Argo Blockchain (LON: ARB) (NASDAQ: ARKB) gets paid by Texas for the process of *not* mining Bitcoin. Now this is nice enough for Argo of course, but it does show up the absurdity of how the bureaucracy manages the energy system. The reliance upon renewables – or unreliables – is such that Texas cannot guarantee that all users of electricity can have electricity when they want it. So, contracts have to be made with those who are willing to forgo it at times – and they have to then get compensated.
Which is what we see in the monthly announcement from Argo: “During the month of July, the Company mined 129 Bitcoin or Bitcoin Equivalents (together, “BTC”), or 4.2 BTC per day. This is a decrease of 11% from the 4.6 BTC per day mined in the previous month. The decrease was driven primarily by greater downtime at Helios from weather-related curtailment and onsite construction. Additionally, the Helios operations participated in economic curtailment, which reduces Bitcoin production but generates additional cash proceeds.” Economic curtailment is an agreement that they will “stop doing that” when power gets short. They get paid for doing that – that’s the cash proceeds. “”I am also pleased with our economic curtailment programs that contribute to the stability of the Texas grid during periods of peak demand while simultaneously reducing our total power costs.”” Logic would suggest that TX simply raise the price of electricity which would make people like Argo stop using it when it’s in short supply. But then we’ve mentioned bureaucratic planning of energy systems above.
Argo Blockchain share price from Google Finance.
We’ve looked at this before at Argo: “Argo Blockchain (LON: ARB) (NASDAQ: ARBK) has long been a favourite of a certain group of share traders. It’s just one of those stocks which seems to have captured the imagination. Given that it’s up 122% year to date this might seem fair enough too – but it’s also down some 80% year on year which is less exciting. Unless you’ve been short that is. But then it’s price volatility – changes in price – which are what traders are interested in. A steady, dividend paying, stock isn’t the point at all when trading. Rather something with price moves that can be moved in and out of.”
We’ve also mused on the idea of a rights issue at Argo Blockchain: “Argo Blockchain shares are down 21% in London this morning. ARB shares have dropped on the news of an institutional placing of shares. This does, we have to admit, strike us as odd as we’re fairly certain that the future isn’t bright for crypto companies, nor even the market as a whole. As we discussed with Coinbase the SEC seems to be gunning for the market and insisting it’s all about securities law. Something that would kill rather a lot of activity. Maybe it’s possible to think that Bitcoin mining itself won’t be affected but we’d be surprised if that turned out to be true in the end.”
And that is our general view of the sector. In the long term we’re bear but there’s always the possibility of good trading opportunities on the way there.