Frank Timis in bitcoin battle with Argo Blockchain
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
It is a blatherskite world where bitcoin, blockchain and Frank Timis, once dubbed “the emperor of west African mining”, are mentioned in the same breath.
Yet last week, a battle broke into the open between Argo Blockchain, the crypto-mining newbie that was granted a standard London listing last summer, and First Investments Holding, a Grand Cayman group that Argo claims is controlled by Mr Timis. FIH is Argo’s biggest shareholder with 13.8 per cent.
Mr Timis is the Australian-Romanian who was convicted twice for heroin possession in his early years. He then headed oil explorer Regal Petroleum in the noughties, which London regulators rapped over the knuckles for misleading investors, and he chaired Aim-quoted iron miner African Minerals until its collapse in 2015.
Argo is involved in the business of cloud mining and blockchain, a peer-to-peer ledger where “miners” use vast amounts of energy and computer power to check, record and verify transactions. In return they extract crypto-coins.
At its float last summer, Argo said it would not mine directly. Instead it would provide shallow-pocketed enthusiasts with access to servers and data centres in Quebec to help them mine. It seemed a surer way to make money — akin to providing baked beans and shovels to gold diggers in the California rush of 1849.
However, in February Argo suddenly changed tack after sharp falls in cryptocurrencies. Bitcoin tumbled from nearly $14,000 to less than $4,000 in 2018 and Argo’s shares fell from 16p at float to 3.3p.
Jonathan Bixby, Argo’s Canadian chairman, announced the group — cash rich but lossmaking — would cut costs and stop offering its subscription-based consumer mining service. Instead Argo would buy new hardware and begin mining on its own account. Mr Bixby said the company would be breaking even by the year end.
FIH objected to the millions spent “on rapidly obsolescing [sic] crypto hardware”. It said there were better uses for the cash. It called for a vote to depose Mr Bixby and Mike Edwards, a fellow executive and founder. A meeting was scheduled for Thursday last week. But on Monday Argo announced it had signed a share swap and a joint venture with Hive, a Canadian crypto-miner, to combine mining capacity and provide mining services to institutions.
FIH initially grumbled the deal was “highly inappropriate and vexatious” and a “last frantic attempt to change shareholders’ views”. Handing 15 per cent of Argo’s equity to Hive would create a poison pill, it said, muttering about “disrespect” and “flagrant abuse of shareholders”.
By Thursday, though, Mr Edwards had replaced Mr Bixby as chairman and FIH had agreed to adjourn the vote and become Argo’s first “enterprise-level customer” paying a subscription of up to $1m a month. Argo’s shares doubled.
Bitcoin and blockchain are bewildering at the best of times without adding a boss battle worthy of Minecraft. To crypto-crusaders, they represent a technological and ideological breakthrough and are democratising, disrupting forces for good. The believers may have a point that blockchain could streamline data transmission and cross-border payments.
But then there are the sceptics, such as Warren Buffett, who once described bitcoin as “rat poison squared” producing nothing and attracting charlatans, while regulators fret about links to money laundering. Jamie Dimon, JPMorgan’s top executive, has likened the bitcoin craze to tulipomania three centuries ago.
It may be another 300 years before we know the truth. Until then, best leave Argo to the ideologues.
Cut a long story short
Lossmaking Ten Lifestyle, the concierge business that floated at 134p a share on London’s junior market in 2017 and has halved since, has commissioned a “light-hearted” short story to broadcast what its technology does.
To cut a long story short, it arranges travel and books restaurant tables.
Being small means few analysts follow the stock, says chief executive Alex Cheatle who warned twice last year Ten would not meet forecasts.
The short story ends “eyes contact eyes. Lives change”, which is more Barbara Cartland than Pulitzer. But Mr Cheatle thinks it will “tell more than the numbers ever could”.
He’s wrong. First-half results showed revenues improving but an increase in working capital and investment and a fall in cash balances. Not exactly leavening.
Letter in response to this column:
Cryptocurrencies require more robust accounting / From Richard Martin, ACCA — the Association of Chartered Certified Accountants
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