Argo Blockchain plc (NASDAQ:ARBK) Q3 2023 Earnings Call Transcript November 16, 2023
Operator: Good afternoon, and welcome to the Argo Blockchain plc Q3 Update Investor Presentation. Throughout this recorded presentation investors will be in listen-only mode. Questions are encouraged, can be submitted at any time by the Q&A tab situated on the right-hand corner of your screen, click Q&A scroll to the bottom type your question and press send. Given the large attendance on today’s call, the Company will not be in a position to answer every question received during the meeting itself. However, the Company will review all questions submitted today, will publish responses where it’s appropriate to do so. Before we begin, I would like to submit the following poll. I’d now like to hand you over to Tom Divine, Vice President of Investor Relations. Good afternoon.
Tom Divine: Thank you, Paul. Before we begin, I’d like to remind everyone that today’s presentation and remarks may contain forward-looking statements. For our full risk factors, please see our Form 20-F filed with the Securities and Exchange Commission for the year 2022. With us today for our discussion of Q3 2023 results are Seif El-Bakly, Argo’s Interim Chief Executive Officer; and Jim MacCallum, Argo’s Chief Financial Officer. And now I’ll turn it over to Seif.
A shot of someone securely accepting crypto assets as payment, showcasing the company’s payment solutions.
Seif El-Bakly: Thanks, Tom. Hi, everyone. Thanks for joining us today to discuss our Q3 results. It was a strong quarter for us, and I’m excited to dive into the numbers. Just a quick reminder for everyone of our three key priorities that helped guide us on a daily basis, we continue to focus on financial discipline and deleveraging, operational excellence, growth and strategic partnerships for the sustainable future of this company. I hope you’re seeing how these priorities have been manifested in the performance of the business over the last couple of quarters. Before we dive into the Q3 results, I want to take a few minutes to discuss the current macro environment and some recent trends that we’re seeing. The network hashrate continues to increase at a fairly rapid pace.
The global network started the year at roughly 270 exahash per second, and it has grown approximately 70% over the course of the year. Over the last two years, we’ve seen some seasonality emerge in hashrate and network difficulty partly due to the large amount of hashrate going online in Texas. During the summer months, we saw instances where hashrate decreased as Texas miners curtailed operations in response to high power prices. This is something we experienced at Helios, which generated significant proceeds in form of power credits. I’ll go into more detail on that a little bit later. But that seasonality does have an impact on network difficulty in hash price, so it’s something that we monitor closely, especially as we head into winter months where cold weather can also impact grid conditions and power prices.
Overall, the third quarter saw hash price trend down, bottoming out at around $60 per petahash per day during August and September, but it’s rebounded strongly in late October and so far into November, rising to over $90 per petahash per day. We’ve historically seen those temporary spikes from ordinal mint before, which drive up transaction fees. We do expect hash price to stabilize as the backlog of transactions is processed. Hash price takes into account the price of Bitcoin, the network difficulty and transaction fees at any given time. It’s a metric that we pay close attention to. Every $10 increase in the dollar per petahash per day has the potential to generate approximately an incremental $840,000 of revenue per month or $2.5 million per quarter based on Argo’s total hashrate capacity.
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