Press Release
28 August 2024
Argo Blockchain
plc
("Argo"
or "the Company")
Interim Half Year Results
2024
Argo Blockchain plc, a global leader
in cryptocurrency mining (LSE: ARB; NASDAQ: ARBK), is pleased to
announce its results for the six months ended 30 June
2024.
Highlights
● Revenues of
$29.3 million for H1 2024 compared to $24.0 million for H1 2023, an
18% increase, driven primarily by an increase in Bitcoin price.
Revenue in the first half of 2024 compared to 2023 increased
despite the Bitcoin halving and a decrease in the number of
Bitcoin mined. The total number of Bitcoin ("BTC") mined during H1
2024 was 507, a 46% decrease from H1 2023 of 947. This is
primarily due to the increase in the global hashrate and the
reduction in the bitcoin denominated hash price.
● Mining margin of
$11.5 million or 39% for H1 2024, compared to $10.2 million or 42%
for H1 2023.
● On 8 January
2024, Argo raised gross proceeds of $9.9 million through the issue
of 38,064,000 ordinary shares at a price per share of £0.205 to
certain institutional investors.
●
On 28 March 2024, the Company closed the sale of
its five megawatt data centre located in Mirabel, Quebec for total
consideration of $6.1 million. The Company relocated the mining
machines from the Mirabel Facility to its facility in Baie Comeau,
Quebec, and the Company expects this consolidation to reduce its
non-mining operating expenses by $0.7 million per year.
● Reduced the
Galaxy loan by $18.2 million from $23.5 million at 1 January 2024
to $5.3 million at 30 June 2024. In August 2024, the Galaxy loan
was repaid in full.
● Recorded a $22
million impairment on its mining machines reflecting current mining
economics.
● Net loss was
$32.7 million for H1 2024, compared to a net loss of $18.6 million
in H1 2023. Adjusted EBITDA was $5.7 million for H1 2024 compared
to $2.8 million in H1 2023.
● The Company
ended June 2024 with $4.0 million of cash and 11 Bitcoin
equivalent. On 31 July 2024, the Company raised $8.3 million of
gross proceeds from the issuance of 57.8 million shares and 57.8
million warrants through a private share placement with an
institutional investor. The shares were issued at £0.1125 and the
warrants have an exercise price of £0.1125.
Management Commentary
Thomas Chippas, CEO at Argo
Blockchain said: "Argo's focus on financial discipline and
operational efficiency enabled us to pay off our $35 million debt
obligation to Galaxy, significantly deleveraging our balance sheet.
This positions us well to explore investing in growth and strategic
initiatives that can drive long-term value for our
shareholders."
Non-IFRS Measures
The following table shows a
reconciliation of mining margin percentage to gross margin, the
most directly comparable IFRS measure, for the six month periods
ended 30 June 2024 and 30 June 2023.
|
|
Period
ended
|
Period
ended
|
|
|
30 June
2024
|
30 June
2023
|
|
|
(unaudited)
|
(unaudited)
|
|
|
$'000
|
$'000
|
|
|
|
|
|
Gross margin
|
1,792
|
(1,371)
|
|
Gross margin percentage
|
6%
|
(6%)
|
|
Depreciation of mining
equipment
|
9,667
|
12,047
|
|
Change in fair value of digital
currencies
|
27
|
(489)
|
|
|
|
|
|
Mining margin
|
11,486
|
10,187
|
|
Mining margin percentage
|
39%
|
42%
|
The following table shows a
reconciliation of Adjusted EBITDA to net (loss) / income, the most
directly comparable IFRS measure, for the six month periods ended
30 June 2024 and 30 June 2023.
|
|
Period
ended
|
Period
ended
|
|
|
30 June
2024
|
30 June
2023
|
|
|
(unaudited)
|
(unaudited)
|
|
|
$'000
|
$'000
|
|
|
|
|
|
Net
Loss
|
(32,734)
|
(18,563)
|
|
Interest expense
|
4,296
|
6,335
|
|
Income tax expense
|
340
|
-
|
|
Depreciation and
amortisation
|
10,114
|
12,698
|
|
Restructuring and transaction
related fees
|
1,118
|
1,399
|
|
Foreign Exchange
|
(292)
|
(1,403)
|
|
Share based payment
|
3,594
|
1,889
|
|
Impairment of property, plant and
equipment
|
22,012
|
|
|
Loss on sale of tangible
assets
|
429
|
|
|
Gain on sale of assets held for
sale
|
(3,397)
|
-
|
|
Impairment of intangible
assets
|
226
|
-
|
|
Equity accounting loss from
associate
|
-
|
458
|
|
Adjusted EBITDA
|
5,706
|
2,813
|
Inside Information and Forward-Looking
Statements This announcement
contains inside information and includes forward-looking statements
which reflect the Company's current views, interpretations, beliefs
or expectations with respect to the Company's financial
performance, business strategy and plans and objectives of
management for future operations. These statements include
forward-looking statements both with respect to the Company and the
sector and industry in which the Company operates. Statements which
include the words "remains confident", "expects", "intends",
"plans", "believes", "projects", "anticipates", "will", "targets",
"aims", "may", "would", "could", "continue", "estimate", "future",
"opportunity", "potential" or, in each case, their negatives, and
similar statements of a future or forward-looking nature identify
forward-looking statements. All forward-looking statements address
matters that involve risks and uncertainties because they relate to
events that may or may not occur in the future, the Company may be
unable to secure sufficient additional financing to meet its
operating needs, and the Company may not generate sufficient
working capital to fund its operations for the next twelve months
as contemplated in note 3 below. Forward-looking statements are not
guarantees of future performance. Accordingly, there are or will be
important factors that could cause the Company's actual results,
prospects and performance to differ materially from those indicated
in these statements. In addition, even if the Company's actual
results, prospects and performance are consistent with the
forward-looking statements contained in this document, those
results may not be indicative of results in subsequent periods.
These forward-looking statements speak only as of the date of this
announcement. Subject to any obligations under the Prospectus
Regulation Rules, the Market Abuse Regulation, the Listing Rules
and the Disclosure Guidance and Transparency Rules and except as
required by the United Kingdom Financial Conduct Authority ("FCA"),
the London Stock Exchange, the City Code on Takeovers and Mergers
or applicable law and regulations, the Company undertakes no
obligation publicly to update or review any forward-looking
statement, whether as a result of new information, future
developments or otherwise. For a more complete discussion of
factors that could cause our actual results to differ from those
described in this announcement, please refer to the filings that
Company makes from time to time with the United States Securities
and Exchange Commission and the FCA, including the section entitled
"Risk Factors" in the Company's Annual Report on Form
20-F.
For further information please
contact:
About Argo:
Argo Blockchain plc is a
dual-listed (LSE: ARB; NASDAQ: ARBK) blockchain technology company
focused on large-scale cryptocurrency mining. With mining
operations in Quebec and Texas, and offices in the
US, Canada, and the UK, Argo's global, sustainable
operations are predominantly powered by renewable energy. In 2021,
Argo became the first climate positive cryptocurrency mining
company, and a signatory to the Crypto Climate Accord. For more
information, visit www.argoblockchain.com.
Interim Management Report
Since the appointment of Thomas
Chippas as CEO on 27 November 2023 and Jim MacCallum earlier as CFO
on 5 April 2023, the Company has focused on three key pillars:
financial discipline, operational excellence, and strategic
partnerships for growth.
Financial Discipline
The focus for Argo in 2023 and the
first half of 2024 has been to reduce its debt obligations and
strengthen its balance sheet. The $35 million debt owed to Galaxy
began amortising at $1.1 million per month in May 2023. 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. This 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 the Company's focus on strengthening its
balance sheet, reducing its financial liabilities, and focusing 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.
Mining economics continue to be
challenging for Bitcoin miners and as a result the Company recorded
a $22 million impairment charge on its mining machines and updated
its going concern disclosure in its financial statements to reflect
current conditions.
Operational Excellence
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
PH/s. The sale allowed the Company to streamline its operations by
locating all self-mining machines at its Baie Comeau facility.
Additionally, the sale of Mirabel reduces the Company's non-mining
operating expenses by $0.7 million annually.
Argo has taken aggressive action on
its cost structure and non-mining operating expenses. As compared
to the second half of fiscal 2022, 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%.
Despite the Bitcoin halving and the
lower hash price realised since then, the Company has maintained
strong mining margins and its mining margin percentage has remained
consistent with the first half of 2023. Lower mining margin and a
lower mining margin percentage are expected for the second half of
2024 as Bitcoin economics have deteriorated since the Bitcoin
halving in April 2024.
Growth and strategic partnerships
The strengthened balance sheet and
repayment of the Galaxy debt gives Argo more flexibility to pursue
strategic opportunities moving forward. The Company continues to
explore opportunities where mining can be paired with stranded or
wasted energy. There is tremendous potential for energy generators
to utilise mining as a balancing and optimization tool,
particularly in the energy transition where limitations currently
exist in the ability to store renewable energy. Argo is evaluating
several projects with companies across the energy value
chain.
For the remainder of 2024, the
Company will continue to focus on its three pillars - financial
discipline, operational excellence and growth and strategic
partnerships. On behalf of the Board, I would like to thank all of
our shareholders and stakeholders. We remain committed to
optimising our capital structure and driving long-term value for
our shareholders.
Sincerely,
Matthew Shaw
Chairman of the Board
Responsibility Statement
We confirm that to the best of our
knowledge:
● the Interim
Report has been prepared in accordance with International
Accounting Standards 34, Interim Financial Reporting;
● gives a true and
fair view of the assets, liabilities, financial position and
profit/loss of the Group;
● the Interim
Report includes a fair review of the information required by DTR
4.2.7R of the Disclosure Guidance and Transparency Rules, being an
indication of important events that have occurred during the first
six months of the financial year and their impact on the set of
interim financial statements; and a description of the principal
risks and uncertainties for the remaining six months of the
year.
● the Interim
Report includes a fair review of the information required by DTR
4.2.8R of the Disclosure Guidance and Transparency Rules, being the
information required on related party transactions.
The Interim Report was approved by
the Board of Directors and the above responsibility statement was
signed on its behalf by:
Matthew Shaw
Chairman of the Board
CONDENSED CONSOLIDATED STATEMENT OF
COMPREHENSIVE LOSS
|
|
|
Period
ended
|
Period
ended
|
|
|
|
30 June
2024
|
30 June
2023
|
|
|
|
(unaudited)
|
(unaudited)
|
|
|
Note
|
$'000
|
$'000
|
|
|
|
|
|
|
Revenues
|
|
29,255
|
23,996
|
|
Power/Hosting Costs
|
|
(19,189)
|
(15,093)
|
|
Power credits
|
|
1,420
|
1,284
|
|
Mining margin
|
|
11,486
|
10,187
|
|
Depreciation of mining
equipment
|
|
(9,667)
|
(12,047)
|
|
Gain (loss) in fair value of digital
currencies
|
9
|
(27)
|
489
|
|
Gross margin
|
|
1,792
|
(1,371)
|
|
|
|
|
|
|
Operating costs and
expenses
|
|
(5,809)
|
(7,863)
|
|
Restructuring and transaction
related fees
|
|
(1,118)
|
(1,399)
|
|
Foreign exchange gain
|
|
292
|
1,403
|
|
Depreciation
|
|
(448)
|
(651)
|
|
Loss on Hedging
|
|
(397)
|
|
|
Share based payment
|
|
(3,594)
|
(1,889)
|
|
Operating loss
|
|
(9,282)
|
(11,770)
|
|
|
|
|
|
|
Gain on sale of assets held for
sale
|
14
|
3,397
|
-
|
|
Loss on disposal of property, plant
and equipment
|
|
(429)
|
-
|
|
Finance cost
|
|
(4,296)
|
(6,335)
|
|
Other Income
|
|
453
|
-
|
|
Equity accounted loss from
associate
|
|
-
|
(458)
|
|
Impairment of property, plant and
equipment
|
7
|
(22,012)
|
-
|
|
Impairment of Intangible
assets
|
6
|
(226)
|
-
|
|
|
|
|
|
|
Loss before taxation
|
|
(32,394)
|
(18,563)
|
|
|
|
|
|
|
Tax expense
|
5
|
(340)
|
-
|
|
|
|
|
|
|
Net
Loss
|
|
(32,734)
|
(18,563)
|
|
Other comprehensive loss
Items which may be subsequently reclassified to profit or
loss:
|
|
|
|
|
-
Currency translation reserve
|
|
(641)
|
(1,330)
|
|
|
|
|
|
|
Total other comprehensive loss, net of tax
|
|
(641)
|
(1,331)
|
|
|
|
|
|
|
Total comprehensive loss attributable to the equity holders of
the company
|
|
(33,375)
|
(19,893)
|
|
|
|
|
|
|
Weighted average shares outstanding 000's
|
|
575,721
|
477,825
|
|
Basic/diluted loss per share
|
|
(0.06)
|
(0.04)
|
|
|
|
|
|
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL
POSITION
|
|
|
As at
|
As at
|
|
|
|
30 June
2024
|
31 December
2023
|
|
|
|
(unaudited)
|
(audited)
|
|
|
Note
|
$'000
|
$'000
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
Non-current assets
|
|
|
|
|
Investments at fair value through
income and loss
|
|
400
|
400
|
|
Intangible assets
|
6
|
521
|
888
|
|
Property, plant and
equipment
|
7
|
26,171
|
59,728
|
|
Total non-current assets
|
|
27,092
|
61,016
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
Trade and other
receivables
|
8
|
1,581
|
2,480
|
|
Prepaids
|
|
503
|
1,355
|
|
Digital assets
|
9
|
170
|
385
|
|
Cash and cash equivalents
|
|
3,985
|
7,443
|
|
Assets held for sale
|
|
-
|
3,261
|
|
Total current assets
|
|
6,239
|
14,924
|
|
|
|
|
|
|
Total assets
|
|
33,331
|
75,940
|
|
|
|
|
|
|
EQUITY AND LIABILITIES
|
|
|
|
|
Equity
|
|
|
|
|
Share capital
|
10
|
764
|
712
|
|
Share premium
|
10
|
219,635
|
209,779
|
|
Share based payment
reserve
|
|
13,087
|
12,166
|
|
RSU Reserve
|
10
|
2,113
|
|
|
Foreign currency translation
reserve
|
|
(30,771)
|
(30,129)
|
|
Accumulated deficit
|
|
(225,104)
|
(192,370)
|
|
Total equity
|
|
(20,276)
|
158
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
Trade and other payables
|
11
|
8,194
|
11,175
|
|
Loans and borrowings
|
12
|
5,790
|
14,320
|
|
Corporation tax
|
5
|
444
|
-
|
|
Liabilities held for sale
|
|
-
|
2,090
|
|
Total current liabilities
|
|
14,428
|
27,585
|
|
|
|
|
|
|
Non
- current liabilities
|
|
|
|
|
Issued debt - bond
|
12
|
38,484
|
38,170
|
|
Loans and borrowings
|
12
|
695
|
10,027
|
|
Total liabilities
|
|
53,607
|
75,782
|
|
|
|
|
|
|
Total equity and liabilities
|
|
33,331
|
75,940
|
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN
EQUITY
|
|
Share
capital
|
Share
premium
|
Currency translation
reserve
|
Share based payment
reserve
|
Accumulated
deficit
|
Total
|
|
|
$'000
|
$'000
|
$'000
|
$'000
|
$'000
|
$'000
|
|
Balance at 1 January 2024
|
712
|
209,779
|
(30,129)
|
12,166
|
(192,370)
|
158
|
|
Loss for the period
|
-
|
-
|
-
|
-
|
(32,734)
|
(32,734)
|
|
Other comprehensive
income
|
-
|
-
|
(642)
|
-
|
-
|
(642)
|
|
Share capital Issued
|
48
|
9,300
|
-
|
-
|
-
|
9,348
|
|
Stock based compensation
charge
|
-
|
-
|
-
|
3,594
|
-
|
3,594
|
|
Share RSUs vested
|
4
|
556
|
-
|
(560)
|
-
|
-
|
|
Balance at 30 June 2024
|
764
|
219,635
|
(30,771)
|
15,200
|
(225,104)
|
(20,276)
|
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN
EQUITY
|
|
Share
capital
|
Share
premium
|
Currency translation
reserve
|
Share based payment
reserve
|
Accumulated surplus/
(deficit)
|
Total
|
|
|
$'000
|
$'000
|
$'000
|
$'000
|
$'000
|
$'000
|
|
Balance at 1 January 2023
|
634
|
202,103
|
(29,350)
|
8,528
|
(157,337)
|
24,578
|
|
Loss for the period
|
-
|
-
|
-
|
-
|
(18,563)
|
(18,563)
|
|
Other comprehensive
income
|
-
|
-
|
(1,331)
|
-
|
-
|
(1,331)
|
|
Foreign exchange movement
|
-
|
-
|
-
|
(28)
|
-
|
(28)
|
|
Stock based compensation
charge
|
-
|
-
|
-
|
1,889
|
-
|
1,889
|
|
Balance at 30 June 2023
|
634
|
202,103
|
(30,681)
|
10,389
|
(175,900)
|
6,545
|
CONDENSED CONSOLIDATED STATEMENT OF CASH
FLOWS
|
|
|
Period
ended
|
Period
ended
|
|
|
|
30 June
2024
|
30 June
2023
|
|
|
|
(unaudited)
|
(unaudited)
|
|
|
Note
|
$'000
|
$'000
|
|
Cash flows from operating activities
|
|
|
|
|
Loss before tax
|
|
(32,394)
|
(18,563)
|
|
Adjustments for:
|
|
|
|
|
Depreciation/Amortisation
|
|
10,114
|
12,698
|
|
Foreign exchange
movements
|
|
(290)
|
(1,403)
|
|
Finance cost
|
|
4,296
|
6,335
|
|
Fair value change in digital
assets
|
|
25
|
-
|
|
Realised gain in digital
assets
|
|
-
|
(489)
|
|
Revenue from digital
assets
|
|
(29,255)
|
(23,996)
|
|
Proceeds from sale of digital
assets
|
|
29,443
|
24,439
|
|
Share of loss from
associate
|
|
-
|
458
|
|
Gain on disposal of assets held for
sale
|
|
(3,397)
|
-
|
|
Impairment of intangible digital
assets
|
|
226
|
-
|
|
Impairment of property, plant and
equipment
|
|
22,012
|
-
|
|
Interest income
|
|
(273)
|
-
|
|
Loss on hedging
|
|
397
|
-
|
|
Loss on sale of property, plant and
equipment
|
|
429
|
-
|
|
Share based payment
expense
|
|
3,595
|
1,889
|
|
Working capital changes:
|
|
|
|
|
Decrease/(increase) in trade and
other receivables
|
8
|
1,341
|
(892)
|
|
Decrease in trade and other
payables
|
11
|
(2,782)
|
(973)
|
|
Net
cash flow (used in)/from operating activities
|
|
3,487
|
(497)
|
|
|
|
|
|
|
Investing activities
|
|
|
|
|
Proceeds from sale of
intangibles/assets held for sale
|
|
6,119
|
989
|
|
Purchase of property, plant and
equipment
|
7
|
-
|
(1,301)
|
|
Proceeds from sale of property,
plant and equipment
|
|
894
|
-
|
|
Interest received
|
|
273
|
-
|
|
Net
cash used in investing activities
|
|
7,286
|
(312)
|
|
|
|
|
|
|
Financing activities
|
|
|
|
|
Proceeds from borrowings
|
16
|
-
|
811
|
|
Loan repayments
|
|
(19,881)
|
(3,381)
|
|
Interest paid
|
|
(3,362)
|
(5,247)
|
|
Proceeds from shares
issued
|
|
9,349
|
-
|
|
Net
cash from (used in)/from financing activities
|
|
(13,894)
|
(7,817)
|
|
Net
decrease in cash and cash equivalents
|
|
(3,121)
|
(8,626)
|
|
Effect of foreign exchange changes
in cash
|
|
(337)
|
(2,318)
|
|
Cash and cash equivalents, beginning
of period
|
|
7,443
|
20,092
|
|
Cash and cash equivalents, end of period
|
|
3,985
|
9,148
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
NOTES TO THE CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS
1. COMPANY
INFORMATION
Argo Blockchain plc ("the
Company") is a public company,
limited by shares, and incorporated in England and Wales. The
registered office is Eastcastle House, 27/28 Eatcastle Street,
London, England, W1W 8DH. The Company was
incorporated on 5 December 2017 as GoSun Blockchain
Limited.
On 21 December 2017, the
Company changed its name to Argo
Blockchain Limited and re-registered as a public company, Argo
Blockchain plc.
On 12 January 2018, Argo Blockchain
plc acquired a 100% subsidiary, Argo Innovation Labs Inc. ,
incorporated in Canada.
On 22 November 2022, the
Company formed Argo Holdings US
Inc., a 100% subsidiary incorporated in Delaware, United
States, and Argo US Holdings Inc. formed Argo US Operating LLC, a
limited liability company incorporated in Delaware, United States
(together, the "Group")
On 21 December 2022, Argo Innovation
Facilities (US) Inc became Galaxy Power LLC. On 28 December 2022,
the Group sold Galaxy Power LLC.
The principal activity of the
Group is Bitcoin
mining.
The ordinary shares of the
Company are listed under the
trading symbol ARB on the London Stock Exchange. The American
Depositary Receipts of the Company are
listed under the trading symbol ARBK on Nasdaq. The
Company bond is listed on the Nasdaq Global Select
Market under the trading symbol ARBKL.
2. BASIS OF
PREPARATION
The condensed consolidated interim
financial statements for the six months ended 30 June
2024 have been prepared in
accordance with IAS 34 'Interim Financial Reporting' and presented
in US dollars which is further described in Note 3. They do not
include all the information required in annual financial statements
in accordance with IFRS and should be read in conjunction with the
consolidated financial statements for the year ended 31 December
2023, which have been prepared in
accordance with UK-adopted International
Financial Reporting Standards as issued by the IASB. The report of
the auditors on those financial statements was
unqualified.
The financial statements have been
prepared under the historical cost convention, except for the
measurement to fair value certain financial and digital assets and
financial instruments.
Critical accounting judgements and key sources of estimation
uncertainty
The preparation of financial
statements in conformity with IFRS requires management to make
judgements, estimates and assumptions that affect the application
of accounting policies and the reported amounts of assets and
liabilities, income and expense. Actual results may differ from
these estimates. In preparing these condensed consolidated interim
financial statements, the significant judgements made by management
in applying the Group's accounting policies and the key sources of
estimation uncertainty were the same as those that applied to the
financial statements for the year ended 31 December
2023.
3. ACCOUNTING
POLICIES
The principal accounting policies
applied in the preparation of these condensed consolidated interim
financial statements are consistent with those of the previous
financial year, except the change in presentational currency from
British Pounds to US Dollars and recognition of power credits
within Mining Margin in the Statement of Comprehensive
Income. The Group changed its presentational currency to US
Dollars with effect from 1 January 2023 due to the fact its
revenues, direct costs, capital expenditures and debt obligations
are now predominantly denominated in US Dollars.
In order to satisfy the requirements
of IAS 8 and IAS 21 with respect to a change in the presentation
currency, the statutory financial information as previously
reported in the Group's Annual Reports have been restated from GBP
into US Dollars using the procedures outlined below:
●
Assets and liabilities were translated to US
Dollars at the closing rates of exchange at each respective balance
sheet date
●
Share capital, share premium and other reserves
were translated at the historic rates prevailing at the dates of
transactions
●
Income and expenses were translated to US Dollars
at an average rate at each of the respective reporting years on a
monthly basis. This has been deemed to be a reasonable
approximation to exchange rates at the date of the
transactions.
●
Differences resulting from the retranslation were
taken to currency translation reserve within equity
●
All exchange rates used were extracted from the
Group's underlying financial records
Power credits: The Group recognized
power credits in relation to selling power back to the power
grid. The hosting facility sells some of the Group's power
back to the power grid when economically feasible.
Going Concern
The preparation of consolidated
financial statements requires an assessment on the validity of the
going concern assumption. Mining economics
since the halving in April 2024 have been challenging due to the
reduced reward not being offset by a reduction in overall network
hash rate. We have benefited from lower power prices at Helios
which has allowed us to sustain mining margin percentages, albeit
on a lower revenue base. However, based on mining economics as of
the date of this report, our mining margin percentage is expected
to decline in the second half of 2024.
During 2024, the Company has
continued to focus on strengthening its balance sheet. Subsequent
to 30 June 2024, the Company issued 57.8 million shares and raised
gross proceeds of $8.3 million. This allowed the Company to repay
the remaining Galaxy debt in August 2024.
Paying off the Galaxy debt is a
significant milestone for the Company. However, material uncertainties exist that may cast significant
doubt regarding the Group's ability to continue as a going concern
and meet its liabilities as they come due. The significant
uncertainties are:
1) In addition to the Galaxy debt which was
repaid in August 2024, the Company also has
interest payments of approximately
$3.5 million annually on its unsecured bonds which mature in
November 2026.
2) The Group's exposure to Bitcoin
prices, power prices, and hashprice, each of which have shown
volatility over recent years and have a significant impact on the
Group's future profitability. The Group may have difficulty meeting
its liabilities if there are significant declines to the hashprice
assumption or significant increases to the power price,
particularly where there is a combination of both factors. Current
mining economics are challenging for
Bitcoin miners and as a result the Group recorded a $22 million
impairment charge during the period. The
Directors' assessment of going concern includes a forecast drawn up
to 31 August 2025 using the Group's
estimate of the forecasted hashprice. These include
estimates of a renewed hosting agreement with Galaxy beginning in
January 2025.
3) The Company may not be able to
extend its hosting agreement with Galaxy on terms that are
acceptable to the Company. In addition, finding acceptable
alternatives may be challenging given that the miners hosted by
Galaxy are an older fleet and in immersion fluid.
Offsetting these potential risks to
the Group's cash flow are the Group's current cash balance, the
Group's ability to generate additional funds by issuing equity for
cash proceeds and selling certain non-core Group assets.
Based on information from
Management, the Directors have considered the period to 31 August
2025, as a reasonable time period given the variable outlook of
cryptocurrencies. Based on the above considerations, the Board
believes it is appropriate to adopt the going concern basis in the
preparation of the Financial Statements. However, the Board notes
that the significant debt service requirements, the volatile
economic environment and uncertainty over the Galaxy renewal at
Helios renewal indicate the existence of material
uncertainties that may cast significant doubt regarding the
applicability of the going concern assumption. The auditors also
made reference to this in their audit report on the financial
statements for the year ended 31 December 2023.
4. ADOPTION OF
NEW AND REVISED STANDARDS AND INTERPRETATIONS
The Group has adopted all
recognition, measurement and disclosure requirements of IFRS,
including any new and revised standards and Interpretations of
IFRS, in effect for annual periods commencing on or after 1 January
2024. The adoption of these standards and amendments did not have
any material impact on the financial results or position of the
Group.
Standards which are in issue but not
yet effective:
At the date of authorisation of
these financial statements, the following Standards and
Interpretation, which have not yet been applied in these financial
statements, were in issue but not yet effective.
|
Standard or Interpretation
|
Description
|
Effective date for annual
accounting period beginning on or after
|
|
IFRS 18
|
Presentation and Disclosure in
Financial Statements
|
1 January
2026
|
The Group has not early adopted any
of the above standards and intends to adopt them when they become
effective.
No deferred tax asset has been
recognised in respect of tax losses carried forward on the basis
that there is insufficient certainty over the level of future
profits to utilise against this amount.
Income tax expense
The tax on the Group's profit before
tax differs from the theoretical amount that would arise using the
weighted average tax rate applicable to profits of the consolidated
entities as follows:
5.
TAXATION
|
|
Period
ended
30 June 2024
(unaudited)
|
Period
ended
30 June 2023
(unaudited)
|
|
|
$'000
|
$'000
|
|
Taxation charge in the financial
statements
|
340
|
-
|
|
|
|
Period
ended
30 June 2024
(unaudited)
|
Period
ended
30 June 2023
(unaudited)
|
|
|
|
$'000
|
$'000
|
|
|
|
|
|
|
Loss before taxation
|
|
(32,394)
|
(18,563)
|
|
Expected tax recovery based on a
weighted average of 25% (2023 - 25%) (UK, US and Canada)
|
|
(8,099)
|
(4,641)
|
|
|
|
|
|
|
Effect of expenses not deductible in
determining taxable profit
|
|
5,465
|
3
|
|
Temporary differences
|
|
3,433
|
3,485
|
|
Other tax adjustments
|
|
191
|
(52)
|
|
Unutilised (utilised) tax losses carried
forward
|
|
(650)
|
1,205
|
|
Taxation charge in the financial statements
|
|
340
|
-
|
6.
INTANGIBLE ASSETS
|
Group
|
|
Goodwill
|
Digital
assets
|
2024 Total
|
|
|
|
$'000
|
$'000
|
$'000
|
|
Cost
|
|
|
|
|
|
At 1 January 2024
|
|
112
|
5,329
|
5,441
|
|
|
|
|
|
|
|
Foreign exchange
movements
|
|
|
(29)
|
(29)
|
|
Disposals
|
|
(112)
|
|
(112)
|
|
At 30 June 2024
|
|
-
|
5,300
|
5,300
|
|
|
|
|
|
|
|
Amortisation and impairment
|
|
|
|
|
|
At 1 January
|
|
-
|
4,553
|
4,553
|
|
Impairment
|
|
226
|
226
|
|
At 30 June 2024
|
|
-
|
4,779
|
4,779
|
|
Balance at 1 January
2024
|
|
112
|
776
|
888
|
|
Balance At 30 June 2024
|
-
|
521
|
521
|
|
Intangible digital assets are
cryptocurrencies owned but not mined by the Group. The
Intangible digital assets are recorded at cost on the day of
acquisition. Changes in fair value are recorded in the fair value
reserve in other comprehensive income.
The Intangible digital assets held
are detailed in the table below:
|
|
As
at 30 June 2024
|
Coins/tokens
|
Fair value
|
|
Crypto asset name
|
|
$'000
|
|
Polkadot - DOT
|
16,554
|
103
|
|
Alternative coins
|
405,248
|
418
|
|
At
30 June 2024
|
421,802
|
521
|
|
|
| |
7.
PROPERTY, PLANT AND EQUIPMENT
|
Group
|
Mining and Computer
Equipment
|
Data
Centres
|
Equipment
|
Total
|
|
|
$'000
|
$'000
|
$'000
|
$'000
|
|
Cost
|
|
|
|
|
|
At 1 January 2024
|
168,149
|
6,281
|
4,034
|
178,464
|
|
Foreign exchange movement
|
16
|
(53)
|
(21)
|
(58)
|
|
Disposals
|
(1,322)
|
-
|
-
|
(1,322)
|
|
At 30 June 2024
|
166,843
|
6,228
|
4,012
|
177,084
|
|
Depreciation and impairment
|
|
|
|
|
|
At 1 January 2024
|
(116,992)
|
(1,537)
|
(206)
|
(118,735)
|
|
Foreign exchange movement
|
-
|
(18)
|
(33)
|
(51)
|
|
Impairment in asset
|
(22,012)
|
-
|
-
|
(22,012)
|
|
Depreciation charged during the
period
|
(9,667)
|
(324)
|
(124)
|
(10,115)
|
|
At 30 June 2024
|
(148,671)
|
(1,879)
|
(363)
|
(150,913)
|
|
Carrying amount
|
|
|
|
|
|
At 1 January 2024
|
51,158
|
4,743
|
3,827
|
59,729
|
|
At
30 June 2024
|
18,172
|
4,349
|
3,649
|
26,171
|
The Group determined that there were
indicators of impairment at 30 June 2024. The reduction in fair
market values of mining equipment, which has accelerated since the
Bitcoin halving in April 2024, and the deterioration of mining
economics resulting from the lower hashprice since the Bitcoin
halving, are the primary factors. In assessing value in use
of Mining and Computer Equipment, the estimated future cash flows
over the useful life of the mining machines were discounted using a
pre-tax discount rate of 13.97%. As a result of the analysis, an
impairment charge of $22.0 million was recorded.
8.
TRADE AND OTHER RECEIVABLES
|
|
As at
30 June 2024
(unaudited)
|
As
at
31 December 2023 (audited)
|
|
|
$'000
|
$'000
|
|
Trade and other
receivables
|
873
|
1,131
|
|
Other taxation and social
security
|
708
|
1,349
|
|
Total trade and other receivables
|
1,581
|
2,480
|
The directors consider that the
carrying amount of trade and other receivables is equal to their
fair value.
9.
DIGITAL ASSETS
|
Group
|
Period
ended
30 June
2024
(unaudited)
$'000
|
Year ended
31
December 2023
(audited)
$'000
|
|
Opening Balance
|
385
|
443
|
|
Additions
|
|
|
|
Foreign exchange movement
|
-
|
24
|
|
Crypto assets mined
|
29,255
|
50,558
|
|
Total additions
|
29,255
|
50,582
|
|
Disposals
|
|
|
|
Crypto assets sold
|
(29,497)
|
(51,378)
|
|
Total disposals
|
(29,497)
|
(51,378)
|
|
Fair value movements
|
|
|
|
Gain/(loss) on crypto asset
sales
|
27
|
738
|
|
Total fair value movements
|
27
|
738
|
|
Closing Balance
|
170
|
385
|
|
|
|
|
|
|
|
|
|
|
| |
The Group mined crypto assets during
the period, which are recorded at fair value on the day of
acquisition. Movements in fair value are recorded in change in fair
value of digital currencies on the statement of comprehensive
loss.
10. ORDINARY SHARES
The Group had 578,397,673 Ordinary shares outstanding at 30
June 2024 and 536,963,471 31 December 2023.
Subsequent to June 30,
2024, the Group issued
57,500,000 ordinary shares and 57,500,000 warrants
for net proceeds of $7.7M.
The Group has in issue 7,273,585
warrants and options at 30 June 2023 (2022: 10,544,406).
The Group granted 7,273,995 restricted stock units (RSUs) in
2024. The RSUs vest over 3 years from
grant date. The grant price of the RSUs was
£0.15.
11. TRADE AND OTHER PAYABLES
|
|
As at
30 June 2024
(unaudited)
|
As at
31 December 2023
(audited)
|
|
|
$'000
|
$'000
|
|
Trade payables
|
820
|
2,336
|
|
Accruals and other
payables
|
5,812
|
7,153
|
|
Other taxation and social
security
|
1,562
|
1,686
|
|
Total trade and other creditors
|
8,194
|
11,175
|
The directors consider that the
carrying value of trade and other payables is equal to their fair
value.
12. LOANS AND BORROWINGS
|
|
|
|
|
Non-current liabilities
|
As at
30 June 2024
(unaudited)
$'000
|
As at
31 December 2023
(audited)
$'000
|
|
Issued debt - bond
|
38,484
|
38,170
|
|
Long term loan
|
-
|
9,230
|
|
Mortgages
|
695
|
797
|
|
Total
|
39,179
|
48,197
|
|
Current liabilities
|
|
|
|
Loans*
|
5,351
|
13,444
|
|
Mortgages
|
439
|
600
|
|
Other loans
|
-
|
276
|
|
Total
|
5,790
|
14,320
|
|
|
|
|
| |
The mortgage is secured against the
building at Baie Comeau and is repayable over periods of 30 months
at an interest rate of lender prime +
0.5%.
*The Galaxy loan was fully repaid
subsequent to quarter end.
13. FINANCIAL INSTRUMENTS
|
|
As at
30 June 2024
(unaudited)
$'000
|
As at
31 December 2023
(audited)
$'000
|
|
Carrying amount of financial assets
|
|
|
|
Measured at amortised
cost
|
|
|
|
- Trade and
other receivables
|
1,581
|
1,131
|
|
-
Cash and cash equivalents
|
3,985
|
7,443
|
|
Measured at fair value - Digital
Assets
|
170
|
400
|
|
Total carrying amount of financial assets
|
5,736
|
8,974
|
|
|
|
|
|
Carrying amount of financial liabilities
|
|
|
|
Measured at amortised
cost
|
|
|
|
-
Trade and other payables
|
8,193
|
7,501
|
|
-
Short term loans
|
-
|
280
|
|
- Long term
loans
-
Issued Debt - bonds
|
6,484
|
25,599
|
|
38,484
|
38,170
|
|
Total carrying amount of financial
liabilities
|
53,161
|
71,550
|
Fair Value Estimation
Fair value measurements are
disclosed according to the following fair value measurement
hierarchy:
-
Quoted prices (unadjusted) in active markets for
identical assets or liabilities (Level 1)
-
Inputs other than quoted prices included within
Level 1 that are observable for the asset or liability, either
directly (that is, as prices), or indirectly (that is, derived from
prices) (Level 2)
-
Inputs for the asset or liability that are not
based on observable market data (that is, unobservable inputs)
(Level 3). This is the case for unlisted equity
securities.
The following table presents the
Group's assets and liabilities that are measured at fair value at
30 June 2024 and 31 December 2023.
|
|
Level 1
|
Level 2
|
Level 3
|
Total
|
|
Assets
|
$'000
|
$'000
|
$'000
|
$'000
|
|
Financial assets at fair value through profit or
loss
|
|
|
|
|
|
Equity holdings
|
-
|
-
|
400
|
400
|
|
Intangible assets - crypto
assets
|
-
|
521
|
-
|
521
|
|
Digital assets
|
-
|
170
|
-
|
170
|
|
Total at 30 June 2024
|
-
|
691
|
400
|
1,091
|
|
|
|
|
|
|
|
|
Level 1
|
Level 2
|
Level 3
|
Total
|
|
Assets
|
$'000
|
$'000
|
$'000
|
$'000
|
|
Financial assets at fair value through profit or
loss
|
|
|
|
|
|
Equity holdings
|
-
|
-
|
400
|
400
|
|
Intangible assets - crypto
assets
|
-
|
888
|
-
|
888
|
|
Digital assets
|
-
|
385
|
-
|
385
|
|
Total at 31 December 2023
|
-
|
1,273
|
400
|
1,673
|
All financial assets are in
listed/unlisted securities and digital assets.
There were no transfers between
levels during the period.
The Group recognises the fair value
of financial assets at fair value through profit or loss relating
to unlisted investments at the cost of investment
unless:
-
There has been a specific change in the
circumstances which, in the Group's opinion, has permanently
impaired the value of the financial asset. The asset will be
written down to the impaired value;
-
There has been a significant change in the
performance of the investee compared with budgets, plans or
milestones;
-
There has been a change in expectation that the
investee's technical product milestones will be achieved or a
change in the economic environment in which the investee
operates;
-
There has been an equity transaction, subsequent
to the Group's investment, which crystallises a valuation for the
financial asset which is different to the valuation at which the
Group invested. The asset's value will be adjusted to reflect this
revised valuation; or
-
An independently prepared valuation report exists
for the investee within close proximity to the reporting
date.
14. SALE OF
SUBSIDIARY
In March 2024, the Group sold
9366-5320 Quebec Inc. for approximately $6.2 million. The
gain on the sale was $3.4 million. A tax provision of $443k was
recorded for the capital gain.
15.
COMMITMENTS
The Group's material contractual
commitments relate to the hosting services agreement with Galaxy
Digital Qualified Opportunity Zone Business LLC, which provides
hosting, power and support services at the Helios facility. This
agreement has a term ending December 28,
2024 and renewal discussions are in progress. It
is impracticable to determine monthly commitments due to large
fluctuations in power usage and as such a commitment over the
contract life has not been determined. The agreement is for
services with no identifiable assets, therefore, there is no right
of use asset associated with the agreement.
As the Company disclosed on February 8, 2023, it is
currently subject to a class action lawsuit. The case, Murphy vs
Argo Blockchain plc et al, was filed in the Eastern District of New
York on 26 January 2023. The Company
refutes all of the allegations and believes that this class action
lawsuit is without merit. The Company is
vigorously defending itself against the action. We are not
currently subject to any other material pending legal proceedings
or claims.
16. RELATED PARTY TRANSACTIONS
Key
management compensation - all amounts in $000's
Key management includes Directors
(executive and non-executive) and senior management. The
compensation paid to related parties in respect of key management
for employee services during the period was made only from Argo
Blockchain PLC, amounting to:
● $68k (2023 -
$68k) to Webslinger Advisors Inc. in
respect of fees of Matthew Shaw (Non-executive
director)
● $63k (2023 -
$63k) in respect of fees for Maria Perrella (Non-executive
director)
● $68k (2023 -
$71k) in respect of fees for Raghav Chopra (Non-executive
Director)
Total director fees and
remuneration, paid directly and indirectly,
totalled $541k (2023: $280k).
17. SUBSEQUENT EVENTS
In July 2024, the Company issued 57,500,000 ordinary
shares and 57,500,000 warrants for net proceeds of $7.7
million.
In August 2024, the Company repaid
the $5.4 million remaining on the Galaxy loan balance.