Executive Summary / Key Takeaways

• Critical Restructuring Underway: Argo Blockchain is undergoing a comprehensive recapitalization and balance-sheet restructuring, approved by the High Court of Justice in London, to address its critically constrained liquidity and return to sustainable growth. This plan, expected to be implemented in December 2025, is a high-stakes effort to avert insolvency.
• Strategic Pivot to HPC: Facing severe headwinds in Bitcoin mining post-halving, Argo is strategically diversifying into High Performance Computing (HPC) at its Baie-Comeau facility, aiming for an April 2025 go-live. This initiative seeks to leverage existing infrastructure for AI and data processing, offering more predictable revenue streams and reducing reliance on volatile crypto markets.
• Significant Dilution for Existing Shareholders: The restructuring plan involves substantial dilution, with existing equity holders seeing their interest reduced to 2.50% of the enlarged share capital, while the secured lender, Growler Mining, will acquire an 87.50% equity interest.
• Operational Resilience Amidst Headwinds: Despite a challenging Q3 2024 marked by a significant drop in mining margin to 8% and a net loss, Argo has demonstrated operational discipline, including fully repaying its Galaxy loan ahead of schedule and reducing non-mining operating expenses.
• Competitive Landscape and Future Outlook: While Argo's global footprint offers some differentiation, it faces intense competition from larger, more financially robust peers in both Bitcoin mining and the emerging HPC sector. The success of the restructuring and the HPC pivot are critical for its long-term viability and competitive positioning.

A New Dawn or Final Chapter? Argo Blockchain's Defining Moment

Argo Blockchain plc, a company deeply rooted in large-scale cryptocurrency mining since its incorporation in 2017, stands at a pivotal juncture. After years of navigating the volatile cryptocurrency landscape, marked by periods of aggressive expansion, strategic deleveraging, and operational optimization, the company is now undertaking a comprehensive restructuring plan. This high-stakes initiative, approved by the High Court of Justice in London in November 2025, is designed to stabilize its critically constrained financial position and chart a course for sustainable growth, with the stark alternative being an insolvency process.

The company's journey has been one of adaptation. Following a significant debt restructuring and the sale of its Helios facility at the end of 2022, Argo embarked on a strategy centered on financial discipline, operational excellence, and strategic partnerships. This focus yielded positive results in 2023, with a notable reduction in Galaxy debt and a significant turnaround in adjusted EBITDA to $8.3 million from a negative $47 million in 2022. The momentum continued into Q1 2024, bolstered by an equity raise and the sale of its Mirabel facility, which streamlined Quebec operations and further reduced debt.

However, the Bitcoin halving in April 2024 ushered in a new era of challenges, severely impacting mining economics. This led to a substantial 41% decrease in Bitcoin production in Q2 2024 compared to Q1, and the company recorded a $22 million non-cash impairment charge on its mining machines. The third quarter of 2024 continued to be challenging, with rising production costs, increasing mining difficulty, and declining hash prices contributing to a net loss and negative adjusted EBITDA. These persistent headwinds underscore the urgent need for the current restructuring and strategic reorientation.

Technological Edge and the HPC Horizon

Argo's operational foundation in Bitcoin mining has been characterized by a focus on efficiency and renewable energy. The company's current fleet operates at an efficiency of approximately 30 joules per terahash across its sites, with inherent flexibility to adjust power consumption through over/underclocking to optimize performance in response to changing hash rates and energy environments. This adaptability is crucial in a sector where energy costs are a primary determinant of profitability. Furthermore, Argo's commitment to sustainable operations is evident in its predominantly renewable energy-powered facilities in Quebec and its leveraging of economic curtailment in Texas, where it can sell electricity back to the grid during periods of high power prices, directly reducing mining costs. In 2023, such curtailment generated $7.2 million in power credits, contributing to an average direct cost per Bitcoin mined of $16,363.

A significant technological and strategic pivot is underway with Argo's entry into High Performance Computing (HPC). The company has signed a non-binding letter of intent with the BE Group to explore a substantial HPC expansion at its Baie-Comeau facility. A feasibility study has confirmed the ability to adapt 12 megawatts of existing infrastructure to support AI servers, with the potential to expand by an additional 11 megawatts, bringing the total potential capacity to 23 megawatts. This initiative is a direct response to the growing demand from hyperscalers for computational power, particularly in AI and data analytics. Bitcoin miners, with their access to scalable power and data center operational experience, are uniquely positioned to meet this demand.

The stated goal for the HPC expansion is a go-live in April 2025, with management actively working on project planning, securing definitive agreements, customer acquisition, and CapEx funding. This diversification is intended to complement Bitcoin mining by offering more predictable income streams, thereby reducing exposure to Bitcoin price fluctuations and enhancing the company's ability to generate value across multiple sectors. While specific revenue contributions are not yet available, management anticipates this expansion will begin adding value relatively quickly once operational. The potential to energize new 8 megawatts with the latest generation of miners could improve Baie-Comeau's fleet efficiency to 24 joules per terahash, or even 15 joules per terahash if the entire fleet is refreshed, showcasing a clear technological roadmap for enhanced performance.

Financial Performance and the Restructuring Imperative

Argo's recent financial performance underscores the critical need for its current restructuring. In Q3 2024, the company mined 123 Bitcoin, generating $7.5 million in revenue. The mining margin plummeted to 8% from 58% in the prior year period, reflecting the severe impact of lower Bitcoin prices and higher energy costs post-halving. This resulted in a net loss of $6.3 million for the quarter and negative adjusted EBITDA of $2.1 million. For the nine months ended September 30, 2024, revenue reached $36.7 million, but the mining margin stood at 33%, down from 47% in the prior year.

Despite these challenges, Argo demonstrated financial discipline by fully repaying its $12.4 million Galaxy loan in Q3 2024, four months ahead of schedule. This was achieved through a combination of non-core asset sales, operational cash flows, and an $8.3 million equity raise. This repayment eliminated $1.1 million in monthly amortization payments and strengthened the balance sheet. However, as of September 7, 2025, the company's available cash was critically constrained at approximately $753,000, highlighting the urgent need for the restructuring.

The proposed Restructuring Plan is comprehensive. It involves the full equitization of the secured lender Growler Mining Tuscaloosa, LLC's debt into new ordinary shares, granting Growler an 87.50% equity interest in the company in exchange for its secured loans (anticipated at $7.5 million), $3.5 million in exit capital, and contributed assets valued between $25 million and $30 million. Noteholders of the 8.75% Senior Notes due 2026 will receive a pro rata allocation of 10% of the enlarged issued share capital. Existing equity holders will face significant dilution, with their aggregate interest reduced to 2.50% of the enlarged share capital. The plan also includes delisting from the London Stock Exchange while intending to maintain its Nasdaq listing, subject to compliance.

Competitive Landscape and Strategic Positioning

Argo operates in a highly competitive and capital-intensive industry, facing direct competition from other publicly traded Bitcoin miners such as Marathon Digital Holdings (MARA), Riot Blockchain (RIOT), Hut 8 Mining (HUT), and Bitfarms (BITF). While Argo's global operational network offers a degree of diversification and resilience against regional disruptions, it generally lags behind larger peers in terms of scale, growth rates, and financial robustness. For instance, companies like Marathon Digital Holdings are known for aggressive expansion and faster deployment of mining rigs, often leading to stronger revenue growth and cash flow generation during favorable market conditions. Similarly, Riot Blockchain has demonstrated superior hardware optimization and scaling capabilities in its more concentrated U.S.-centric operations.

Argo's financial metrics, such as its recent negative gross profit margin of -1.23% and net profit margin of -156.62% (TTM), stand in stark contrast to some competitors who, despite market volatility, have managed to maintain positive, albeit inconsistent, profitability. The company's smaller scale can lead to higher operating costs per unit, impacting profitability and limiting pricing power compared to more efficient, larger-scale operations like Bitfarms, which focuses on cost leadership through strategic site selection.

The pivot to HPC introduces new competitive dynamics. While Bitcoin miners are uniquely positioned to leverage their infrastructure for HPC, they will face competition from established technology firms and cloud computing giants. The "competition is probably really more about energy and energy resources," as those providing HPC services are willing to pay top dollar for access to energy. Argo's access to low-cost, reliable power, particularly its hydroelectric-powered Baie-Comeau facility, could be a competitive advantage here. However, its success will depend on securing definitive agreements, acquiring customers, and effectively funding the CapEx for the HPC expansion, all while managing its current financial distress.

Risks and Outlook

The path forward for Argo Blockchain is fraught with significant risks. The most immediate is the successful implementation of the Restructuring Plan. The plan is conditional on court sanction and shareholder approval of a waiver under the Takeover Code, which, if not granted, could lead to an application for dispensation to facilitate a "rescue of Argo which is in serious financial difficulty." The "Relevant Alternative" to the plan is an insolvency process, under which existing shareholders would receive no recovery. While a valuation analysis determined a going-concern enterprise value of approximately $30.5 million to $35.3 million, significantly higher than the $8 million in an insolvency scenario, the "no worse off" test is only one factor the Court will consider, with fairness being the overriding consideration.

Beyond the restructuring, market conditions, including Bitcoin price volatility, energy market fluctuations, and increasing network difficulty, remain critical factors. The ongoing federal and provincial tax reassessments in Canada for Argo Innovation and Argo Quebec also pose a financial drag. However, management expresses optimism about the potential for more favorable regulatory changes in the US post-election and the long-term appeal of Bitcoin mining's role in grid stability. The HPC expansion, while a diversification strategy, also carries execution risks related to project planning, customer acquisition, and CapEx funding.

Conclusion

Argo Blockchain is at a critical inflection point, undertaking a profound restructuring to secure its future. The proposed plan, while leading to significant dilution for existing shareholders, is presented as the viable path to avert insolvency and recapitalize the company. This financial overhaul, coupled with a strategic pivot towards High Performance Computing, represents a bold attempt to diversify revenue streams and leverage existing infrastructure in a rapidly evolving technological landscape.

The success of this re-envisioned Argo hinges on several factors: the smooth implementation of the restructuring plan, the effective execution of the HPC expansion at Baie-Comeau by its April 2025 target, and the company's ability to navigate the persistent volatility of the cryptocurrency and energy markets. While its global presence and operational flexibility offer foundational strengths, Argo must demonstrate sustained operational excellence and strategic agility to compete effectively against larger, more established players in both Bitcoin mining and the burgeoning HPC sector. For investors, the coming months will be a defining period, determining whether this restructuring marks a true rebirth for Argo Blockchain or merely a temporary reprieve.