[Andreas Prott - stock.adobe.com]
The cryptocurrency mining company, Argo Blockchain (ARB ) has signed a fleet swap agreement with the NASDAQ-listed firm Core Scientific, Inc. which will reduce Argo’s operational expenses as part of its ongoing transition to operate its own mining facilities.
The agreement exchanges Argo’s Bitmain Antminer S19 series bitcoin mining fleet hosted at Core for S19J Pro bitcoin miners previously ordered by Core to be delivered directly to Argo’s new Helios facility. The fleet swap represents around 60% of Argo’s total mining capacity.
The agreement stipulates that Core will deliver the new S19J Pro machines to Argo’s Helios facility in Dickens County, Texas and Argo will assign its existing fleet of Bitmain Antminer S19 mining machines which represents a nameplate capacity of around 958 PH/s to Core.
Argo said the new S19J Pro machine represents a nameplate capacity of around 967 PH/s. Meanwhile, the deal also provides for the mutual termination of Argo’s hosting agreements.
To mitigate any temporary loss of hashrate for Argo, the swap of miners will occur in stages as the machines are delivered, which is anticipated to be between May and July of 2022.
Upon completion of the swap, Argo will no longer have any mining machines hosted at third party facilities. The agreement will mean Argo also avoids the logistical challenge and downtime associated with relocating its existing machines hosted by Core to its Helios site.
Commenting, Peter Wall, CEO of Argo, said: “The agreement with Core marks the final step towards our strategic objective of owning and operating all our miners, a path which we chose to pursue in 2020. While we have been pleased with the performance of our miners hosted with Core, this agreement allows us to upgrade our existing fleet and strengthen our mining infrastructure, while greatly reducing the operational risk of relocating between facilities.
Also commenting, Mike Levitt, Chief Executive Officer of Core Scientific, said: “We are happy to accommodate our long-time customer Argo, and we are pleased that this transaction benefits both parties while accelerating the growth of the Core Scientific self-mining fleet.”
In a morning research note released today by the UK broker finnCap, analysts stated that:
“As highlighted by today’s announcement, Argo continues to be on track to complete its transformational new Texas facility in H1, and we look forward to further detail at Argo’s FY results on its plans to scale the Texas facility to 800MW from 200MW, and the operational and financial impacts of the differentiated technology that it is using within its new facility.
At 63p and using a BTC price of $50k in our forecasts, Argo is trading on FY22 multiples of 1.6x EV/Sales, 1.8x EV/EBITDA and 6x adjusted P/E, with +50-80% growth in each metric.”
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