Yahoo Finance London bitcoin miner hit by attack from short-seller Boatman Capital
A London-listed bitcoin miner linked with potential investment by Elon Musk is facing accusations that it purchased a strip of land in Texas for up to 100 times its actual value.
Low-profile research outfit Boatman Capital claims that Argo Blockchain’s deal to spend up to $17.5m on land that is allegedly worth just $168,000 raises “serious governance questions about why this deal was done and who benefited”.
The company said the claims made by Boatman were “unfounded” and its boss, Peter Wall, insisted that the acquisition of the Texas land was a "very solid deal".
Argo Blockchain, which uses powerful computers to perform complex calculations to “mine” bitcoin, has rode the recent boom in cryptocurrency. Its shares have increased from 6p to almost 130p over the past year, leaving it worth £500m.
Shares spiked 17pc last month on unsubstantiated reports that Mr Musk’s Tesla had bought a stake in Argo Blockchain.
The criticism is the latest levelled by Boatman, which made headlines nearly three years ago with its attack on Babcock, Britain’s second-biggest contractor.
In June, the short-seller launched a stinging assault on Anglo-American’s spin-off of a group of South African coal mines.
In February, Argo Blockchain announced it had agreed to buy 320 acres of land for $5m in shares initially, rising to $17.5m once other milestones were met.
The company later clarified that the size of the land in question was actually 160 acres. Some £49m was raised from shareholders in the first three months of the year.
Boatman obtained a formal valuation of the land by a certified real estate appraiser in Texas, which concluded that the land was worth $168,000.
Before the report was published, a spokesman for Argo Blockchain said over the weekend: “We are aware of potential unfounded allegations against Argo that are circulating in a leaked report by a known short-seller. We have not seen this report and therefore we are not in a position to have considered its contents.”
After seeing the report, Mr Wall, the chief executive and interim chairman, defended the price paid for the Texas land.
"We feel that it was a good deal ... because it wasn't just a land acquisition, it was a project acquisition," he said. "It was a shovel-ready project that allowed us to skip 12 to 18 months of work that Argo would have had to do, had we not acquired this project."
Mr Wall continued: "Our feeling was that the opportunity cost to wait, to try and find our own piece of land to do all of that legwork ourselves would be too big. The cost of waiting would be too big. We feel that it was a very solid deal."
The Boatman attack risked taking the shine off bumper results posted by Argo Blockchain for the first six months of the year. Pre-tax profit rose from £523,074 to £10.7m on £31.1m of revenue.
Mr Wall said: "We have capitalised on a change in market conditions in the first half of 2021 to deliver strong growth in both revenues and profits, demonstrating that our smart growth strategy is delivering value to shareholders."
