Argo's H1 Revenue Soars but Profits Drop as Bitcoin's Halving Boosts Mining Costs

Argo Blockchain has reported a near quadrupling in revenue even as capital depreciation led pre-tax profits to slide by 45%.

AccessTimeIconSep 9, 2020 at 6:02 p.m. UTC
Updated Sep 14, 2021 at 9:54 a.m. UTC

Argo Blockchain's earnings look like a tale of two cities, with revenue almost quadrupling even as the arms race for ever-more powerful mining rigs caused pre-tax profits to slide 45%.

  • The London-listed company mined a total of 1,669 bitcoin – up 545% from H1 2019 – with revenue increasing $8 million year on year (YoY) to £11.12 million (US$14.5 million), according to half-year results released Wednesday.
  • Earnings before interest, taxes, depreciation, and amortization (EBITDA) – which factors out the declining value of a mining rig over time – nearly doubled to £3.23 million (US$4.2 million) YoY.
  • Rising interest in mining bitcoin – which currently trades at just over $10,000 – means the computing power needed to mine bitcoin has been rising as well, reaching a new all-time high on Tuesday.
  • As such, older mining units, like Bitmain's AntMiner S9, quickly become obsolete and unprofitable as new rigs, with more hashing power, come to market. As an example, the Antminer S19, which came out in February, is nearly nine times more powerful than the S9.
  • To stay in the game, professional operators are under constant pressure to replenish their mining equipment every few years. Because of this, the mining industry is highly susceptible to rapid capital depreciation.
  • When rig depreciation, as well as electricity costs, are accounted for, Argo's pretax profit came to £0.52 million ($677,000) – a 45% decrease YoY.
  • Argo's total capacity rose to 18,000 mining rigs after it purchased 11,000 rigs in H1 2020, including $500,000 worth of zcash miners acquired at the end of June.
  • CEO Peter Wall, who said EBITDA was his preferred performance metric, told CoinDesk he was pleased by the results, saying they were better than those of most other publicly listed miners.
  • In August rival Canadian miner Hut 8 reported a sharp 28% drop in revenue in Q2. It only finished in the black because the company's bitcoin holdings increased in value.
  • May's bitcoin halving event – which took the block reward from 12.5 to 6.25 BTC – will likely cause the the crypto mining industry to consolidate further, Wall said, with smaller entities coming under increasing pressure to remain profitable.
  • Increasing mining capacity remains a core part of the company's strategy, Wall continued. He declined to comment on whether the company has any more acquisition deals in the pipeline.
  • Argo shares finished Wednesday trading in London at 5.66 penny sterling (GBX) – up 3% from the market open.


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