Argo Blockchain saw its Bitcoin mining margin drop to 20% in August

Argo Blockchain PLC (LON: ARB ), a publicly traded Bitcoin mining company that is one of the largest in the world, has released an operational update showing that its mining margin fell to 20% in August.

In this latest blockchain news, and according to the company’s announcement on Friday, the reduction in mining margin – from 37% in July – was down to two factors:

Bitcoin (BTC) price fell 11% during the month and rising power costs at the firm’s Helios mining facility.

In particular, Argo’s power purchase agreement at the Texas-based facility provides for the spot purchase of power. In August 2022, spot market prices averaged $0.09 per kWh, almost three times the prices of previous years, a scenario that has contributed to the reduced margin.

Argo’s mining revenue increased

To explain the high spot power costs in West Texas, the firm pointed to a 204% jump in natural gas prices, the highest over the month compared to the same period in 2018-2021. The gas price problem, Argo claims, is due to the impact of the war in Ukraine, as well as low storage levels of the commodity in the US.

But despite this drawback, Argo Blockchain mined 235 Bitcoin during the month – compared to 219 BTC mined in July. Increased hash rate at Helios and installation of new Bitmain S19J Pro miners had pushed the total hash rate to 2.5 EH/s and keeps the company on track to reach the target of 3.2 EH/s by the end of October 2022.

The company has signed a strategic hosting agreement with an unnamed third party that will allow efficiencies at Helios and add to the hashrate, Peter Wall, Argo CEO noted in a statement.

“Although our mining margin is lower than expected, the recent high natural gas and electricity prices are a temporary reflection of broader market dislocations, and we are confident that electricity prices will match historical trends in the near future. Also, electricity prices are seasonal and we expect that prices will drop as temperatures drop through the cooler months.”

Argo had 1,098 Bitcoin as of August 31, 2022, while mining revenue was £4.39 million ($5.23 million), up from £3.89 million ($4.73 million) in July. The company’s shares rose more than 10% on Friday as blockchain shares mirrored the crypto market with a fresh bounce along with broader risk market assets.