Argo Blockchain Mines More but Earns Less in H1 2023: Reports $18.8M Net Loss

The recent Argo Blockchain financial report presents a mixed bag, with the company making strides in reducing operational costs and debt but facing a decline in revenue and net loss. The publicly-listed firm’s results for the first half of 2023 show what problems the mining industry centered around Bitcoin (BTC) and other cryptocurrencies is currently facing.

Argo Blockchain Reduces Debt and Costs

Argo Blockchain managed to cut its non-mining operational costs 21% in Q2 2023, compared to the previous quarter. This led to a positive Adjusted EBITDA of $1 million for Q2 and $2.3 million for H1 2023. Additionally, the company reduced its debt by $4 million during the quarter, reducing it to $75 million as of 30 June. It marked a significant drop from $143 million a year ago.

However, this does not change the fact that adjusted EBITDA in the same period a year earlier was much higher at nearly $18 million.

Mining, Revenues and Net Loss

The company mined 947 Bitcoin and Bitcoin Equivalent (BTC) during the H1 2023, marking an increase of 1% over the same period last year.

"During H1 2023, the Company achieved a mining margin of 42%, which is an increase from the mining margin in H2 2022 of 33%," the company commented in the official statement.

However, this achievement was overshadowed by a revenue decrease of 31%, totaling $24 million for H1 2023. The decline was primarily due to a drop in Bitcoin prices and an increase in global hashrate, which made mining more competitive. In H1 2022, revenues ranked at $34.6 million.

New RNS: Argo has released its H1 2023 financials and Q2 2023 update:🔸Mined 947 BTC w/ $24m of rev in H1'23🔸Cut expenses by 21% in Q2'23 vs prior quarter🔸Ended June with $9m cash & 46 BTC🔸Mining margin of 42% for H1'23Full results: https://t.co/4NhsOaW3Jt#ARB $ARBK

Despite the positive cost and debt reduction strides, Argo Blockchain reported a net loss of $18.8 million for H1 2023. Although it is an improvement over the $39.6 million net loss reported in H1 2022, it clearly shows the difficult situation facing the mining industry.

The company ended June with $9.1 million in cash and 46 BTC in its balance sheet. It raised an additional $7.5 million in July through a share placement.

Argo Saved by Mike Novogratz

In a move that quashed rumors of impending bankruptcy, the company, listed on the London and New York stock exchanges, entered into a pivotal agreement with Galaxy Digital Holdings, Ltd. The latter is a financial institution specializing in digital assets and is helmed by Mike Novogratz. As part of the deal, Argo Blockchain offloaded its Texas-based Helios cryptocurrency mine for a sum of $65 million. Galaxy Digital also restructured the loans Argo had previously secured to fund its ongoing operations.

Several months after the Galaxy deal, Argo Blockchain announced the appointment of Jim MacCallum as its new Chief Financial Officer. Alongside this leadership change, the company disclosed its latest operational metrics, which indicated a decline in mining output relative to the previous month. According to the company's July 2023 report, there was a noticeable decrease in both monthly Bitcoin production and revenue. In June 2023, the company mined an average of 4.6 Bitcoin per day, marking a drop of 17% from the 5.6 Bitcoin mined daily in May 2023.

As you can see from the chart above, 2022 proved to be a difficult period for Bitcoin miners, following a highly profitable 2021. The decline in earnings, amounting to a staggering $6 billion, was primarily attributed to the increasing complexity of the mining process.