Argo Blockchain – Update

Bitcoin price surge and further expansion of infrastructure provide significant opportunities for 2021

Argo Blockchain plc is a global leader in cryptocurrency mining with one of the largest and most efficient operations powered by clean energy.

  • Infrastructure expansion boosts results in 2020

    Numbers for the six months to 30th June 2020 reported that Argo mined 1,669 Bitcoin equivalent in the first half of its financial year, up from 306 in H1 2019 mainly due to the expansion of the mining estate. Revenues for the period were up by 280% at £11.1m, with EBITDA up 96% to £3.23m.

  • Well placed to benefit from surge in the Bitcoin price

    After falling to a low of c.$4,900 in March amidst the coronavirus inspired sell off, following a significant rally from the $10,000 level in September, the Bitcoin price has gone on to reach a three year high of c.$19,400 as we write. The Bitcoin price is the key driver of Argo’s revenues, with every $1 increase all falling through to gross margins as there are no additional direct costs incurred.

  • Infrastructure expansion adds to attractions

    Argo’s total mining capacity currently stands at 16,000 machines and 645 petahash in addition to 280 Megasols of equihash mining capacity. Capacity is expected to grow significantly in February next year following a lease order for 4,500 state-of-the-art Bitmain Antminer S19 and S19 Pro miners.

  • Bitcoin rewards halving also provides opportunities

    In May this year the reward for mining Bitcoin blocks reduced from 12.5 to 6.25. Argo believes that it will be a long-term beneficiary as reduced rewards are expected to exclude less efficient miners from the market. These miners turning off their mining units, as they become unprofitable, will be favourable for efficient and larger scale miners like Argo due to an expected fall in the network’s total hash rate.

  • Valuation suggests significant upside remains despite share price rise

    We believe a multiple of 8 times earnings is a reasonable value to place on Argo shares. On our 2021 forecasts for c.2.05p of earnings, and adding in forecast cash and cryptocurrency, we arrive at a value of 21.14p per share, which we choose to adopt as our new target price. 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 2019A 2020E 2021E
Revenue (£m) 0.76 8.6 19.2 30.1
Pre-tax (£m) (4.14) (0.87) 0.48 7.43
EPS (p) (2.2) (0.2) 0.13 2.05
Source: Company accounts & Align Research