Argo Buys $500K-Worth of Zcash Miners as Bitcoin Revenue Shrivels

Argo has nearly doubled its mining capacity for zcash, possibly as it looks to diversify from bitcoin.

The publicly listed mining firm has bought 750 Antminer Z11s, that specialize in the Equihash algorithm, for a total of $474,000. The rigs are now already in operation and were working at full capacity, Argo said in a filing at the London Stock Exchange (LSE).

Only a handful of coins use the Equihash algorithm and the largest, by far, is Zcash. The acquisition means Argo – which listed on the LSE in 2018 – has significantly increased its zcash mining capacity. The new Z11s join the 1,000 rigs the company already owns.

Argo’s mining power is mostly focused on bitcoin. In May, the firm had a total of 18,000 mining rigs, 17,000 focus of which are focused on the SHA-256 algorithm that is primarily used by bitcoin.

But since Argo bought its first lot of Z11 miners in May 2019 – in a bid to salvage its stock price after a $5.3 million pre-tax loss in 2018 – it has become one of the largest zcash miners. The company claimed on its website to make up roughly 3.5% of the network’s mining power.

Assuming total hashrate stays the same, the additional 750 miners means Argo could now constitute something like 6% of the Zcash blockchain.

“[T]he correct strategy is continued investment in mining infrastructure,” said CEO Peter Wall, in a statement. “Argo’s existing fleet of Z11s have performed extremely well, and we are pleased to add more Equihash mining capacity to our fleet of machines.”

Although Bitmain, the Chinese manufacturer of the Z11, has since released a more powerful Equihash miner, Argo claims that they would still get a better return on investment from the older model – which was released in March 2019.

The company estimates to have fully recouped the $474,000 purchase price in about eight months’ time.

Like the rest of the cryptocurrency market, zcash toppled in the wake of the pandemic. After riding high at $73 in February, the coin promptly slumped to a three-year-low at sub $24 by the middle of March. It has regained much ground over the past three months, trading at around $53 by the start of the week. Zcash had surged to just under $60 at press time, according to CoinDesk data.

As well as increasing zcash prices, it’s also possible Argo might be diversifying from bitcoin. Earlier this month, the company reported a $600,000 dip in revenue, in part because a slash in the block reward meant it mined around 60 less bitcoin with the same number of machines.

CryptoCompare’s mining profitability calculator shows mining Zcash with a Z11 brought in much greater returns – upwards of $130 each month – compared to bitcoin which, even with the latest S17 rigs, would still mine at a loss of about $90 a month.

CoinDesk approached Argo for comment, but a company spokesperson had not responded by press time.