The miner signed a deal to host up to 32 megawatts of mining machines, enough to power about 10,000 rigs.

Bitcoin mining company Argo Blockchain’s (ARB) self-mining margin narrowed to 20% in August as soaring natural gas prices increased the cost of energy at its Helios facility in Texas, the firm said Friday.

Rampant energy costs at the facility, which uses electricity bought on the spot market, have eaten into profitability this year. The margin, which stood as high as 74% in January, had sunk to 37% by July. The company is trying to secure a long-term, fixed-price power purchasing agreement to lower its exposure to volatility in energy markets.

“Spot power prices in West Texas averaged nearly $0.09 per kWh, which is nearly three times the average price during the month of August in prior years,” Argo said.

Mining analyst Wolfie Zhao noted on Twitter that under current market conditions, gross margins for even some of the newest mining machines have dropped. According to his calculations, Bitmain Antminer S19Pro and S19XP are down to 44% and 23% respectively.

Argo also signed an agreement to host up to 32 megawatts of mining machines, around 10,000, according to the statement. The London-based company will receive a quarter of the net profit from mining bitcoin with those machines. Mining firms that don’t own and operate their own infrastructure can have their machines hosted at a facility run by a different company.

Argo has been installing its own miners at Helios since it opened in April, but reduced its expectations for its own hashrate, or computing power on the bitcoin network, for the rest of the year.

The company’s shares had gained 9.8% on the London Stock Exchange as of 8:49 UTC.

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Argo said the decline also reflected an increase in mining difficulty on the Bitcoin network.

Argo Blockchain (ARB), the only London Stock Exchange-listed crypto miner, said bitcoin production dropped 25% from April as its new Helios facility in Texas experienced “unplanned downtime” and mining difficulty increased on the Bitcoin network.

The company produced 124 bitcoin or bitcoin equivalents in May compared with 166 the previous month.

May saw the start of mining operations at the Helios facility in Dickens County, Texas. While bringing the facility online, the company “faced some limited instances of unplanned downtime,” it said in an announcement Tuesday.

In addition, high temperatures in the state saw increased energy demand and higher electricity prices, so Argo voluntarily curtailed reduced its energy usage there curtailing mining operations.
Argo also attributed the decline to an increase in mining difficulty on the Bitcoin network.

“The company’s hashrate on Terra Pool produced substantially lower bitcoin than in previous months, primarily due to short-term probabilistic outcomes. The company continues to explore all options to optimize its hashrate across alternative pools,” Argo added.

Argo reported mining revenue for May of just under £3.1 million ($3.89 million). For April it reported £5.52 million.

ARB shares fell 8.65% as of publication time, trading at 47.5 pence.

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Bitcoin was priced in the $40,000 range for much of Q1 compared with nearly $60,000 in the same period a year earlier.

Argo Blockchain (ARB) reported net income of £1.6 million ($2.1 million) in Q1, a drop of over 90% compared with the corresponding quarter a year earlier.

Argo cited, among other factors, a change in fair value of digital currencies, with bitcoin priced in the $40,000 range for much of Q1 compared with nearly $60,000 in the same period a year earlier.

The London-based and only bitcoin miner listed on the London Stock Exchange (LSE) saw its revenue increase by 9% from a year ago to £14.9 million. This is attributed to a growth in the firm’s hashrate throughout 2021, Argo announced Tuesday.

Argo mined 470 bitcoin and bitcoin equivalents compared to 387 in the same period a year ago.

As of the end of Q1, Argo was hodling 2,700 bitcoin and bitcoin equivalents.

Argo has in recent weeks borrowed $70.6 million from a New York Digital Investment Group (NYDIG) subsidiary to purchase mining equipment for its Helios facility in Texas which would operate at 200 megawatts with the potential to be ramped up to 800 MW.

Shares in ARB on the LSE were up nearly 3% on the day at the time of writing.

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The stock rose the most since March after the miner said it expects its hashrate to reach 5.5 EH/s by year-end.

Argo Blockchain (ARB) shares surged on the London Stock Exchange on Thursday after the bitcoin miner raised the hashrate guidance in its annual earnings report.

The shares traded around 70 pence, ($0.9) at the time of writing, an increase of 15% from Wednesday’s market close. The jump is the biggest since March 9, when it gained 18% on the day, data from TradingView shows.

In a report published after U.S. markets closed, Argo said it expects its hashrate to increase to 5.5 exahash/second (EH/s) by the end of the year, up from its previous estimate of 3.7 EH/s.

The miner is among four companies that have disclosed they will be using Intel’s new bitcoin mining chip, the other three being Hive Blockchain, Griid Infrastructure, and Jack Dorsey’s Block (formerly Square).

The miner also saw sales reach $100.1 million, beating the average analyst estimate of $98.3 million, with revenue up 291%.

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