While the domestic technology sector has its eyes on Arlo’s IPO today, another offering with a similar name is generating excitement in the blockchain sector. Argo, a crypto-focused company, went public on the London Stock Exchange this week, raising 25 million pounds in the process.
The company’s offering is intriguing. Argo is not a traditional company repainted in blockchain colors or a tradeable entity that apes crypto prices. The newly-public company doesn’t even touch the stuff. Instead, it rents crypto mining power to blockchain enthusiasts for those who may not be able to build and deploy their own rigs.
Argo itself doesn’t hold or store coins, letting it avoid the a regulatory bite. And, as its debut was a traditional IPO, Argo also doesn’t fall prey to legal traps. Market data has yet to update with new market cap figures.
Crunchbase News spoke with Argo founder Jonathan Bixby, digging into the company’s mechanics and why it went public.
Argo supports four cryptocurrencies: Ethereum, Ethereum Classic, Bitcoin Gold, and Zcash. All four are GPU-mining friendly and have over a billion dollars in market cap, making them ideal candidates for Argo’s crypto mining services. 1
Argo’s mining shop is located in Quebec, Canada, where the company can access low-cost hydropower, saving it money on operational costs and reducing climate impact.
Given that Argo lets users rents its mining capacity at a fixed cost—and collects regular fees for its software system regardless of what happens to crypto prices—the company basically follows a SaaS model, and that’s intriguing. Most SaaS companies, as we know, have incredibly high sales and marketing costs. Companies under this model book sales acquisition costs up front while revenue is portioned out over the life of the newly-secured contract. This can scale and generate cash; however, that’s a long road for most SaaS companies.
In contrast, Argo has an enormous waiting list (50,000, according to Bixby) for its “mining-as-a-service” offering. That means it can invest in hardware with its new IPO-provided capital while anticipating very low acquisition costs compared to the long-term value of those new customers (a very low CAC-LTV ratio). That’s a bit like roller skating while wearing a jetpack.
Small And Public
I asked the company why it went public when it did and why it chose the London exchange. Essentially, the firm wanted to have its customers as shareholders. And it chose London over other options (Bixby noted Shanghai and Hong Kong as other options) due to a banking connection between Canada and the UK.
Argo is an eye-catching company for its SaaS play inside the crypto space and for going public as young as it is. In America, Pinterest, Airbnb, Uber, and Lyft are all a bit unready to go public. Yet Argo managed it. Remember that the next time a domestic company says it’s too young to file.
Crypto mining is the process by which computers do the hard work of confirming blockchain transactions. It’s the guts-and-bolts work that powers bitcoin, ether, and other crypto-assets.↩