Good afternoon, and welcome to the Argo Blockchain plc Investor Presentation. Throughout this recorded presentation investors will be in listen-only mode. Questions are encouraged and can be submitted at any time by the Q&A tab situated on the right-hand corner of your screen. Simply type in your questions and press send. The company may not be in a position to answer every questioner received during the meeting itself. However, the company can review all questions submitted today and will publish those responses where it's appropriate to do so. Before we begin, I would like to submit the following poll. I'd now like to hand you over to management team from Argo Blockchain plc. Tom, good afternoon, sir.

Thanks, Lilly. Before we begin, I'd like to remind everyone that today's presentation and remarks may contain forward-looking statements. Please see our Form 20-F filed with the Securities and Exchange Commission for our full risk disclosures. With us today for our discussion of Q4 and full year 2023 results are Thomas Chippas, Argo's Chief Executive Officer; and Jim MacCallum, Argo's Chief Financial Officer. And now I'll turn it over to Thomas for some introductory remarks.

Thanks, Tom, and thank you to everyone for joining us today. I am excited to be speaking with you and certainly it's been a busy few months since I stated and I'm eager to fill you in on what we've been working on. This is my first earnings call since joining Argo back in November. And as I'm sure everyone is aware, we just went through the fourth Bitcoin halving at the end of last week. It's an exciting time to be in the Bitcoin mining space. During 2023 and so far in 2024, we at Argo have had three priorities that guide us on a daily basis. We focus on financial discipline and deleveraging, operational excellence, and growth and strategic partnerships for the sustainable future of this company. By concentrating on these goals, I believe that we put ourselves in a strong position going into the halving, and I'm excited to continue with the great work that the team is doing. A few comments on the macro environment. It goes without saying that the most significant event of late for miners was last week's halving. Block rewards were reduced from 6.25 to 3.125 Bitcoin, and we saw substantially higher fees being paid in the blocks initially produced post halving. Although fees have retreated from those initial post halving peaks, they were generally outperforming previous year's post halving environments until today's retreat in hash price. This halving is different to previous halving events in several ways. The change in the number of new Bitcoin entering circulation is reduced by half as compared to the previous halving event per normal, but with 94% of the Bitcoin supply already released, one could interpret this reduction as likely less impactful on supply than previous halving events. The presence of the Bitcoin ETFs is…

Thanks, Tom. During the fourth quarter, we mined 443 Bitcoin, which was a 20% increase over the prior quarter. This was largely driven by lower levels of economic curtailment in the fourth quarter, as weather in Texas was fairly moderate compared to the heat waves we saw in Q3. This also increased our net direct costs and reduced our mining margin percentage when compared to Q3. Our revenue in Q4 was also significantly higher than the third quarter, primarily due to the higher price of Bitcoin. Our realized Bitcoin price in Q4 was approximately 36,500, which was 30% higher than the roughly 28,100 Bitcoin price that we realized in Q3. As Tom mentioned in his remarks, we continue to focus on financial discipline. In the fourth quarter, we reduced our non-mining operating expenses by 12% to $3.1 million. We also recorded a non-recurring expense of $2 million for the quarter, which included a legal settlement, some other legal costs, and transaction expenses. We generated adjusted EBITDA of $3.6 million in the fourth quarter, which continues our pattern of growing adjusted EBITDA sequentially each quarter during 2023. At the end of the year, we had $7.4 million of cash in hand. We executed two significant transactions in the first quarter of 2024, which has bolstered our cash position in addition to reducing our debt. We raised $9.9 million of gross proceeds through an equity raise in January, of which we used a portion of that to pay down our Galaxy debt. We also sold our Mirabel facility in March for $6.1 million. We used all of the net proceeds from that transaction to reduce our Galaxy debt down to less than $13 million at the end of March 31st, with a total debt balance of $54 million. Now let's look at…

Thanks, Jim. In Quebec, we've strengthened our operations by consolidating our fleet at our Baie Comeau facility post the sale of Mirabel. I want to take this opportunity to recognize the herculean efforts of our Quebec operations team. They were able to relocate the Mirabel miners to Baie Comeau in a matter of days with minimal impact to our operations. As part of the fleet consolidation, we took the opportunity to decommission and sell some older generation machines, which reduced our total hashrate capacity from 2.8EH to 2.7EH. We still have the majority of our fleet, roughly 2.4 EH of total hashrate capacity located at Helios in Texas. As we think about strategic growth, we're focused on working with energy generators to utilize Bitcoin mining's inherent flexibility. We talked about economic curtailment in Texas, but that's just one example of how Bitcoin mining can integrate with power grids. Demand response is a critical component of transitioning to the power grid of the future, and we believe that Bitcoin miners can play an important role in that transition. We are having discussions focused on ways to integrate our operations with those of energy companies, and we look forward to updating everyone on those discussions in due course. With that, back to Lilly and Tom for any questions.

Thomas, Jim, thank you very much for your presentation this afternoon. [Operator Instructions]

Thanks, Lilly. Our first question for Tom is from Bill Papanastasiou from Stifel, as well as [indiscernible] from the Q&A chat. Can you speak to the current appetite for a fleet upgrade and the growth strategy in the post-halving environment?

Thanks, Tom. Look, Argo has a strong fleet. It's important to remember that these rigs do not operate with the toggle switch, but instead with the dimmer switch, allowing us to vary the amount of power consumed through over underclocking. We are, of course, aware of the capabilities of newer generation machines. As we think about opportunities for growth, we will look at hash price, the availability of rigs, and the nature of any opportunities energy cost to determine the right approach on machines. We also look to use our size as an advantage and target sites and opportunities, the scale of which might not be appealing to substantially larger miners, but are to Argo. Look, knowing that everyone is likely familiar with Argo's history, shifting the company back to a growth mindset is new for this year. And the team is digging in on several opportunities. Back to you, Tom.

Thanks, Thomas. Next question comes from Joe Flynn at Compass Point, as well as Chris H. from the Q&A chat. And this one is for Jim. From a capital allocation standpoint, can you walk us through your ongoing strategy to pay down the remaining $54 million of debt following the sale of the Quebec data center?

Hey, thanks. Thanks, Joe and Chris for the question. Yeah, we think we've done a pretty good job in the last 18 months paying down our debt. We currently have cash on hand of $12 million, and our Galaxy debt is a similar balance to this. We enter the halving in strong financial position, and obviously, we continue to focus on our debt reduction and strengthening the balance sheet.

Thanks, Jim. Our next question comes from Kevin Dede at H.C. Wainwright. This is for Thomas, can you give an update on where hashrate currently is in Quebec after the sale of Mirabel?

For sure. So post the sale of Mirabel, as I noted, we very quickly moved the Mirabel fleet to Baie Comeau. So now up and running at Baie Comeau is approximately 300 petahash.

Thanks, Thomas. Next question for Jim this comes from Jason B. in the chat. Does the Q1 31,000 direct cost per Bitcoin include depreciation?

Yes, good question, Jason. Yes, this figure only includes our power and hosting costs paid at Helios and our Quebec sites. It does not include any depreciation. Thank you.

Thanks, Jim. Another one for you from Bill Papanastasiou at Stifel. Can you please provide some color as to how expense management is progressing in Q1 and Q2?

Yes, thanks, Bill. Yes, we continue to focus on costs. We feel that most of the heavy lifting has been successfully completed here. Our run rate for non-mining OpEx has trended to approximately a $1 million per month over the last few quarters. And we believe that's a reasonable outlook for the balance of the year.

Great, thanks. Next question for Thomas. This comes from [indiscernible] in the chat. Could you give an update on the shareholder lawsuit?

I can. Thanks, [indiscernible], for the question. On the shareholder suit, we filed a motion to dismiss a few months ago and we're awaiting a ruling from the judge on that motion. Once there is an update, I would expect we'll send out an RNS to make everyone aware.

Thanks, Thomas. Next question was pre-submitted ahead of the earnings call. Will Argo invest into infrastructure again or only focus on investing in machines?

Sure. So today, obviously, we have both hosted and self-operated machines, Helios and Baie Comeau. As the market evolves, we think there will be opportunities where it makes sense to be hosted and somewhere it makes sense to own everything vertically. So we'll continue to evaluate those decisions on an individual basis.

Thanks, Thomas. Another pre-submitted question. Does Argo have any plans to branch into AI or HPC data centers?

Sure. So look, we most definitely understand the demand for AI and HPC processing in the market. But from our perspective, that is a substantially different business than operating a Bitcoin mining facility. We've certainly looked at it, but it's not an area where we're currently focused.

Great. Thanks, Thomas. Here is another question that was pre-submitted. We got this a couple of times and we seem to get this every quarter. This is for Jim. Are there any plans to start paying a dividend?

No, we do not have any current plans to start paying a dividend at the moment. Any excess cash that we generate is being used to pay down debt and also to invest in future growth for the company. So yes, no plans at this point to pay a dividend. Thank you.

Great. Thanks, Jim. Next question from Jeff R. [ph] in the chat for Tom. How do you think about M&A in the post-halving environment?

Thank you, Jeff. Look, the market may present opportunities for inorganic growth. We're evaluating many projects and would certainly consider opportunities that make sense and ultimately create value for shareholders.

Thanks, Tom. Next question from the chat. What was the thought process around selling the Mirabel facility?

Sure. So the sale of Mirabel achieved a great sales price, as we mentioned, $6.1 million. That works out to $1.2 million per megawatt, which is much more than the development costs for facilities anywhere in North America. The opportunity to consolidate our operations to Baie Comeau and achieve some cost-saving synergies, were obviously a driver. And ultimately, being able to do this with minimal impact to our hash rate or revenue generation from consolidating the machines also made it an appealing option for us.

Great, thanks. Next question, can you talk a little bit more about the power price you achieved in Texas?

Sure, I'll take that. So as we noted in the presentation, our power costs across all sites for 2023 was just under $0.05 per kilowatt hour. And in Texas, we benefited from $7.2 million in economic curtailment revenue from demand response programs. That obviously played a very important part in driving down our net electricity costs for the year.

Great. Okay. Thanks, Thomas. Lily, back to you.

Thomas, Jim, thank you for answering all those questions you got from investors. And of course, the company can review all questions submitted today and we'll publish those responses on the Investor Meet Company platform. Just before redirecting investors to provide you with their feedback, which I know is particularly important to the company, Thomas, can I please just ask you for a few closing comments?

Certainly, Lily. Thank you. Thanks everyone for joining us today. It's an exciting time in mining space, as I said, and certainly very exciting time for Argo. We look forward to speaking with everyone in a few weeks to discuss our Q1 results in more detail. Thank you for your time today.

Thomas, Jim, thanks for updating investors today. Can I please ask investors not to close this session as you'll now be automatically redirected to provide your feedback in order that the management team can best understand your views and expectations. This will only take a few moments to complete and I'm sure will be greatly valued by the company. On behalf of the management team of Argo Blockchain plc, we would like to thank you for attending today's presentation. And good afternoon to you all.