Argo Blockchain, a bitcoin mining firm listed on the London Stock Exchange, reported stellar 2019 earnings Wednesday. The company attributed its success to cutting off its consumer-facing arm and focusing on mining some 1,330 bitcoin (BTC) on the year.
In its full-year results, Argo said 2019 revenue was up 11-fold from the year before, a dramatic spike from $948,000 to $10.7 million. Argo's earnings before interest, tax, depreciation and amortization (EBITDA) came to $1.74 million, compared to a $4.56 million loss in 2018.
While partly the result of a significant capital outlay into mining equipment – with the number of active rigs increasing from 10,000 to 17,000 by year's end – the company said it also made savings by moving from its original mining-as-a-service (MaaS) business to mining for itself.
Whole areas of the business, including customer support and acquisition, could be axed, the report said, with significant reductions also being made in the marketing budget. The company also shrunk its headcount from 11 to seven.
CEO Peter Wall told CoinDesk the company's pivot last year means it can now focus all of its energies on optimizing mining equipment and remain competitive against its rivals. He said the move puts Argo in a good position to deal with the volatility and uncertainty from the COVID-19 pandemic and the upcoming bitcoin halving event.
"The lockdown in the first half of 2020 has thrown a curveball into the global economy, which is being felt everywhere," Wall said. "However, given the crucial infrastructure investment Argo made last year, we now find ourselves in a very good place."
Argo originally set out to offer mining services via a subscription model. The premise was that this would make crypto mining accessible to just about anyone, co-founder and then-executive chairman Jonathan Bixby told the Financial Times in 2018.
But costs soon outstripped revenues, and Argo reported a pre-tax loss of $4.1 million in its 2018 financial report. The share price, which had been £12.50 ($15.55) at the IPO in August 2018, sunk to a low of £3.00 ($3.74) by the following February.
As Argo faced the very real threat of a shareholder revolt, the company pivoted into mining for itself, increasing the number of mining rigs by 1,000 in May 2019. Argo continued its capital outlay so that by August 2019, co-founder Mike Edwards, who had replaced Bixby as new executive chairman, expressed confidence the firm was in solid health.
Wednesday's results come three months after Argo first said 2019 had been a strong year. In January, it released unaudited figures that indicated the company was looking at a ten-fold revenue increase, which sparked a 3.55% increase in the share price.
Wall said the full-year results meant the company entered 2020 with "considerable business momentum" and that it was "on track to deliver strong growth in the first half [of 2020] compared with the corresponding period the year before."
The new executive chairman, Ian McLeod, who took over the position in January, said 2019's strong revenues allowed Argo to put pressure on the competition, especially smaller miners using outdated equipment.
He also expressed "cautious optimism" in the macro backdrop, adding that looser monetary policy could contribute to a waning, if not full collapse, in confidence in fiat currencies. Cryptocurrencies, and especially bitcoin, McLeod said, could stand to benefit as investors hunt for stores of value independent of governments and central banks.
Having already mined more than 900 bitcoin in Q1 2020, Argo is well on track to exceed the 1,300 bitcoin the company mined in 2019. The company is on track to soon hit 18,000 rigs – with a combined hash power of 730 Petahash (PH).
While Argo has been listed on the London Stock Exchange since 2018, the company's three mining facilities are all in Quebec, Canada, with the largest being a 40,000-square-foot facility near the town of Baie-Comeau on the Saint Lawrence River.
As of press time, Argo's stock was trading at $5.85 a share.