Argo Blockchain

Updated financial model confirms complete disconnect between market price and underlying value

Argo Blockchain plc is a global data centre business that provides a purpose-built and flexible platform for the mining of leading cryptocurrencies in the enterprise-scale and institutional sectors worldwide from operational centres in Quebec, Canada. Following a change of strategy earlier this year the company is now focused on mining cryptocurrency for its own book and providing an enterprise level Mining as a Service (MaaS) product.

  • Strategic shift further vindicated by recent updates

    Argo’s results for the six months to June 2019 showed revenues growing by 283% to £2.93 million as the company turned to mining cryptocurrencies for its own book and as the Bitcoin price rose strongly over the period. This helped the company to post a maiden pre-tax profit of £0.95 million. The third quarter (to end-September) saw revenues of £3.63 million generated from cryptocurrency mining operations, up 75% from Q2 2019, with mining margins for the period of c.73%..

  • Further investment in hardware made to accelerate growth

    An existing order for 5,000 Antminer S17 machines costing $13.09 million has been replaced by an order for 10,000 Antminer T17s costing $9.51 million. This decision has been made as the amended order is significantly superior in terms of total mining efficiency and enables the Argo to grow further its overall mining capacity. Argo expects the amended order will be delivered in batches from early December this year and will increase the size of the mining estate to 17,000 machines or 640 PH by the end of Q1 2020, increasing total mining capacity by 240%.

  • Shares look cheap on a range of valuation metrics

    With a current market cap of less than £18 million Argo trades at a discount of 20% to net assets of £22.38 million as at 30th June 2019. On a price/earnings basis the shares currently trade on a multiple of just over 3 times our 2020 forecasts. Taking into account Argo’s growth profile and efficient operations, we remain of the belief that a multiple of 8 times earnings & cash & crypto assets would be a reasonable value to place on the shares. On our 2020 forecasts for c.1.83p of earnings, that equates to a value of 23.33p per share, implying 286% upside. Conviction Buy.


    Argo Blockchain is a research client of Align Research. Align Research and a director of Align Research hold an interest in the shares of Argo Blockchain. Full details of our Company & Personal Account Dealing Policy can be found on our website 

    For full disclaimer information please refer to the last page of the full document. This investment may not be suitable for your personal circumstances. If you are in any doubt as to its suitability you should seek professional advice. This note does not constitute advice and your capital is at risk. This is a marketing communication and cannot be considered independent research.

Table: financial overview
Year to Dec 2018A 2019E 2020E
Revenues (£m) 0.76 10.76 27.39
Pre-tax (£m) (4.12) 1.23 6.53
EPS (p) (2.2) 0.35 1.83
Source: Company accounts