Argo Blockchain PLC (LON:ARB) shares rose in early afternoon trading Monday after it reported a ten-fold increase in sales of its cryptocurrency mining packages in the first significant ramp-up of revenues since its initial public offering (IPO) in August.
The increase follows an expansion of the company’s mining capacity in early September after it introduced new server technology allowing it to support seven-times more subscribers.
As a result, Argo said more than 3,800 new packages of its crypto mining as a service (MaaS) had been signed up with effect from today, with the enlarged capacity being sold out immediately.
The expansion takes the total number of packages sold to 4,200.
Cryptocurrency mining is a process by which computers solve complex algorithms to validate transactions that are then added to a blockchain, with the computer operator being rewarded in cryptocurrency when a transaction block is completed.
The firm said it would continue to add new capacity in line with its phased growth plans, which call for capacity to support around 30,000 packages within the first 12 months of operations.
Mike Edwards, president of Argo, said the strong uptick in demand indicated that demand for crypto mining services “remains robust” despite a recent downturn in the sector, adding that the firm would “continue to execute our growth strategy as quickly as possible to meet this pent-up demand".
Alan Howard, senior equity analyst at the company's house broker, Mirabaud Securities, said following the rise in sales the company was now operating an annualised revenue run rate of US$2.5mln "just three months after opening to customers".
Howard added that if the firm met its target of 30,000 packages within its first 12 months of business, the run rate would increase to US$18mln, which when coupled with estimates around hardware, customer acquisition, and electricity costs would result in Argo becoming "earnings positive".
"Longer term, the company is well positioned to develop a mass market and highly profitable global crypto-mining service, having already secured enough power capacity at highly attractive electricity costs (US$0.030-0.038 per kWh) to be able to service over 150,000 packages from its Canadian data centres," Howard said.
At its IPO the company raised gross proceeds of £25mln, above its current market cap of around £22mln.
Shares were up 3.3% at 7.7p.
--Adds house broker comment and updates share price--