ARGO BLOCKCHAIN PLC
Company Registration No. 11097258 (England and Wales)
ARGO BLOCKCHAIN PLC
ANNUAL REPORT AND FINANCIAL
STATEMENTS FOR THE YEAR ENDED 31
DECEMBER 2023
1
ARGO BLOCKCHAIN PLC
COMPANY INFORMATION
Directors
M I Shaw
T Chippas
R Chopra
M Perrella
P G Wall (resigned 9 February 2023)
A Appleton (resigned 1 February
2023)
S Gow (resigned 8 February 2023)
Company secretary
MSP Corporate Services Limited
Company number
Registered office
Auditor
Broker
Bankers
Registrar
Solicitors
11097258
Argo Blockchain PLC
Eastcastle House
27/28 Eastcastle Street
London
W1W 8DH
United Kingdom
PKF Littlejohn LLP
15 Westferry Circus
Canary Wharf
London
E14 4HD
United Kingdom
Tennyson Securities
65 Petty France
London, United Kingdom
SW1 9EU
Bank of Montreal
129 St-Jacques
Montreal
Quebec
H2Y 1L6
Canada
Computershare Investor Services PLC
The Pavilions
Bridgwater Road
Bristol
BS13 8AE
United Kingdom
Fladgate LLP
16 Great Queen Street
London
WC2B 5DG
United Kingdom
2
ARGO BLOCKCHAIN PLC
CONTENTS
COMPANY INFORMATION........................................................................................................................ 2
CONTENTS ................................................................................................................................................ 3
CHAIRMAN’S STATEMENT ....................................................................................................................... 5
BOARD OF DIRECTORS ........................................................................................................................... 7
STRATEGIC REPORT ............................................................................................................................... 8
DIRECTORS’ REPORT ............................................................................................................................ 14
DIRECTORS’ REMUNERATION REPORT .............................................................................................. 19
NOMINATION COMMITTEE REPORT .................................................................................................... 25
AUDIT COMMITTEE REPORT................................................................................................................. 28
TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURE (TCFD) REPORT ......................... 33
DIRECTORS’ RESPONSIBILITIES STATEMENT ................................................................................... 44
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ARGO BLOCKCHAIN PLC ................ 45
GROUP STATEMENT OF COMPREHENSIVE INCOME ......................................................................... 51
GROUP STATEMENT OF FINANCIAL POSITION ................................................................................... 52
GROUP STATEMENT OF CHANGES IN EQUITY .................................................................................. 54
GROUP STATEMENT OF CASHFLOWS ................................................................................................ 56
NOTES TO THE FINANCIAL STATEMENTS ........................................................................................... 58
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COMPANY INFORMATION...................................................................................................... 58
BASIS OF PREPARATION ...................................................................................................... 58
ACCOUNTING POLICIES ........................................................................................................ 59
FINANCIAL RISK FACTORS ................................................................................................... 66
ADOPTION OF NEW AND REVISED STANDARDS AND INTERPRETATIONS ..................... 68
KEY JUDGEMENTS AND ESTIMATES ................................................................................... 69
REVENUES .............................................................................................................................. 69
EXPENSES BY NATURE ......................................................................................................... 69
AUDITOR’S REMUNERATION ................................................................................................ 70
EMPLOYEES ........................................................................................................................... 70
DIRECTOR’S REMUNERATION .............................................................................................. 70
EARNINGS PER SHARE ......................................................................................................... 71
TAXATION................................................................................................................................ 72
ASSETS AND LIABLITIES HELD FOR SALE ......................................................................... 73
INVESTMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS ........................................... 73
INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD ..................................... 73
INTANGIBLE FIXED ASSETS .................................................................................................. 75
TANGIBLE FIXED ASSETS ..................................................................................................... 76
TRADE AND OTHER RECEIVABLES ..................................................................................... 78
DIGITAL ASSETS..................................................................................................................... 78
SHARE OPTIONS, RESTRICED STOCK UNITS AND WARRANTS ..................................... 79
ORDINARY SHARES ............................................................................................................... 81
RESERVES .............................................................................................................................. 81
3
ARGO BLOCKCHAIN PLC
24.
25.
26.
27.
28.
29.
30.
TRADE AND OTHER PAYABLES ............................................................................................ 82
LOANS AND BORROWINGS ................................................................................................... 82
FINANCIAL INSTRUMENTS .................................................................................................... 83
COMMITMENTS AND CONTINGENCIES............................................................................... 85
RELATED PARTY TRANSACTIONS ....................................................................................... 85
CONTROLLING PARTY ........................................................................................................... 85
POST BALANCE SHEET EVENTS .......................................................................................... 85
COMPANY STATEMENT OF FINANCIAL POSITION ............................................................................. 86
COMPANY STATEMENT OF CHANGES IN EQUITY ............................................................................. 88
COMPANY STATEMENT OF CASH FLOWS ........................................................................................... 90
NOTES TO THE FINANCIAL STATEMENTS .......................................................................................... 91
1.
2.
3.
4.
5.
6.
TRADE AND OTHER RECEIVABLES / INTERCOMPANY ..................................................... 91
TRADE AND OTHER PAYABLES ........................................................................................... 91
FINANCIAL INSTRUMENTS ................................................................................................... 92
INVESTMENT IN SUBSIDIARIES AND LOSS ON SALE OF SUBSIDIARY ........................... 93
KEY JUDGEMENTS AND ESTIMATES .................................................................................. 94
EMPLOYEES ........................................................................................................................... 94
4
ARGO BLOCKCHAIN PLC
CHAIRMAN’S STATEMENT
We began 2023 on the heels of a transformational and strategic pivot in our operations. In December 2022 we sold
the Helios facility, which we designed, constructed, and energized over the course of 2021 and 2022. The
transaction strengthened our balance sheet through $41 million of debt reduction and through a refinance of our
remaining machine-backed loans with a new asset-backed loan from Galaxy Digital Holdings Ltd. (“Galaxy”).
Argo maintained ownership of its entire fleet of mining machines, including roughly 23,600 Bitmain S19J Pro
machines that were operating at Helios prior to the sale. Those miners remained in situ and continued to operate
pursuant to a hosting agreement with Galaxy. Currently, approximately 2.4 EH/s of total hashrate capacity is
deployed at Helios, and the machines continue to perform very well in the custom-designed immersion-cooled
facility.
The hosting agreement with Galaxy allows Argo to share in the proceeds from economic curtailment, which occurs
when Helios monetizes its fixed-price PPA during periods of high power prices. During the year, Argo generated
approximately $7.2 million in power credits, with $3.8 million generated in the month of August during a state-wide
heat wave. Not only does the ability to curtail operations benefit Argo economically, but it greatly enhances the
stability of the Texas grid.
Throughout the year, the Company focused on three key pillars: financial discipline, operational excellence, and
strategic partnerships for growth.
Financial discipline
After the sale of the Helios facility, the Company was able to significantly reduce its operating expenses. During the
first quarter alone, Argo reduced its non-mining operating expenses by 68% compared to the run rate in the second
half of 2022. The Company has been able to sustain these cost reductions, achieving a 58% reduction in non-mining
operating expenses for the full year 2023 compared to the prior year.
The Company has also made progress in strengthening its balance sheet by reducing debt. For the full year 2023,
the company reduced its debt by $13 million to $66 million. Most of the debt reduction was focused on the asset-
backed loans with Galaxy through monthly amortization, supplemented by additional prepayments throughout the
year. The prepayments were funded with proceeds of non-core asset sales and a portion of the proceeds from an
equity raise completed in July 2023.
In addition, subsequent to year end, the Company paid down an additional $12 million using a portion of proceeds
raised through an equity raise in January 2024, the proceeds of the sale of non-core assets, including the Mirabel
facility, and $3 million through monthly amortization payments. As of March 31, 2024, the debt balance owed to
Galaxy was $13 million, and total debt was $54 million.
Operational excellence
After selling the Mirabel facility in March 2024, Argo continues to own and operate its data center in Baie Comeau,
Quebec. The Baie Comeau site is over 40,000 square feet and has 15 MW of 99% renewable power capacity
sourced from the nearby Baie Comeau hydroelectric dam.
During the third quarter of 2023, the Company deployed approximately 2,750 BlockMiner machines from ePIC
Blockchain Technologies, representing approximately 300 PH/s, at its Quebec facilities. This deployment increased
the Company’s total hashrate capacity by approximately 300 PH/s. As of 31 March 2024, taking into account the
sale of certain prior generation machines that occurred in conjunction with the sale of the Mirabel facility, the
Company’s total hashrate capacity is 2.7 EH/s.
Additionally, the Company has the ability to expand its capacity at Baie Comeau from 15 MW to 23 MW. The local
municipality has approved the expansion, and the Company is in the evaluation phase of this project.
Growth and strategic partnerships
The Company continues to explore opportunities where mining can be paired with stranded or wasted energy. There
is tremendous potential for energy generators to utilize mining as a balancing and optimization tool, particularly in
the energy transition where limitations currently exist in the ability to store renewable energy. Argo is evaluating
several projects with companies across the energy value chain.
Financial results
Revenue in 2023 was $50.6 million, compared to $58.6 million in 2022. Non-mining operating expenses were $18.8
million, a significant decrease from $34.1 million in 2022. Adjusted EBITDA was $8.3 million, compared to $(46.7)
million in 2022. Loss attributable to shareholders totaled $35.0 million. In 2023, total capital expenditures were $5.2
million. Our cash balance at December 31, 2023 was $7.4 million.
5
ARGO BLOCKCHAIN PLC
Operating results
With the deployment of the BlockMiners at its Quebec facilities, the Group’s total hashrate capacity increased by
12% from 2.5 EH/s in June 2023 to 2.8 EH/s by September 2023. Argo’s mining margin averaged 44% for the full
year 2023, which is lower than the 54% mining margin achieved in 2022. The decrease in mining margin from 2022
was driven primarily by the 71% increase in average network difficulty in 2023.
Bitcoin macro environment
While 2022 was a challenging year for Bitcoin with several macroeconomic headwinds, 2023 provided a bit of a
reprieve for miners. After starting the year at $16,616, the Bitcoin price experienced a rapid increase in March 2023
amidst a period of distress in the regional banking sector, climbing 21% during the month. Additionally, the price
saw a steady increase during the second half of the year as speculation intensified about the impending January
2024 deadline for the approval of Bitcoin Spot ETFs by the US Securities and Exchange Commission (post the
period end, the ETFs were approved by the SEC on 10 January 2024). By the end of 2023, the price of Bitcoin had
increased to $42,208, a 154% increase for the year.
Another tailwind for Bitcoin miners was the growth of transaction fees from the introduction of ordinals and
inscriptions. Transaction fees on the Bitcoin network more than quadrupled in 2023 compared to the prior year.
There was a large but temporary spike in transaction fees in May, along with longer periods of elevated fees in
November and December from increased ordinal and inscription activity.
The increase in Bitcoin price, combined with growth in transaction fees, enabled hashprice to climb from $60 per
petahash per day at the end of 2022 to $98 per petahash per day at the end of 2023, which is a 64% increase during
the year. The growth in hashprice was not as dramatic as the increase in Bitcoin price or transaction fees because
it takes into account the network difficulty, which increased by 104% during the year to account for significant growth
in the global hashrate.
Commitment to sustainability
Since inception, Argo has always maintained a strong focus on environmental sustainability. This is why we located
our mining operations in Quebec, where they are powered by hydroelectricity, and the Texas Panhandle, where
more than 85% of the installed generation capacity comes from renewable sources.
To our knowledge, we are the first publicly traded cryptocurrency mining company to publish a report in accordance
with the Task Force on Climate-related Financial Disclosures (“TCFD”) Recommendations and Recommended
Disclosures (see page 32).
Leadership changes
On 30 January 2023, Chief Financial Officer and Executive Director Alex Appleton resigned from his positions at
Argo to pursue other opportunities. After a formal recruitment process led by an executive search firm, the Board
appointed Jim MacCallum as Chief Financial Officer effective 5 April 2023.
On 9 February 2023, Chief Executive Officer and Interim Chairman Peter Wall resigned from his positions at Argo
to pursue other opportunities. Matthew Shaw became Chairman of the Board, and the Board appointed Chief
Operating Officer Seif El-Bakly to serve as Interim CEO.
On 27 November 2023, after a formal recruitment process led by an executive search firm, the Board of Directors
appointed Thomas Chippas as Chief Executive Officer and Executive Director. Seif El-Bakly returned to his role as
Chief Operating Officer.
On 5 January 2024, Seif El-Bakly resigned from his position to pursue other opportunities.
Strategic focus in 2024
With the Bitcoin halving occurring in April 2024, the Company’s priorities in the first quarter of 2024 continued to
involve a strong focus on financial discipline, operational excellence, and modest growth in operations. We believe
that our efficient fleet, stable and competitive power prices, and strengthened balance sheet make us well-positioned
for a post-halving environment.
On behalf of the Board, I would like to thank all of our shareholders and stakeholders. I am excited for Argo to
continue in its mission of powering the world’s most innovative and sustainable blockchain infrastructure.
Matthew Shaw
Chairman of the Board
24 April 2024
6
ARGO BLOCKCHAIN PLC
BOARD OF DIRECTORS
Matthew Shaw (Chairman of the Board)
Matthew Shaw has served on our board of directors since July 2019, and he became Chairman of the Board in
February 2023. He brings over 25 years of experience as an international banker, corporate adviser, and serial
entrepreneur. He has been specializing in the blockchain and cryptocurrency sector since 2017. He is currently Chief
Executive Officer of Webslinger Advisors, a specialist web3 advisory and administration firm which provides services
to Cayman Foundations/DAOs. He previously co-founded Protos Asset Management, a Swiss company that
manages a cryptocurrency fund, and co-founded DeFi Yield Technologies, a DeFi firm acquired by Dispersion
Holdings (now AQRU). He is also currently Chief Executive Officer of Blimp Technologies and is also president of a
proprietary family investment company. Mr. Shaw holds a B.A. in English Language and Literature from Manchester
University and an M.B.A. from Bradford University.
Thomas Chippas (Chief Executive Officer and Executive Director)
Thomas Chippas has served as our Chief Executive Officer since November 2023. Mr. Chippas is a seasoned
executive with significant experience in digital assets, technology, and financial services. Most recently he served
as the Chief Executive Officer of CBOE Digital where he was also a former member of its Board of Directors. He
has previously held the positions of Chief Executive Officer of Citadel Technology LLC, Chief Operating Officer of
Axoni and Managing Director of Citigroup, Barclays and Deutsche Bank. He currently serves as a director of TS
Imagine. Mr. Chippas graduated from the University of Illinois with a BSc, Accounting.
Raghav Chopra (Non-Executive Director)
Raghav Chopra is an investor with over 16 years of experience and is currently Managing Partner of Tephra Digital,
a privately held digital assets investment firm. He was previously a Portfolio Manager for AllianceBernstein LP and
has managed a significant and wide range of technology investments at leading hedge funds. Prior to that, Mr.
Chopra was an Associate in private equity at The Carlyle Group and an Analyst in investment banking at Goldman,
Sachs & Co. Mr. Chopra serves on the Board of the Harvard Club of New York City Foundation and is a member of
the Economic Club of New York. Mr. Chopra holds a B.S. in Electrical Engineering and Economics with Distinction
from Yale University, and an M.B.A. with High Distinction from the Harvard Business School, where he was named
a George F. Baker Scholar.
Maria Perrella (Non-Executive Director)
Maria Perrella has served on our board of directors since July 2021. Over the last 25 years, Ms. Perrella has held
several senior leadership positions and currently Maria Perrella serves as Chief Financial Officer of Samuel, Son &
Co., a leading metals distributor and industrial products manufacturer. Previously, she served as the Chief Financial
Officer of MDA, a Canadian-based international space mission partner, and she spent the previous 12 years at
Automation Tooling Systems Inc. (ATS)(ATA.TSX), when it was a TSX-listed automation company with over 4,500
employees across six countries. Her various roles have allowed her to develop skills in financial planning and
corporate governance and compliance, and her many years as a Chief Financial Officer have provided her with
extensive experience in mergers and acquisitions, capital markets, and strategic corporate finance. Maria graduated
from the Schulich School of Business (BBA) and is a Chartered Public Accountant in Ontario, Canada.
7
ARGO BLOCKCHAIN PLC
STRATEGIC REPORT
The directors present their strategic report on the Group for the year ended 31 December 2023.
Principal activity
The Group’s principal activity is that of cryptocurrency mining.
Review of the business and future developments
Argo Blockchain plc (the “Company”) was incorporated on 5 December 2017. Argo Blockchain plc is the parent
holding company of the Argo group of companies including Argo Innovation Labs Inc., a British Columbia, Canada
Corporation, and Argo Operating US LLC, a Delaware, United States Limited Liability Corporation (collectively
“Argo” or “the Group”).
On 3 August 2018 the Company’s Ordinary Shares were admitted to the standard segment of the Official List
maintained by the Financial Conduct Authority and to trading on the London Stock Exchange’s Main Market. The
Company’s Ordinary Shares traded on the OTCQB® Venture Market under the ticker symbol “ARBKF” from 13
January 2021 until 23 February 2021, and traded on the OTCQX from 24 February 2021 to 31 December 2022.
The Company’s American Depositary Shares (ADSs) have traded on the Nasdaq Stock Market (“Nasdaq”) since
24 September 2021.
The Chairman’s statement provides an in-depth review of 2023, so this strategic report is instead looking forward
to the plans and intentions of the Group.
2024 began with an exciting catalyst for Bitcoin with the SEC’s approval of the Bitcoin Spot ETF product on 10
January 2024. This event was widely anticipated across the industry and was preceded by a 39% increase in the
price of Bitcoin in the second half of 2023.
The other key catalyst for Bitcoin is the halving, which occurred on 19 April 2024. The halving is a feature of the
Bitcoin network whereby the block reward is reduced by 50% every 210,000 blocks, or roughly every four years. In
prior halving cycles, the price of Bitcoin has experienced significant appreciation in the months following the halving.
However, there is no guarantee that Bitcoin will follow the same pattern during this halving cycle.
As we approached the halving, the Company’s balance sheet had improved significantly following a $10 million
equity raise completed in January 2024, the sale of the Mirabel facility, and the focus on paying down debt,
particularly with Galaxy.
Group strategy and business model
We are targeting a balance between owning and operating our own mining facilities and utilizing third party facilities
with access to reliable, low-cost and renewable energy. Throughout the Company’s history, we have invested in
purchasing, building and operating mining facilities. We will continue to explore the acquisition and development of
future mining facilities that provide opportunities to utilize wasted or stranded energy. This could include using
mobile and/or modular mining infrastructure. We will continue to evaluate opportunities from hosting providers that
offer reliable, low-cost, and clean power in order to balance the gap between our available capacity and the power
needed to run our mining operations.
We believe the combination of increased mining difficulty, driven by greater network hashrate, and the periodic
adjustment of reward rates, such as the recent halving of Bitcoin rewards, will increase the importance of power
efficiency in cryptocurrency mining over the long term. As a result, we are focused on deploying our mining
machines at locations with access to reliable clean power sources, as successfully doing so should enable us to
reduce our power costs.
Performance of the business during the period and the position at the end of the year
The financial results for 2023 reflect a year of rising Bitcoin prices, partially offset by significant growth in the global
hashrate, which resulted in a 71% higher average network difficulty for the year. During the year, Argo grew its
mining fleet by 12%, from a total hashrate capacity of 2.5 EH/s to 2.8 EH/s.
8
ARGO BLOCKCHAIN PLC
)
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$18.0
$16.0
$14.0
$12.0
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$8.0
$6.0
$4.0
$2.0
$-
$16.2
$11.4
$12.6
$10.4
$5.6
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$5.5
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40%
30%
20%
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g
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Q1 2023
Q2 2023
Q3 2023
Q4 2023
Revenue
Mining Profit
Mining Margin
Key performance indicators
The Board monitors the activities and performance of the Group on a continuing basis. The main performance
indicators applicable for the Group is mining revenue and mining profit.
KPI
Mining revenue ($000s)
Mining profit1 ($000s)
Mining margin
Bitcoin mined (number)
Total hashrate capacity (EH/s)
Average network difficulty (T)
2023
$50,558
$21,756
43%
1,760
2.8
40.4
2022
$58,464
$31,705
54%
2,156
2.5
30.4
% Change
(14%)
(31%)
(10%)
(18%)
12%
33%
1. Mining profit defined as mining revenue minus direct costs (excluding depreciation and amortization of mining
equipment).
9
ARGO BLOCKCHAIN PLC
Non-IFRS Reconciliation
The following table shows a reconciliation of Bitcoin Mining Margin to gross margin, the most directly comparable
IFRS measure, for the years ended December 31, 2023 and December 31, 2022.
Year ended
Year ended
31 December
31 December
2023
$’000
2022
$’000
Gross profit/(loss)
3,839
(42,623)
Depreciation of mining equipment
Change in fair value of digital currencies
Other revenue
Mining profit
Bitcoin Mining Margin
18,656
(738)
—
21,757
43%
20,469
53,978
(119)
31,705
54%
The following table shows a reconciliation of Adjusted EBITDA to net income/(loss), the most directly comparable
IFRS measure, for the years ended December 31, 2023 and December 31, 2022.
Year ended
Year ended
31 December
31 December
2023
$’000
2022
$’000
(35,033)
11,556
(228,961)
22,661
20,129
29,003
—
(11,731)
(3,348)
(189,028)
855
1,082
(428)
(36)
—
(1,597)
4,969
3,892
716
55,838
5,155
—
55,418
23,228
(21,337)
11,862
6,096
6,027
Net income/(loss)
Interest expense
Depreciation / amortisation
Income tax (credit) / expense
EBITDA
Impairment of assets
Impairment of intangible assets
Loss/(gain) on disposal of intangible fixed assets
Loss/(gain) on sale of subsidiary and investments
Loss on sale of fixed assets
Foreign exchange
Restructuring and transaction-related fees
Share based payment charge
Equity accounted loss from associate
10
ARGO BLOCKCHAIN PLC
Write off of investment in associate
Adjusted EBITDA
Principal risk and uncertainties
2,236
8,341
—
(46,741)
While the Group focuses on self-mining, the Board considers the principal risks for the Group to be volatility in the
cryptocurrency market, specifically downside risk to Bitcoin, energy price risk, access to the capital markets, and
general sentiment regarding crypto assets as a whole. The Group operates in an uncertain environment and is
subject to a number of risk factors. The Board considers the following to be of particular relevance, but this is by no
means an exhaustive list as there may be other risk factors not currently known.
Market conditions
Market conditions, including the cryptocurrency market values and general economic conditions and their effect on
exchange rates, interest rates, and inflation rates, may impact the ultimate value of the Group regardless of its
operating performance. The Group also faces competition from other organisations, some of which may have
greater resources.
Cyber risk
The Group holds digital assets via software and hardware which may prove to be vulnerable to data security
breaches in the future. Data security breach incidents may compromise the confidentiality, integrity or availability of
data such that the data is vulnerable to access or acquisition by unauthorised persons. These data security
breaches may result in the unrecoverable loss of digital assets. The Group’s hardware devices and remote servers
holding the Group’s data may be breached and result in the loss of valuable data. Loss of the private keys required
to access the digital assets may result in irrecoverable loss of access to the digital assets, which may not be covered
by insurance (whether in full or part). In order to mitigate these risks, the Group holds its assets with third party
specialist crypto-currency custodians with a number of security measures in place.
Cryptocurrency price volatility
Revenues are denominated in cryptocurrency or tokens. These ‘digital assets’ can be subject to high levels of
volatility, and it may not always be possible for the Group to trade out or effectively hedge its position. The Group
will always seek, where practicable, to manage the price volatility risk and actively monitor its portfolio of digital
assets. The majority of the Group’s crypto assets (as per note 22) are stored in Bitcoin, which dominates the crypto
market. Cryptocurrency exchange rates have exhibited strong volatility. Many factors outside of the control of the
Group can affect the market price of cryptocurrencies, including, but not limited to, national and international
economic, financial, regulatory, political, terrorist, military, and other events, adverse or positive news events and
publicity, and generally extreme, uncertain, and volatile market conditions. Extreme changes in price may occur at
any time, resulting in a potential loss of value of our entire portfolio of cryptocurrencies, complete or partial loss of
purchasing power, and difficulty or a complete inability to sell or exchange the Group’s digital currency.
Capital raising
The Group’s activities are capital intensive, and the Company may need to raise additional capital to fund its
operations, pursue growth strategies, including potential acquisitions of complementary businesses, and respond
to competitive pressures or unanticipated working capital requirements. The Company has previously raised equity
and debt however, may not be able to obtain additional debt or equity financing on favourable terms, if at all, which
could impair its growth and adversely affect its existing operations. The Group may be required to accept terms that
restrict its ability to incur additional indebtedness or to take other actions including terms that require it to maintain
specified liquidity or other ratios. In order to mitigate these risks, the Company keeps its financing requirements
under review and actively manages its activities and operations within the resources available to it.
Property and development risk
The Group’s strategy is to balance its operations between owning and operating its own mining facilities and utilising
third party facilities with access to reliable, low cost and clean energy. The development and maintenance of its
own properties could incur unexpected costs, delays or problems, or the properties may have insufficient capacity
for our future expansion. As further capacity is required, the Group will be reliant on implementing upgrades and
further development at its property which may be constrained by local laws, consents or other approvals which may
create delays, unexpected problems or issues that could adversely affect the Group’s ability to develop or operate
the facility. While the Group will take prudent precautions to minimise the risks in such development and expansion,
these may not be successful.
Hosting counterparty risk
The Group relies upon a third-party facility to host and maintain a majority of its miners. Should the third party not
fulfil its obligations to the Group,or should that third party suffer an insolvency or related event, the Group’s
11
ARGO BLOCKCHAIN PLC
operations may be materially and adversely affected. The Group has sought to limit this risk by entering into
contracts with an established third party with a proven track record, however this is not a guarantee of future
performance. The Group has also entered into other agreements with its host, and there is a risk that non-
performance under one agreement could adversely affect the performance under other agreements with the same
counterparty.
Electricity supply and price
The Group’s activities require substantial and sustained electrical provision and its profitability is dependent on
securing acceptable electricity prices. Should electricity not be available in the quantities the Group’s operations
require (whether intermittently or for a sustained period) or should the service be unreliable, the Group’s operations,
revenue and profitability may be materially adversely affected. If the price of electricity increases (whether as a
result of local, national or international events or pressures), the Group’s profitability may be materially adversely
affected.
Technology and supply risks
Argo operates within a highly technological environment where software and hardware are consistently updated.
To ensure the Group remains as a leading provider and stays ahead of its competitors, it needs to continue to invest
in its technology, software, and hardware which requires a large amount of capital. The Group procures its software
and hardware from third party providers and is reliant on those third parties complying with their obligations to the
Group. Should a third party fail to comply with its obligations to the Group, the Group’s operations, revenue and
profitability may be materially adversely affected.
Risk relating to the Group’s business strategy
The Group is dependent on the ability of the directors to identify suitable opportunities and to implement the Group’s
strategy. There is no assurance that the Group’s activities of mining for itself will continue to be successful even
though internal forecasts continue to suggest otherwise.
Dependence on key personnel and management risks
The Group’s business is dependent on retaining the services of a small executive management team, and the loss
of a key individual could have an adverse effect on the future of the Group’s business. The Group’s future success
will also depend in large part upon its ability to attract and retain highly skilled personnel. This risk is managed by
offering compensation plans that are competitive in the current market.
Regulatory risk
The Group operates in a rapidly evolving sector, the regulatory approach to which is not always certain and is still
developing. The Group seeks to comply with all applicable law and regulation, however breach of any regulatory
requirements may give rise to reputational, financial, or other sanctions against the Group. The Board considers
these risks seriously and designs, maintains, and reviews the policies and processes so as to mitigate or avoid
these risks. While the Board has a good record of compliance, there is no assurance that the Group’s activities will
always be compliant.
Litigation risk
The Company is currently subject to a class action lawsuit over alleged misleading statements made by Argo
during the initial public offering of its American depositary shares on Nasdaq in 2021. The case, Murphy vs
Argo Blockchain plc et al, was filed in the Eastern District of New York on 26 January 2023. The Company
refutes all of the allegations and believes that this class action lawsuit is without merit. Argo is vigorously
defending itself against the action.
Promotion of the Company for the benefit of the members as a whole
The directors believe they have acted in the way most likely to promote the success of the Company for the benefit
of its members as a whole, as required by s172 of the Companies Act 2006.
The requirements of s172 are for the directors to:
• Consider the likely consequences of any decision in the long term
• Act fairly between the members of the Company
• Maintain a reputation for high standards of business conduct
• Consider the interests of the Company’s employees
• Foster the Company’s relationships with suppliers, customers and others
• Consider the impact of the Company’s operations on the community and the environment
12
ARGO BLOCKCHAIN PLC
The Company operates as a crypto mining business, which is inherently speculative in nature and, with volatile
revenue, at times may be dependent upon fund-raising for its continued operation. The nature of the business is
well understood by the Company’s members, employees, and suppliers, and the directors are transparent about
the cash position and funding requirements.
The application of the s172 requirements can be demonstrated in relation to the most significant decisions made
during 2023, in addition to the disclosures made in the Directors’ Report and the Strategic Report:
• On 22 March 2023, the Company granted equity awards in the form of restricted stock units (RSUs) to
all employees. The Company’s performance, and therefore long-term value creation, is driven by the
performance of its staff, placing the incentivisation and retention of its staff as a key focus for the
Company’s board and senior management. After careful review of the Company’s existing employee
incentivisation arrangements, it was decided to ensure that all staff have the opportunity to benefit
directly from the Company’s long-term success. In order to ensure their incentivisation is aligned with
creating long-term value for shareholders, the RSUs vest over a three-year period, with the first vesting
occurring twelve months from the date of the grant..
• During 2023, the Company focused its efforts in reducing debt and strengthening the balance sheet. The
Group’s long term success is dependent on a strong financial footing. The Company spent considerable
time and effort to identify sustainable cost savings and utilised all excess cash flow for debt reduction.
As a result, the Company was able to reduce debt by $12.7 million in 2023, providing a significantly
strengthened balance sheet and greater potential for the future.
Responsibilities to local communities
As a crypto mining company with operations in Canada and the United States, the Board is mindful of its
responsibilities to the communities and environments in which it works. The Group sources its electricity from
predominantly renewable sources (hydropower in Canada and wind in Texas) and participates in demand response
programmes to curtail usage in peak times to assist in ensuring resilience of the local power grid. In addition, the
Group has explored ways to capture and usefully utilise the heat generated from its operations, both to improve
efficiency and provide added value. The Group has also taken steps to improve overall efficiency of its operations.
Further details are set out in the Group’s report on the TCFD Recommendations on page 33 of this Annual Report.
Employees
The interests of employees are a primary consideration for the Board; in March 2023, all employees were granted
equity in the Company in order to align incentives and enable employees to share in the future success of the
Group. Personal development opportunities are encouraged and supported.
This report was approved by the Board on 24 April 2024 and signed on its behalf by:
Matthew Shaw
Chairman of the Board
13
ARGO BLOCKCHAIN PLC
DIRECTORS’ REPORT
General Information
The directors present the Annual Report and audited consolidated financial statements for the year ended 31
December 2023.
The Company was incorporated on 5 December 2017. Argo Blockchain plc is the parent holding company of the
Argo group of companies including Argo Innovation Labs Inc., a British Columbia, Canada Corporation, and Argo
Operating US LLC, Inc., a Delaware, United States Limited Liability Corporation.
On 3 August 2018 the Company’s Ordinary Shares were admitted to the standard segment of the Official List
maintained by the Financial Conduct Authority and to trading on the London Stock Exchange’s Main Market. The
Company’s Ordinary Shares traded on the OTCQB® Venture Market under the ticker symbol “ARBKF” from 13
January 2021 until 23 February 2021, and traded on the OTCQX from 24 February 2021 to 31 December 2022. The
Company’s American Depositary Shares have traded on Nasdaq since 24 September 2021.
Future developments
The Group continues to focus its strategy on self-mining cryptocurrencies as detailed further in the Strategic
Report.
Dividends
The directors do not propose a dividend in respect of the period ended 31 December 2023 (2022: nil).
Directors
The Board is responsible for the Company’s objectives and business strategy and its overall supervision.
Acquisition, divestment and other strategic decisions will all be considered and determined by the Board including,
when circumstances permit, whether the payment of dividends, issue or buy back of shares is appropriate.
Attendance at Board meetings:
Member
Matthew Shaw
Maria Perrella
Raghav Chopra
Thomas Chippas*
Peter Wall**
Meetings attended
while a director
28 of 31
27 of 31
28 of 31
2 of 2
6 of 7
Alex Appleton***
Sarah Gow****
1 of 5
3 of 7
* Effective 27 November 2023, Thomas Chippas was appointed as Chief Executive Officer and executive director.
** Effective 9 February 2023, Peter Wall resigned from his positions as Chief Executive Officer and Interim
Chairman of the board of directors to pursue other opportunities.
*** Effective 30 January 2023, Alex Appleton resigned from his positions as Chief Financial Officer and executive
director to pursue other opportunities.
**** Effective 8 February 2023, Sarah Gow resigned from her position as non-executive director on the board
of directors for health reasons.
The Board leads the Company within a framework of appropriate and effective controls. The Board has
responsibility for establishing, operating, and monitoring the corporate governance values of the Company. The
Board also has overall responsibility for setting the Company’s strategic aims, defining the business objective,
managing the financial and operational resources of the Company and reviewing the performance of the officers
and management of the Company’s business. The Board has taken appropriate steps to ensure that the Company
complies with Listing Principles 1 and 2 as set out in Chapter 7 of the Listing Rules and (notwithstanding that they
only apply to companies with a Premium Listing) the Premium Listing Principles as set out in Chapter 7 of the Listing
Rules.
The Company supports the concept of an effective Board leading and controlling the Company. The Board is
responsible for approving Company policy and strategy. It meets regularly and has a schedule of matters specifically
reserved to it for decision. Management supplies the Board with appropriate and timely information and the directors
14
ARGO BLOCKCHAIN PLC
are free to seek any further information they consider necessary. All directors have access to advice from the
General Counsel and independent professionals at the Company’s expense. Training is available for new directors
and other directors as necessary.
All directors are subject to re-election every three years and, on appointment, at the first AGM after appointment.
In 2021, the Company established a nomination committee. Prior to this, and given the size of the Board, all director
appointments were approved by the Board as a whole.
Communications with shareholders
Communications with shareholders are given a high priority. In addition to the publication of an annual report and
an interim report, there is regular dialogue with shareholders and analysts. The Annual General Meeting is viewed
as a forum for communicating with shareholders, particularly private investors. Shareholders may question the
Chairman and other members of the Board at the Annual General Meeting. All published information for
shareholders is also available on the Company website, including annual and interim reports, circulars,
announcements and significant shareholdings.
Accountability and audit
The Board presents a balanced and understandable assessment of the Company's position and prospects in all
interim and price sensitive reports to regulators as well as in the information required to be presented by statutory
requirements.
The Company’s Audit Committee has responsibility to supervise and review the Company’s audit and financial
procedures. In relation to the activities of the Audit Committee during the year, please see the Audit Committee
Report in this Annual Report.
Internal control
The Board has responsibility for designing and implementing systems of internal control and for reviewing the
effectiveness of these systems. The risk management process and systems of internal control are designed to
manage rather than eliminate the risk of the Company failing to achieve its strategic objectives. It should be
recognised that such systems can only provide reasonable and not absolute assurance against material
misstatement or loss. The Company will continue to review and develop its internal systems and processes.
Political donations and political expenditure
The Group did not make any political donations or expenditure during the year under review.
Directors’ and officers’ liability insurance and directors’ indemnities
The Company maintains directors’ and officers’ liability insurance, which gives appropriate cover for legal action
brought against its directors. Qualifying third-party indemnity provisions for the benefit of the Company’s directors,
secretary and other officers were in force during the year ended 31 December 2023 and to the date of this report.
In addition, the Company has agreed to indemnify former directors of the Company in respect of their appointments
as directors of the Company.
Financial Instruments
Information about the use of financial instruments by the Company and its subsidiaries is given in note 26 to the
financial statements.
Activities in the field of research and development
During the year under review, the Group did not have any material activities in the field of research and
development.
Post balance sheet events
On 8 January 2024, the Company raised $9.9 million of gross proceeds via a non-preemptive placing of 38,064,000
new ordinary shares to institutional investors in the UK. The proceeds were used for general corporate purposes
and to repay a portion of the Galaxy Loan.
Mirabel asset sale
In March 2024, a purchase and sale agreement was signed for the sale of 9366-5230 Quebec Inc. (“Mirabel”) for
approximately $6.1 million. The net proceeds from this sale, after the payment of the mortgage and other costs,
was used to pay down the Galaxy debt.
Directors and directors’ interests
The directors who held office at the date of signature of the financial statements were as follows:
15
ARGO BLOCKCHAIN PLC
Director
Appointment/resignation
during the year
Matthew Shaw (Chairman of the Board, Chair of the Nomination Committee)
Appointed 17 July 2019
Thomas Chippas (Chief Executive Officer)
Appointed 27 November 2023
Maria Perrella (Chair of the Audit and Remuneration Committees, Member of
the Nomination Committee)
Appointed 29 July 2021
Raghav Chopra (Member of the Audit and Remuneration Committees)
Appointed 23 February 2022
Directors’ share holdings
Director
Matthew Shaw
Thomas Chippas
Maria Perrella
Raghav Chopra
Ordinary Shares, PSUs, RSUs
and ADSs at 31 December
2023
Percentage of Issued Share
Capital
137,289 Ordinary Shares
2,850,000 PSUs on ADS
6,000 ADS
Nil
0.02%
5.35%
0.01%
Nil
Directors’ option holdings
Name
Date of Grant
Aggregate
number of
options over
Ordinary Shares
granted
Exercise Price
Exercise
Conditions
Lapse Date
Matthew Shaw
17 July 2019
537,037
16 pence
Matthew Shaw
5 Feb 2020
294,048
7 pence
Maria Perrella
22 Sept 2021
500,000
157 pence
Raghav Chopra
23 May 2022
500,000
49 pence
1/3 on the first
anniversary of
admission, 1/36
of the total
options monthly
thereafter
1/12 per month
commencing of
4th month from
issue
6/36th after 6
month
anniversary,
1/36th thereafter
6/36th after 6
month
anniversary,
1/36th thereafter
17 July 2025
4 Feb 2030
21 Sept 2031
23 May 2032
Going Concern
The directors, having made due and careful enquiry, are of the opinion that the Group has adequate working
capital to meet its obligations over the next 12 months. The directors therefore have made an informed
16
ARGO BLOCKCHAIN PLC
judgement, at the time of approving the financial statements, that there is a reasonable expectation that the Group
has adequate resources to continue in operational existence for the foreseeable future. As a result, the directors
have adopted the going concern basis of accounting in the preparation of the annual financial statements, more
detail can be found in the accounting policies. However, the Board notes that the significant debt service
requirements and the volatile economic environment indicate the existence of material uncertainties that may
cast significant doubt regarding the applicability of the going concern assumption, and the auditors have made
reference to this in their audit report (Note 3).
Financial Risk Management
The Group has a simple capital structure and its principal financial assets are cash and digital assets. The Group
is subject to market risk by way of being exposed to volatility in crypto asset value and variations in foreign
exchange rates. The Group has little exposure to credit risk due to holding its reserves with credible institutions.
The Group may also be exposed to liquidity and capital risk, due to the nature of operations and the requirements
for mining hardware acquisition. The Group manages these risks through portfolio management and maintenance
of sufficient working capital. Further details of risks can be seen within the Strategic Report or in the Notes to the
accounts.
Capital Structure
The Company’s capital structure is comprised of one class of ordinary shares. There are no restrictions on the
transfer of the ordinary shares, and there are no persons holding securities carrying special rights regarding the
control of the Company. The rights over shares under the Company’s employee share schemes are set out in
Note 21 of the financial statements. There are no restrictions on voting rights nor, so far as the Company is
aware, any agreements between holders of securities that may restrict the transfer of securities or voting rights.
Substantial shareholders
There are no substantial shareholders as at the date of the report.
Controlling shareholder
The Group does not have a controlling shareholder.
Directors
The Company’s directors are appointed in accordance with, and have the powers and authorities set out in, the
Company’s articles of association.
Takeovers
Other than potential lump sum payments due under certain employment contracts and equity award vesting for
management, there are no significant agreements that take effect, alter or terminate on a change of control of the
Company following a takeover. Other than the entitlement to a notice period and reimbursement of expenses in
the normal manner, there are no agreements with the Company and its directors or employees for compensation
for loss of office or employment as a result of a takeover bid.
Greenhouse gas emissions
Details about the Group’s greenhouse gas emissions, energy consumption, energy efficiency disclosures, and
broader climate risk management strategies are included in the TCFD Report on page 33.
Employee and business relationships
The Board consists of the Chief Executive Officer and 3 Non-executive directors, and the Group’s senior
management consists of 8 key management personnel, including the Chief Executive Officer and the Chief
Financial Officer. This facilitates the direct and frequent communication between all parties and the Board. Due
to the nature of a small team and the wide and varied skills possessed, key strategic business decisions are
generally discussed and analysed by all concerned, ensuring all relevant interests and perspectives are
considered and addressed in the decision making process.
A significant part of any business is maintaining a good relationship with its suppliers, and the Group is well aware
of the need to ensure that its current main supplier Galaxy, which provides hosting services for the Group’s
machines at Helios and has provided the Group an asset-backed loan, is managed carefully. We maintain a close
working relationship with Galaxy with regular meetings and an open dialogue, and we continue to meet our
accounts payable as they fall due. As a result, the Group has considered the strategic and longer term impact of
decisions relating to its current and future relationships with its material suppliers and lenders and has sought to
ensure that any decisions made appropriately balance the short, medium and long term objectives of the Group,
with a view to generating and maintaining long term shareholder value.
17
ARGO BLOCKCHAIN PLC
Diversity Policy
Given the Company’s current stage of development, its organizational structure and limited headcount, the Board
considers that a formal diversity policy would not be practicable for the Company to develop and implement and
would not improve the Group’s policies or processes in a meaningful manner. The Company and the Board
already integrate equality and diversity in all aspects of the Company’s business and all decisions are made on
merit and without regard to protected characteristics. Where appropriate and practicable for the Company, the
Company considers and implements positive actions to enable the Company to provide additional support. This
can include, for example, making adjustments to assist staff and ensuring that, to the extent possible, all relevant
perspectives are included in decision making on an ongoing basis.
The Company will keep the requirement for a formal diversity policy under review and will give serious
consideration to the adoption of a policy, tailored to the nature of the Company’s business, its operations and
resources at the appropriate point.
Provision of Information to Auditor
So far as each of the Directors is aware at the time this report is approved:
there is no relevant audit information of which the Company's auditor is unaware; and
the Directors have taken all steps that they ought to have taken to make themselves aware of any
relevant audit information and to establish that the auditor is aware of that information.
•
•
Auditors
The auditors, PKF Littlejohn LLP have indicated their willingness to continue in office, and a resolution that they
be re-appointed will be proposed at the annual general meeting.
This report was approved by the Board on 24 April 2024 and signed on its behalf by:
Matthew Shaw
Chairman of the Board
18
ARGO BLOCKCHAIN PLC
DIRECTORS’ REMUNERATION REPORT
2023 key achievements:
• Utilised the Company’s equity incentive plan to offer suitably tailored equity incentivisation to the Group’s
employees across the globe;
• Completed a comprehensive review of remuneration, including benchmarking and standardization of
roles as compared to peers. This enabled the Group to continue to attract, retain and develop talent in a
competitive labour market while remaining mindful of challenging market conditions and the recent 2024
halving; and
• Explored and executed employee retention strategies including supporting internal growth opportunities.
2024 areas of focus:
•
Launch the equity administration platform to streamline compliance and financial reporting related to the
employee incentive plan;
• Continue with comprehensive review of remuneration; and
• Refine and improve employee growth and retention strategies, including focused work on organizational
architecture, performance management and goal-setting.
Letter from the Chair of the Remuneration Committee
Dear Shareholders,
I am pleased to introduce the Directors’ Remuneration Report for the year ended 31 December 2023.
The Remuneration Committee met twice during the financial year, and all of the Directors on the Committee attended
both of these meetings. Its role is to formally oversee matters relating to compensation, including benchmarking
remuneration against comparable peers, the adoption of a new equity incentive plan, and the grant of awards under
that plan to align the remuneration of our team with the interests of our shareholders.
The Remuneration Committee consists of myself, as Chair, and Raghav Chopra as member. In February 2023, I
became Chair, replacing Sarah Gow who stepped down (as detailed below), Matthew Shaw moved off the
Committee following his appointment as Chairman, and Raghav Chopra was appointed as his replacement. The
Committee has discretion to invite members of the executive management of the Company to the meetings as
required and considers the input and recommendation of executive management to be critical to ensuring a well-
developed remuneration strategy. Therefore, executive management were invited to present to the committee at
the appropriate junctures during the year. In order to ensure appropriate scrutiny of decisions, no director was
present when their own remuneration was considered, approved, or voted upon.
The Group’s primary remuneration challenge is the different market norms and expectations between the
jurisdictions in which it operates. The reward markets in the UK and US have significant differences, particularly in
the technology sector, and market expectations in the UK can present challenges to the Group in structuring
attractive remuneration packages, particularly for the Company’s senior executive leadership. More generally, the
Group is also competing against significantly larger and better capitalised companies in the cryptoasset sector, who
do not have the same limitations.
During the year under review, the Company’s remuneration strategy was to deliver remuneration packages
consistent with the Company’s Remuneration Policy and market norms that provide a balanced structure of short,
medium, and longer-term remuneration. Remuneration packages typically comprised a competitive base salary,
appropriate annual bonuses and longer-term equity incentivisation. In addition, the Company has offered
competitive benefit and pension offerings based on the market norms in the country in which the relevant team
member is engaged.
The Committee took the following key decisions in relation to remuneration during the year:
•
•
•
approved a robust organization-wide compensation audit and subsequent strategy to ensure equity
across company levels and standardization of the Company’s compensation and total reward offerings
to each employee group;
approved the Company’s first Restricted Share Unit and Performance Share Unit awards which worked
to strengthen the alignment of corporate strategies with every role, at every level, within the organization;
and
approved a cost of living salary increase for staff in direct response to the persistent inflationary pressures
and to remain market competitive.
The Committee remains focused on ensuring that the Group’s remuneration policy is implemented through an
19
ARGO BLOCKCHAIN PLC
appropriate remuneration strategy that enables the Group to attract, retain and develop appropriately skilled and
experienced staff sufficient for the Group’s present and anticipated requirements. The Committee is also determined
to ensure that remuneration incentivises staff to deliver on both financial and non-financial objectives.
Following the year under review, the Company made separation payments to Seif El-Bakly in respect to his
resignation and subsequent support to the Company through his transition period. Details of these payments will
be included in the Company’s next annual report.
The Committee determined Mr. Chippas’, Mr. El-Bakly’s and Mr. MacCallum’s remuneration for serving as CEO,
Interim CEO, and CFO, respectively, based on a review of benchmarking against relevant comparables in the
market.
Maria Perrella
Chair of the Remuneration Committee
24 April 2024
20
ARGO BLOCKCHAIN PLC
Directors Remuneration Report
Membership of the Remuneration Committee
During the year, the Company’s Remuneration Committee consisted of Maria Perrella and Raghav Chopra. Maria
Perrella served as Chair of the committee.
Role of the Remuneration Committee
The Remuneration Committee’s role is to determine and operate a remuneration policy that supports the
Company’s strategy and promotes long-term sustainable success and aligns the interests of directors with
shareholders.
The Remuneration Committee’s primary responsibilities include:
●
identifying, reviewing and proposing policies relevant to executive officer compensation;
● evaluating each executive officer’s performance in light of such policies and reporting to the Board;
● determining any long-term equity incentive component of each executive officer’s compensation in line
with the remuneration policy and reviewing its executive officer compensation and benefits policies
generally and
●
reviewing and assessing risks arising from the Company’s compensation policies and practices.
Advisors to the Committee
None.
Directors' remuneration (audited)
Details of directors’ remuneration during the year ended 31 December 2023 is as follows:
Director
Salary and
fees
Bonus
Stock
compensation
Loss of
Office
2023 Total
Fixed
element
Variable
element
USD
USD
USD
USD
USD
USD
USD
Executive Directors
T Chippas*
P Wall**
A Appleton***
38,512
85,766
20,905
Non-executive Directors
M Shaw*
R Chopra
M Perrella*
S Gow ****
Total
170,554
135,105
129,752
10,601
591,195
—
—
—
—
—
—
—
—
273,125
—
70,627
152,317
87,805
304,633
27,925
—
618,614
145,833
311,637
704,380
38,512
85,766
237,365
20,905
—
—
—
—
322,871
135,644
222,910
434,385
38,526
125,934
124,340
10,601
273,125
618,614
216,460
187,227
96,976
310,045
27,925
916,432
764,447
2,272,074
541,702
1,730,372
* Stock based compensation is in relation to the fair value charge during the year. Thomas Chippas received a grant of 2,850,000
PSUs with a total fair value of $3,277,500 during the period vesting over a maximum of 3 years, of which the fair value charge during
the year was $273,125.
** Peter Wall resigned as a director with effect from 9 February 2023.
*** Alex Appleton resigned as a director with effect from 1 February 2023.
**** Sarah Gow resigned as a director with effect from 8 February 2023.
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ARGO BLOCKCHAIN PLC
Details of directors’ remuneration during the year ended 31 December 2022 is as follows:
Director
Salary and
fees
USD
Bonus
USD
Stock
compensation
USD
Loss of
Office
USD
2022 Total
USD
Fixed
element
USD
Variable
Element
USD
Executive Directors
P Wall
419,585
186,627
219,377
A Appleton
309,225
493,887
—
Non-executive Directors
M Shaw
R Chopra
M Perrella
S Gow
133,867
130,483
148,679
87,077
—
—
—
—
—
264,594
—
—
Total
1,228,916
680,514
483,971
Total pension entitlements (audited)
—
—
—
—
—
—
—
825,589
419,585
803,112
309,225
406,004
493,887
133,867
395,077
72,022
68,638
148,679
86,834
87,077
87,077
61,845
326,439
61,845
—
2,393,401 1,043,381 1,350,020
The Company currently does not have any pension plans for any of the directors and does not pay pension
amounts in relation to their remuneration.
The Company has not paid out any excess retirement benefits to any directors or past directors.
Payments to past directors (audited)
The Company has not paid any compensation to past Directors.
Statement of directors’ shareholding and share interests (audited)
The Directors who held office at 31 December 2023 and who had beneficial interests in the Ordinary Shares of
the Company are summarised as follows:
Director
Maria Perrella
Matthew Shaw
Details of these beneficial interests can be found in the Directors' Report.
Service Agreements and Letters of Appointment
Position
Non-Executive Director
Non-Executive Director
On 27 November 2023, the Company entered into an employment contract with Thomas Chippas, pursuant to which
Mr. Chippas serves as our Chief Executive Officer (the “Chippas Employment Agreement”). Under the terms of the
Chippas Employment Agreement, Mr. Chippas is entitled to receive a base salary annually, participate in the
Company’s group health benefits, participate in the Company’s 401k plan, and earn an annual bonus as determined
by the board of directors. In addition, Mr. Chippas was awarded 2,850,000 ADSs, which vest over three years (with
a one year initial cliff) subject to certain performance conditions.
Under the Chippas Employment Agreement, we may terminate Mr. Chippas’ employment by providing Mr. Chippas
with the minimum (i) notice, or pay in lieu thereof, or some combination of the two, (ii) severance pay (if applicable),
(iii) period of benefits continuation, and (iv) vacation pay, and in each case, subject to payment of severance equal
to 12 months’ base salary, provided that we may terminate the services of Mr. Chippas at any time with immediate
effect for certain reasons including misconduct, criminal offense, or other reasons “for cause”. Mr. Chippas may
terminate his contract with us by providing the company with a minimum of 60 days’ notice. The Chippas
Employment Agreement also contains restrictive covenants pursuant to which Mr. Chippas has agreed to refrain
from competing with us or soliciting certain clients or employees of the Company who could materially damage our
interests if involved in a competing business, for a period of twelve months following his termination of services.
The appointments of Maria Perrella, Matthew Shaw and Raghav Chopra are subject to a 3 year term and to
termination upon 3 months’ notice given by either party.
22
ARGO BLOCKCHAIN PLC
Terms of appointment
The services of the directors engaged during the year under review were provided under the terms of agreement
with the Group are dated as follows:
Director
Matthew Shaw
Maria Perrella
Raghav Chopra
Thomas Chippas
Year of
appointment
2019
2021
2022
2023
Number of
years
completed
5
2
2
0
Date of current
engagement letter
7 September 2019
21 July 2021
23 February 2022
24 November 2023
Performance relative to market index
Comparing the total shareholder return of an ordinary share in Argo Blockchain plc against the total shareholder
return of the FTSE All-share index. For the year ended 2023, ARB saw an increase in share price from 6.5p to
29p, a 346% increase. In the same period, FTAS increased from 4,075.13 to 4,232.01, an increase of 4%.
UK 10-year CEO table and UK percentage change table
The directors have considered the requirement for a UK 10-year CEO table and UK percentage change table.
The directors do not currently consider that including these tables would be meaningful because, the CEO
remuneration is not currently linked to performance, therefore any comparison across years or with the employee
group would be significantly skewed and would not add any information of value to shareholders. The CEO’s
remuneration is disclosed in full in the directors’ remuneration section. The directors will review the inclusion of
this table for future reports.
Relative importance of spend on pay
The directors have considered the requirement to present information on the relative importance of spend on
pay compared to shareholder dividends paid. Given that the Company does not currently pay dividends this
would not provide meaningful disclosure to shareholders.
Consideration of shareholder views
At the present time, the Company does not have any significant institutional shareholder base, or any significant
shareholders with which to proactively consult. Therefore, the Board considers shareholder feedback received in
the context of annual general meetings and applicable guidance from shareholder bodies. This feedback, plus
any additional feedback received from time to time, is considered as part of the Group’s annual policy on
remuneration.
At the general meeting held on 6 September 2021 the following votes were cast on the remuneration policy,
equity incentive plan and equity awards for non-executives:
Resolution
To approve the remuneration policy
To approve the equity incentive plan
To approve equity awards for non-executives
For
77%
33%
82%
Against
23%
67%
18%
In light of shareholder feedback, the Company amended the equity incentive plan and put it to shareholders
at the Company’s 2022 AGM, where the votes cast were as follows:
Resolution
To approve the equity incentive plan
For
71%
Against
29%
The Board is aware that, while there was significant support for the revised equity incentive plan, not all shareholders
supported its adoption. The Board considers appropriate long-term incentivisation remains critical to the Group’s
ability to attract and retain talent over the longer term, and therefore create sustainable shareholder value. The
Board has also taken any relevant feedback received into account in determining awards under the plan.
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ARGO BLOCKCHAIN PLC
Policy for new appointments
Base salary levels will take into account market data for the relevant role, internal relativities, the individual’s
experience and their current base salary. Where an individual is recruited at below market norms, they may be
re- aligned over time (e.g. two to three years), subject to performance in the role. Benefits will generally be in
accordance with the approved policy.
For external and internal appointments, the Board may agree that the Group will meet certain relocation and/or
incidental expenses as appropriate.
Other matters
The Company does not currently have any annual or long-term incentive schemes in place for any of the directors
and as such there are no disclosures in this respect. The share options granted are discussed above.
Maria Perrella
Chair of the Remuneration Committee
24 April 2024
24
ARGO BLOCKCHAIN PLC
NOMINATION COMMITTEE REPORT
Letter from the Chair of the Nomination Committee
Dear Shareholders,
I am pleased to present the Nomination Committee’s report for the year ended 31 December 2023.
The Nomination Committee met twice during the financial year under review, and all of the directors on the
Committee attended both meetings. At a high level, its role is to:
● draw up selection criteria and appointment procedures for board members;
●
recommend nominees for election to its Board and its corresponding committees; and
● assess the functioning of individual members of Board and executive officers and report the results of
such assessment to the Board.
Composition of the Committee
The Nomination Committee as originally constituted at the beginning of 2023 consisted of me, as Chair, Sarah
Gow and Maria Perrella. For health reasons, Sarah Gow resigned as a director near the beginning of the year
under review. We thank Sarah for her contribution to the Committee.
In light of the current structure of the Board, in the near term the Nomination Committee will be comprised of
me, as Chair, and Maria Perrella. The membership of the committee will be reviewed on a regular basis,
particularly in light of any changes to the wider composition of the Board, and any changes announced in due
course.
The Committee has discretion to invite members of the executive management of the Company to its meetings
as required and considers the input and recommendation of executive management to be critical to ensuring
the Committee’s activities reflect the ongoing needs of the Company. Therefore executive management were
invited to present to the committee at the appropriate junctures during the year.
Focus of the Committee
During the year under review, the Committee’s focus was on:
●
the appropriate size and makeup of the Board;
● any appropriate changes and/or additions to the Board; and
●
the identification, recruitment and screening of potential candidates.
On an ongoing basis, the Committee carefully considers the structure of the Board and executive management
and ensures that the Board and executive management have an appropriate balance of skills, expertise and
talent. The Committee and the Board are committed to ensuring that appointments are based on merit and
objective criteria aligned with the Company’s needs, and that every effort is made to ensure equality, diversity
and inclusion are at the heart of the appointment process.
Advisors to the Committee
None.
Appointments
On 27 November 2023, the Board of Directors appointed Thomas Chippas as Chief Executive Officer and
Executive Director.
Equality, Diversity and Inclusion
Given the Company’s current stage of development, its organizational structure and limited headcount, the Board
considers that a formal diversity policy would not be practicable for the Company to develop and implement and
would not improve the Group’s policies or processes in a meaningful manner. The Company and the Board
already integrate equality and diversity in all aspects of the Company’s business and all decisions are made on
merit and without regard to protected characteristics. Where appropriate and practicable for the Company, the
Company considers and implements positive actions to enable the Company to provide additional support. This
can include, for example, making adjustments to assist staff and ensuring that, to the extent possible, all relevant
perspectives are included in decision making on an ongoing basis.
25
ARGO BLOCKCHAIN PLC
The Company will keep the requirement for a formal diversity policy under review and will give serious
consideration to the adoption of a policy, tailored to the nature of the Company’s business, its operations and
resources at the appropriate point.
Gender composition
At 31 December 2023, the gender composition of employees and directors of the Company was as follows:
Gender Composition
Directors
Senior Management
Employees
Ethnic composition
Male
3
7
21
Female
1
1
11
At 31 December 2023, the ethnic composition of directors of the Company was as follows:
Ethnic
composition
White
Other
Number of
board members
3
Percentage of
the board
75%
Number of
senior
positions on
the board
2
Number in
executive
management
4
Percentage of
executive
management
100%
1
25%
0
0
0%
The above information was collected through a voluntary open-ended self-identification survey. Questions
included “What gender do you identify with?” and “What is your ethnic composition?”.
Diversity Targets
The Company notes the diversity targets included in the Listing Rules, being:
● at least 40% of the individuals on the Board are women;
● at least one of the specified senior board positions is held by a woman; and
● at least one individual on the Board is from a minority ethnic background.
As at 31 December 2023, the Company met the target to have one individual on the board from a minority ethnic
background.
During the year under review, three directors, including the Chief Executive Officer, the Chief Financial Officer
and a female non-executive director resigned their appointments as directors of the Company. Following a
recruitment process lead by an external recruitment consultancy, the Company appointed Thomas Chippas as
the Company’s new Chief Executive Officer and to the Board. This appointment was made after due and careful
consideration of all suitably qualified candidates and without regard to protected characteristics.
Previously, the Company had an even composition of men and women, however following significant changes
to the Company’s activities the Company operates a small board, comprised of four people, which the Board
considers is appropriate with the current stage of development of the Company and the scale and sophistication
of its activities. One of the four directors appointed is a woman, however given the size of the Board, the
Company does not have a senior independent director and the Chief Financial Officer is a non-board role. The
Company does not therefore currently meet the remaining two targets.
Should the Board look to appoint further directors in the future, the Company will give due consideration to how
it may achieve the diversity targets while ensuring the appropriate structure of the Board and mix of skills and
expertise relevant to the Company’s operations. As part of its recruitment processes, the Company gives careful
consideration to all potential applicants however has a particular regard to those with knowledge and experience
of the digital asset and cryptomining sector. This necessary focus narrows considerably the pool of potential
applicants and poses potential challenges in both recruitment and meeting the diversity targets. The Company
will keep this under ongoing review.
26
ARGO BLOCKCHAIN PLC
Future Work
As part of its work during the coming year, the Committee will consider the Company’s present and near future
requirements and will review the composition of the Board, succession planning for management, and the
structure of the overall management of the Company going forwards. Further announcements will be made in
due course.
Matthew Shaw
Chair of the Nomination Committee
24 April 2024
27
ARGO BLOCKCHAIN PLC
AUDIT COMMITTEE REPORT
Letter from the Chair of the Audit Committee
Dear Shareholders,
I am pleased to present the Audit Committee’s report for the year ended 31 December 2023.
The Audit Committee met three times during the financial year under review, and all of the directors on the
Committee attended all of these meetings. At a high level, the Audit Committee is responsible for, among other
things:
●
the appointment, compensation, retention and oversight of the work and termination of any independent
auditor engaged for the purpose of preparing or issuing an audit report or performing other audit services;
● pre-approving the audit services and non-audit services to be provided by its independent auditor before
the auditor is engaged to render such services;
● evaluating the independent auditor’s qualifications, performance and independence, and presenting its
conclusions to the full Board on at least an annual basis;
●
reviewing and discussing with the executive officers, the Board and the independent auditor its financial
statements and its financial reporting process;
● approving or ratifying any related person transaction (as defined in its related person transaction policy) in
accordance with its related person transaction policy;
●
reviewing and overseeing the adequacy and effectiveness of its financial reporting and internal control
policies and systems; and
●
reviewing and recommending amendments to the Code of Business Conduct and Ethics.
Composition of the Committee
The Audit Committee is comprised of me, as Chair, Raghav Chopra, and Matthew Shaw. Brief biographies of
each of the members of the Committee, including their professional experience and qualifications are set out
on page 6.
As required by the Disclosure Guidance and Transparency Rules (DTRs), Nasdaq Rule 5605(c)(2)(A)(ii),
section 301 of the Sarbanes-Oxley Act 2002 and Rule 10A-3 of the Exchange Act the Committee comprises:
● a majority of independent directors;
● at least one member with competence in accounting or auditing, or both;
● as a whole, competence relevant to the sector in which the Group is operating.
The Board considers that, in light of their respective professional experience and expertise, the members of the
committee have recent and relevant financial experience, including competence in accounting matters relevant
to the sector of operation, and operational experience in businesses at a similar stage of development.
Committee Meetings
The Committee has discretion to invite members of the executive management of the Company to its meetings
as required and considers the input and recommendation of executive management to be critical to ensuring
the Committee’s activities reflect the ongoing needs of the Company. Therefore, executive management were
invited to present to the committee at the appropriate junctures during the year.
Where the Committee considers matters relating to the audit of the Group, the Committee invited David
Thompson, the lead audit partner for the Group at PKF Littlejohn LLP, to attend the meeting. His attendance
was critical to ensuring the Committee has access to Mr Thompson’s independent judgement and ensuring the
Committee can solicit his views on matters to be considered or addressed as part of the audit.
The Committee also meets independently to consider matters relating to financial management and audit,
providing a forum for discussion of the agenda for the year ahead and strategic priorities for the Committee.
28
ARGO BLOCKCHAIN PLC
Focus of the Committee
During the year under review, the Committee’s focus was on:
●
reviewing the Company’s financial reporting processes, taking into account changes to the business
during the year under review;
● working with the Group’s auditors to consider matters arising from the Group’s previous audit and the
measures necessary to address them;
● monitoring the effectiveness of the internal control and risk management systems adopted by the Group,
regarding financial reporting of the Group;
●
reviewing the audit of the Group, in particular noting areas for potential improvement;
● considering the independence and suitability for reappointment of the Group’s auditors, PKF Littlejohn
LLP;
● communicating with the Board the findings of the audit, and its contribution to the integrity of the Group’s
financial reporting;
● considering the integrity of the Company’s and the Group’s financial statements, the processes and
procedures for the Company’s monthly operational updates and reviewing significant financial issues and
judgments contained in them;
●
reviewing the Group’s internal financial reporting function, in particular its structure, staffing and
resources; and
● considering the Group’s management and internal reporting metrics.
As a result of its work, the Committee brought in a new CFO in 2023 and recommended the reappointment of
PKF Littlejohn LLP for the year under review and intends to do so again for the current financial year.
Performance Evaluation
Given the nature and scope of the Group, the Committee does not currently consider an external performance
review would be of significant benefit to the Group, however the Committee will continue to review the
appropriateness of such a review on an ongoing basis.
Significant Judgment in relation to financial statements
The Committee has considered the following matters, being significant accounting areas which required the
exercise of judgement or a high degree of estimation during the year, together with details of how these were
addressed. Some of the matters considered were of a one-off nature, while others will have a continuing applicability
to the Group’s business.
Significant issue and explanation
Impairment for Mining Machines
Work undertaken by the Committee
The Group is required to perform impairment reviews
of its capital assets on an annual basis to determine
the appropriate value of those assets. Following the
disposal of Helios, the Group’s principal capital
assets are its data centres in Canada and its fleet of
mining machines. While properties are long life
assets, mining machines have a finite useful life, and
therefore it is imperative the Group correctly accounts
for the impairment based on the Group’s current
expectations of the machines’ useful life.
The Committee has considered management’s
assessments of the appropriate value of the Company’s
mining machines at the reporting date. This included
specifically considering and approving the predicted useful
life remaining, the impact of the recent halving, the market
value of the machines, and the relative profitability of the
machines compared with other alternatives available in
the market.
Impairment was also a significant issue for the Group’s
auditors, who reported its findings to us.
29
ARGO BLOCKCHAIN PLC
Going concern basis for the financial statements and
viability statement
The Committee reviewed and challenged management’s
assessment of forecast cash flows, including applying
appropriate sensitivities, and the potential impact of future
uncertainties, the Group’s financial resources and
potential sources of additional liquidity. The Committee
was satisfied that the application of the going concern
basis for the preparation of the financial statements
remained appropriate.
External Audit
During the year, the Audit Committee assessed the independence and effectiveness of PKF Littlejohn LLP and
considers that that they remain independent from the Group and provide an effective external audit of the Group. The
Committee has therefore recommended that PKF Littlejohn LLP be proposed for reappointment at the upcoming
Annual General Meeting.
PKF Littlejohn LLP has been the auditor of the Company since its inception in December 2017, and David Thompson,
lead audit partner for the Group at PKF Littlejohn, has lead the Group’s audit since 2020. While retendering and
change of personnel is not currently required as a result of these requirements, the Group and PKF Littlejohn LLP will
comply with the restrictions and limitations applicable to re-appointment of auditors and maximum terms of audit
personnel, which require PKF Littlejohn LLP to rotate audit personnel engaged on the Group’s audit and impose a
maximum engagement period for PKF Littlejohn LLP as the Company’s auditor.
Non-audit services
During the year, PKF Littlejohn LLP did not provide any non-audit services to the Group and therefore no issues
regarding the objectivity or independence of PKF Littlejohn LLP arose from the provision of non-audit services.
Maria Perrella
Chair of the Audit Committee
24 April 2024
30
ARGO BLOCKCHAIN PLC
CORPORATE GOVERNANCE REPORT
The QCA 10 Principles of Corporate Governance
The board of directors of Argo Blockchain PLC recognises the importance of corporate governance and has
decided to apply the Corporate Governance Code published by the Quoted Companies Alliance (the ”QCA
Code”). A copy of the QCA Code is available at https://theqca.com/corporate-governance/. The QCA Code sets
out a standard of best practice for small and midsize quoted companies. The QCA’s ten principles of corporate
governance are set out below, along with a description of the Company’s approach to the relevant principle.
Principle 1: Establish a strategy and business model which promotes long-term value for shareholders
The Group is a UK based provider of cryptocurrency mining with its mining operations located in Canada and
the US. The business endeavours to acquire efficient hardware to support its mining facilities with a focus on
return on investment and prioritises the utilisation of renewable energy sources (wherever possible) at the most
competitive prices.
Principle 2: Seek to understand and meet shareholder needs and expectations
The Group seeks to communicate with shareholders to ensure that its financial performance and strategy are
clearly understood. This is achieved through regular updates by RNS to the London Stock Exchange, filings
with the Security and Exchange Commission in the United States and meetings with various shareholders. The
Group attends investor conferences in the UK and USA and ensures its website provides accurate information
and is kept up to date.
Principle 3: Take into account wider stakeholder and social responsibilities and their implications for
long term success
Our stakeholder groups include our employees in Canada, the United Kingdom, United States of America and
our business partners. Employees are kept informed of the Company’s progress and development by way of
recurring meetings and have access to the Board at all times. We aim to recruit and retain our staff by ensuring
our pay and conditions are competitive in the marketplace and offer training and career development where
appropriate. We seek to maintain a good business relationship with our business partners who are well-
respected experts in their field.
Principle 4: Embed effective risk management, considering both opportunities and threats, throughout
the organisation
The Group considers robust systems and controls will enhance the Group’s ability to manage and respond to
challenges and opportunities. With the sale of Helios to Galaxy, the Group is in the process of adopting revised
systems and controls in line with its agreements with Galaxy, while simultaneously reviewing its systems for its
owned and managed properties to ensure they remain appropriate for the size and nature of operations.
The Board is responsible for overall supervision of the Group’s operations while the Company’s CEO and CFO
are responsible for the implementation of the systems and controls across the Group and recommending
improvements and revisions to the Board for consideration. As part of its systems and controls, the Group has
adopted clearly defined roles and responsibilities, with clear lines of reporting and supervision. Given the
Group’s current stage of development, the Group considers the processes and procedures adopted provide the
necessary framework for effective risk management throughout the organisation, while retaining flexibility and
the opportunity to continue to develop in line with the Group’s future strategy.
Principle 5: Maintain the Board as a well-functioning, balanced team led by the chair
The Board is led by Matthew Shaw as the Company’s Chairman, supported by the senior management team
and other non-executive directors. Matthew Shaw was appointed as the Company’s Chairman following the
departure of the Company’s previous Interim Chairman, Peter Wall, in February 2023. He is supported by
Thomas Chippas, the Company’s Chief Executive Officer, Jim MacCallum, the Company’s Chief Financial
Officer, and the Company’s two other non-executive directors. Members of the Company’s senior management
team are invited to Board meetings as necessary and appropriate. The Board considers that each director has
the required level of expertise and experience in his or her field, and regular Board meetings are held to discuss
all key matters and the Board functions well and is appropriately led.
Principle 6: Ensure that, between them, the directors have the necessary up-to-date experience, skills
and capabilities
The Board is comprised of individuals with appropriate expertise and experience, each of whom brings a
differing but complementary skillset to the Board. All the directors receive regular updates on the Group’s
operational and financial performance and attend frequent Board meetings where key issues are discussed at
length. The Board is responsible for the appointment, removal and re-election of directors and when such a
decision is required it will take account of the Company’s need for a balance of market, operational and financial
expertise. All directors have the ability to take independent professional advice at the Company’s expense
31
ARGO BLOCKCHAIN PLC
where they consider it necessary to ensure they fulfil their duties in an appropriate manner.
Principle 7: Evaluate Board performance based on clear and relevant objectives, seeking continuous
improvement
The Board is constantly reviewing the Group’s and its own performance based on internally set performance
indicators and utilises those performance evaluations and indicators to identify areas of success and the
potential for improvement.
Principle 8: Promote a corporate culture that is based on ethical values and behaviours
The Board, together with the Company’s senior management team is conscious to impart and maintain a
forward- looking corporate culture throughout the Group, based on ethical values and respect for the
contributions of the Company’s staff. The Board leads by example and sets high standards and expectations
for the Company’s staff.
Principle 9: Maintain governance structures and processes that are fit for purpose and support good
decision making by the Board
As a company with a Standard Listing, the Company is not required to comply with the provisions of the
Corporate Governance Code published by the Financial Reporting Council. However, in the interests of
observing best practice on corporate governance, the Company intends to comply with the provisions of the
QCA Code insofar as is appropriate having regard to the size and nature of the Company and the size and
composition of the Board.
The Company’s Standard Listing means that it is also not required to comply with those provisions of the Listing
Rules which only apply to companies on the Premium List. The UK Listing Authority will not have the authority
to (and will not) monitor the Company’s compliance with any of the Listing Rules which the Company has
indicated that it intends to comply with on a voluntary basis, nor to impose sanctions in respect of any failure by
the Company so to comply.
Principle 10: Communicate how the Company is governed and is performing by maintaining dialogue
with shareholders and other relevant stakeholders
The Company is proactive in communicating with shareholders and other relevant stakeholders, on an annual
basis by way of the Annual Report and the financial statements, and more regularly through the half year
Interims, monthly operational updates and regulatory announcements. Outside of formal communications, the
Company engages with shareholders and interested parties through Q&A sessions and other informal updates.
The Company maintains a comprehensive website, which is available at https://argoblockchain.com.
QCA Corporate Governance Code 2023
The Company currently reports against the QCA Corporate Governance Code 2018. The Company notes the
publication of the revised and updated QCA Corporate Governance Code 2023 which will have effect for
accounting periods commencing on or after 1 April 2024. The first accounting period for which it will therefore
apply to the Company will be the financial year ended 31 December 2025, however the Company will consider
if there is an opportunity to adopt any of the developments of the QCA Code for the financial year ended 31
December 2024, ahead of the actual implementation date.
32
ARGO BLOCKCHAIN PLC
TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURE (TCFD) REPORT
Argo recognizes the adverse effects caused by climate change and is committed to assessing and managing
both the impact of climate change on our operations and our impact on the planet. Investors, employees,
regulators, members of the community in which we operate and other stakeholders want to understand how we
are planning for and adapting to climate change. The Task Force on Climate-related Disclosures (TCFD)
provides a framework that enables companies to communicate climate-related financial risks to this audience.
At Argo, our stakeholders have high expectations of how we operate as a business. Since the Company’s
inception, Argo has been committed to sustainability which includes the objectives of minimizing our waste and
carbon footprint as well as creating disclosures on an annual basis that align with our stakeholders’
expectations. In compliance with Listing Rule 14.3.27(2)R, our climate-related financial disclosures are set out
below. These are a mixture of fully and partially compliant with the TCFD Recommendations and
Recommended Disclosures. We have structured the report so that it follows the 4 TCFD pillars with the 11
recommended disclosures set out in Figure 4 of Section C of the TCFD Annex entitled “Guidance for All
Sectors”. When drafting this report, we also reviewed whether any of the sector-specific Supplemental guidance
within Section E of the TCFD Annex entitled “Supplemental Guidance for Non-financial Groups” was relevant;
however it was deemed that Argo could not be categorised within one of the sectors provided within these
supplements. The Company has decided not to gain assurance for the content of this report nor the GHG
emissions or other KPIs included within.
The Company consists of a small team and hence is still developing the resources in order to be fully compliant
with all the TCFD’s Recommendations and Recommended Disclosures. We recognize the gaps that we must
cover in order to achieve full compliance with the TCFD’s Recommendations and Recommended Disclosures.
In the future, we intend to evaluate our practices and consider opportunities to enhance our disclosures on an
ongoing basis consistent with our objective to incorporate and expand our best practice reporting. We intend to
build on what we have completed and ensure the Company is implementing the necessary strategies,
structures, resources, and tools to manage the risks and opportunities posed by climate change. We will also
consider the work being conducted by the Transition Plan Taskforce so that we are aligning our climate-related
reporting with best practices, which goes beyond our regulatory obligations.
In accordance with LSE Listing Rule 14.3.27(2)R, the table below sets out whether Argo has made disclosures
fully or partially consistent with the TCFD recommended disclosures:
TCFD Pillar
TCFD Recommended Disclosures
Compliance
Status
Governance
Strategy
Risk
Management
Metrics and
targets
Board’s oversight of climate-related risks and opportunities
Management’s role in assessing and managing climate-related
risks and opportunities
Climate-related risks and opportunities the organization has
identified over the short, medium and long term
Impact of climate-related risks and opportunities on the business,
strategy, and financial planning
Resilience of the organisation’s strategy, taking into consideration
different climate-related scenarios, including a 2°C or lower
scenario
Organization’s processes for identifying and assessing climate-
related risks
Organization’s processes for managing climate-related risks
Processes for identifying, assessing, and managing climate-
related risks are integrated into the organization’s overall risk
management
Metrics used by the organization to assess climate-related risks
and opportunities in line with its strategy and risk management
process
Scope 1, Scope 2 and, if appropriate, Scope 3 greenhouse gas
(GHG) emissions and the related risks
Targets used by the organization to manage climate-related risks
and opportunities and performance against targets
Partial
Partial
Full
Partial
Full
Partial
Partial
Partial
Partial
Partial
Partial
Disclosure
Location
(page)
33
33
34
37
39
40
41
41
41
41
42
33
ARGO BLOCKCHAIN PLC
Governance
Recommended disclosure: a. Describe the Board’s oversight of climate-related risks and opportunities
The board of directors monitors the Company’s overall sustainability performance against its stated ambition
and targets. It therefore has oversight responsibility for Argo’s climate strategy and performance, whereas the
CEO has ultimate responsibility for setting Argo’s ESG strategy and performance objectives as well as oversight
of its implementation and execution.
The Board is informed about the Company’s climate-related progress through Board meetings and annual
reports from the ESG Committee. It is the CEO who reports to the Board on ESG and climate-related issues on
an annual basis or as required.
The Board uses climate-related issues to guide them when:
● Finalising annual budgets (purchase of Renewable Electricity Credits (RECs), Verifiable Emissions
Reductions (VERs) as well as the costs associated with efficiency gains, data collection and calculation).
● Monitoring Implementation and Performance (with regards to the metrics outlined on page 48)
● Overseeing major capital expenditures (ensuring our facilities are located on low carbon emission grids
and built to be as efficient as possible)
Recommended disclosure: b. Describe management’s role in assessing and managing climate-related
risks and opportunities
The CEO is responsible for achieving Argo’s strategy and ESG objectives, whereas day-to-day responsibility
for such tasks is delegated to the ESG Committee, which is a working group of employees and not a board-
level committee. The ESG Committee is chaired by the CEO and includes the VP of Technology and
Development, VP of Mining and VP of Investor Relations. The ESG Committee has climate-related expertise
and is supported by external climate experts on a regular basis providing the Company with both data
proficiency and strategic advisory. The committee is responsible for the management and implementation of
ESG initiatives and directives. To do this, the committee meets annually to (i) assess climate-related issues, (ii)
develop and discuss the status of ongoing climate-related initiatives and (iii) monitor and track progress against
certain KPIs.
One of the major challenges that the Bitcoin mining industry faces is its reputation regarding energy
consumption and GHG emissions. Hence, over the past year the ESG Committee has taken a stakeholder
focus and created initiatives focused on supporting, and in some cases educating, certain stakeholder groups
to ensure that the Company’s climate change strategy is in line with their expectations. We identify key
stakeholders according to Argo’s impact on their interests as well as their ability to influence our strategy and
objectives. Hence, management’s role is to engage with our key stakeholders which includes shareholders,
34
ARGO BLOCKCHAIN PLC
suppliers, employees, local communities, society, and local governments on climate-related issues.
Strategy
Recommended disclosure: a. Describe the climate-related risks and opportunities the organization has
identified over the short, medium, and long term.
We recognise that climate-related risks and opportunities present a potential material impact to our business
and are committed to taking the necessary steps recommended by the TCFD to assess the severity of the
business risks and the value of the opportunities on our business.
The tables below generally describe the climate-related risks that are considered by the Company. This list may
grow as we further evaluate these risks and the associated business impacts:
Climate-related Risks
Transition Risks
Climate Risk
Drivers
Summary Description and
Business Impact
Mitigation and Adaptation
Policy & Legal
Increased costs
for energy from
carbon pricing
Federal authorities may pursue
and implement legislation and
regulation that seeks to limit the
amount of carbon dioxide
produced from electric
generation, which would affect
the availability and price of
electricity sourced from power
grids that are dependent upon
fossil fuel- fired sources of power
generation. Where we purchase
electricity from the grid, this could
impact us in a potentially material
adverse manner. The bankruptcy
or insolvency of any power
generator or wholesale market
supplier from whom we expect to
obtain supply for our mining
operations could also result in a
curtailment or loss of supply,
which would have a material
adverse effect on our ability to
continue mining operations.
Market
Increased Costs
of ASIC mining
machines
There are risks related to the
potential disruption of our global
supply chain by climate-related
issues for cryptocurrency mining
hardware, and difficulty in
obtaining new mining machines
that may have a negative effect
on our business.
We are focused on deploying our
mining machines at locations
with access to low-cost and
reliable renewable power
sources, as successfully doing
so should enable us to reduce
our power costs. Our Quebec
facilities are primarily powered
using renewable hydroelectric
power, and our operations in
Texas are in the Texas
Panhandle, where more than
85% of the installed electricity
generation capacity comes from
renewable sources. We will
continue to work with power grids
and electric generators who have
an abundance of remote
renewable electricity because
this aligns with the Company
sustainability principles and
climate strategy. As an additional
benefit, the use of lower-
emission sources reduces our
risk exposure to the potential
introduction of carbon pricing and
associated reduced availability of
fossil fuel-fired electric
generation.
While we have typically
purchased our mining machines
from Bitmain, and we have
diversified our access to mining
machines by establishing a
relationship with ePIC Blockchain
Technologies
(“ePIC”). We purchased ePIC’s
BlockMiner mining machine that
utilized Intel’s Blockscale ASIC
chip. We will continue to assess
our supply chain management
and opportunities to reduce our
risk exposure to any disruption to
our key suppliers.
35
Main
Affected
Time
Horizon
Medium to
Long term
Medium to
Long term
ARGO BLOCKCHAIN PLC
Reputational
Damage
Increased awareness and any
adverse publicity in the global
marketplace about potential
impacts on climate change by
Argo or other companies in our
industry could harm our
reputation. This could therefore
have a material adverse effect
on our financial position, results
of operations and cash flows.
Argo’s stakeholders and society
in general are becoming
increasingly climate conscious.
Argo recognizes this – we have
always been, and always will be,
committed to promoting
sustainability. We routinely
emphasize our commitment to
sustainability through our
ongoing PR and communications
efforts. Additionally, we are
involved in several initiatives that
focus on educating these
stakeholders on the positive
impact that Bitcoin mining
operations can have for the
energy transition, including the
incentivization of renewable
energy development and
stabilization of power grids via
demand response.
Physical Risks
Climate Risk
Drivers
Summary Description and
Business Impact
Mitigation and Adaptation
Acute Disruptions
to our facilities
and operations
Extreme weather events have the
potential to disrupt or damage
Argo’s operations. Flooding,
heatwaves, wildfires, droughts,
and rising sea levels could all
impact the business. Insufficiently
prepared facilities could be
unable to deal with more frequent
and intense occurrences of such
events.
Chronic
An increasing number of volatile
weather conditions, particularly
extremes of temperature or
extended periods of abnormal
weather conditions could impact
the price of energy. Due to Argo’s
electricity demand from the grid,
it could be that Bitcoin mining
companies are requested to shut
down leading to a material
adverse effect on the Company’s
revenue.
Due to the nature of our
operations and facility ownership
structure, Argo is in a position to
be able to locate its operations in
areas that are of relatively lower
risk or relocate mining machines
if there are ongoing operational
disruptions related to acute
weather disruptions. We will
explore assessing the risk
exposure of our current sites and
develop location-specific
Business Continuity Plans
(BCP).
Variability in weather conditions
have already impacted Argo’s
operations. In Quebec, Argo
curtails its operations in the
winter months to help stabilize
the power grid. In Texas, Argo
voluntarily curtails operations
when electricity prices are high,
which often occurs during
extreme weather events. While
our property strategy takes
climate- related issues into
account, we will seek to explore
incorporating these weather-
related risks into our potential
site location decisions.
Short to
Long term
Main
Affected
Time
Horizon
Medium to
Long term
Short to
Long term
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ARGO BLOCKCHAIN PLC
Climate-related Opportunities
Transition Opportunities
Climate Risk Drivers
Summary Description and
Business Impact
Mitigation and Adaptation
Resource
Efficiency
Enhancing our Bitcoin mining
operational efficiency presents an
opportunity to reduce operating
costs and bolster our reputation.
We compete against our peers
on the efficiency of our
operations and hence improving
it is a cornerstone to our strategy.
Bitcoin miners may have the
potential to enhance the shift
toward decentralized energy
generation by co-locating near
renewable energy producers and
acting as a sink for excess
energy production. Serving as a
sink or flexible load is valuable as
it provides a market mechanism
for use of excess electricity,
allowing generators to increase
intermittent renewable energy
generation into the grid without
fear that it won’t be used and
uncompensated for. This may
reduce operating costs and
increase revenue, capital
availability, and reputation.
Bitcoin mining’s unique ability to
serve as a buyer of last resort for
excess energy encourages
further investment in renewable
projects. This, in conjunction with
demand response, enhances grid
resilience.
Energy
Source
Renewable
energy
procurement
and
deployment
Our mining hardware primarily
consists of Bitmain Antminer
S19, S19J Pro, and ePIC
BlockMiners, featuring
application- specific integrated
circuits (“ASICs”) for
cryptocurrency mining. These
machines offer superior speed
and efficiency in cryptocurrency
mining compared to general
computing hardware. In addition,
our operations in Texas utilize
immersion cooling technology,
which improves efficiency,
extends the lifespan of the
mining machines, and reduces
costs. Due to the infancy of these
machines, moving forward Argo
will continue to explore the large
opportunities for
improvement with regards to
efficiency.
Bitcoin mining can play a
valuable role in the transition to a
low carbon economy. Bitcoin
mining has the capability to
balance the grid and hence
provide value to power producers
who deploy renewable energy
generation. In the short- term,
Texas provides the greatest
opportunity for this as the grid
operator, ERCOT, has worked
with Bitcoin miners to assist with
increased integration of
renewable energy into the grid.
Bitcoin mining therefore indirectly
supports the deployment of
additional renewable electricity
and in the long-term could be
deployed in other regions. We
will continue to explore
opportunities to foster strategic
relationships with independent
power producers.
Main
Affected
Time
Horizon
Short to
Long term
Short to
Long term
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ARGO BLOCKCHAIN PLC
New Products and
Services
Argo’s stakeholders and society
in general are increasingly
climate conscious. This has led
to the development of market-
based tools to incentivize
sustainable production of Bitcoin.
Markets
Ability to form
new and strategic
partnerships
As the world is transitioning its
energy system there will be
pressure on companies to
reduce their GHG emissions and
by- products that impact the
environment negatively. In order
to deal with these impacts,
companies will need to
collaborate with each other to
find solutions and reduce the risk
of regulatory action and
reputational damage.
Short to
Long term
Short to
Long Term
Argo has actively explored and
pursued various opportunities to
promote the sustainable
production of Bitcoin. In 2021,
we announced the creation of
the world’s first Bitcoin mining
pool powered by clean power,
Terra Pool.
Argo has a significant
opportunity to enable the
transition to a net zero economy
through the use of its Bitcoin
mining operations. Below are
three examples of potential
strategic partnerships that the
Company is exploring:
●
Independent
Power
Producers
● Oil & gas producers
● Local municipalities
Please see below for an
expansion of how Argo can and
foster these relationships.
Recommended disclosure: b. Describe the impact of climate-related risks and opportunities on the
organization’s businesses, strategy, and financial planning.
In 2020 we defined our climate-related goals and ambitions with specific targets identified to guide our
activities, and we set our objective of being a climate positive company. Our strategy to be a climate positive
company is based on 6 steps:
1. Minimising emissions at the outset – intentionally locating our own operations on grids with low
emissions as well as investing in energy saving and efficiency measures at our own facilities.
2. Scope 1 emissions – No scope 1 emissions as we have no power generation or generator use at our
own facilities.
3. Scope 2 emissions – Minimise scope 2 emissions through the use of low-emission grids. For any
residual scope 2 emissions, RECs may be purchased at owned (Argo) or hosted facilities for emissions
created by electricity use.
4. Scope 3 emissions – VERs may be purchased for emissions resulting from all Argo activities in its value
chain.
5. Additional VERs – Additional VERs may be purchased to become climate positive.
6. Third-party verification – Argo assessment validated by an accredited third-party verification consultant.
In alignment with these targets, we are focused on addressing the risks and opportunities identified above by
integrating climate considerations in our:
● Strategic Partnerships
Argo continually seeks potential opportunities and looks for new ways for our Bitcoin mining operations to
provide value to other corporations, utility companies, and government agencies. Below is a non-exhaustive list
of some examples of ideas that we are in the process of evaluating:
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ARGO BLOCKCHAIN PLC
› Electricity generators or independent power producers – We are evaluating opportunities to co-locate
our mining operations with renewable energy producers in order to gain access to “behind the meter”
electricity. This type of relationship with a power generator can be symbiotic because we can gain access
to low-cost electricity directly from the producer and the power producer will have a buyer of last resort
for its electricity regardless of the export capacity or market price obtainable through the power grid.
› Local municipalities – Exploring partnerships with local municipalities to use waste heat from our facilities
and provide this heat to the municipality or nearby facilities such as greenhouses that can make use of
the heat. This creates a savings for the greenhouse as they can reduce the heat they need. In addition to
creating an economic opportunity for both parties, this also saves energy and reduces our collective
environmental impact.
› Oil & gas Producers – There is potential for partnerships with oil & gas companies who produce natural
gas as an unwanted by-product of their oil production. Currently, oil & gas producers typically dispose of
the unwanted natural gas via venting or flaring, which releases methane into the atmosphere. On a 100-
year timescale, methane has 28 times greater global warming potential than carbon dioxide and is 84
times more potent on a 20-year timescale. Instead of venting or flaring the waste gas, it can be combusted
in a generator to provide electricity for Bitcoin mining operations. Combusting the natural gas reduces
methane emissions by up to 99% when compared to venting or flaring. This therefore provides an
opportunity for both parties since a Bitcoin miner can provide an economic incentive to reduce the
methane emissions of oil & gas producers whilst the Bitcoin miner gains access to low-cost energy for its
Bitcoin mining machines.
● Energy/Resource Efficiency
Additionally, we have worked on becoming more efficient with the energy we use through purchasing more
energy- efficient technologies. These initiatives have included:
Having our fleet hosted at the Helios site in the West Load Zone of Texas, where more than 85% of
the installed generation capacity is renewable.
Constructing the Helios facility so that it uses high-efficiency immersion cooling technology.
Purchasing Bitcoin mining machines which can be optimised to run on various efficiency settings,
therefore enabling the Group to increase efficiency depending on market conditions.
These initiatives ensure that we keep pace with the transition to a net-zero economy by proactively complying
with evolving regulation, providing energy efficient technology and maintaining a strong reputation amongst
our stakeholders.
● Stakeholder engagement
We have taken a proactive approach to developing a more efficient and cleaner industry through the promotion
of transparency, sharing of best practice and education to the public about the benefits of Bitcoin and Bitcoin
mining. Argo is a founding member of the Bitcoin Mining Council, which educates the public on the increasing
amount of renewable energy used for Bitcoin mining. It also seeks to improve reporting and increase the amount
of data available on the use of renewable energy within the sector. Argo also seeks to engage with regulators
and policymakers at the state and federal level to educate them on the benefits of Bitcoin mining. Argo is a
member of the Digital Power Network, which is a coalition spearheading policy advocacy for digital asset mining
in Washington, DC and crafting the future of energy policy.
● Site location
Our property strategy includes criteria that considers the availability of renewable electricity and the sites’
exposure to the physical risks of climate change.
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ARGO BLOCKCHAIN PLC
Recommended disclosure: c. Describe the resilience of the organization’s strategy, taking into
consideration different climate-related scenarios, including a 2°C or lower scenario.
In 2022, we conducted a climate-related scenario analysis with the aid of a third-party consultant to further
validate our climate strategy. We also carried out a scenario-based climate change risk assessment exercise
to determine potential implications of climate risks on our business and strengthen the resilience of our strategy
moving forward. Given that the Group’ business and overall risk profile of the sector in which it operates has
not changed materially in 2023, we consider such scenarios remain relevant and therefore have not updated
our scenario analysis from 2022.
In building our scenarios, we used the Intergovernmental Panel on Climate Change (IPCC) warming scenarios,
which provides pathways for assessing the physical impacts of climate change from varying degrees of GHG
emissions in the atmosphere. Since many of the publicly-available climate-related scenarios that exist focus on
transitions in heavy- emitting sectors (e.g. utilities, heavy industry), the majority of the assumptions in these
existing scenarios do not directly impact Argo. As such, we drafted three qualitative transition scenarios, drawing
from existing scenarios and trends, and combined them with three warming scenarios:
Assumptions:
Business-as-usual
RPC 8.5 - Extremely high emissions scenario with global mean temperature expected to rise by 3.7°C (2.6-
4.9°C) by end of the century. The scenario assumes high dependence on fossil fuels and no policy-driven
mitigation.
Qualitative assumptions – Limited regulation and impact of climate risks and emissions performance on the
Company’s reputation. There is uneven pressure regarding climate action and emission reduction targets, with
limited investment in renewable electricity. Insurance becomes increasingly expensive and demand for RECs
begins to outstrip supply resulting in much higher prices to purchase these RECs. Investors in crypto have
limited interest in acquiring currencies that have been produced with fewer emissions.
Delayed transition
RPC 6.0 – High emissions scenario with global mean temperature expected to rise by 2.2 °C (1.4-3.1°C) by
end of the century, which assumes emissions peak around 2080 and then decline.
Qualitative assumptions – There is uneven regulatory action from state to state in the US and globally, with
some setting stringent climate expectations and others not incorporating ESG into regulatory standards. This
means that some regions decarbonize quicker and employ renewable electricity whilst others fail to do so.
Prices of RECs vary by region.
Net-zero
RPC 2.6 – A stringent pathway with a large regulatory push and the development of new technologies enable
the likelihood of keeping global temperature rises below 2°C by 2100.
Qualitative assumptions – Strong local, state, and national-level regulation and action on building performance
standards and energy benchmarking, which includes high penalties for non-compliance. Potential high
investment costs to bring manufacturing locations in line with state, local, and national laws. Strong impact of
emissions performance on company reputation and market value, which is seen worldwide in nearly all
geographies and across investors, potential employees, and society. Nearly 100% of electricity generation
globally is from renewable electricity sources and societies have adapted to become more electrified.
Business Impacts
Below is a table that summarizes the results of the scenario analysis in which we identified how each scenario
may impact Argo’s business and operations:
Physical climate
risks
RCP 8.5 / Business-as-usual
RCP 6.0 / Delayed
Transition
RCP 2.6 / Net-zero
Increased chances of property damage due to floods and
increased wildfires
Increased energy usage as a result of increased cooling
required at our facilities due to increase in ambient
temperature.
Increased risk of heatwaves and droughts affecting energy
prices and supply chain.
Impacts of flooding and
droughts on the
semiconductor industry,
already being observed
within supply chain.
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ARGO BLOCKCHAIN PLC
Transition Climate
risks
The Company has very low
potential exposure to carbon
pricing and the associated
policy/legal risks. However, Argo
will see an increase in insurance
premiums, the price of RECs and
disruptions to its supply chain due
to the reduced supply in raw
materials.
Heightened legal and
regulatory risks due to
uneven application. This
makes it more difficult for
Argo to operate in
certain regions as legal
and regulatory action is
highly uncertain. Argo’s
climate strategy sees a
higher cost due to the
price of RECs but there
is a low exposure to
carbon pricing. There is
limited reputational
damage.
Transition
opportunities
Opportunities for strategic
partnerships are limited due to a
lack of investment in renewables
and the lack of appetite to reduce
flare / methane gas emissions.
There are certain
geographies where Argo
can locate its operations
where the Company can
make use of strategic
partnership
opportunities.
The Bitcoin mining
industry’s reputation is
increasingly scrutinized
and Argo as a result has
a higher risk exposure to
reputational damage as
well as policy/legal risks.
There is a relatively
larger risk exposure to
indirect carbon pricing
with the price of fossil-
fuel based electricity
increasing in the short-
term.
There is a large
demand for
technologies that
enable demand
response initiatives to
help balance the supply
and demand of
electricity on the grid,
which boosts Argo’s
ability to develop
strategic partnerships.
Argo is presented with
opportunities to benefit
from renewable
electricity deployment
and the requirements to
decrease flare
/ methane gas
emissions.
Company Resilience to Climate Risk
In all scenarios there is a focus on energy efficiency because this is a key variable on which Argo competes
with its peers.
The Company has set a climate strategy that approaches the risks and opportunities associated with each
scenario, however, the greatest opportunities are presented from the Net Zero scenario where Argo Blockchain
is positioned to help enable the energy transition with the increased deployment of renewable electricity and
demand response.
We are therefore currently trying to manage these risks so that we are well-prepared across these different
types of scenarios and will try to incorporate these insights into our climate strategy moving forward. However,
this is only our first climate-related scenario analysis, and we will work over the future to expand this analysis
and to quantify the financial impacts of these different scenarios and to reflect developments in climate science
and methodology.
Although these are the risks and opportunities that currently face the Company, we will continue to identify new
and emerging climate-related risks that could impact the Company.
Risk Management
Recommended disclosure: a. Describe the organization’s processes for identifying and assessing
climate- related risks.
Argo identifies and assesses risks associated with climate change across all transition risks (policy and legal,
technology, market changes and reputation) and physical risks (both acute and chronic). Processes that help
identify climate-related risks and opportunities include:
● Monitoring changes in the external policy environment, including existing and emerging legislation, and
national and international government announcements.
● Observing market developments, such as advances in technology that may reduce our operating costs,
41
ARGO BLOCKCHAIN PLC
or changes in perception about the industry’s impact on the environment
●
Internal and external judgement using resources such as regulatory guidance, industry reports and peer
comparisons.
We use these and other processes to identify risks relating to climate change, and to determine their significance.
The Company has yet to formalize a process in which climate-related risks are assessed in terms of their
significance relative to other principal risks and assessing the potential size and scope of the risk.
Recommended disclosure: b. Describe the organization’s processes for managing climate-related risks.
Risk management is undertaken by the board of directors. The Board recognizes climate change as a financial
risk and has delegated responsibility to the management team to monitor and report climate-related risks as
well as lead the response across the organization. The management team will also track as to where any new
climate-related risks may arise and report these risks to the Board.
Recommended disclosure: c. Describe how processes for identifying, assessing, and managing
climate- related risks are integrated into the organization’s overall risk management.
The Board has assigned climate change as a Principal Risk because it is aware that Bitcoin mining is power
intensive and has an environmental impact as a consequence. Climate change is integrated into the Company’s
overall risk management programme, which seeks to minimise potential adverse effects on the Company’s
financial performance.
In addition, due to the nature of the climate-related risks to our business and strategy, many elements are
already captured within other Principal Risks, such as Electricity Supply and Price, and Technology and Supply
risks. This approach enables us to capture a more holistic picture of the climate-related risks.
Metrics and Targets
Recommended disclosure: a. Disclose the metrics used by the organization to assess climate related
risks and opportunities in line with its strategy and risk management process.
In addition to measuring and disclosing our absolute scope 1, 2 and 3 emissions, we internally track and monitor
climate-related metrics and KPIs to further help us manage climate-related risks and opportunities:
● Electricity consumption (kWh)
● Renewable Energy consumption (kWh)
● Hashrate (EH)
● Mining Efficiency (EH/GW)
● Emissions intensity (kgCO2e/$1 revenue)
The Company has not yet set an internal or external carbon price as we have minimal exposure, nor have we
incorporated climate-related metrics into the Company’s remuneration policy.
Recommended disclosure: b. Disclose Scope 1, Scope 2 and, if appropriate, Scope 3 greenhouse gas
(GHG) emissions and the related risks
A full view of our greenhouse gas emissions data for the last 3 years can be found below. We use energy to
power our ASIC mining machines, as well as light and cool the facilities in which our machines operate. Since
2020 we have been focused on reducing our operational emissions through investing in energy saving and
efficiency measures at our own facilities and by locating our operations on grids with relatively low emission
electricity supply.
Most of the Group’s emissions come from the electricity that is used to power our ASIC mining machines in
North America. As the Group does not have any mining operations in the UK, there were minimal GHG
emissions in the UK.
Categories
Scope 2
Electricity Use
Scope 3
2021 Total Emissions
(MTCO2e)
61,077
61,077
2022 Total Emissions
(MTCO2e)
168,718
168,718
2023 Total Emissions
(MTCO2e)
192,872
192,872
31,819
48,242
40,060
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ARGO BLOCKCHAIN PLC
C1: Purchased Goods and
Services
C2: Capital Goods
C3: Fuel & Energy
C4: Upstream T&D
Total Scope 1, 2 and 3
378
20,597
7,653
3,191
92,896
1,882
21,525
24,752
83
216,960
508
12,727
26,486
339
232,932
The GHG data boundary includes our operations in the US and Canada. The GHG emissions have been
calculated using the GHG Protocol Corporate Accounting and Reporting Standard of the Greenhouse Gas
Protocol. The data presented above uses a market-based approach which accounts for >99% of the GHG
emissions and energy consumption in respect of activities where we are the operator.
A GHG verification assessment was undertaken using recognized assessment tools and approaches (i.e., The
GHG Protocol Corporate Accounting and Reporting Standard with reporting, information, and data collected
and provided by Argo) and complies with the requirements and general guidance for companies compiling and
reporting on corporate-level GHG emissions inventory.
Scope 1 emissions are not reported due to no power generation or generator use at our own facilities. Our
Greenhouse Gas reporting period is from January 1st to December 31st for 2021, 2022, and 2023.
Recommended disclosure: c. Describe the targets used by the organization to manage climate-related
risks and opportunities and performance against targets.
In 2020, Argo set the objective of being a climate positive company and in 2021 Argo reached this goal,
releasing a full climate strategy and becoming the first Bitcoin mining company to announce climate positive
status through its use of renewable energy to power mining operations, and by offsetting more scope 2 and 3
greenhouse gas emissions than we emitted in 2020 and 2021. Going forward, we aspire to procure electricity
for our operations from primarily renewable sources.
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ARGO BLOCKCHAIN PLC
DIRECTORS’ RESPONSIBILITIES STATEMENT
The directors are responsible for preparing the Annual Report and the financial statements in accordance with
applicable law and regulations. Company law requires the directors to prepare financial statements for each
financial year. Under that law the directors have prepared the Group and parent company financial statements
in accordance with UK-adopted international accounting standards. Under company law the directors must not
approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs
of the Group and Company and of the profit and loss of the Group and Company for that period.
In preparing these financial statements, the directors are required to:
● Select suitable accounting policies and then apply them consistently;
● Make judgements and accounting estimates that are reasonable and prudent;
● State whether applicable UK-adopted international accounting standards have been followed, subject to
any material departures disclosed and explained in the financial statements; and
● Prepare the financial statements on the going concern basis unless it is inappropriate to presume that the
Group and Company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain
the Group’s and Company’s transactions and disclose with reasonable accuracy at any time the financial
position of the Group and Company and enable them to ensure that the financial statements and the Directors’
Remuneration Report comply with the Companies Act 2006. They are also responsible for safeguarding the
assets of the Group and Company and hence for taking reasonable steps for the prevention and detection of
fraud and other irregularities.
The directors are also responsible for ensuring that the Annual Report and financial statements taken as a
whole, is fair, balanced and understandable and provides the information necessary for the shareholders to
assess the Group’s and Company’s position and performance, business model and strategy.
Website publication
The directors are responsible for ensuring the Annual Report and the financial statements are made available
on a website. Financial statements are published on the Company’s website in accordance with legislation in
the United Kingdom governing the preparation and dissemination of financial statements, which may vary from
legislation in other jurisdictions. The maintenance and integrity of the Group and Company’s website is the
responsibility of the directors. The directors’ responsibility also extends to the on-going integrity of the financial
statements contained therein.
Directors’ responsibilities pursuant to DTR4 (Disclosure and Transparency Rules)
The directors confirm to the best of their knowledge:
● The Group and Company financial statements have been prepared in accordance with UK-adopted
international financial reporting standards and give a true and fair view of the assets, liabilities, financial
position and profit or and give a true and fair view of the assets, liabilities, financial position and profit and
loss of the Group and Company; and
● The Annual Report includes a fair review of the development and performance of the business and
financial position of the Group and Company together with a description of the principal risks and
uncertainties that it faces.
On behalf of the Board:
Matthew Shaw
Chairman
24 April 2024
44
ARGO BLOCKCHAIN PLC
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ARGO BLOCKCHAIN
PLC
Opinion
We have audited the financial statements of Argo Blockchain plc (the ‘parent company’) and its subsidiaries
(the “group”) for the year ended 31 December 2023 which comprise the Group Statement of Comprehensive
Income, the Group and Parent Company Statements of Financial Position, the Group and Parent Company
Statements of Changes in Equity, the Group and Parent Company Statements of Cash Flows and notes to the
financial statements, including significant accounting policies. The financial reporting framework that has been
applied in their preparation is applicable law and UK-adopted international accounting standards and as regards
the parent company financial statements, as applied in accordance with the provisions of the Companies Act
2006.
In our opinion:
•
•
•
•
the financial statements give a true and fair view of the state of the group’s and of the parent company’s
affairs as at 31 December 2023 and of the group’s loss for the year then ended;
the group financial statements have been properly prepared in accordance with UK-adopted international
accounting standards;
the parent company financial statements have been properly prepared in accordance with UK-adopted
international accounting standards and as applied in accordance with the provisions of the Companies Act
2006; and
the financial statements have been prepared in accordance with the requirements of the Companies Act
2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable
law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the
audit of the financial statements section of our report. We are independent of the company in accordance with
the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s
Ethical Standard as applied to listed public interest entities, and we have fulfilled our other ethical responsibilities
in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
Material uncertainty related to going concern
We draw attention to note 3 in the financial statements, which indicates that due to the group’s debt service
obligations and the exposure to Bitcoin, power and hashprice which have shown significant volatility over recent
years, resulting in a current loss recorded for the year. In addition to this, the group needs to raise further funding
during the assessment period, in order to meet liabilities as they fall due for the foreseeable future. As stated in
note 3, these events or conditions, along with the other matters as set forth in note 3, indicate that a material
uncertainty exists that may cast significant doubt on the group’s and company’s ability to continue as a going
concern. Our opinion is not modified in respect of this matter.
In auditing the financial statements, we have concluded that the director’s use of the going concern basis of
accounting in the preparation of the financial statements is appropriate. Our evaluation of the directors’
assessment of the group’s and parent company’s ability to continue to adopt the going concern basis of
accounting included a review of management’s cash flow forecasts to June 2025, along with an assessment of
the “downside case” forecast as well as its likelihood. The audit team performed sensitivity analysis on the
hashprice applied throughout the assessment period and the refinancing of the debt position. We have reviewed
all key inputs into the cash flow forecasts, with particular emphasis on those areas of judgement and estimation
uncertainty such as the hashprice, power costs, loan repayments and hashpower, and ensured they are
appropriate and no evidence of management bias exists.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the
relevant sections of this report.
Our application of materiality
For the purposes of determining whether the financial statements are free from material misstatement, we define
materiality as the magnitude of misstatement that makes it probable that the economic decisions of a reasonably
knowledgeable person, relying on the financial statements, would be changed or influenced. We also determine
a level of performance materiality which we use to assess the extent of testing needed to reduce to an
appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds
materiality for the financial statements as a whole.
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ARGO BLOCKCHAIN PLC
The group materiality for the financial statements as a whole was set at US$759,000 (2022: $969,000). This
was calculated based on an average of 1% of total revenue for the year and 2.5% of the loss before tax (2022:
average of 1% of total revenue for the year and 2.5% of the loss before tax). The benchmark was chosen as a
result of the key focus of the business in recent years being the assessment of not just revenue, but reducing
trading losses in light of difficult trading periods of low hashprice, high power costs and the ability of the entity
to repay its debt obligations. The percentage used is a reflection of the perceived risk in the industry and the
significant growth of the group, which therefore enabled greater coverage of revenue from the audit procedures
undertaken.
The parent company materiality for the financial statements as a whole was set at US$318,500 (2022:
$581,000). This was calculated based on 2% of total expenditure, which was same benchmark was used in the
prior year. We have determined this to be the principal benchmark of the parent company, as revenue is
generated solely through its subsidiaries. A key management target is to minimise parent company expenditure,
in order to maximise the utilisation of funds within the trading subsidiary. Materiality for the subsidiaries has
been calculated on individual levels either on the same basis as that of the group, capped at group performance
materiality, 2% of net assets and 1% of Gross assets.
These significant components of the group, were audited to a level of materiality ranging from US$88,966 to
US$505,000 (2022: $56,101 to $581,000). Performance materiality was set at 60%.
Performance materiality for the group financial statements was set at US$455,000 (2022: $581,000) and the
parent company was set at US$191,100 (2022: $348,844), being 60% of materiality for the financial statements
as a whole. The performance materiality for the group and all subsidiaries is based on our assessment of the
relevant risk factors e.g. previous experience of misstatements, management’s attitude towards proposed
adjustments, and the level of estimation inherent within the group and the subsidiaries including the parent
company.
We agreed to report to those charged with governance all corrected and uncorrected misstatements we
identified through our audit with a value in excess of US$37,000 (2022: $48,451) for the group and for the parent
company a value in excess of US$15,925 (2022: $29,070). We also agreed to report any other audit
misstatements below that threshold that we believe warranted reporting on qualitative grounds.
Our approach to the audit
The scope of our audit was influenced by our application of materiality. The quantitative and qualitative
thresholds for materiality determine the scope of our audit and the nature, timing and extent of our audit
procedures. In particular, we looked at areas involving significant accounting estimates and judgement by the
Directors, and those areas assessed to be Key Audit Matters as presented below. We also addressed the risk
of management override of internal controls, including among other matters consideration of whether there was
evidence of bias that represented a risk of material misstatement due to fraud.
We assessed all components of the group for their significance in order to determine the extent of the work to
be performed on them in order to obtain sufficient and appropriate audit evidence on which to base the group
audit opinion. Those entities of the group which were considered to be significant components, being Argo
Blockchain plc, Argo Innovation Labs Inc and Argo Operating US LLC were subject to full scope audit
procedures by PKF Littlejohn LLP. Procedures were performed to address the assessed risks of material
misstatement.
We did not rely on the work of any component auditors.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of
the financial statements of the current period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on: the
overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial statements as a whole, and in forming
our opinion thereon, and we do not provide a separate opinion on these matters. In addition to the matter
described in the Material uncertainty related to going concern section we have determined the matter described
below to be the key audit matter to be communicated in our report.
Key Audit Matter
How our scope addressed this matter
Carrying value of mining machines (Note 18)
The group holds a significant value of mining
machines at the year end totalling $51,158k (2022:
$65,358k), which is made up of newly acquired
machines in the year as well as those in place from
prior periods.
The machine prices fluctuate based on their hashpower
rating and the price of bitcoin.
46
In responding to the identified key audit matter we
completed the following audit procedures:
• Reviewing management’s VIU calculations
and challenging
the key assumptions
both
made,
corroborative and contradictory evidence
of the key inputs;
obtaining
including
ARGO BLOCKCHAIN PLC
Although the bitcoin price has recovered during the
current year, there are numerous factors which indicate
a potential impairment under IAS 36, Impairment of
Assets. These factors include, but are not limited to:
bitcoin halving, power costs, curtailments and machine
uptime.
Where an impairment indicator exists, management are
required to prepare an assessment of the recoverable
amount of said machines, being the higher of their fair
value less costs to sell and the value in use.
The key assumptions and inputs underlying the Value in
Use (‘VIU’) calculations, including the cash flow forecasts
and discount rates, require significant judgement and
estimation by management and therefore this has been
assessed as a key audit matter.
• Evaluating the allocation of relevant costs
relating to mining machines and ensuring
completeness and reasonableness of the
key inputs;
• Ensuring mathematical accuracy of the
VIU calculations;
the
• Obtaining evidence of current selling prices
of new and used machines in order to
assess
the
machines were to be sold to a third party
and to also assess the validity of the
salvage value as part of
the VIU
calculation;
recoverable value
if
• Performing sensitivity analysis on the key
inputs in the VIU calculations prepared,
and assessing the accuracy of previous
forecasts to actual results;
• Engaging our internal valuation specialists
to perform a Weighted Average Capital
Cost calculation to compare against the
discount rate applied by management in
their assessment;
• Performing physical verification checks of
the mining machinery to assess for any
indicators of impairment;
• Reviewing management’s assessment of
the useful life of mining machinery and
ensuring this is appropriate; and
• Reviewing the disclosures in the financial
statements and ensuring they provide a
true and
fair view of management’s
assessment performed.
Key observations:
We are satisfied that management’s impairment
assessment and key assumptions applied in the
VIU calculation are reasonable.
Other information
The other information comprises the information included in the annual report, other than the financial
statements and our auditor’s report thereon. The directors are responsible for the other information contained
within the annual report. Our opinion on the group and parent company financial statements does not cover the
other information and, except to the extent otherwise explicitly stated in our report, we do not express any form
of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial statements or our knowledge obtained
in the course of the audit, or otherwise appears to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a
material misstatement in the financial statements themselves. If, based on the work we have performed, we
conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion the part of the directors’ remuneration report to be audited has been properly prepared in
accordance with the Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
47
ARGO BLOCKCHAIN PLC
•
•
the information given in the strategic report and the directors’ report for the financial year for which
the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors’ report have been prepared in accordance with applicable legal
requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and the parent company and their environment
obtained in the course of the audit, we have not identified material misstatements in the strategic report or the
directors’ report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006
requires us to report to you if, in our opinion:
•
•
•
adequate accounting records have not been kept by the parent company, or returns adequate for our
audit have not been received from branches not visited by us; or
the parent company financial statements and the part of the directors’ remuneration report to be audited
are not in agreement with the accounting records and returns; or
certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement, the directors are responsible for the
preparation of the group and parent company financial statements and for being satisfied that they give a true
and fair view, and for such internal control as the directors determine is necessary to enable the preparation
of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the group and parent company financial statements, the directors are responsible for assessing
the group’s and the parent company’s ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern basis of accounting unless the directors either
intend to liquidate the group or the parent company or to cease operations, or have no realistic alternative but
to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in
accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures
in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities,
including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is
detailed below:
• We obtained an understanding of the group and parent company and the sector in which they operate
to identify laws and regulations that could reasonably be expected to have a direct effect on the financial
statements. We obtained our understanding in this regard through discussions with management,
industry research and application of cumulative audit knowledge and experience of the sector.
• We determined the principal laws and regulations relevant to the group and parent company in this
regard to be those arising from:
o Companies Act 2006
o Canada Business Corporations Act
o Securities Law
o Anti Money Laundering Legislation
o Disclosure Rules and Transparency rules for listed entities
o SEC regulations
o Local tax laws and regulations
48
ARGO BLOCKCHAIN PLC
• We designed our audit procedures to ensure the audit team considered whether there were any
indications of non-compliance by the group and parent company with those laws and regulations.
These procedures included, but were not limited to:
o A review of the Board minutes throughout the year and post year-end
o A review of the RNS announcements
o A review of general ledger transactions
o Discussion with management
o Obtained confirmation from legal advisors
• We also identified the risks of material misstatement of the financial statements due to fraud. We
considered, in addition to the non-rebuttable presumption of a risk of fraud arising from management
override of controls, the risk relating to the valuation of digital assets and the impairment assessment
of property, plant and equipment to be an area of potential for management bias. The valuation of the
digital assets held at the year-end have been classified as “level 2” in the fair value hierarchy table,
and supporting evidence has been obtained from a relevant trading platform to support the fair value
of assets held.
• As in all of our audits, we addressed the risk of fraud arising from management override of controls by
performing audit procedures which included, but were not limited to: the testing of journals; reviewing
accounting estimates for evidence of bias; and evaluating the business rationale of any significant
business.
outside
transactions
unusual
normal
course
that
are
the
or
of
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including
those leading to a material misstatement in the financial statements or non-compliance with regulation. This
risk increases the more that compliance with a law or regulation is removed from the events and transactions
reflected in the financial statements, as we will be less likely to become aware of instances of non-
compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud
involves intentional concealment, forgery, collusion, omission or misrepresentation.
A further description of our responsibilities for the audit of the financial statements is located on the Financial
Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our
auditor’s report.
Other matters which we are required to address
We were appointed by the Board on 13 November 2023 to audit the financial statements for the period ending
31 December 2023. Our total uninterrupted period of engagement is 6 years, covering the periods ending 31
December 2018 to 31 December 2023.
The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the group or the parent
company and we remain independent of the group and the parent company in conducting our audit.
Our audit opinion is consistent with the additional report to the audit committee.
49
ARGO BLOCKCHAIN PLC
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of
the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s
members those matters we are required to state to them in an auditor’s report and for no other purpose. To
the fullest extent permitted by law, we do not accept or assume responsibility to anyone, other than the
company and the company's members as a body, for our audit work, for this report, or for the opinions we
have formed.
David Thompson (Senior Statutory Auditor)
For and on behalf of PKF Littlejohn LLP
15 Westferry Circus, Canary Wharf, London E14 4HD
Statutory Auditor
24 April 2024
50
ARGO BLOCKCHAIN PLC
GROUP STATEMENT OF COMPREHENSIVE INCOME
Year ended
December
2023
Year ended
December 2022
(Restated,
Note 2)
$’000
$’000
50,558
58,583
7,163
(35,964) (26,759)
-
738
(18,656)
(53,978)
(20,469)
Note
7
7
17, 20
18
8
(19,345) (34,057)
3,839
(42,623)
-
2,097
21
(3,892)
(6,096)
14
16
(19,398)
36
-
(2,236)
-
(80,679)
-
(55,418)
-
(23,228)
15
-
(406)
8
18
17
17
16
(11,556)
346
(855)
428
(1,082)
(716)
-
(35,033)
13
-
(22,661)
3,726
(55,838)
-
(5,155)
(6,027)
4,994
(240,692)
11,731
16
(35,033)
(228,961)
(779)
-
-
(779)
(20,639)
(8,744)
(551)
(29,934)
(35,812)
(258,895)
Continuing operations
Revenues
Power and hosting costs
Power Credits
Crypto asset fair value movement
Depreciation – mining hardware
Gross profit (loss)
Operating expenses
Gain on hedging
Share based payment charge
Operating loss
Gain on sale of investments
Loss on sale of subsidiary
Write off of investment
Loss on disposal of fixed assets
Investment fair value movement
Finance costs
Other income
Impairment of tangible fixed assets
Gan on disposal of intangible assets
Impairment of intangible assets
Equity accounted loss from associate
Revaluation of contingent consideration
Loss before taxation
Tax Credit
Loss after taxation
Other comprehensive income
Currency translation reserve
Equity accounted OCI from associate
Fair value reserve
Total other comprehensive loss
Total comprehensive loss attributable
to the equity holders of the Company
Loss per share attributable to equity owners (cents)
Basic and diluted loss per share
12
(0.07)
(0.48)
51
ARGO BLOCKCHAIN PLC
GROUP STATEMENT OF FINANCIAL POSITION
As at 31
December
2023
Note
$’000
15
16
17
18
18
19
19
20
26
14
22
22
23
23
ASSETS
Non-current assets
Investments at fair value through profit or loss
Investments accounted for using the equity
method
Intangible fixed assets
Property, plant and equipment
Right of use assets
Total non-current assets
Current assets
Trade and other receivables
Prepaids
Digital assets
Cash and cash equivalents
Assets held for sale
Total current assets
Total assets
EQUITY AND LIABILITIES
Equity
Share Capital
Share Premium
Share based payment reserve
Currency translation reserve
Fair value reserve
Other comprehensive income of equity
accounted associates
Accumulated income (deficit)
Total equity
Current liabilities
Trade and other payables
Corporation Tax
Deferred Tax
Contingent consideration
Loan and Borrowings
Lease liability
Liabilities held for sale
Total current liabilities
As at 31
December
2022
(Restated,
Note 2)
$’000
414
2,863
2,103
76,991
525
82,896
823
5,979
443
20,092
27,337
-
27,337
400
-
888
59,728
-
61,016
2,480
1,355
385
7,443
11,663
3,261
14,924
75,940
110,233
712
209,779
12,166
(30,129)
-
-
634
202,103
8,528
(29,350)
-
-
23
(192,370)
(157,337)
158
24,578
11,175
9,780
-
-
-
14,320
-
25,495
2,090
27,585
-
-
-
11,605
5
21,390
-
21,390
24
13
25
25
14
52
As at 1
January
2022
$’000
543
18,642
7,560
150,571
472
177,788
10,072
75,409
108,956
15,923
210,360
-
210,360
388,148
622
196,911
2,531
(8,711)
551
8,744
71,624
272,272
20,566
10,360
386
10,889
31,558
10
73,769
-
73,769
ARGO BLOCKCHAIN PLC
Non-current liabilities
Deferred tax
Issued debt - bond
Loans
Lease liability
Total liabilities
13
4
25
25
-
38,170
10,027
-
75,782
-
37,809
25,916
540
85,655
Total equity and liabilities
75,940
110,233
730
36,303
4,575
499
115,876
388,148
The Group financial statements were approved by the Board of Directors on 24 April 2024 and authorised for
issue and they are signed on its behalf by:
Thomas Chippas
Chief Executive Officer
The accounting policies and notes on pages 58 to 85 form part of the financial statements.
Registered number: 11097258
53
ARGO BLOCKCHAIN PLC
GROUP STATEMENT OF CHANGES IN EQUITY
Share
Capital
Share
Premium
Currency
translation
reserve
Share based
payment
reserve
Accumulated
surplus/
(deficit)
Total
Balance at 1 January 2023
634
202,103
(29,350)
$’000
$’000
$’000
Total comprehensive loss for
the period:
Loss for the period
Other comprehensive loss
Total comprehensive loss for the
period
Transactions with equity owners:
Share capital issued
Share based payment charge
Share RSUs vested
Total transactions with equity
owners
-
-
-
78
-
-
78
-
-
-
7,676
-
-
7,676
-
(779)
(779)
-
-
-
-
$’000
8,528
-
-
-
-
3,892
(254)
3,638
$’000
$’000
(157,337)
24,578
(35,033)
-
(35,033)
(779)
(35,033)
(35,812)
-
-
-
-
7,754
3,892
(254)
11,392
Balance at 31 December 2023
712
209,779
(30,129)
12,166
(192,370)
158
54
ARGO BLOCKCHAIN PLC
Other
comprehensive
income of
associates
$’000
8,744
-
(8,744)
(8,744)
-
-
-
-
-
Accumulated
surplus/
(deficit)
Total
$’000
$’000
71,624
272,272
(228,961)
-
(228,961)
(29,934)
(228,961)
(258,895)
-
-
-
-
5,204
6,096
(99)
11,201
(157,337)
24,578
(551)
(551)
-
-
-
-
-
Share
Capital
Share
Premium
Currency
translation
reserve
Share based
payment
reserve
Fair
Revaluation
Reserve
$’000
622
$’000
196,911
$’000
(8,711)
$’000
2,531
$’000
551
Balance at 1 January 2022
Total comprehensive loss for
the period:
Loss for the period
Other comprehensive loss
Total comprehensive loss for the
period
Transactions with equity owners:
Share capital issued
Share based payment charge
Share options/warrants exercised
Total transactions with equity
owners
-
-
-
12
-
-
12
-
-
-
5,192
-
-
5,192
-
(20,639)
(20,639)
-
-
-
-
-
-
-
-
6,096
(99)
5,997
Balance at 31 December 2022
634
202,103
(29,350)
8,528
55
ARGO BLOCKCHAIN PLC
GROUP STATEMENT OF CASHFLOWS
Cash flows from operating activities
Loss before tax
Adjustments for:
Depreciation and amortisation
Foreign exchange movements
Loss on disposal of tangible assets
Finance cost
Loss on sale of subsidiary and investment
Fair value change in digital assets through profit or loss
Revenue from digital assets
Impairment of intangible digital assets
Impairment of property, plant and equipment
Investment fair value movement
Write off of investment
Share of loss from associate
Gain on sale of investment
Revaluation of contingent consideration
Hedging gain
Proceeds from sale of digital assets
Share based payment expense
Working capital changes:
(Increase)/decrease in trade and other receivables
Increase/(decrease) in trade and other payables
Net cash generated from operating activities
Investing activities
Cash transferred on disposal of subsidiary
Proceeds from sale of investment
Purchase of tangible fixed assets
Proceeds from disposal of tangible fixed assets
Net cash used in investing activities
Financing activities
Increase in loans
Lease payments
Loan repayments
Interest paid
Proceeds from issue of loan in conjunction with the disposal of
subsidiary
Proceeds from shares issued – net of issue costs
Net cash (used in) generated from financing activities
Net (decrease) increase in cash and cash equivalents
Effect of foreign exchange on cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
56
Note
17, 18
8
20
20
17
18
16
16
20
10
19
24
15
18
25
26
25
23
Year ended
December
2023
$’000
Year ended
December
2022
(Restated,
Note 2)
$’000
(35,033)
(240,692)
20,129
(1,597)
-
11,556
-
(738)
(50,558)
654
855
-
2,236
716
(36)
-
-
51,866
3,892
(1,152)
1,041
3,831
-
50
(1,112)
-
(1,062)
1,429
(14,064)
(10,661)
-
7,518
(15,778)
(13,009)
360
20,092
7,443
29,003
(21,337)
23,228
22,662
55,418
55,555
(60,172)
5,548
55,838
406
-
6,027
-
(4,994)
(2,097)
114,646
6,096
(26,150)
(5,576)
13,409
(1,678)
-
(108,047)
12,404
(97,321)
96,995
(93)
-
(22,661)
9,936
-
84,177
265
3,904
15,923
20,092
ARGO BLOCKCHAIN PLC
Material non-cash movements:
● The Group sold its Helios facility in December 2022, in exchange for paying down existing debt and obtaining
●
new debt. See Note 19 for additional details.
In March 2022, the Group entered into an agreement to exchange mining machines and terminate a hosting
agreement. See Note 19 for additional details.
● During the period, the Group utilised “Prepayments for mining machines” amounting to $4,118,000, included
within receivables, in order to acquire mining machines within property plant and equipment additions.
Group - net debt reconciliation
Current loans and borrowings
Non-current issued debt – bonds
Non-current loans and borrowings
Lease liability
Cash and cash equivalents
Total net debt
26
26
26
Year ended
31 December
2023
$’000
(14,320)
(38,170)
(10,027)
-
7,443
Year ended
31 December
2022
$’000
(11,605)
(37,809)
(25,916)
(545)
20,092
(55,074)
(55,783)
57
ARGO BLOCKCHAIN PLC
NOTES TO THE FINANCIAL STATEMENTS
1.
COMPANY INFORMATION
Argo Blockchain PLC (“the company”) is a public company, limited by shares, and incorporated in England and Wales. The
registered office is Eastcastle House, 27-28 Eastcastle Street, London, W1W 8DH. The company was incorporated on
5 December 2017 as GoSun Blockchain Limited and changed its name to Argo Blockchain Limited on 21 December
2017. Also on 21 December 2017, the company re-registered as a public company, Argo Blockchain plc. Argo Blockchain
plc acquired a 100% subsidiary, Argo Innovation Labs Inc. (together “the Group”), incorporated in Canada, on 12 January
2018.
On 4 March 2022 the Group acquired 100% of the share capital of DPN LLC and was merged into new US entity Argo
Innovation Facilities (US) Inc (also 100% owned by Argo Blockchain plc).
On 11 May 2022 the Group acquired 100% of the share capital of 9377-2556 Quebec Inc and 9366-5230 Quebec Inc.
These are held by Argo Innovation Labs Inc. (Canada).
On 22 November 2022, the Group formed Argo Operating US LLC and Argo Holdings US Inc.
On 21 December 2022, Argo Innovation Facilities (US) Inc became Galaxy Power LLC. On 28 December 2022, the
Group sold Galaxy Power LLC.
The principal activity of the group is that of Bitcoin mining.
The common shares of the Group are listed under the trading symbol ARB on the London Stock Exchange. The American
Depositary Receipt of the Group are listed under the trading symbol ARBK on Nasdaq. The Group bond is listed on the
Nasdaq Global Select Market under the trading symbol ARBKL.
The financial statements cover the year ended 31 December 2023.
2.
BASIS OF PREPARATION
The financial statements have been prepared in accordance with UK-adopted international accounting standards and with
the requirements of the Companies Act 2006. The financial statements have been prepared under the historical cost
convention, except for the measurement to fair value certain financial and digital assets and financial instruments as
described in the accounting policies below.
During 2023, the Group changed its reporting currency to US dollars as further described in Note 3. Monetary amounts
in these financial statements are rounded to the nearest thousand US dollars. Argo Blockchain PLC’s functional currency
is GBP. Argo Innovations Labs Inc., 9377-2556 Quebec Inc, and 9366-5230 Quebec Inc.’s functional currency is
Canadian Dollars; Argo Operating US LLC and Argo Holdings US Inc.’s functional currency is United States Dollars; all
entries from these entities are presented in the Group’s presentational currency of US dollars. This change in accounting
policy, added retrospectively requires a third balance sheet as at the beginning of the preceding comparative period to
be reported. Where the subsidiary's functional currency is different from the parent, the assets and liabilities presented
are translated at the closing rate as at the Statement of Financial Position date. Income and expenses are translated at
average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates
prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the
transactions).
Critical accounting judgements and key sources of estimation uncertainty
The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and
assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income
and expense. Actual results may differ from these estimates. The significant judgements made by management in
applying the Group’s accounting policies and the key sources of estimation uncertainty are disclosed in Note 6.
Prior year restatement
The 2022 income tax accounting was completed based on preliminary information at the time of the financial statement
completion. When updating the income taxes for 2023 it was determined that the 2022 estimates were inaccurate and
have been restated.
The impact on the 2022 financial statements are as follows:
Income tax recovery increased by $11,285,000 from $446,000 to $11,731,000.
Cumulative translation adjustment increased by $455,000 from $20,184,000 to $20,639,000
Net loss decreased by $11,285,000 from a loss of $240,246,000 to a loss of $228,961,000.
Deferred tax liability decreased by $10,589,000 from $10,589,000 to $nil.
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Statement of Cashflows reclassification
Proceeds from the sale of digital assets were reclassified from investing cashflows to operating cashflows in the 2022
Statements of Cashflows, amongst other presentational changes in 2022 in order to ensure comparability with the
presentation and classification in the current year.
3.
ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of these consolidated financial statements are below.
Change in Presentation Currency
The Group changed its presentational currency to US Dollars during 2023 due to the fact its revenues, direct costs,
capital expenditures and debt obligations are predominantly denominated in US Dollars. In order to satisfy the
requirements of IAS 21 with respect to a change in the presentation currency, the financial information as previously
reported in the Group’s Annual Reports have been restated from GBP into US Dollars using the procedures outlined
below:
• Assets and liabilities were translated to US Dollars at the closing rates of exchange at each respective balance sheet
date
• Share capital, share premium and other reserves were translated at the historic rates prevailing at the dates of
transactions
•
Income and expenses were translated to US Dollars at an average rate at each of the respective reporting years
• Differences resulting from the retranslation were taken to reserves
• All exchange rates used were extracted from the Group’s underlying financial records
Going Concern
The preparation of consolidated financial statements requires an assessment on the validity of the going concern
assumption.
On 28 December 2022, the Group announced a series of transactions with Galaxy Digital Holdings, Ltd. (“Galaxy”) that
improved the Group’s liquidity position and enabled the Group to continue its mining operations. As part of the
transactions, Argo sold the Helios facility and real property in Dickens County, Texas to Galaxy for $65 million and
refinanced existing asset-backed loans via a new $35 million, three-year asset-backed loan with Galaxy. The transactions
reduced total indebtedness by $41 million and allowed Argo to simplify its operating structure. During 2023 and through
March 31, 2024, the Group has repaid a significant portion of the Galaxy debt by making its scheduled amortization
payments, sweeps on equity raises, and through the sale of non-core assets. In addition, an equity raise completed in
January 2024 provided the Group with additional cash resources. This has strengthened the Group’s balance sheet and
liquidity position. However, material uncertainties exist that may cast significant doubt regarding the Group’s ability to
continue as a going concern and meet its liabilities as they come due. The significant uncertainties are:
1. The Group’s debt service obligations as of reporting date are approximately $18 million (Galaxy principal and
interest on Galaxy and the bonds) from 31 March 2024 to 30 June 2025.
2. The Group’s exposure to Bitcoin prices, power prices, and hashprice, each of which have shown volatility over
recent years and have a significant impact on the Group’s future profitability. The Group may have difficulty
meeting its liabilities if there are significant declines to the hashprice assumption or significant increases to the
power price, particularly where there is a combination of both factors. The recent April 2024 Bitcoin halving has
created pressure on the hashprice. The Directors’ assessment of going concern includes forecasted scenarios
drawn up to 30 June 2025 using the Group’s estimate of potential hashprices and power costs.
Offsetting these potential risks to the Group’s cash flow are the Group’s current cash balance, cash generated from
operations and the Group’s ability to generate additional funds by issuing equity for cash proceeds.
Based on information from Management, as well as independent advisors, the Directors have considered the period to
30 June 2025, as a reasonable time period given the variable outlook of cryptocurrencies and the Bitcoin halving in April
2024. Based on the above considerations, the Board believes it is appropriate to adopt the going concern basis in the
preparation of the Financial Statements. However, the Board notes that the significant debt service requirements and
the volatile economic environment, indicate the existence of material uncertainties that may cast significant doubt
regarding the applicability of the going concern assumption and the auditors have made reference to this in their audit
report.
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Revenue and Other Income Recognition
Mining Revenue
The provision of hash calculation services is an output of our ordinary activities from the Company’s mining equipment.
The Company has entered into arrangements with a Mining pool and has undertaken the performance obligation of
providing computing power used for hashing calculations to the Mining pool in exchange for noncash consideration in
the form of cryptocurrency, which is variable consideration. Providing our computing power is at the Company’s discretion
and our enforceable right to compensation begins when, and continues for as long as, services are provided. The
cryptocurrency earnings are calculated based on a formula which, in turn, is based on the hashrate contributed by the
Company's provided computing power used for hashing calculations allocated to the Mining pool, assessed over a 24-
hour period, and distributed daily based on the Full Pay Per Share (“FPPS”) methodology. The Company assesses the
estimated amount of the variable non-cash consideration to which it expects to be entitled for providing computational
power used for hashing calculations at contract inception and subsequently measures if it is highly probable that a
significant reversal in the amount of cumulative revenue recognized will not occur. The uncertainties regarding the daily
variable consideration to which the Company is entitled for providing its computational power used for hashing
calculations are no longer constrained at 23:59:59 UTC regardless of the timing of the BTC received. The amount earned
is calculated based on the Company's computing power used for hashing calculations provided to the Mining pool and
the estimated (i) block subsidies and (ii) daily average transaction fees which the Mining Pool expects to earn, less (iii)
a Mining pool discount.
1. Block subsidies refers to the block reward that are expected to be generated on the BTC network as a whole.
The fee earned by the Company is first calculated by dividing (a) the total amount of hashrate the Company
provides to the Mining pool operator, by (b) the total BTC network’s implied hashrate (as determined by the BTC
network difficulty), multiplied by (c) the total amount of block subsidies that are expected to be generated on the
BTC network as a whole.
2. Transaction fees refer to the total fees paid by users of the network to execute transactions. The fee paid out by
the Mining pool operator to the Company is further calculated by dividing (a) the total amount of transaction fees
that are actually generated on the BTC network as a whole less the 3 largest and 3 smallest transactions per
block, by (b) the total amount of block subsidies that are actually generated on the BTC network as a whole,
multiplied by (c) the Company’s fee earned as calculated in (i) above. The Company is entitled to its relative
share of consideration even if a block is not successfully added to the blockchain by the mining pool.
3. Mining pool discount refers to the discount applied to the total FPPS payout otherwise attributed to computing
power service providers for their sale of computing power used for hashing calculations as defined in the rate
schedule of the agreement with the Mining pool operator.
The Company is entitled to the fee from the Mining Pool as calculated above regardless of the actual performance of the
Mining Pool operator. Therefore, even if the Mining Pool does not successfully add any block to the blockchain in a given
contract period, the fee remains payable by the Mining Pool to the Company. Accordingly, the Company is not sharing
in the earnings of the Mining pool operator.
The Company’s agreements with the Mining pool operator provide the Mining pool operator and the Company with the
enforceable right to terminate the contract at any time without substantively compensating the other party for the
termination. Upon termination, the Mining pool operator is required to pay the Company the amount due related to
previously satisfied performance obligations. As a result, the Company has determined that the duration of the contract
is less than 24 hours and the contract is continuously renewed throughout the day. The Company has also determined
that the Mining pool operator’s renewal right is not a material right as the terms, conditions, and compensation amounts
are at then-current market rates.
The cryptocurrency earned is received in full and can be paid in fractions of cryptocurrency. Revenues from providing
cryptocurrency computational power used for hashing calculations are recognized upon delivery of the service over a
24-hour period, which generally coincides with the receipt of crypto assets in exchange for the provision of computational
power used for hashing calculations and the contract inception date. The Company updates the estimated transaction
price of the non-cash consideration received at its fair market value. Management estimates fair value daily based on
the quantity of cryptocurrency received multiplied by the price quoted from Coingecko on the day it was received.
Management considers the prices quoted on Coingecko to be a level 1 input under IFRS 13, Fair Value Measurement.
Power Credits - Power credits are credits we receive in Texas when we curtail our mining production and sell the power
back to the grid. The hosting agreement with Galaxy allows Argo to share in the proceeds from these curtailments, which
occurs when the Helios facility monetizes its fixed-price PPA during periods of high power prices. The Company records
power credits in the period they are earned provided they are estimable and recoverable.
Management fees: In 2022, the Group recognised management fees on the services provided to third parties for
management of mining machines on their behalf, ensuring the machines are optimised and mining as efficiently as
possible. The performance obligation is identified as the services are performed, and thus revenue is recorded over time.
Other Income: The Group receives credits and or coupons for the purchase and use of "Application-Specific Integrated
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Circuits ("ASICs") on a periodic basis for Bitcoin Mining. These credits are provided to the Group after it purchases ASICs
based on the variance between the price paid by the Group versus the reduction in ASIC prices. The credits are
transferable. The Group elects to sell the credits at the market rate to willing buyers upon receipt of the credits. Other
income is recognised at the date the sale is completed.
Derivative Contracts – Hedging: In 2022, the Group used derivatives contracts in connection with some of its lending
activities and its treasury management. Derivative contracts are susceptible to additional risks that can result in a loss of
all or part of the investment. The Group’s derivative activities and exposure to derivative contracts are subject to interest
rate risk, credit risk, foreign exchange risk, and macroeconomic risks. In addition, Argo is also subject to additional
counterparty risks due to the potential inability of its counterparties to meet the terms of their contracts. There were no
hedging contracts in 2023.
Basis of consolidation
Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity
when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to
affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control
is transferred to the Group. They are deconsolidated from the date that control ceases.
The Group assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to
one or more of the three elements of control. Assets, liabilities, income and expenses of a subsidiary acquired or disposed
of during the year are included in the consolidated financial statements from the date the Group gains control until the
date the Group ceases to control the subsidiary.
The group consists of Argo Blockchain plc and its wholly owned subsidiaries Argo Innovation Labs Inc, Argo Operating US
LLC and Argo Holdings US Inc., 9366-5230 and 9377-2556 and Argo Innovation Labs Ltd. Argo Innovation Labs Ltd has
been dormant since incorporation.
In the parent company financial statements, investments in subsidiaries, joint ventures and associates are accounted for
at cost less impairment.
The consolidated financial statements incorporate those of Argo Blockchain plc and all of its subsidiaries (i.e., entities that
the group controls through its power to govern the financial and operating policies so as to obtain economic benefits).
Subsidiaries acquired during the year are consolidated using the purchase method. Their results are incorporated from
the date that control passes.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on
consolidation.
Business Combinations
The group applies the acquisition method to account for business combinations. The consideration transferred for the
acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the
acquisition and the equity interests issued by the group. The consideration transferred includes the fair value of any asset
or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The group
recognises any non-controlling interest in the acquiree on an acquisition-by-acquisition basis, either at fair value or at the
non-controlling interest’s proportionate share of the recognised amounts of acquiree’s identifiable net assets.
Acquisition-related costs are expensed as incurred.
Associates
Associates are all entities over which the Group has significant influence but not control, generally accompanying a
shareholding of between 20% and 50% of the voting rights. Investments in associates are accounted for using the equity
method of accounting. Under the equity method, the investment is initially recognised at cost, and the carrying amount is
increased or decreased to recognise the investor’s share of the profit or loss of the investee after the date of acquisition.
The Group’s investment in associates includes goodwill identified on acquisition.
If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate share of the
amounts previously recognised in other comprehensive income is reclassified to profit or loss where appropriate.
The Group’s share of post-acquisition profit or loss is recognised in the income statement, and its share of post-
acquisition movements in other comprehensive income is recognised in other comprehensive income with a
corresponding adjustment to the carrying amount of the investment. When the Group’s share of losses in an associate
equal or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognise
further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.
The Group determines at each reporting date whether there is any objective evidence that the investment in the associate
is impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable
amount of the associate and its carrying value and recognises the amount adjacent to ‘share of profit/(loss) of associates
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in the income statement.
Segmented reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating
decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing the
performance of the operating segments, has been identified as the CEO or equivalent. The directors consider that the
Group has only one significant reporting segment being crypto mining which is fully earned by a Canadian and USA
subsidiary for the financial year ended 31 December 2023.
Loans and issued debt
Loans and issued debt are recognised initially at fair value, net of transaction costs incurred. Loans and issued debt are
subsequently carried at amortised cost; any difference between the proceeds and the redemption value is recognised in
the income statement over the period of the borrowings, using the effective interest method. Loans and issued debt are
removed from the statement of financial position when the obligation specified in the contract is discharged, cancelled or
expired. Loans and borrowings and issued debt are classified as current liabilities unless the Group has an unconditional
right to defer settlement of a liability for at least 12 months after the end of the reporting period.
Intangible assets
Intangible fixed assets comprise of the Group’s website and digital assets that were not mined by the Group and are held
by Argo Labs (our internal team) as investments. The Group’s website is recognised at cost and is amortised over its useful
life. Amortisation is recorded within administration expenses. Digital assets recorded under IAS 38 have an indefinite
useful life initially measured at cost, and subsequently measured at fair value.
Argo’s primary business is focused on cryptocurrency mining. Argo Labs is an in-house innovation arm focused on
identifying opportunities within the disruptive and innovative sectors of the broader cryptocurrency ecosystem. Argo Labs
uses a portion of Argo’s crypto assets to deploy into various blockchain projects.
Increases in the carrying amount arising on revaluation of digital assets are credited to other comprehensive income and
shown as other reserves in shareholders’ equity. Decreases that offset previous increases of the same asset are charged
in other comprehensive income and debited against the fair value reserve directly in equity; all other decreases are
charged to the income statement.
The fair value of intangible cryptocurrencies on hand at the end of the reporting period is calculated as the quantity of
cryptocurrencies on hand multiplied by price quoted on www.coingecko.com, one of the leading crypto websites, as at
the reporting date.
Goodwill is initially measured at cost (being the excess of the consideration transferred and the amount recognised for
non-controlling interests and any previous interest held of the net identifiable assets acquired and liabilities assumed). If
the fair value of the net assets acquired is in excess of the aggregate consideration transferred, the difference is
recognised in profit or loss.
Tangible fixed assets
Tangible fixed assets are comprised of right of use assets, office equipment, mining and computer equipment, data centres,
leasehold improvements, and electrical equipment.
Right of use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for
any remeasurement of lease liabilities. The cost of the right of use assets includes the amount of lease liabilities
recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease
incentives received. Right of use assets are depreciated on a straight-line basis over the shorter of the lease term and
the estimated useful lives of the assets.
Office equipment assets are measured at cost, less any accumulated depreciation and impairment losses. Office
equipment is depreciated over 3 years on a straight-line basis.
Mining and computer equipment and leasehold improvements: Depreciation is recognised so as to write off the cost or
valuation of assets less their residual values over their estimated useful lives. It is 3 to 4 years in the case of mining and
computer equipment and 5 years in the case of the leasehold improvements, on a straight-line basis.
Data centres: Depreciation on the data centres is recognised so as to write off the cost or valuation of assets less their
residual values over their estimated useful lives of 25 years on a straight-line basis from when they are brought into use.
Depreciation is recorded in the Income Statement within general administrative expenses once the asset is brought into
use. Any land component is not depreciated.
Electrical equipment: Depreciation is recognised on a straight-line basis to write off the cost less their residual values over
their estimated useful lives of 7 years.
Management assesses the useful lives based on historical experience with similar assets as well as anticipation of future
events which may impact their useful life.
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Assets Held for Resale
An asset is classified as held for sale if its carrying amount will be recovered principally through sale rather than through
continuing use, which is when the sale is highly probable, and it is available for immediate sale in its present condition
subject only to terms that are usual and customary for sales of such assets. Assets classified as held for sale are
measured at the lower of the carrying amount upon classification and the fair value less costs to sell. Assets classified
as held for sale and the associated liabilities are presented separately from other assets and liabilities in the Consolidated
Balance Sheet. Once assets are classified as held for sale, property, plant and equipment and intangible assets are no
longer subject to depreciation or amortisation.
Impairment of non-financial assets
At each reporting period end date, the Group reviews the carrying amounts of its non-financial assets to determine
whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the
recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is
not possible to estimate the recoverable amount of an individual asset, the Group and Company estimates the
recoverable amount of the cash-generating unit to which the asset belongs.
Digital assets
Digital assets consist of mined bitcoin, and do not qualify for recognition as cash and cash equivalents or financial assets
and have an active market which provides pricing information on an ongoing basis.
The Group has assessed that the most appropriate accounting for its digital assets is IAS 2, Inventories, in characterising
its holding of Digital assets as inventory. If assets held by the Group are principally acquired for the purpose of selling in
the near future and generating a profit from fluctuations in price, such assets are accounted for as inventory, and changes
in fair value (less costs to sell) are recognised in profit or loss. Digital assets are initially measured at fair value.
Subsequently, digital assets are measured at fair value with gains and losses recognised directly in profit or loss.
Digital assets are included in current assets as management intends to dispose of them within 12 months of the end of
the reporting period. Digital assets are cryptocurrencies mined by the Group. Cryptocurrencies not mined by the Group
are recorded as Intangible Assets (see note 17).
Cash and cash equivalents
Cash and cash equivalents are comprised of cash held at banks with high credit ratings. The Group considers the credit
risk on cash and cash equivalents to be limited because the counterparties are banks with high credit ratings assigned
by international credit rating agencies.
Financial instruments
Financial assets: Financial assets are recognised in the Statement of Financial Position when the Group becomes party
to the contractual provisions of the instrument. Financial assets are classified into specified categories. The classification
depends on the nature and purpose of the financial assets and is determined at the time of recognition. Financial assets
are subsequently measured at amortised cost, fair value through OCI, or fair value through profit and loss.
The classification of financial assets at initial recognition that are debt instruments depends on the financial asset’s
contractual cash flow characteristics and the Group’s business model for managing them. The Group initially
measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss,
transaction costs.
In order for a financial asset to be classified and measured at amortised cost, it needs to give rise to cash flows that are
‘solely payments of principal and interest (SPPI)’ on the principal amount outstanding. This assessment is referred to as
the SPPI test and is performed at an instrument level.
The Group’s business model for managing financial assets refers to how it manages its financial assets in order to
generate cash flows. The business model determines whether cash flows will result from collecting contractual cash
flows, selling the financial assets, or both.
Subsequent measurement: For purposes of subsequent measurement, financial assets are classified in four categories:
• Financial assets at amortised cost
• Financial assets at fair value through OCI with recycling of cumulative gains and losses (debt instruments)
• Financial assets designated at fair value through OCI with no recycling of cumulative gains and losses upon
derecognition (equity instruments)
• Financial assets at fair value through profit or loss
Equity Instruments: The Group subsequently measures all equity investments at fair value. Dividends from such
investments continue to be recognised in profit or loss as other income when the Group’s right to receive payments is
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established. Changes in the fair value of financial assets at FVPL are recognised in other gains/(losses) in the statement
of profit or loss as applicable.
Financial assets at amortised cost (debt instruments): This category is the most relevant to the Group. The Group
measures financial assets at amortised cost if both of the following conditions are met:
• The financial asset is held within a business model with the objective to hold financial assets in order to collect
contractual cash flows; and
• The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of
principal and interest on the principal amount outstanding.
Financial assets at amortised cost are subsequently measured using the effective interest rate (EIR) method and are
subject to impairment. Interest received is recognised as part of finance income in the statement of profit or loss and
other comprehensive income. Gains and losses are recognised in profit or loss when the asset is derecognised, modified
or impaired. The Group’s financial assets at amortised cost include other receivables and cash and cash equivalents.
Derecognition: A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial
assets) is primarily derecognised (i.e., removed from the Group’s consolidated Balance sheet) when:
• The rights to receive cash flows from the asset have expired; or
• The Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay
the received cash flows in full without material delay to a third party under a ‘pass-through’ arrangement; and
either (a) the Group has transferred substantially all the risks and rewards of the asset, or (b) the Group has
neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control
of the asset
When the Group has transferred its rights to receive cash flows from an asset or has entered into a pass-through
arrangement, it evaluates if, and to what extent, it has retained the risks and rewards of ownership. When it has neither
transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the
Group continues to recognise the transferred asset to the extent of its continuing involvement. In that case, the Group also
recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects
the rights and obligations that the Group has retained.
Impairment of financial assets: The Group recognises an allowance for expected credit losses (ECLs) for all debt
instruments not held at fair value through profit or loss. ECLs are based on the difference between the contractual
cash flows due in accordance with the contract and all the cash flows that the Group expects to receive, discounted at
an approximation of the original EIR. The expected cash flows will include cash flows from the sale of collateral held or
other credit enhancements that are integral to the contractual terms.
The Group considers a financial asset in default when contractual payments are 90 days past due. However, in certain
cases, the Group may also consider a financial asset to be in default when internal or external information indicates that
the Group is unlikely to receive the outstanding contractual amounts in full before taking into account any credit
enhancements held by the Group. A financial asset is written off when there is no reasonable expectation of recovering the
contractual cash flows and usually occurs when past due for more than one year and not subject to enforcement activity.
At each reporting date, the Group assesses whether financial assets carried at amortised cost are credit impaired. A
financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash
flows of the financial asset have occurred. The Company has an Intercompany loan due from its 100% Canadian subsidiary
for which there is no formal agreement including payment date and therefore it cannot be considered to be in breach of
an agreement and accordingly the loan is not subject to adjustments and is maintained at its book value in the financial
statements.
Financial liabilities: Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit
or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as
appropriate. All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and
payables, net of directly attributable transaction costs. The Group’s financial liabilities include trade and other payables
and loans.
Subsequent measurement: The measurement of financial liabilities depends on their classification, as described below:
Loans and trade and other payables: After initial recognition, interest-bearing loans and borrowings and trade and other
payables are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in the
statement of profit or loss and other comprehensive income when the liabilities are derecognised, as well as through the
EIR amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an
integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit or loss and other
comprehensive income. This category generally applies to trade and other payables.
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Derecognition: A financial liability is derecognised when the associated obligation is discharged or cancelled or expires.
When an existing financial liability is replaced by another from the same lender on substantially different terms, or the
terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition
of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is
recognised in profit or loss or other comprehensive income.
Equity instruments: Equity instruments issued by the group are recorded at the proceeds received, net of transaction
costs. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction,
net of tax, from the proceeds.
Leases
At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a
lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for
consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Group uses
the definition of a lease in IFRS 16.
The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of use asset
is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments
made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle
and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease
incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the
end of the lease term, unless the lease transfers ownership of the underlying asset to the Group by the end of the lease
term or the cost of the right-of-use asset reflects that the Group will exercise a purchase option. In that case the right-of-
use asset will be depreciated over the useful life of the underlying asset, which is determined on the same basis as those
of property and equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and
adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement
date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group’s
incremental borrowing rate. Generally, the Group uses its incremental borrowing rate as the discount rate.
The Group determines its incremental borrowing rate by obtaining interest rates from various external financing sources
and makes certain adjustments to reflect the terms of the lease and type of the asset leased. The lease liability is
measured at amortised cost using the effective interest method. It is remeasured when there is a change in future lease
payments.
When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the
right-of-use asset or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.
Taxation
The tax expense or recovery represents the sum of tax currently payable or receivable and deferred tax.
Current tax: The tax currently payable or receivable is based on taxable profit or loss for the year. Taxable profit or loss
differs from net profit or loss as reported in the income statement because it excludes items of income or expense that are
taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group’s liability
for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax: Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts
of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable
profit and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for
all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits
will be available against which deductible temporary differences can be utilised. Deferred income tax assets are
recognised on deductible temporary differences arising from investments in subsidiaries, associates and joint
arrangements only to the extent that it is probable the temporary difference will reverse in the future and there is sufficient
taxable profit available against which the temporary difference can be utilised.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no
longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred
tax is calculated at the tax rates that are expected to apply in the period when the liability is settled, or the asset is
realised. Deferred tax is charged or credited to the income statement, except when it relates to items charged or credited
directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are
offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax
assets and liabilities relate to taxes levied by the same tax authority.
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Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to
terminate the employment of an employee or to provide termination benefits.
The group does not have any pension schemes.
Share-based payments
Equity-settled share-based payments are measured at fair value at the date of grant by reference to the fair value of the
equity instruments granted using the Black-Scholes model. The fair value determined at the grant date is expensed on a
straight-line basis over the vesting period, based on the estimate of shares that will eventually vest. A corresponding
adjustment is made to equity.
Cancellations or settlements are treated as an acceleration of vesting and the amount that would have been recognised
over the remaining vesting period is recognised immediately.
RSUs (Restricted Stock Units)
Where RSUs are granted to employees, the fair value of the RSUs at grant date is based upon the market price of the
shares underlying the awards and is charged to the Statement of Comprehensive Income over the vesting period. The
expense charged is adjusted based on actual forfeitures.
Foreign exchange
Transactions in currencies other than US dollars are recorded at the rates of exchange prevailing at the dates of the
transactions. At each reporting end date, monetary assets and liabilities that are determined in foreign currencies are
retranslated at the rates prevailing on the reporting end date - Gains and losses arising on translation are included in the
income statement for the period. At each reporting end date, non-monetary assets and liabilities that are determined in
foreign currencies are retranslated at the rates prevailing on the opening balance sheet date. Gains and losses arising
on translation of subsidiary undertakings are included in other comprehensive income and contained within the foreign
currency translation reserve.
Earnings per share
Basic earnings per share is calculated by dividing:
•
•
the profit attributable to owners of the company, excluding any costs of servicing equity other than ordinary
shares;
by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus
elements in ordinary shares issued during the year and excluding treasury shares.
• Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into
account:
•
•
the after-income tax effect of interest and other financing costs associated with dilutive potential ordinary
shares; and
the weighted average number of additional ordinary shares that would have been outstanding, assuming the
conversion of all dilutive potential ordinary shares.
4.
FINANCIAL RISK FACTORS
The Group’s activities expose it to a variety of financial risks: market risk, credit risk and liquidity risk. The Group’s overall
risk management programme seeks to minimise potential adverse effects on the Group’s financial performance. Risk
management is undertaken by the Board of Directors.
Market Risk
The Group is dependent on the state of the cryptocurrency market, sentiments of crypto assets as a whole, as well as
general economic conditions and their effect on exchange rates, interest rates and inflation rates. During the year the
Group sold its digital assets held at 31 December 2022 at a loss. The Group now sells its Bitcoin production as it is mined
to reduce the impact of Bitcoin prices.
The Group is also subject to market fluctuations in foreign exchange rates. The subsidiary (Argo Innovation Labs Inc.) is
based in Canada, and transacts in CAD$, USD$ and GBP. 9377-2556 Quebec Inc. and 9366-5230 Quebec Inc. are
based in Canada and transact in CAD. Argo Innovations Facilities (US) Inc., Argo Holdings US Inc. and Argo Operating
US LLC are located in the United States of America and transacts in USD. The Group bond is denominated in USD.
Cryptocurrency is primarily convertible into fiat through USD currency pairs and through USD denominated stable coins
and is the primary method for the Group for conversion into cash. The Group maintains bank accounts in all applicable
66
ARGO BLOCKCHAIN PLC
currency denominations.
Foreign currency sensitivity
The following tables demonstrate the sensitivity to a reasonable possible change in GBP and CAD exchange rates, with
all other variables held constant. The impact on the Group’s profit before tax is due to changes in the fair value of
monetary assets and liabilities.
2023
2022
2023
2022
Change in GBP
rate
+/-10%
Effect on profit
before tax
$’000
+/- 74
+/-10%
+/-77
Change in CAD
rate
Effect on profit
before tax
$’000
Effect on pre-
tax equity
$’000
+/-10%
+/- 274
-
+/-10%
+/-1,384
+/-3,208
Interest rate sensitivity
The following table demonstrates the sensitivity to a reasonable possible change in interest rates on the portion of
the loans and borrowings affected. With other variables held constant, the impact on the Group’s profit before tax is
affected through the impact on floating rate borrowings, as follows.
Increase/decrease
in basis points
+/-180
Effect
on profit
before
tax
$’000
+/-464
+/-180
+/-665
2023
2022
Credit risk
Credit risk arises from cash and cash equivalents as well as any outstanding receivables. Management does not
expect any losses from non-performance of these receivables. The amount of exposure to any individual counter
party is subject to a limit, which is assessed by the Board.
The Group considers the credit risk on cash and cash equivalents to be limited because the counterparties are banks
with high credit ratings assigned by international credit rating agencies.
The carrying amount of financial assets recorded in the financial statements represents the Group’s and Company’s
maximum exposure to credit risk. The Group and Company do not hold any collateral or other credit enhancements
to cover this credit risk.
Liquidity risk
Liquidity risk arises from the Group’s management of working capital. It is the risk that the Group will encounter
difficulty in meeting its financial obligations as they fall due.
Management updates cashflow projections on a regular basis and closely monitors the cryptocurrency market on a
67
ARGO BLOCKCHAIN PLC
daily basis. Accordingly, the Group’s controls over expenditure are carefully managed, in order to maintain its cash
reserves. The Treasury committee meets on a weekly basis to make decisions around future cashflows and working
capital requirements. Decisions may include considering debt/equity options alongside selling Bitcoin.
The table below analyses the Group’s non-derivative financial liabilities and net-settled derivative financial liabilities
into relevant maturity groupings, based on the remaining period at the Statement of Financial Position to the
contractual maturity date. Derivative financial liabilities are included in the analysis if their contractual maturities are
essential for an understanding of the timing of the cash flows. The amounts disclosed in the table are the contractual
undiscounted cash flows.
The Group complied with all covenants during the year and through to the reporting date.
At 31 December 2023
Loans
Issued debt – bonds
At December 2022
Loans
Lease liabilities
Issued debt – bonds
Capital risk management
Less than 1
year
Between 1
and 2 years
Between 2
and 5 years
Over 5 years
14,320
-
9,830
-
197
38,170
11,605
5
-
13,643
5
-
12,273
15
37,810
-
-
-
511
-
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern,
in order to provide returns for shareholders and benefits for other stakeholders, and to maintain an optimal capital
structure.
5.
ADOPTION OF NEW AND REVISED STANDARDS AND INTERPRETATIONS
The Group has adopted all recognition, measurement and disclosure requirements of IFRS, including any new and
revised standards and Interpretations of IFRS, in effect for annual periods commencing on or after 1 January 2023. The
adoption of these standards and amendments did not have any material impact on the financial result or position of the
Group.
At the date of authorisation of these financial statements, the following Standards and Interpretation, which have not yet
been applied in these financial statements, were in issue but not yet effective:
Standard
Interpretation
or
Description
IFRS S1
General Requirements for Disclosure of Sustainability-
related Financial Information
IFRS S2
Climate-related Disclosures
Classification of Liabilities as Current and Non-Current
Effective date
for annual
accounting period beginning
on or after
1 January 2024
1 January 2024
1 January 2024
Presentation of Non-current Liabilities with Covenants
1 January 2024
Disclosures on Supplier Finance Arrangements
1 January 2024
IAS 1
(amendments)
IAS 1
(amendments)
IAS 7 and IFRS 7
(amendments)
The Group has not early adopted any of the above standards and intends to adopt them when they become effective.
68
ARGO BLOCKCHAIN PLC
KEY JUDGEMENTS AND ESTIMATES
6.
In the application of the Group’s accounting policies, the directors are required to make judgements, estimates and
assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The
estimates and associated assumptions are based on historical experience and other factors that are considered to be
relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of
the revision and future periods where the revision affects both current and future periods. The estimates and assumptions
which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are outlined
below.
Valuation of tangible fixed assets – Note 18
The directors considered whether any impairments were required on the value of the property, plant and equipment. In
doing so they made use of forecasts of revenues and expenditure prepared by the Group and came to the conclusion
that impairment of those assets was required based on current forecasts. Key assumptions include Bitcoin production,
hashprice, power prices and discount rate.
Share-based payments – Note 21
The company has issued options and warrants to Directors, consultants and employees which have been valued in
accordance with the Black Scholes model. Significant estimation and judgement is required in determining the
assumptions under the Black Scholes method. Further details of these estimates are available in note 21.
The company has issued restricted stock units (RSUs) and performance stock units (PSUs) to employees which have
been valued based on the share price on the date of the award. The RSUs vest over three years, beginning six months
after the award and then every three months thereafter. It is assumed that employees will meet each vesting period and
a related expense is recorded each month. If an employee’s employment is terminated prior to a vesting date, the prior
expense for that vesting period is reversed. PSUs are amortised over the vesting period based on the mostly outcome
of the performance metrics.
Taxation and Contingent liabilities – Notes 13 and 27
The Group is subject to tax liabilities (both income and excise taxes)as assessed by the tax authorities in the jurisdictions
in which it operates. The Group has recorded its tax liabilities based on the information which it has available, as
described in Note 13.
However, a tax authority could challenge our allocation of income, transfer pricing and eligibility for input tax credits or
assert that we are subject to a tax in a jurisdiction where we believe we have not established a taxable connection. If
successful, these challenges could increase our expected tax liability in one or more jurisdictions. The Group is also
subject to a class action lawsuit as described in Note 28 and no accrual has been made as there is no basis to estimate
any liability.
7.
REVENUES
Cryptocurrency mining revenues are recognised at a point in time.
Cryptocurrency management fees are services recognised over time.
Other Income
Argo held 2,441 Bitcoin (fair valued at $80 million as at 31 December 2022) on its Balance Sheet at the beginning of
2022. The Group used up to 1,504 Bitcoins as collateral with Galaxy Digital LP for a short-term payable on demand loan
of USD $30 million taken out on December 23, 2022. To protect its Bitcoin holdings used as collateral for the loan and
reduce overall exposure, Argo took positions in the markets which resulted in a net hedge gain of $2.1 million for 2022.
There were no hedging contracts in 2023.
During the year, Argo generated $7,163,000 in power credits (2022: $nil), with $3.8 million generated in the month of
August during a state-wide heat wave.
8.
EXPENSES BY NATURE
Operating expenses
2023
$’000
2022
$’000
69
ARGO BLOCKCHAIN PLC
Salary and other employee related costs
Restructuring and transaction related costs
Insurance
Depreciation and amortisation
Legal, professional and regulatory fees
Indirect taxes
Property tax
Consulting fees
Repairs and maintenance
Audit fees
Office general expenses
Public relations and associated activities
Travel
Carbon credits
Bank charges
Freight, postage and delivery
Capital loss
Research costs
Foreign exchange loss
Total operating expenses
Finance costs – interest on borrowings and bond
Total finance costs
9.
AUDITOR’S REMUNERATION
In relation to statutory audit services
Total auditor’s remuneration
6,430
4,969
2,128
1,473
1,431
994
919
533
455
341
285
255
226
129
34
30
-
-
(1,287)
19,345
11,556
11,556
2023
$’000
341
341
11,887
11,862
7,455
8,535
3,925
4,208
349
1,024
1,067
383
1,039
642
839
-
297
1,625
143
11
(21,234)
34,057
22,661
22,661
2022
$’000
383
383
10.
The average monthly number of persons (including directors) employed by the group during the period was:
EMPLOYEES
Directors and employees
The aggregate remuneration (including directors) comprised of:
Wages and salaries
Social security costs
Pension costs
Share based payments
11.
DIRECTOR’S REMUNERATION
70
2023
2022
Number
Number
30
82
2023
$’000
6,017
250
163
3,892
10,322
2022
$’000
11,051
799
37
6,096
17,983
ARGO BLOCKCHAIN PLC
Director’s remuneration for qualifying services
Severance
Share based payments
Total remuneration for directors and key management
2023
$’000
591
765
916
2,272
2022
$’000
1,588
-
1,883
3,471
Further details of Directors’ remuneration are available in the Remuneration report and note 28.
12.
EARNINGS PER SHARE
The basic earnings per share are calculated by dividing the loss attributable to equity shareholders by the weighted average
number of shares in issue.
Net loss for the period attributable to ordinary equity holders from continuing
operations ($’000)
2023
2022
(35,033)
(228,961)
Finance Weighted average number of ordinary shares in issue (‘000)
503,917
473,930
Basic and diluted loss per share for continuing operations (pence)
(0.07)
(0.48)
The diluted loss per Ordinary Share is calculated by adjusting the weighted average number of Ordinary Shares
outstanding to consider the impact of options, warrants and other dilutive securities. As the effect of potential dilutive
Ordinary Shares in the current year would be anti-dilutive, they are not included in the above calculation of dilutive
earnings per Ordinary Share for 2023.
71
ARGO BLOCKCHAIN PLC
13.
TAXATION
Current tax:
Current tax recovery on loss for the year
Total current tax
Deferred tax:
2023
$’000
2022
(Restated)
$’000
-
(11,731)
-
(11,731)
2023
$’000
2022
$’000
9,840
Origination and reversal of temporary differences
Total deferred tax liability
-
-
Total tax credit
-
(446)
No deferred tax has been recognised on the losses brought forward and carried forward on the UK, Canada and US
losses given the uncertainty on the generation of future profits.
Income tax expense
The tax on the Group’s profit before tax differs from the theoretical amount that would arise using the weighted
average tax rate applicable to profits of the consolidated entities as follows:
Profit (loss) before taxation
2023
$’000
(35,033)
2022
$’000
(240,693)
Expected tax charge (recovery) based on a weighted average of
25% (2022 - 25%) (UK, US and Canada)
(8,758)
(60,172)
Effect of expenses not deductible in determining taxable profit
Temporary differences
Other tax adjustments
Origination and reversal of temporary differences
Unutilised tax losses carried forward
Taxation charge in the financial statements
851
32,662
5,930
18
-
1,959
-
8,470
254
(1,023)
8,078
(11,731)
The group has tax losses available to be carried forward and used against trading profits arising in future periods of
approximately $136,000,000 (2022 - $87,000,000).
The weighted average applicable tax rate was 25% (2022: 25%).
A tax authority may disagree with tax positions that we have taken, which could result in increased tax liabilities. For
example, His Majesty’s Revenue & Customs (“HMRC”), the IRS or another tax authority could challenge our allocation
of income by tax jurisdiction and the amounts paid between our affiliated companies pursuant to our intercompany
arrangements and transfer pricing policies, including amounts paid with respect to our intellectual property development.
Similarly, a tax authority could assert that we are subject to tax in a jurisdiction where we believe we have not established
a taxable connection and such an assertion, if successful, could increase our expected tax liability in one or more
jurisdictions.
72
ARGO BLOCKCHAIN PLC
14.
ASSETS AND LIABLITIES HELD FOR SALE
In December 2023, the group signed an offer to purchase 9366-5230 Quebec Inc. In March 2024, a purchase and sale
agreement was signed for the sale of 9366-5230 Quebec Inc. (“Mirabel”) for proceeds of $6.1 million. As a result of the
sale, the material assets and liabilities of Mirabel were reclassified to be held for sale as at December 31, 2023, as
follows:
Non-current Assets
Tangible Fixed Assets
Right of use assets
Assets held for sale
Non-current liabilities
Mortgage Payable
Lease Liability
Liabilities held for sale
15.
INVESTMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS
Non-current
Group
At 1 January
Foreign exchange movement
Additions
Fair value through profit or loss
Disposals
At 31 December
16.
INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD
Opening balance
Share of loss
Share of fair value (losses)/gains on intangible assets
through other comprehensive income
Foreign exchange movement
Write off of investment
Closing balance
2023
$’000
2,725
536
3,261
2023
$’000
1,532
558
2,090
2023
$’000
414
-
-
-
(14)
400
2023
$’000
2,863
(716)
-
89
(2,236)
2022
$’000
543
1
300
(430)
-
414
2022
$’000
18,642
(6,027)
(8,744)
(1,008)
-
-
2,863
73
ARGO BLOCKCHAIN PLC
Nature of investment in associates:
Name of entity Address
of
the
registered office
of
%
ownership
interest
Nature
relationship
of
Measurement
method
Emergent
Entertainment
PLC Previously
Pluto Digital plc)
Hill Dickinson LLP, 8th
The Broadgate
Floor
Primrose
20
Tower,
Street, London, United
Kingdom, EC2A 2EW
19.5%
Refer below
Equity
In December 2023, Emergent Entertainment Ltd (“EEL”) announced they have engaged an insolvency advisor to place it
in liquidation. On January 10, 2024, EEL appointed liquidators to voluntarily wind up the company. The Group has written
off the balance of the investment in 2023.
74
ARGO BLOCKCHAIN PLC
17.
INTANGIBLE FIXED ASSETS
Group
Cost
At 1 January 2023
Foreign Exchange Movements
Disposals
At 31 December 2023
Amortisation and impairment
At 1 January 2023
Foreign exchange movement
Fair value movement
Amortisation charged during the period
At 31 December 2023
Goodwill
$’000
Digital
assets
$’000
Website
$’000
96
16
-
112
5,722
334
(727)
5,329
-
3,811
-
-
-
-
88
654
-
4,553
873
19
-
892
780
-
-
112
892
2023
Total
$’000
6,691
369
(727)
6,333
4,591
88
654
112
5,445
Balance At 31 December 2023
112
776
-
888
Group
Cost
At 1 January 2022
Foreign Exchange movement
Additions
Disposals
At 31 December 2022
Amortisation and
impairment
At 1 January 2022
Foreign exchange movement
Fair value movement
Amortisation charged during the period
At 31 December 2022
Goodwill
$’000
Digital
assets
$’000
Website
$’000
2022
Total
$’000
96
-
-
-
96
6,394
(274)
2,084
(2,482)
5,722
-
-
-
-
-
146
(1,490)
5,155
-
3,811
873
-
-
-
873
543
(31)
-
267
780
7,364
(274)
2,084
(2,482)
6,691
689
(1,521)
5,155
267
4,588
Balance At 31 December 2022
96
1,913
94
2,103
Digital assets are cryptocurrencies not mined by the Group. The Group held crypto assets during the year, which are
recorded at cost on the day of acquisition. Movements in fair value between acquisition (date mined) and disposal (date
sold), and the movement in fair value in crypto assets held at the year end, impairment of the intangible assets and
any increase in fair value are recorded in the fair value reserve.
The digital assets held below are held in Argo Labs (a division of the Group) as discussed above. The assets are all
held in secure custodian wallets controlled by the Group team and not by individuals within the Argo Labs team. The
assets detailed below are all accessible and liquid in nature.
75
ARGO BLOCKCHAIN PLC
Crypto asset name
Coins / tokens
Polkadot – DOT
Ethereum – ETH
USDC (stable coin – fixed to USD)
Other tokens, NFTs and other digital assets
As at 31 December 2023
16,554
4
31,713
N/A
Crypto asset name
Coins / tokens
Fair value
$’000
135
10
55
576
776
Fair value
$’000
931
626
142
214
1,913
N/A
518
32,964
N/A
Token Deals
Ethereum – ETH
Polkadot – DOT
Other tokens, NFTs and other digital assets
As at 31 December 2022
18.
TANGIBLE FIXED ASSETS
Group
Cost
At 1 January 2023
Foreign Exchange Movement
Additions
Transfer to Assets held for sale
At 31 December 2023
Depreciation and impairment
At 1 January 2023
Foreign exchange movement
Depreciation charged during the period
Impairment in asset
Transfer to Assets held for sale
At 31 December 2023
Carrying amount
At 1 January 2023
At 31 December 2023
Mining
Machinery
$’000
Data
Centres
$’000
Equipment
Total
$’000
$’000
162,839
8,700
5,414
176,953
108
517
5,203
-
168,150
(97,481)
-
(18,656)
(855)
-
(116,992)
-
(2,937)
6,280
(1,924)
(38)
(359)
-
784
(1,537)
569
27
(1,976)
4,034
1,195
5,230
(4,913)
178,464
(31)
(43)
(1,000)
-
868
(206)
(99,437)
(81)
(20,015)
(855)
1,652
(118,736)
65,358
51,158
6,775
4,743
5,383
3,828
77,516
59,728
76
ARGO BLOCKCHAIN PLC
Group
Cost
At 1 January 2022
Mining
Machines
$’000
Assets under
construction
$’000
Data
Centres
Equipment
Total
$’000
$’000
$’000
70,539
73,924
7,900
5,313
157,676
Foreign exchange movement
3,310
Additions
Transfers to another class – cost
Disposals
At 31 December 2022
Depreciation and impairment
At 1 January 2022
Foreign exchange movement
Depreciation charged
Impairment in asset
Transfer to another class
At 30 December 2022
Carrying amount
At 1 January 2022
At 31 December 2022
Acquisition of DPN LLC
162,315
-
(73,325)
162,839
(22,316)
(1,047)
(19,955)
(54,163)
-
(97,481)
48,223
65,358
-
-
-
-
-
-
-
-
8,787
-
(82,711)
701
99
82,711
(82,711)
8,700
-
-
12,797
162,518
-
(156,038)
176,953
103
(2)
5,414
(364)
(17)
(8,286)
(271)
7,014
(1,924)
-
-
(31)
-
-
(31)
(22,680)
(1,064)
(28,273)
(54,434)
7,014
(99,437)
73,924
-
7,536
6,775
5,313
5,383
134,966
77,516
On 8 March 2022 the Group completed the acquisition of DPN LLC to acquire 160 acres (with option to purchase a
further 157 acres) of land in West Texas for the construction of a 200MW mining facility for completion mid-2023.
The acquisition of DPN LLC, effectively comprising the land acquisition in West Texas, has been treated as an asset
acquisition in the financial statements. The consideration for the acquisition was an initial price of GBP 3.6m, satisfied
by the issue and allotment to the shareholders of DPN LLC of 3,497,817 new ordinary shares in Argo, with up to a
further 8.6m of shares payable if certain contractual milestones related to the facility are fulfilled.
The initial issue and allotment of GBP 3.6m has been recognised based on the estimated fair value of assets received
at acquisition in line with IFRS 2 Share-based payments. Contingent consideration balance of this business
combination has been subsequently measured at fair value with changes recognised in profit and loss in line with
IFRS 9. The fair value of assets acquired was assessed in line with independent valuations of the site by CBRE as
well as external financial due diligence and financial modelling. Financial models used historical power purchase
assumptions for the area and the Company’s internal hash rate and Bitcoin pricing assumptions to help the Company
evaluate the financial benefits of developing a Bitcoin mining operation on the land. Work performed by DPN LLC
from August 2019, when it purchased the land, to March 2022, when it sold the land to the Company, to prepare for
a Bitcoin mining operation added to the value of the land for that purpose.
Consideration at 8 March 2022
Share based payment
Contingent consideration to be settled in shares
Total
Allocated as follows
77
$’000
4,355
10,710
15,065
ARGO BLOCKCHAIN PLC
Tangible fixed assets (Asset under construction)
Total
$’000
15,065
15, 0 6 5
Property, Plant and Equipment Impairments and Loss on Sale
The Group has a single line of business, crypto mining. As such, the Group has one cash generating unit (CGU). At
each reporting date, the Group assesses whether there is an indication that an asset may be impaired. If an indication
exists, the Group estimates an asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset
or CGU’s fair value, less costs of disposal and its value in use. When the carrying value of an asset or CGU exceeds
its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.
In assessing the fair value of Mining and Computer Equipment, the Group used readily available tera hash pricing
("hashprice") less a 15% discount for used equipment. In assessing value in use, the discounted estimated future
cash flows over the useful life of the mining machines using a pre-tax discount rate of 14.09%. As a result of the
analysis, an impairment charge of $0.9 million (2022 - $55.8 million) was recorded. A 5% change in the hashprice
has a $1.5 million impact on the impairment. A 1% change in the discount rate has a $0.4 million impact on the
impairment.
Impairment of Chips
In assessing the fair value of machine components, the Group used readily available chip set prices and
management’s estimate of other components in the chip sets to determine the value of chips on hand. As a result of
this analysis, an impairment of $(0.1 million) was recorded (2022 - $18 million).
Loss on Sale
During 2022, the Group sold chips for proceeds of $12,404 and recorded a loss on disposal of $23,228.
Mining Machine Swap
In March 2022, the Group entered into an agreement to exchange mining machines and terminate a hosting
agreement. With the completion of Helios, the Group no longer required third party hosting services. The agreement
provided the hosting provider with ownership of the Group's machines at their facilities in exchange for new mining
machines for our Helios facility. The hash rate between the two groups of mining machines was similar. This
transaction lacks commercial substance, therefore, IFRS 16 requires the mining machines acquired to be recorded
at the book value of the mining machines transferred to the hosting service provider.
19.
TRADE AND OTHER RECEIVABLES
Trade and other receivables
Prepaids
Mining equipment prepayments
Other taxation and social security
Total trade and other receivables
Group
2023
$’000
1,131
1,355
-
1,349
3,835
Group
2022
$’000
-
-
5,978
824
6,802
Within other taxation and social security is a provision against GST/QST/VAT receivable of $2,325,000 in relation to
ongoing matters in connection with GST Notice 324 released by the Canadian Revenue Authority, and ongoing discussions
with HMRC. The Group have included the provision for prudence and upon conclusion of the matter, the Group will adjust
this provision accordingly.
20. DIGITAL ASSETS
The Group mined crypto assets during the period, which are recorded at fair value on the day of acquisition.
Movements in fair value between acquisition (date mined) and disposal (date sold), and the movement in fair value
in crypto assets held at the year end, are recorded in profit or loss.
78
ARGO BLOCKCHAIN PLC
All of the Group’s holding in crypto currencies other than Bitcoin are now classified as intangible assets.
At the period end, the Group held Bitcoin representing a fair value of $385k. The breakdown of which can be seen
below:
Group
At 1 January
Foreign Exchange Movement
Crypto assets purchased and received
Crypto assets mined
Total additions
Disposals
Transferred to/from intangible assets
Crypto assets sold
Total disposals
Fair value movements
Gain/(loss) on crypto asset sales
Movements on crypto assets held at the year end
Total fair value movements
At 31 December
2023
$’000
443
2022
$’000
108,956
24
833
-
50,558
50,582
(51,378)
(51,378)
738
-
738
385
264
60,172
61,269
420
(114,646)
(114,226)
(55,410)
(145)
(55,555)
443
As at 31 December 2023, digital assets comprised of 9 Bitcoin (2022: 25 Bitcoin).
21.
SHARE OPTIONS, RESTRICED STOCK UNITS AND WARRANTS
In 2022, the Remuneration Committee of the Board (“Committee”) approved the 2022 Equity Incentive Plan (“the
Plan”). Under the Plan, the Committee, at its discretion, may issue awards, including share awards, stock options,
stock appreciation rights (“SARs”), restricted stock units, performance awards and American Depository Shares to
any employee of the Group. The exercise price of stock options and the base price of SARs may not be less than
the market price of the underlying shares on the date of grant. Stock options and SARs may have an exercise period
up to ten years after the grant date.
The following table summarizes share-based compensation expense for the years ended December 31, 2023 and
2022:
Stock options and warrants
Restricted stock units
Performance stock units
At 1 January 2023
Granted
Exercised
Lapsed
Outstanding at 31 December 2023
2023
3,332
287
273
3,892
2022
6,096
-
-
6,096
Weighted average
exercise
price £
0.78
0.13
-
0.67
0.83
Number of options
and
warrants ‘000
18,698
659
-
(8,329)
11,028
79
ARGO BLOCKCHAIN PLC
Exercisable at 31 December 2023
7,904
0.89
At 1 January 2022
Granted
Exercised
Lapsed
Outstanding at 31 December 2022
Exercisable at 31 December 2022
Number
of options
and
warrants ‘000
17,689
5,220
(1,593)
(2,618)
18,698
11,345
Weighted average
exercise
price £
0.81
0.50
0.07
0.89
0.78
0.61
The weighted average remaining contractual life of options and warrants as at 31 December 2023 is 83 months (2022
-93 months). If the exercisable shares had been exercised on 31 December 2023 this would have represented 1.5%
(2022 – 2.3%) of the enlarged share capital.
At the grant date, the fair value of the options and warrants prior to the listing date was the net asset value and post
listing determined using the Black-Scholes option pricing model. Volatility was calculated based on data from
comparable listed technology start-up companies, with an appropriate discount applied due to being an unlisted entity
at grant date. Risk free interest has been based on UK Government Gilt rates for an equivalent term. The inputs
into the Black-Scholes model are as follows:
Grant date share price £
Exercise price £
Volatility
Life
Risk free rate
Dividend yield
2023
0.14
0.13
2022
0.94 - 1.57
0.94 - 1.57
187%
91 – 169%
10 years
5 – 10 years
3.4%
0%
1.6 - 3.6%
0%
Restricted Stock Units
In 2023, the Committee approved the grant of RSUs to employees. The RSUs vest quarterly beginning the sixth
month after the grant date over a three-year period. The weighted average remaining vesting period is the period to
the last vesting date.
Outstanding at beginning of period
Granted during the period
Vested during the period
Forfeited during the period
Outstanding at the end of period
2023
Number of Awards Weighted Average
Grant Date Price £
Weighted Average
Remaining Vesting
Period (months)
-
12,041,192
(3,617,136)
(1,424,239)
6,999,817
-
0.13
0.13
0.13
0.12
28
Performance Stock Units (American Depository Shares)
In 2023, the Committee approved the grant of PSUs for the American Depository Shares to the CEO of the Group.
The PSUs vest annually over a three-year period. The annual vesting amount may vary from 25% - 100%. The
weighted average remaining vesting period assumes the last vesting date is the latest vesting date possible.
2023
80
ARGO BLOCKCHAIN PLC
Number of Awards Weighted Average
Grant Date Price $
Weighted Average
Remaining Vesting
Period (months)
Outstanding at beginning of the period
Granted during the period
Vested during the period
Forfeited during the period
-
2,850,000
-
-
Outstanding at the end of the period
2,850,000
-
1.15
-
-
1.15
35
22.
ORDINARY SHARES
Ordinary share capital
Issued and fully paid
477,825,166 Ordinary Shares of $0.001 each
Issued in the period
59,138,305 Ordinary Shares of $0.001 each
536,963,471 Ordinary Shares of $0.001 each
Share premium
At beginning of the period
Issued in the period
Issue costs
At the end of period
As at 31
December
2023
$’000
634
78
712
202,103
7,676
-
209,779
As at 31 December
2022
$’000
622
12
634
196,911
5,192
-
202,103
See the subsequent events note for additional shares issued after period end.
23.
RESERVES
The following describes the nature and purpose of each reserve:
Reserve
Description
Ordinary Shares
Represents the nominal value of equity shares
Share Premium
Amount subscribed for share capital in excess of nominal value
Share based payment reserve Represents the fair value of options and warrants granted less amounts
transferred on exercise, lapse or expiry
Currency translation
reserve
Cumulative effects of translation of opening balances on non-monetary assets
between subsidiaries functional currencies (Canadian dollars and Uk Sterling) and
Group presentational currency (US Dollars).
Fair value reserve
Cumulative net gains on the fair value of intangible assets
Other comprehensive income
of equity accounted
associates
Accumulated surplus
The other comprehensive income of any associates is recognised in this reserve
Cumulative net gains and losses and other transactions with equity holders not
recognised elsewhere.
81
ARGO BLOCKCHAIN PLC
24.
TRADE AND OTHER PAYABLES
Trade payables
Accruals and other payables
Other taxation and social security
Total trade and other creditors
Group
2023
Group
2022
$’000
$’000
2,336
7,153
1,686
11,175
3,079
6,012
689
9,780
The directors consider that the carrying value of trade and other payables is equal to their fair value.
Contingent consideration
In June 2022, the Company issued 8,147,831 Ordinary Shares to settle $5.0 million in contingent
consideration. The remaining contingent consideration of $5.0 million was not earned and as a result was
reversed into profit or loss.
25.
LOANS AND BORROWINGS
Non-current liabilities
Issued debt – bond (a)
Galaxy loan (b)
Mortgage – Quebec facility (c)
Lease liability
Total
Current liabilities
Galaxy loan (b)
Mortgage- Quebec facility (c)
Other Loans
Lease liability
Total
(a) Unsecured Bonds:
As at 31 December
2023
As at 31 December
2022
$’000
$’000
38,170
9,230
797
-
48,197
37,810
18,475
2,785
531
59,601
13,444
10,169
600
276
-
14,320
1,130
306
5
11,610
In November 2021, the Group issued an unsecured 5-year bond with an interest rate of 8.75%. The bonds mature
on 30 November 2026. The bonds may be redeemed for cash in whole or in part at any time at the Group’s
82
ARGO BLOCKCHAIN PLC
option (i) on or after 30 November 2023 and prior to 30 November 2024, at a price equal to 102% of their principal
amount, plus accrued and unpaid interest to, but excluding, the date of redemption, (ii) on or after 30 November
30 and prior to 30 November 2025, at a price equal to 101% of their principal amount, plus accrued and unpaid
interest to, but excluding, the date of redemption, and (iii) on or after November 30, 2025 and prior to maturity,
at a price equal to 100% of their principal amount, plus accrued and unpaid interest to, but excluding, the date
of redemption. The Group may redeem the bonds, in whole, but not in part, at any time at its option, at a
redemption price equal to 100.5% of the principal amount plus accrued and unpaid interest to, but not including,
the date of redemption, upon the occurrence of certain change of control events. The bonds are listed on the
Nasdaq Global Select Market under the symbol ARBKL.
(b) Galaxy and related loans
On 23 December 2021 the Group entered into a loan agreement with Galaxy Digital LP for a loan of USD$30
million. The proceeds of the loan were used, in conjunction with funds raised previously, to continue the build-out
of the Texas data centre, Helios. The short-term loan was a Bitcoin collateralised loan with an interest rate of 8%
per annum. This loan was repaid during 2022 as part of the Galaxy transaction.
In March 2022, the Group entered into loan agreements with NYDIG ABL LLC for loans in the amounts of USD$97
million for the purchase of mining machines and Helios infrastructure, respectively. The loan was repaid during
the year as part of the Galaxy transaction.
In May 2022, the Group entered into a loan agreement with Liberty Commercial Finance for a loan of USD$1.2
million ($1.0m) to purchase equipment. The loan is repayable over a period of 36 months with an interest rate
of 11.9%. In June 2022, the loan was assigned to North Mill Equipment Finance LLC (“New Mill”). The loan
was repaid during the year as part of the Galaxy transaction.
In December 2022, the Group sold Galaxy Power LLC (see note 14) and entered into a loan agreement with
Galaxy Digital LLC for USD$35 million. Proceeds were used to pay off the Galaxy Digital LP, New Mill and
NYDIG loans and working capital. The Galaxy Digital LLC loan is payable monthly based on an amortization
schedule over 32 months with an interest rate of the secured overnight financing rate by the Federal Reserve
Bank of New York plus 11%. The loan is secured by the Group’s property, plant and equipment.
(c) Mortgage – Quebec Facility
The mortgage is secured against the property at Baie-Comeau and is repayable over 36 months at an interest
rate of Lender Prime + 0.5%. (7.7% as of 31 December 2023).
26.
FINANCIAL INSTRUMENTS
Carrying amount of financial assets
Measured at amortised cost
- Mining equipment prepayments
-
Trade and other receivables
- Cash and cash equivalents
Measured at fair value through profit or loss
Total carrying amount of financial assets
Carrying amount of financial liabilities
Measured at amortised cost
-
-
-
-
-
Trade and other payables
Short term loans
Long term loans
Issued debt – bonds
Lease liabilities
Total carrying amount of financial
liabilities
Group
2023
$’000
-
1,131
7,443
400
8,974
7,501
280
25,599
38,170
-
Group
2022
$’000
5,978
-
20,091
414
26,483
10,020
11,605
25,915
37,810
545
71,550
85,895
83
ARGO BLOCKCHAIN PLC
Fair Value Estimation
Fair value measurements are disclosed according to the following fair value measurement hierarchy:
- Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1)
-
-
Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either
directly (that is, as prices), or indirectly (that is, derived from prices) (Level 2)
Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs)
(Level 3). This is the case for unlisted equity securities.
The following table presents the Group’s assets that are measured at fair value at 31 December 2023 and 31
December 2022.
Assets
Financial assets at fair value through
profit or loss
-
Equity holdings
- Digital assets
Total at 31 December 2023
Assets
Financial assets at fair value
through profit or loss
-
Equity holdings
- Digital assets
Total at 31 December 2022
Level 1
Level 2
Level 3
$’000
$’000
$’000
-
-
-
-
385
385
400
-
400
Level 1
Level 2
Level 3
$’000
$’000
$’000
14
-
329
-
443
443
400
-
400
Total
$’000
400
385
785
Total
$’000
414
443
857
All financial assets are in listed and unlisted securities and digital assets. There were no transfers between levels
during the period.
The Group recognises the fair value of financial assets at fair value through profit or loss relating to
unlisted investments at the cost of investment unless:
-
-
-
-
There has been a specific change in the circumstances which, in the Group’s opinion, has permanently
impaired the value of the financial asset. The asset will be written down to the impaired value;
There has been a significant change in the performance of the investee compared with budgets, plans or
milestones;
There has been a change in expectation that the investee’s technical product milestones will be achieved
or a change in the economic environment in which the investee operates;
There has been an equity transaction, subsequent to the Group’s investment, which crystallises a valuation
for the financial asset which is different to the valuation at which the Group invested. The asset’s value will
be adjusted to reflect this revised valuation; or
- An independently prepared valuation report exists for the investee within close proximity to the reporting date.
-
The deferred consideration has been fair valued to the year-end date as the amount is to be paid in Argo
shares.
84
ARGO BLOCKCHAIN PLC
-
27.
COMMITMENTS AND CONTINGENCIES
The Group’s material contractual commitments relate to the hosting services agreement with Galaxy Digital
Qualified Opportunity Zone Business LLC, which provides hosting, power and support services at the Helios
facility. Whilst management do not envisage terminating agreements in the immediate future, it is impracticable
to determine monthly commitments due to large fluctuations in power usage and variations on foreign exchange
rates, and as such a commitment over the contract life has not been determined. The agreement is for services
with no identifiable assets, therefore, there is no right of use asset associated with the agreement.
As the company disclosed on February 8, 2023, it is currently subject to a class action lawsuit. The case, Murphy
vs Argo Blockchain plc et al, was filed in the Eastern District of New York on 26 January 2023. The company
refutes all of the allegations and believes that this class action lawsuit is without merit. The company is
vigorously defending itself against the action. We are not currently subject to any other material pending legal
proceedings or claims.
The Company is also subject to other litigation matters in the ordinary course of business. Subsequent to period
end, the Company settled a breach of contract claim for $0.5 million. This was accrued in operating expenses
at 31 December 2023.
28.
RELATED PARTY TRANSACTIONS
The compensation paid to related parties in respect of services rendered in 2023 were:
•
•
•
•
•
$170,554 (2022 - $133,867) to Webslinger Advisors in respect of fees of Matthew Shaw (Non-executive
director);
$129,752 (2022 - $148,679) in respect of fees for Maria Perrella (Non-executive director);
$135,105 (2022 - $130,438) in respect of fees for Raghav Chopra (Non-executive director);
$27,659 (2022 - $nil) to Jim MacCallum (CFO) through JMM Consulting Inc.;
$166,738 (2022 - $803,112) to Alex Appleton (Previous CFO) through Appleton Business Advisors Limited.
29.
CONTROLLING PARTY
There is no controlling party of the Group.
30.
POST BALANCE SHEET EVENTS
In January 2024, the Company issued 38,064,000 new ordinary shares at a price per share of £0.205 to certain
institutional investors for gross proceeds of $9.9 million.
In March 2024, the Group sold its Mirabel Facility for proceeds of $6.1 million. See note 14 for additional details.
85
ARGO BLOCKCHAIN PLC
COMPANY STATEMENT OF FINANCIAL POSITION
Note
As at
December
2023
$’000
As at
December
2022
$’000
As at
January 1
2022
$’000
3
4
1
1
3
1
22
22
ASSETS
Non-current assets
Investment at fair value through profit or loss
Investments in Associate
Investments in Subsidiary
Tangible Fixed Assets
Total non-current assets
Current assets
Trade and Other Receivables
Prepaids
Cash and cash equivalents
Intercompany
Total Current Assets
Total assets
EQUITY AND LIABILITIES
Equity
Share Capital
Share Premium
Share based payment reserve
Foreign Currency Translation Reserve
Other comprehensive income of equity
accounted associates
Accumulated (surplus)/deficit
Total equity
Current liabilities
Trade and other payables
Contingent consideration
Loan
Total current liabilities
Non-current liabilities
Issued Debt
Total liabilities
100
-
43,983
739
44,822
77
573
705
28,199
29,554
100
2,863
65,000
2,195
70,158
-
1,080
139
10,336
11,555
100
18,642
-
-
18,742
1,466
10,226
170
253,935
265,797
74,376
81,713
284,539
(712)
(209,779)
(12,166)
29,295
-
(634)
(202,103)
(8,528)
26,935
-
161,448
146,547
(31,914)
(37,783)
2
(4,042)
(6,120)
-
(250)
(4,292)
-
-
(6,120)
(38,170)
(42,462)
(37,809)
(43,930)
(622)
(196,911)
(2,531)
8,100
(8,744)
(24,929)
(225,637)
(11,710)
(10,899)
-
(22,599)
(36,303)
(58,902)
Total equity and liabilities
(74,376)
(81,713)
(284,539)
86
ARGO BLOCKCHAIN PLC
As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and
related notes. The company’s total comprehensive loss for the year was $17.3 million (2022: $191.1 million).
The Group financial statements were approved by the board of directors on 24 April 2024 and authorised for
issue; they are signed on its behalf by:
Thomas Chippas
Chief Executive Officer
24 April 2024
The accounting policies and notes on pages 91 to 94 form part of the financial statements.
Registered number: 11097258
87
ARGO BLOCKCHAIN PLC
COMPANY STATEMENT OF CHANGES IN EQUITY
Share Capital
$’000
634
Share
Premium
$’000
202,103
Currency
Translation
Reserve
$’000
(26,935)
Share based
payment
reserve
$’000
8,528
Accumulated
surplus/
(deficit)
$’000
(146,547)
Total
$’000
37,783
-
-
-
78
-
-
78
-
-
-
7,676
-
-
7,676
-
(2,360)
(2,360)
-
-
-
-
-
-
3,892
(14,901)
-
(14,901)
-
-
-
-
(254)
3,316
-
-
-
(2,360)
(17,261)
7,754
3,892
(254)
11,392
712
209,779
(29,295)
12,166
(161,448)
31,914
Balance at 1
January 2023
Total
comprehensive
income for the
period:
Loss for the period
Other comprehensive
income
Total comprehensive
income for the period
Transactions with
equity owners:
Share capital issued
Share based
payments charge
Share RSUs vested
Total transactions
with equity owners
Balance at 31
December 2023
88
ARGO BLOCKCHAIN PLC
Balance at 1 January 2022
Total comprehensive income for
the
period:
Loss for the period
Other comprehensive income
Total comprehensive income for the
period
Transactions with equity owners:
Share capital issued
Share based payments charge
Share options/warrants exercised
Total transactions with equity owners
Share
Capital
Share
Premium
$’000
$’000
Share
based
payment
reserve
$’000
Currency
Translation
Reserve
$’000
Other
comprehensive
income of
associate
$’000
Accumulated
surplus/
(deficit)
Total
$’000
$’000
622
196,911
2,531
(8,100)
8,744
24,929
225,637
-
-
-
12
-
-
12
-
-
-
5,192
-
-
5,192
-
-
-
-
(18,835)
(18,835)
-
(8,744)
(8,744)
(171,476)
-
(171,476)
(171,476)
(27,579)
(199,055)
-
5,997
5,997
-
-
-
-
-
-
-
-
-
-
-
-
5.204
5,997
-
11,201
(146,547)
37,783
Balance at 31 December 2022
634
202,103
8,528
(26,935)
89
ARGO BLOCKCHAIN PLC
COMPANY STATEMENT OF CASH FLOWS
Cash flows from operating activities
Loss before tax
Adjustments for:
Share of loss from associate
Fair value adjustment on contingent consideration
Foreign exchange movements
Finance cost
Write off of investments
Impairment of assets
Share based payment expense
Loss on disposal of investment in subsidiary
Impairment of assets
Working capital changes:
(Increase)/decrease in trade and other receivables
Increase/(decrease) in trade and other payables
Year ended
December
2023
Year ended
December
2022
$’000
$’000
(14,901)
(171,476)
716
-
(1,877)
4,888
22,764
83
3,874
-
-
1,803
(2,079)
6,026
(4,995)
(7,617)
-
-
-
6,095
128,949
18,702
10,071
(4,116)
Net cash generated/used in operating activities
15,271
(18,361)
Investing activities
(Increase)/decrease in loan to subsidiary
Net cash used in/generated from investing activities
(17,863)
(17,863)
18,346
18,346
Financing activities
Loan proceeds
Loan repayments
Interest paid
Proceeds from shares issued – net of issue costs
Net cash generated from financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at beginning of period
Effect of foreign exchange on cash and cash equivalents
Cash and cash equivalents at end of period
811
(561)
(4,602)
7,518
3,166
574
139
(8)
705
-
-
-
-
-
-
(14)
156
(2)
139
90
ARGO BLOCKCHAIN PLC
Company - net debt reconciliation
Non-current loans and borrowings
Cash and cash equivalents
Total net (debt) / asset
Year ended
31 December
2023
Year
ended
31 December
2022
$’000
$’000
(38,170)
705
(37,465)
(37,809)
139
(37,670)
2
NOTES TO THE FINANCIAL STATEMENTS
Argo Blockchain PLC (“the company”) is a public company, limited by shares, and incorporated in England and
Wales. The registered office is Eastcastle House, 27-28 Eastcastle Street, London, W1W 8DH. The company
was incorporated on 5 December 2017 as GoSun Blockchain Limited and changed its name to Argo Blockchain
Limited on 21 December 2017. Also on 21 December 2017, the company re-registered as a public company,
Argo Blockchain plc. Argo Blockchain plc acquired a 100% subsidiary, Argo Innovation Labs Inc. (together “the
Group”), incorporated in Canada, on 12 January 2018.
The Company financial statements are required by Companies House and do not include any intercompany
eliminations, The Company financial statements and note disclosures should be read in conjunction with the
Group statements and notes above.
1. TRADE AND OTHER RECEIVABLES / INTERCOMPANY
Trade and other receivables/prepayments
Total trade and other receivables
Company
2023
$’000
650
650
Company
2022
$’000
1,080
1,080
Within receivables is a provision against VAT receivable of $499,000 in relation to ongoing matters in connection with
ongoing discussions with HMRC. The Group have included the provision for prudence and upon conclusion of the
matter, the Group will adjust this provision accordingly.
COMPANY - INTERCOMPANY
Amounts due from group companies, net
Company
2023
$’000
28,199
Company
2022
$’000
10,336
Funds advanced to group companies were used for operating expenses, settling debt and purchasing tangible and
intangible assets. There are no terms of repayment. The amounts due are non-interest bearing. The decrease in 2022
is as a result of the debts from Argo Innovation Facilities (US) which were converted to shares to be issued prior to the
sale.
The Company considers the intercompany loan to its subsidiary (Argo US Operating LLC.) to be fully recoverable based
on review of projected cash flows and acceptance of regular payments directly to the Company’s creditors.
2. TRADE AND OTHER PAYABLES
Trade payables
Company
2023
Company
2022
$’000
1,253
91
$’000
2,690
ARGO BLOCKCHAIN PLC
Accruals and other payables
Other taxation and social security
Total trade and other creditors
2,781
9
4,043
3,430
-
6,120
The directors consider that the carrying value of trade and other payables is equal to their fair value.
Contingent consideration
In June 2022, the Company issued 8,147,831 Ordinary Shares to settle $5.0 million in contingent consideration. The
remaining contingent consideration of $5.0 million was not earned and as a result was reversed into profit or loss.
3. FINANCIAL INSTRUMENTS
Carrying amount of financial assets
Measured at amortised cost
-
Trade and other receivables
- Cash and cash equivalents
Measured at fair value through profit or loss
Total carrying amount of financial assets
Carrying amount of financial liabilities
Measured at amortised cost
Trade and other payables
-
- Short term loans
-
Long term loans
-
Issued debt – bonds
-
Lease liabilities
Total carrying amount of financial
liabilities
Fair Value Estimation
Company
2023
$’000
Company
2022
$’000
77
705
100
882
3,044
250
-
38,170
-
41,464
-
139
100
239
4,431
-
-
37,810
-
42,241
Fair value measurements are disclosed according to the following fair value measurement hierarchy:
- Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1)
-
-
Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly
(that is, as prices), or indirectly (that is, derived from prices) (Level 2)
Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (Level
3). This is the case for unlisted equity securities.
The following table presents the company’s assets that are measured at fair value at 31 December 2023 and 31
December 2022.
Assets
$’000
$’000
$’000
Level 1
Level 2
Level 3
Total
$’000
Financial assets at fair value
through profit or loss
- Equity holdings
Total at 31 December 2023
-
-
-
-
100
100
100
100
92
ARGO BLOCKCHAIN PLC
Assets
Financial assets at fair
value through profit or loss
- Equity holdings
Total at 31 December 2022
Level 1
Level 2
Level 3
$’000
$’000
$’000
Total
$’000
-
-
-
100
100
100
100
All financial assets are in unlisted securities. There were no transfers between levels during the period.
The Group recognises the fair value of financial assets at fair value through profit or loss relating to unlisted investments
at the cost of investment unless:
-
-
-
-
There has been a specific change in the circumstances which, in the Group’s opinion, has permanently impaired
the value of the financial asset. The asset will be written down to the impaired value;
There has been a significant change in the performance of the investee compared with budgets, plans or
milestones;
There has been a change in expectation that the investee’s technical product milestones will be achieved or a
change in the economic environment in which the investee operates;
There has been an equity transaction, subsequent to the Group’s investment, which crystallises a valuation for the
financial asset which is different to the valuation at which the Group invested. The asset’s value will be adjusted to
reflect this revised valuation; or
- An independently prepared valuation report exists for the investee within close proximity to the reporting date.
-
The deferred consideration has been fair valued to the year-end date as the amount is to be paid in Argo
shares.
4.
INVESTMENT IN SUBSIDIARIES AND LOSS ON SALE OF SUBSIDIARY
Company
Details of the Company’s subsidiaries at 31 December 2023 are as follows:
Name of Undertaking
Country of
Incorporation
Ownership
Interest
(%)
Voting Power
Held (%)
Nature of
Business
Argo Innovation Labs Inc.
9377-2556 Quebec Inc.
9366-5230 Quebec Inc.
Argo Holdings US Inc.
Argo Operating US LLC
* The provision of cryptocurrency mining services
** The provision of cryptocurrency mining sites
Canada
Canada
Canada
USA
USA
100%
100%
100%
100%
100%
*** Converted from the provision of cryptocurrency mining services to cost centre in 2023
**** Holding company
Investment in subsidiaries
At January 1
Impairment
Additions
Disposals
93
100%
100%
100%
100%
100%
2023
$’000
65,000
(21,017)
-
-
***
**
**
****
*
2022
$’000
15,067
-
65,000
(15,067)
ARGO BLOCKCHAIN PLC
At 31 December
Argo Holdings US Inc. was incorporated on November 22, 2023, with a registered office of 1209 Orange
Street, Wilmington, Delaware, USA, 19801. The company contributed shares in Argo Innovation Facilities
(US) valued at $65m.
43,983
65,000
Argo Operations US LLC was formed on November 22, 2022, with a registered office of 1209 Orange Street,
Wilmington, Delaware, USA, 19801.
Argo Innovation Facilities (US) Inc was incorporated on 25 February 2022 with a registered address of 2028
East Ben White Blvd. Austin, TX 78740. This entity held the Helios facility and real property in Dickens
County, Texas. On 21 December 2023, Argo Innovation Facilities (US) Inc. was converted to Galaxy Power
LLC. Galaxy Power LLC was sold on 28 December 2023 pursuant to an equity purchase agreement. The
proceeds received for the sale were $65 million against a book value of $120 million resulting in a loss on sale
for the Group of $120 million.
The effects of the disposal of Galaxy Power LLC on the cash flows of the Group were:
Carrying amounts of assets and liabilities as at the date of disposal:
Cash and bank balances
Property, plant and equipment
Trade and other debtors
Total assets
Trade and other creditors
Total liabilities
Net assets disposed of
Cash flows arising from disposal:
Proceeds used to paydown existing debt
Proceeds used for new loans
Total Proceeds
Net assets disposed of (as above)
Loss on disposal
5. KEY JUDGEMENTS AND ESTIMATES
Group
At 28
December
2022
$000
1,678
129,736
367
131,782
12,077
12,077
119,705
56,029
8,258
64,287
119,705
(55,418)
Valuation of investments in subsidiaries and amounts due from group companies – Note 19
The Board considered amounts due from group companies and whether any further impairments were required on their
carrying value. When considering these amounts, they made use of forecasts of the profitability of the subsidiary and
of their revenues and expenditure and concluded that impairment of those assets was necessary based on current
forecasts and performance during the first part of 2024.
The forecasts to support this were built using our existing internal models showing positive cash contribution and
profitability of the subsidiaries and their future value to the Group as a whole. Both pre and post year end these models
continue to show that the contribution to the Group is at least the carrying value of these investments and as such no
impairment has been recognised.
6. EMPLOYEES
The average monthly number of persons (including directors) employed by the company during the period was:
Directors and employees
94
2023
2022
Number
Number
6
10