Getting to know Argo Blockchain (LON:ARB)

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Argo Blockchain (LON:ARB)

Argo Blockchain became the first cryptocurrency company to be listed on the London Stock Exchange. So far, The stock’s has been underwhelming thus far, since listing to time of writing. Argo Blockchain stock is trading at 13.108 pence per share on LSE which is down by 18% of the issue price at 16.0 pence per share.

Details about the LON:ARB Listing

Details obtained from the regulatory filings of Argo Blochchain

  • A total of 156,250,000 ordinary shares (representing 53.2% of the Company’s issued share capital on Admission) were placed at 16 pence per share, valuing Argo at a market capitalisation of £47 million. The Placing was significantly over-subscribed.
  • On admission, the Company will have 293,750,000 ordinary shares in issue.
  • The purpose of the flotation is to raise the public profile and provide new funds for the Company’s expansion and long-term growth.
  • Argo was established in December 2017 to develop a global datacentre management business facilitating cryptocurrency Mining as a Service (MaaS) to be available at scale to anyone, anywhere in the world.
  • The service went live on 11 June 2018 and initially covers four cryptocurrencies, being Bitcoin Gold, Ethereum, Ethereum Classic and Zcash. These cryptocurrencies had a total market capitalisation of over $51bn as at July 26th 2018. The Company may, in future, add or remove cryptocurrencies from its service offerings.
  • The Directors believe that there is significant pent-up demand for a user-friendly and cost-effective MaaS that enables users to procure mining services without the up-front capital commitment to purchase hardware or the necessary technical skills to operate a home mining farm.
  • Argo’s system allows the user to configure and manage the cryptocurrency they wish to mine, which mining pool they wish to contribute to and how they would like to store the generated coins. The Company does not intend to offer any form of cryptocurrency custody service, and therefore the user will be responsible for the storage and security of their cryptocurrency.

Company has provided the Use of the raised funds as (source: Prospectus)

This expenditure will allow the Company to:

  • expand its Mining as a Service (MaaS) operations in existing and new jurisdictions;
  • develop its technology;
  • to fund the expenses of the Placing; and
  • the day-to-day expenses of the Company.

The Company’s objective is to build its MaaS offering and to take advantage of
opportunities in different jurisdictions. The Directors’ intention is to create and operate a trading business, rather than an investment entity. It is not intended that the Company acquire minority stakes in target entities.

Competition

Prospectus consisted of the competition as –

The Directors are aware of HIVE Blockchain, a TSX listed company which looks to “build a bridge” between the blockchain market to traditional capital markets, and is strategically partnered with Genesis Mining, a cryptocurrency mining hashrate provider and currently the world’s largest mining-as-a-service provider. The Company’s activities will be competitive with those of HIVE Blockchain.

It also enlisted the number of other competitors

Publicly Traded Companies – DigitalX (ASX), Blockchain Global (ASX), 360 Blockchain (CSE), BTL Group (TSX), Coinsilium Group (NEX), .eXeBlock Technology (CSE), HashChain Technology (TSX)

Other Competitors in the Mining-as-a-Services Sector –  Genesis Mining, HUT 8, GMP, Cloud hashing, BitFury, Bitmain, BTC Corporation, F2Pool, BW

Subscription Based Model

For Argo Blockchain, as per Proactiveinvestors , The goal for year-one is to attract 30,000 subscribers, rising to 140,000 in year-two.

As per Financial Times, Argo plans to charge $25 a month for the raw computing power to mine any one of four cryptocurrencies — bitcoin gold, ethereum, ethereum classic and zcash. But it will not hold virtual coins on behalf of its customers or arrange the mining pools that are typically used. It will limit customers to one contract each.

All the Packages are Sold Out, as per Company’s website 

Conclusion

There are few points we wish to point out –

  • Expected Revenue Argo Blockchain may have is 1st Year $9.0 Million (12*25*30,000)  or GBP 6.95 Million; and Second Year is $42.0 Million (12*25*140,000)  or GBP 32.5 Million
  • on 31 March 2018, Company showed the Total Group Equity value of

  • Return on Equity is calculated as Net Income Divided by Total Equity. 
  • We have the equity figure. We have the expected revenue numbers. With the assumption of Net Profit Margin (means the net amount company will able to achieve as profit after all the expenses, interests and taxes). Please comment that figure on the how much Margin is possible with regards to Argo Blockchain.
  • This figure will be something which every prospective investor will look at.
  • Getting listed on LSE is a good and welcomed step. The scrutiny and transparency required is much higher with London Stock Exchange.
  • We believe, based on the information available on the web, the Company didn’t performed the Public Relations or Investor Relations activity well.

Disclaimer

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