to fuel HPC growth desires and by firms that find themselves challenged one way or another, and are looking to link up with other firms and grow in size. Argo continues to keep an open mind in these regards and we engage in conversations that make sense. And then as far as other growth, we talked about Baie-Comeau and we do have our eyes on some other opportunities that are very early right now. But certainly, I would expect that M&A continues to be an active discussion in the mining sector in the coming months. Operator: Thank you, Thomas. And another pre-submitted question directed to you. Do you see a world where the HPC AI stuff starts to become a competitive pressure to Bitcoin mining? Thomas Chippas: Well, the competition is probably really more about energy and energy resources. So, what we're seeing in the market is that, those who are providing HPC services are willing to pay top dollar for access to energy. Now whether this economic opportunity is attractive to miners, depends on their cost and their views on where the hash price might be heading long term. For Bitcoin miners, this is actually an opportunity to diversify their revenue streams. They can choose between sticking with traditional mining and to the extent their energy and facilities are appropriate, selling their energy access or compute power to these HPC providers, or perhaps as we're seeing in some instances a mixture of both. So again, this'll be an ongoing thread of conversation for the entire industry and we're certainly analyzing opportunities in the space as well. Operator: Thank you, Thomas. The pre-submitted question, but from the chat and this time directed to Jim. Are there any plans to start paying a dividend? Jim MacCallum: No. We have no plans at this time to start paying a dividend. Any excess cash will be used either to pay down debt or to invest in future growth of the Company. Operator: Thank you, Jim. And I think with the next question, we'll be drawing the Q&A to a close. So, another pre-submitted question directed to Jim as a final. Could you give an update on the lawsuit? Jim MacCallum: Sure. Regarding the shareholder lawsuit, we filed our motion to dismiss back in March of this year, and we are currently awaiting a ruling from the court on this. Operator: Thank you for answering all those questions. Just before we close this session, Thomas, could I please ask you for a few closing comments? Thomas Chippas: Certainly, so appreciate everyone's interests and ongoing interest in Argo, and all that we've been doing. We appreciate your questions and look forward to updating everyone on our next call. Operator: Thank you once again for updating investors today. Can I please ask investors not to close this session as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations. This will only take a few moments to complete and I'm sure be greatly valued by the Company. On behalf of the management team of Argo Blockchain plc, we'd like to thank you for attending today's presentation and good afternoon to you all.