- Argo Blockchain says Bitcoin price declines of 11% in August and soaring power costs impacted mining margin.
- Mining margin narrowed from 37% in July to 20% last month.
- The firm mined 235 Bitcoin in August, up from 219 in July as hashrate hit 2.5 EH/s at Helios.
Argo Blockchain PLC (LON: ARB), a publicly traded Bitcoin mining company that’s one of the largest in the world, has released an operational update showing its mining margin decreased to 20% in August.
Bitcoin (BTC) price dropping 11% during the month and rising power costs at the firm’s mining facility Helios.
Notably, Argo’s power purchase agreement at the Texas-based facility provides for spot purchases of power. In August 2022, spot market prices averaged at $0.09 per kWh, almost three times prices in previous years, a scenario that has contributed to the reduced margin.
Argo’s mining revenue increased
Explaining the high spot power costs in West Texas, the firm pointed to the 204% jump in natural gas prices, the highest over the month compared to the same period in 2018-2021. The gas price problem, Argo contends, is due to the impact of war in Ukraine as well as low storage levels of the commodity in the US.
But despite this downside, Argo Blockchain mined 235 Bitcoin during the month – compared to 219 BTC mined in July. Increased hashrate at Helios and installation of new Bitmain S19J Pro miners had pushed total hashrate to 2.5 EH/s and keeps the company on track to achieve the target of 3.2 EH/s by end of October 2022.
The company has signed a strategic hosting agreement with an unnamed third party that will allow for efficiency at Helios and add to the hashrate, Peter Wall, Argo chief executive noted in a statement.
“While our mining margin is lower than expected, the recent high natural gas and electricity prices are a temporary reflection of broader market dislocations, and we are confident that electricity prices will align with historical trends in the near future. Further, electricity prices are seasonal, and we expect prices to decrease as temperatures come down through the cooler months.”
Argo held 1,098 Bitcoin as of 31 August 2022, while mining revenue was £4.39 million ($5.23 million), up from £3.89 million ($4.73 million) in July. The company’s shares were up by more than 10% on Friday as blockchain stocks mirrored the crypto market with a fresh bounce alongside broader risk market assets.