Last week one of the most unusual equities ever to be listed on a public stock exchange arrived in London.
A pre-profit, pre-revenue crypto mining company with only a handful of customers raised £25 million ($32.1 million) on the London Stock Exchange (LSE) and reached a valuation of £47 million ($60.6 million).
Not bad for a company barely 10 months old.
Argo Blockchain is the brainchild of Jonathan Bixby and Mike Edwards, a pair of Canadian serial entrepreneurs and investors who found themselves drawn to the opportunities in the crypto sector.
“When we look at which companies back in the 90s were the ones that really succeeded and had a huge global opportunity, the answer is those were the infrastructure companies,” Bixby told Forbes shortly after the listing.
“The basic infrastructure of crypto starts with incentive, which is mining, and we see a game-changing opportunity at this level.”
For the uninitiated, crypto mining is the process by which transactions or changes to a blockchain are verified, it’s an intensive computing process so those who take part are incentivized with tokens as a reward.
In Argo’s view, the crypto mining today is falling short of the crypto’s principle of being decentralized and democratic. According to Bixby 98% of crypto mining is currently done on an industrial scale by wealthy miners.
“Even if you have the capital, even if you have the know-how, you still can’t mine in urban centers like London, it’s just too expensive, electricity is just too expensive,” he said.
Instead, Argo’s plan is to become the “Amazon Web Services of crypto” with data centers in Canada, China, and northern Europe where they can offer low-cost crypto mining on a rolling monthly contract, similar to a gym membership.
And while traditionally mining was associated with bitcoin, due to the challenging economics Argo is instead focused on the less resource intensive Bitcoin Gold, Ethereum, Ethereum Classic and Zcash.
It’s not the first mining-as-a-service company to launch. Argo’s biggest competitor is Genesis Mining, which offers mining capacity on fixed two or five-year contracts and which Bixby claims has a million person waiting list.
Competing against Genesis isn’t Argo’s goal, instead the goal is to move beyond “crypto bros” to educate the next “crypto curious” generation about the crypto opportunity.
“We believe a millennial, well everybody, but specifically a millennial, should start building up a portfolio and in that portfolio a certain percentage should be crypto assets.”
In order to do Bixby and his team are taking a page from Apple, with plans to build a presence on the high street to spread their crypto gospel.
Crypto Genius Bars
“It’s kind of like sex,” the Argo cofounder explains.
“Everyone thinks they know all about it, but no one talks about it and no one wants to ask a dumb question.”
Bixby said this point was driven home for him during recent investor meetings, many of which started with questions around the fundamentals of cryptocurrencies and blockchain structure.
“So we’re starting to put plans in place for [Argo’s] first retail location in London, followed by Soul, Tokyo, and Singapore.”
“It’s all about education education education,” he told Forbes, explaining that the plan is primarily to educate and offer customer service, rather than sales.
During its first few days of trading on the LSE investors response to Argo has remained tepid—since listing at 16p a share its stock has fallen to under 12p.
While Argo has yet to make waves on the stock market, it is certainly making waves in the world of stock exchanges.
“Especially where the investment you need is the thing that’s actually going to drive revenues further down the track, I’d say this is a great example of that sort of business.”
In some ways the unusual listing can be seen as a dual response from the LSE, both to concerns that it has fallen behind when it comes to crypto-related equities (there are several listed in the U.S.), and to those who say it’s not responding to the rise of blockchain technology, especially as crypto startups in countries like Malta work on tokenized securities which could one day challenge the exchange’s dominance.
Forbes is aware of at least one company in the U.K. in talks with the regulator about launching tokenized securities.
In response to the changing landscape, Clark said he sees the LSE and traditional markets still offering unique value to businesses looking to raise funds.
“Conversation I’ve been having subsequently throughout 2018 have been around ‘we want to access the capital, but we also want the credibility that comes with working with a major international stock exchange’.”
The London Stock Exchange Group is working on a blockchain project in partnership with its Italian subsidy Borsa Italiana and IBM to let unlisted small companies digitize their private shares, however this remains in the early testing stages.