By Richard Gill, CFA

Cryptocurrency miner Argo Blockchain (ABR) has announced an early year management reshuffle, with company founder and current Vice President of Operations Peter Wall being appointed as CEO with immediate effect. He has been responsible for overseeing the day-to-day operations of the mining organization as well as the management of the software development team. Mike Edwards will remain in the role of executive chairman.

Also, non-executive director Gil Penchina has stepped down and will be succeeded by Ian Macleod. Ian joins Argo with more than 20 years of international experience providing strategic legal advice at board level. Since 2007, he has served as Corporate Secretary and General Counsel to the Teligence Group of Companies in Canada which operate in telecoms, payments, ecommerce and software development.

New mining hardware delivered

Argo has also announced that it has taken delivery of 3,616 Bitmain Antminer T17 machines which are being installed and expected to be operational by 10^th January. The new machines represent 159 petahash (PH) of hashing power, an increase of 75% from the company’s existing installed base of mining machines. Argo is on track to operate a total production base of approximately 17,000 machines, or 640PH, by the end of the first quarter of 2020, increasing total mining capacity by 204% from its current base. The remaining 6,384 machines required to achieve this target are on order and expected to be delivered in batches from early January.

Assessment

It is good to see Argo begin a new year with a positive statement. Alongside the management reshuffle we see the main point of this news being that the new mining machines are being delivered as expected. When the remaining order is received, Argo will be the largest publicly listed crypto miner and well positioned to continue growing its profitable Bitcoin mining operation.

Our financial model shows that Argo (at a current price of 5.65p) now trades on an earnings multiple of just 3.3 times our 2020 forecasts. More pertinently however the earnings multiple, incredibly, turns negative on an ex-liquid assets basis as we forecast cash + crypto to exceed the current market cap by the year end. As per the recent analysis in our 5 Picks for 2020 report our stance remains at Conviction Buy.

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• Argo Blockchain