Argo Blockchain - a speculative buy? Gary Newman reviews...

Video HERE: Bear raider Carson Block and President Trump's favourite porn star Stormy Daniels to honour financial scumbags, did anyone say Burford?

At first glance Argo Blockchain (ARB) seems to be very different to the type of companies that I normally cover within the natural resources sector, but the actual economics of the business isn’t all that dissimilar. Whilst I cover quite a few mining companies in my articles, they are normally extracting a physical commodity whilst Argo is a very different type of miner as what it is producing is cryptocurrencies, such as Bitcoin, and instead of using machinery to dig holes in the ground it uses a network of computers to produce them.

Woodford Dog Eddie Stobart Logistics – DBAY updates proposals as Woodford funds sell. Read from Nigel Somerville HERE

I’m certainly not going to pretend that I understand all aspects of the mining side of things, nor do I think that you need to. One of my friends has a son who is a student studying computer sciences, and I know that he saved up to buy the hardware necessary to ‘mine’ crypto coins, and now makes relatively small amounts of money by doing so, although it is quite a slow process. Argo appears to be doing exactly the same but on a much larger scale, and for anyone who wants exposure to cryptocurrencies, but on a much less volatile basis than directly investing in crypto themselves and without the need to fully understand them – not to mention the security of not having to worry about someone stealing all of your coins or an exchange going bust or being hacked – I would suggest that companies like Argo actually offer a leveraged play on crytpos. In much the same way that a conventional mining company would do with whatever commodity they happen to produce. Like with any other miner, success all comes down to the price of the commodity compared to what it costs to actually extract it, along with the longevity of the project and at what point it becomes too difficult to mine it economically.

Read HERE: TechFinancials – but I thought it was “considerable progress away from the historical business model to new products and technologies”?!...

I view the mining of cryptocurrency in exactly the same way, with the main risks currently being a further pullback in the value of things such as Bitcoin – which has been incredibly volatile and now trades at around the $7,300 area – alongside the potential for the cost of mining it increasing, and the price of electricity in the location where the mining operation is being carried out plays a big part in that. You also have risk from the fact that there is only a finite amount of these cryptocurrencies, and it will become progressively harder and more time intensive to mine the same amount of coins as time goes by. The upside comes from how profitable the operation is currently, the potential growth in output, and the possibility of the price of Bitcoin and other cryptos rising. Argo has been growing rapidly, and recently announced that it now has 7,000 Bitmain S17 Antminer machines operating. It also released an RNS announcing that it had changed an existing order for new machines and had doubled the number from 5,000 to 10,000, as well as switching it from the S17 model to the T17, which should increase output per machine. That is going to cost the company $9.5 million, but it has already paid a deposit of more than $6.5 million, and the remainder will be funded from existing cash balances, and are expected to be online by the end of Q1 2020. This is obviously quite a large investment for the company, but if we look at the new machines which began production in late May, those had already produced enough cryptocurrency to pay for themselves by early November. Once these new machines are installed it is expected that they will increase mining capacity by around 240%, so that shows the sort of growth that the business has currently – of course though, you also have to consider whether it will be possible to maintain that going forwards, but even if it plateaued it should still be very profitable and is yet to be factored into the market valuation of the company, which currently stands at around £19 million, with a share price of 6.4p on the ask.

ShareProphets Election coverage: Vote Conservative says Councillor Chris Bailey HERE

Geographical location of the mining facility plays a big part, as by far the biggest operating cost is the price of electricity. The Argo facility is in Quebec, which has some of the lowest power costs in the world and the company uses renewable hydroelectricity to keep these costs low. There is of course always a risk that those costs could rise in the future and put a serious dent in the profitability of the operation, but currently those costs are about as low as they can get. That is all great and gives some background into how the business operates, but like any mining operation it largely comes down to the financials. The latest quarterly update, for the three months up to the end of September, showed a 75% increase in revenues to £3.63 million, and with a mining margin of 73%, which by the standards of this industry is high. To put that into context, for the first half of the year it achieved revenue of £2.93 million – which was up by 283% compared to whole of 2018, rather than. Just a six month period – with a gross profit of £1.74 million, and a net profit of £940,000. That in itself is quite unusual for a company of this size, and comes partly as a result of its ability to reduce it admin costs - compared to the much higher levels those have been in the past – to around £105,000 per month. Of course, it needs to continue to keep those costs low, plus due to previous retained losses it didn’t pay any tax on the profit for that period, but that will change in the future – although, again, for a company of this size it is fairly unusual to have a profit to pay tax on in the first place! Argo is also in a position whereby its Net Asset Value more than supports its market cap, and unlike so many that you see, this is in the form of tangible assets rather than being mostly intangibles.

Dividend Munchers – November update from Nigel Somerville HERE

Although you do have to consider the fact that these assets mainly consist of the value of its computer equipment, and were it ever to reach a stage where its operations were no longer profitable, that might imply that the crypto mining boom was over and at that point the machines wouldn’t realise that sort of value. At first glance the current liabilities, with trade payables of over £13 million, don’t look that healthy, compared to net assets, but that is largely as a result of the machines that it has on order as part of its expansion, and at that time it had more than £5.6 million in the bank. It certainly isn’t something I would have any concerns about. My only other real concern would be the longevity of the business – although it is likely that something else would come along anyway as crypto isn’t going to just disappear – as although on paper it looks incredibly cheap using metrics such as PE and PEG ratios, that only becomes the case for investors if the business lasts for long enough to continue generating these sort of profit levels to more than pay back the level that the market is valuing it at currently i.e. how many years does it take to generate EPS equivalent to the current share price. In conclusion, I think that the current share price offers a good speculative buying opportunity, especially if you are bullish on cryptocurrencies like Bitcoin longer term. I’ve mentioned concerns over the potential longevity of mining these coins, but given the rate of revenue growth that it is achieving at the moment, I certainly see that as a risk worth taking. Once the rapid growth and expansion phase starts to slow down and there is less need for intensive Capex, then I would also expect to see this company start to pay a dividend. I've always avoided cryptocurrency myself, but Argo has got my interest and I may even end up taking a small position in the shares myself.

FREE Podcast HERE: ShareProphets Radio Edition NINETEEN with Tom Winnifrith on how housebuilders can collapse, the three top AIM overpromotes and the Appbox scam

Filed under: Argo Blockchain, Carson Block, Woodford, Eddie Stobart Logistics, TechFinancials

Rockrose Energy - a week is a long time says Peter Brailey...


Cineworld - a good shorting opportunity? Gary Newman reviews...


Silver is my metal of choice at the moment says Gary Newman


Golden Prospect Precious Metals - a gold buy


Hurricane Energy - valuation is far too high. I am short says Peter Brailey...


Altyn - mining equipment purchases, gold production increasing...


Versarien - when & at what price the attempted bailout fundraise?


The company playbook on Covid-19...


Doing nothing looks a great move... with a few possible exceptions says Nigel Somerville


As an investor, doing nothing is generally under-rated... but sometimes the facts have changed...


Bowleven - another AIM oil & gas play crunched by the market sell-off, is it a buy?...


A review of my favourite two gold stocks by Nigel Somerville


GVC & Aviva - catching up on some boring but worthy updates (& the continuing Amigo shambles)...


Volvere - a buy suggest Tom Winnifrith & Steve Moore


Finablr - the car-crash continues at Red Flag Central. Sell says Nigel Somerville


Aggreko, Ibstock, Ashtead & Robert Walters update - any value amongst them?


Hurricane Energy - more risks? Peter Brailey reviews...


Investment thoughts as fear has racked up in recent days - from Chris Bailey...


Ariana Resources - bank gains? A review from the HotStockRockets team...


Goldplat - interims emphasise return to profit & reasons for further encouragement


Gold set to remain strong & Highland Gold Mining a favourite producer considers Gary Newman


Petra Diamonds - now a sell? Gary Newman reviews...


B.P. Marsh and Partners - a buy say Tom Winnifrith & Steve Moore


OptiBiotix - now a US and Canada LPLDL distributor agreement...


Yourgene Health - Elucigene DPYD now approved for Australia, adding to confidence


Checking into InterContinental Hotels Group or Whitbread or Carnival instead?


Goldplat - further share buying interest, but still a buy? The HotStockRockets team review...


Pharos Energy - persistent seller providing a buying opportunity considers Gary Newman


Cluff Natural Resources - a buy says the team at HotStockRockets


Versarien - sell, and a target price of a few pennies if that says Tom Winnifrith


ITM Power - having been a great share tip, where is it going now? reviews Peter Brailey


NMC Health and Finablr - has Dr Shetty been a very naughty boy? Nigel Somerville reviews...


Ariana Resources - an exciting week ahead as interest (and the share price) mount


Rotala - trading statement, still a buy?


Ingenta - 2019 update & remains a buy considers the team from HotStockRockets


Apple & Tesla - are we getting close to the top? Lucian Miers reviews...


5 Slam-dunk sells for 2020 - January update and off to a flier says Nigel Somerville


Why value investors should buy PZ Cussons and not Crest Nicholson says Chris Bailey


UK Oil & Gas - 3 billion reasons to sell says Peter Brailey


Vast Resources is shortable and should be shorted says Tom Winnifrith


KEFI Minerals - after positive drilling results from Hawiah, shares still a buy?


Ariana Resources further adds to upcoming potential catalysts considers the HotStockRockets team


Sage, Sainsbury, Burberry & WH Smith update - buys amongst them?


Cluff Natural Resources is a speculative buy considers Gary Newman


Has Fevertree completely lost its fizz? Chris Bailey reviews...


Tip of the year Pires 24 percent ahead in 22 days but still value says the HotStockRockets team


Corporate updates frenzy - are Whitbread, Wood Group & Halfords buys?


Centamin - Endeavour deal off, ups dividend, shares down. Buy says Nigel Somerville


Where to place an investing bet in the gambling sector? Chris Bailey reviews...


Hostelworld - recovery potential? Gary Newman reviews...


Shoe Zone - full-year results suggest still income and further recovery attractions...


Sainsbury, Morrison and the two quid bargain bucket level...


Aston Martin - needing much more help than even James Bond can offer?


Next plc - where from here? Chris Bailey reviews...


Hurricane Energy - it is not in the Vomit list... but could be by the end of March...


Five slam-dunk sells for 2020 from Nigel Somerville


One of the 20 ShareProphets share tips of the year 2020. A buy from Tom Winnifrith...


Ingenta - a recovery buy?


Powerhouse Energy - still a sell after Santa update? Peter Brailey reviews...


What of - and where now for - my share tips for 2019? Nigel Somerville reviews...


Who might go the way of Thomas Cook in 2020? Lucian Miers reviews...


Ahead of my share tips for 2020, what of those for 2019? Chris Bailey reviews...


A dividend munchers update from Nigel Somerville


Time for a brokerage Christmas lunch review. Chris Bailey writes...


Ariana Resources - drilling news, shares well worth a look suggests Nigel Somerville


Three to take the Boris bounce profits in & Unilever unsurprisingly stumbles says Chris Bailey


Amino Technologies - various updates boost shares. Tom Winnifrith & Steve Moore write...


SolGold - a buy for the long term from these levels?...


Versarien - shocking interims & the cash is running out says Tom Winnifrith


BigDish only half apologies. Not enough says Tom Winnifrith, The Sheriff of AIM...


The FirstGroup share price train heads north again writes Chris Bailey...


Tesco - is the cash register set to ring big? Chris Bailey writes...


The Election and corporate stinkers Versarien & Purplebricks. Tom Winnifrith writes...


Give me corrugated board this Christmas, not more Metro Bank or Amigo desperation says Chris Bailey


Yourgene Health - a half-year results review from HotStockRockets


Image Scan Holdings - full-year results & where now following recent share price action?


FTSE reshuffle imminent - a review by Chris Bailey...


Argo Blockchain - a speculative buy? Gary Newman reviews...


Ariana Resources - potentially exciting deal to partially monetise Kiziltepe & Salinbas


KEFI Minerals - after recently soaring, Tulu Kapi project update...


Rolls Royce, Dignity & Sage - a catch-up by Chris Bailey


Versarien, Bidstack & AFC Energy - short now or later reviews Tom Winnifrith


easyJet - time to disembark? Chris Bailey reviews...


Views on Royal Mail, Centrica & Johnson Matthey from a jet lagged and thoughtful Chris Bailey


PetroTal - failure of finance & corporate governance control. Sell says Peter Brailey...


Time for General Inaction but still short Sirius Minerals argues Lucian Miers


RiverFort Global Opportunities - remains a buy say the team at HotStockRockets


Volex - positive interims, a good share tip and now we upgrade...


Oops...FirstGroup did it again. Chris Bailey writes...


Eco Atlantic - following Jethro & Joe wells initial results analysis, Peter Brailey reviews...


KEFI Minerals - financial & Tulu Kapi project updates... shares soar again & stance upgraded


Bluebird Merchant Ventures - Gubong permit received, shares very cheap?...


Rolls Royce remains an attractive long cycle stock considers Chris Bailey


A terrible deal for Sound Energy? Gary Newman reviews...


Marks & Spencer - you know what happens when there are no believers...


Kicking when down - ref. Sirius Minerals. Tom Winnifrith writes...


Columbus Energy Resources - Saffron prospect spud update, drilling excitement ahoy...


Image Scan Holdings - a buy considers the HotStockRockets team...


Large-cap earnings frenzy - Shell, Lloyds, BT, Crest Nicholson & DS Smith. Buys amongst them?


Tom Winnifrith reviews - is lying and fraud acceptable on the London Market?


RISK WARNING & DISCLAIMER - tips are provided by independent authors via a common carrier platform and do not represent the opinions of does not accept responsibility for or make any warranties in connection with or recommend that you or any third party rely on such information. The information available at and via emails you receive from [email protected] are for your general information and use and are not intended to address your particular requirements. In particular, the information does not constitute any form of advice or recommendation by the tipsters or and is not intended to be relied upon by users in making (or refraining from making) any investment decisions. Trading shares involves the risk of loss. The tipsters and shall not be liable for any losses or other damages incurred. The value of investments can go up or down and the past is not necessarily a guide of future performance.

Five Free Share Tips?

. . . . . . . . . .

Well actually it will be six. One every week day and one on Sunday, each landing with you at 11 AM sharp.

The Details

Unlike other services (which may always have a vested interest) we pride ourselves on our impartiality and cover all small caps including AIM. the Standard List, The Wider Main Market and NEX.

We cover small caps, penny shares, FTSE 350 stocks and blue chips. We look for red hot penny shares, Warren Buffett style value investments with yield and growth stocks. There is no technical analysis in our work just solid fundamental analysis from a team of experts with decades of stockmarket experience.

You will not agree with all we publish but if you are interested in small caps you cannot afford to ignore it either. Yo'll never be charged for the free share tips from Five Free Share Tips and given the star writers involved you know that they will move share prices.

There's no telephone number or postal address required and there is no charge, ever, for your Five Free Share Tips membership. Just free shares tips every day apart from Saturday And each day's share tip will not just be a few thoughts cobbled together but will be detailed analysis from experts.

Our experts do not just earn their living from writing. All own shares. If they own shares in a stock they cover they will declare it and will not sell until after advising a sell to our readers. And why not our tips are so good that why shouldn't our readers put their money where their mouth is?

Don't just take our word for it! Judge us on the calibre of our free share tips and join today to start receiving them from September 1 2017. If you don't like what you get delivered to your inbox unsubscribe and you will never hear from us again. So why not give it a go? Sign Up Now

The Team

We've put together a panel of top tipsters, including:

Tom Winnifrith, in his 27th year writing about shares, noted fraudbuster & dubbed "The maverick Tipster"

Chris Bailey, City whizz kid turned financial guru, rated as one of the top 50 commentators on shares on twitter, founder of Financial Orbit

Steve Moore, has worked with Tom Winnifrith for all bar 3 weeks of his working life - a noted commentator on value stocks

Malcolm Stacey, The Grandfather of Share Blogging, the founder of ShareCrazy & a best selling autthor of stockmarket books

Lucian Miers, the Bard of the Boleyn, one of the UK's best known short sellers

Gary Newman, writes about value investing on AIM, speciality is in share tips on oil and mining companies

Nigel Somerville, The Deputy Sheriff of AIM, an expert in forensic analysis a skill used to bust frauds but also to tip true value investments

The team from HotStockRockets, specialising in AIM and small cap shares which will fly on a three month view

Sign Up Now

UK Investor Show 2018

Remember to book your place at the UK Investor Show 2018. The UK’s top investment show taking place on Saturday 21 April 2018 at the Queen Elizabeth II Conference Centre in Westminster, London. The show will feature a unique line-up of top speakers including Nigel Wray, tech queen Vin Murria, Dave Lenigas, Mark Slater, Tom Winnifrith, Adam Reynolds, Ed, Croft, Nick Leslau Luke Johnson and Dr Johnny Hon as well as 135 exhibiting small cap companies.

To reserve your ticket, visit UK Investor Show.

Risk Warning & Disclaimer

The hot share tips given here are of necessity, general. They cannot relate to the individual circumstances of investors. Anyone considering following the share tips contained here should seek independent advice from a Financial Conduct Authority authorised Stockbroker or Financial Adviser. We cannot be held liable if individuals suffer losses through following share tips contained on this site or emailed out as free share tips. The value of investments can go down as well as up. The past is not necessarily a guide to future performance. Investing in shares can lose you part or all of your capital although the potential returns are theoretically unlimited. The difference between the buy share price and the sell share price for smaller company shares (penny shares) can be significant. Profits from dealing in shares may be liable to tax - the level of tax and bases of relief from tax are subject to change. Changes in the rates of exchange may have an adverse effect on the value or price of an investment in sterling terms if it is denominated in a foreign currency. Some of the shares recommended on this site will be smaller company shares. By their nature such investments can be relatively illiquid and thus hard to trade. And that makes such investments more of a high risk than larger company shares (or 'small caps'/'penny shares'). & its sister site defines a smaller company share as any stock traded on AIM or NEX or which has a market capitalisation of less than £300 million.