North American bitcoin mining firm Argo has slashed its cost of bitcoin production by 33% in the latest quarter, all thanks to power credits.
The company released its third-quarter earnings report on Tuesday, showing a total revenue of $10.4 million generated from mining 370 bitcoin between July to September. Argo operates proprietary sites in Canada while also hosting miners at Galaxy Digital’s Helios site in Texas.
While reporting a cost of revenue of $8.7 million, Argo received power curtailment credits amounting to $4.4 million, effectively offsetting a substantial portion of its direct costs. Applying the power credits, Argo said its cost of bitcoin production was reduced to $11,736 in Q3, down 33.1% from $17,566 in Q2.
The cost of bitcoin production includes direct costs related to bitcoin mining, such as energy bills and site expenses, excluding other corporate overhead and interest expenses.
Consequently, Argo boosted its bitcoin mining gross margin to 58% in Q3. However, this increase in margin came at the expense of mining fewer bitcoins during the summer, mining 370 BTC compared to 456 BTC in Q2.
Argo is the latest public bitcoin mining company that has tapped into the demand and response program in Texas for power curtailment credits. As previously reported, Riot received nearly $50 million in power curtailment credits, resulting in a gross margin of over 120% on the book for its bitcoin mining segment in Q3.
Meanwhile, Argo noted its ongoing efforts to reduce outstanding loans owed to Galaxy Digital, reducing it from $32 million to $27 million. The company initially sold the Helios site to Galaxy Digital last December to alleviate financial pressures amid the challenging crypto market environment.
Argo still had $70 million in debt outstanding as of the end of Q3 but the continuous deleveraging helps mitigate financial expenses. In addition, Argo further reduced its corporate overhead from $3.8 million in Q2 to $3 million in Q3. However, because of the reduced bitcoin output in exchange for power credits, Argo’s all-in cost of mining in Q3 was estimated to be over $27,500.