British miner Agro Blockchain reported threefold growth in revenue

In 2020, the company spent a lot of money on upgrading its ASIC fleet, so in the first half of the year, its profit decreased by 45% compared to the same period last year.

British mining company Agro Blockchain reported a three-fold increase in revenue in the first half of 2020. In a press release published on the website of the London Stock Exchange (LSE) it is said that over the indicated period of time, the company’s revenue increased by 280% to £ 11.12 million (approximately $ 14.5 million).

Earnings before interest, tax, depreciation, and amortization (EBITDA) nearly doubled year-on-year to £ 3.23 million ($ 4.2 million). However, Agro’s actual profits have dropped significantly.

The May halving and the excitement in the Bitcoin market, which is currently trading at $ 10,000, brought to the situation when mining companies need much more computing power to mine efficiently than previously required. Mining difficulty – a dimensionless value that reflects how difficult it is to perform a mathematical calculation to find a new block and receive a reward – has grown by more than 60% over the past year.

Thus, ASICs of the previous generation, such as Bitmain’s Antminer S9, quickly become obsolete and unprofitable. The emergence of new devices on the market (in February, Bitmain introduced the Antminer S19, which is almost nine times more powerful than the S9 model), with a higher hash rate, only accelerates this process.

To stay in the game, professional miners are forced to update their hardware every few years. This makes the industry extremely sensitive to rapid capital amortization.

Taking into account energy costs and equipment depreciation, Agro’s pre-tax profit was only £ 0.52 million ($ 677,000), down 45% year-on-year. At the same time, Agro now employs 18 thousand mining rigs – in the first half of 2020, the company bought 11 thousand ASICs.

Agro CEO Peter Wall said in a conversation with Coindesk that he believes EBITDA is the preferred metric for enterprise performance. Wall emphasized that he was pleased with the results of his company, noting that the performance of most public miners was significantly worse.

Recall that Agro Blockchain shares are traded on the LSE – in 2018 the company held an IPO, during which it raised $ 32.5 million. Over the past six months, Agro’s capitalization has grown by more than 20% – its shares are now trading at £ 5.58.

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