This Bitcoin Miner Nears Penny Stock Status as Revenue Declines Despite Mining Gains

Phoenix Group, the first UAE-listed cryptocurrency mining company, reported mixed financial results for 2024, with strong mining revenue growth contrasting against an overall decline in total revenue and profitability.

UAE Bitcoin Miner Sees Mixed Results

While the company's mining revenue surged 236% to $107 million, total revenue fell almost 30% to $205.7 million from $288.2 million in 2023. Net profit attributable to shareholders declined to $167.4 million from $207.8 million, with earnings per share dropping to $0.028 from $0.040 the previous year.

However, the company claims that its net result would have been higher, reaching $193 million (a 7% year-over-year decline), if not for “multiple one-off transactions” in Q4 2024. These included costs related to the company's exit from the CIS region.

Despite these headwinds, Phoenix Group maintained its expansion strategy, with CEO Munaf Ali expressing optimism: “The past year has been pivotal for Phoenix Group, marked by significant expansion and enhanced profitability.”

However, the financial statements tell a more complex story, with EBITDA declining to $190.7 million from $208.6 million in 2023.

The company's total assets grew modestly to $962.4 million from $834 million, while shareholders' equity increased to $891.8 million from $697.1 million. Phoenix Group maintained its Bitcoin network presence with 15.0 EH/s of computing power, representing a 1.90% market share.

$370M IPO

A year ago, Finance Magnates reported that the Abu Dhabi stock market (ADX) welcomed its first publicly listed Bitcoin mining company, a business that has been extremely popular in countries like the U.S. Following its IPO, which raised $370 million, the company released a financial report showing a threefold decrease in revenue compared to the previous year. Despite this decline, the company significantly increased its asset holdings.

Net profit, however, rose sharply despite falling revenues, which was achieved due to a “one-time contract” that distorted the company’s expected cash flows.

However, the report did not sit well with shareholders last year, as the company’s stock fell 20% since its debut, and it remains unpopular now.

Almost a Penny Stock

The company's stock performance has been particularly challenging since its late 2023 debut on the ADX. The shares have plummeted approximately 60% from their all-time high, currently trading at AED 1.01 ($0.27), bringing the company perilously close to penny stock territory.

The fourth quarter showed some operational improvements, with self-mining gross margins expanding to 24% from 5% in the previous quarter, benefiting from Bitcoin's price appreciation and efficiency gains in North American facilities.

Looking ahead, the company has secured agreements for additional facilities in Ethiopia and Texas while also diversifying into various cryptocurrencies and partnering with the Tether Foundation for a dirham-backed stablecoin initiative.