Argo Slashes Bitcoin Production Costs by 33%
Date: 2023-11-15 Author: Dima Zakharov Categories: IN WORLD
Driving Down Costs with Electricity Credits
In a groundbreaking move, Argo reported a total revenue of $10.4 million from mining 370 bitcoins between July and September. Managing its facilities in Canada and deploying miners at Galaxy Digital's Helios platform in Texas, Argo demonstrated its commitment to innovation.
The Impact of Electricity Credits
Argo strategically applied $4.4 million worth of electricity credits, effectively offsetting a substantial portion of its direct costs. This move lowered the Bitcoin production cost to $11,736 in the third quarter, marking a significant 33.1% decrease from $17,566 in the second quarter.
Understanding Bitcoin Production Costs
Bitcoin production costs encompass direct expenses related to mining, such as electricity bills and on-site expenditures, excluding corporate overheads and interest expenses. Consequently, Argo increased its gross profit margin from Bitcoin mining to 58% in the third quarter.
A Marginal Increase in Profit
While the margin increased, Argo mined fewer bitcoins during the summer, producing 370 BTC compared to 456 BTC in the second quarter. This adjustment aligns with the company's participation in Texas's demand response program, securing electricity credits for reduced consumption.
Adopting Texas's Demand Response Program
Argo joins the league of public Bitcoin mining companies leveraging Texas's demand response program for electricity credits. Riot, another player in the industry, secured nearly $50 million in credits, resulting in a remarkable 120% increase in the gross profit margin for the mining segment in the third quarter.
Debt Reduction and Financial Efficiency
Argo highlighted ongoing efforts to reduce its outstanding debt with Galaxy Digital, successfully decreasing it from $32 million to $27 million. Despite an existing debt of $70 million at the end of the third quarter, Argo's continuous debt reduction contributes to lowering overall financial expenses.
Strategic Cost-Cutting Measures
In addition to reducing debt, Argo further streamlined its corporate overheads from $3.8 million in the second quarter to $3 million in the third quarter. However, due to the reduced Bitcoin production in exchange for electricity credits, Argo's overall mining cost in the third quarter was estimated at over $27,500.
