Argo Blockchain PLC (LSE:ARB, OTCQX:ARBKF, NASDAQ:ARBK, ETR:0XP) said it made “significant” progress towards completing the first phase at its new Helios facility in Texas.
The comments came as the cryptocurrency miner revealed its performance in the first half of the year was impacted by the fall in the price of Bitcoin.
Revenue dropped 14% to £26.7mln and underlying profit (adjusted EBITDA) declined 28% from the first half last year to £17.1mln.
Argo mined 939 Bitcoin and Bitcoin Equivalent (BTC) during the first six months, up 6% year-on-year.
The mining margin fell to 71% from 81% due to the decrease in Bitcoin price and an increase in network difficulty.
The company held 1,953 BTC at end-June 2022, up from 1,268 BTC a year earlier.
Hashrate capacity increased to 2.2 EH/s at the end of July 2022 from 1.6 EH/s at the end of 2021.
Argo revised its year-end hashrate guidance to 3.2 exahash per second (EH/s) of total hashrate capacity by the end of 2022, increasing to 4.1 EH/s in the first quarter of 2023.
The company had previously expected to increase its hashrate to 5.5 EH/s by the end of this year.
“The revision to our hashrate guidance reflects our current expectations for delivery and deployment of the custom machines we are developing with ePIC Blockchain Technologies that utilise the Intel Blockscale ASIC chips,” said Argo CEO Peter Wall.
“We have worked closely with ePIC and Intel to modify the machine design to increase total mining efficiency, which has delayed our expected deployment schedule. Further, we are preserving our optionality by reducing our overall capital spending on these machines as market conditions remain volatile.
“We remain confident in the performance of the custom machines and are excited to deploy them starting in Q1 2023," Wall said.
The company said it has continued to install new machines at the Helios facility since it opened in May and said it is on track to complete the installation 20,000 S19 J Pro machines ordered from Bitmain by October this year.
This is in addition to 10,000 machines installed following a machine swap agreement with Core Scientific in July.
Argo now operates 100% of its owned machines and has no third-party hosting arrangements, giving it more operational control over its mining machines and helping drive increased performance.
Also, controlling operating costs will be “critical” as the next Bitcoin halving cycle takes place in May 2024 and the Bitcoin block reward is reduced by 50%, the company noted.
The company operated with a mining margin of 70% in the first half, the highest among its peers, and continues to review its mining fleet. Since the period-end, it has removed 460 peta hash per second (PH/s) of non-operations mining capacity from its total hashrate.
Despite the fall in Bitcoin price, Argo raised significant new funding during the first half, comprising two debt financing agreements with NYDIG of £20.2mln and £56.3mln.
“While the first half of 2022 presented many challenges, I am delighted with the progress that we have made in developing Helios and positioning ourselves as a leader in the Bitcoin mining industry,” said CEO Wall.
Noting the global macroeconomic headwinds and their impact on financial assets, including Bitcoin, Wall said Argo is well positioned to weather the current downturn.
He said Argo has utilised derivatives to obtain a higher realized price for Bitcoin than simply selling into the market.
In the second quarter, it sold Bitcoin at an average realized price of approximately US$28,500, realising hedge gains in excess of US$1,500 per Bitcoin.
“Despite the challenging economic environment in 2022, we continue to focus on our strategic priority of completing Phase 1 of Helios and laying the groundwork to further scale operations,” Wall said.