Bitcoin miner in London attacked by short seller Putman Capital

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A London-listed bitcoin miner linked to a potential investment by Elon Musk is facing accusations that he purchased a plot of land in Texas for up to 100 times its actual value.

Low-level research firm Boatman Capital claims that the Argo Blockchain deal to spend up to $17.5 million on land allegedly worth only $168,000 raises “serious governance questions about why this deal was entered into and who benefited from it.”

The company said the allegations made by Putman were “baseless” and its president, Peter Wall, insisted that the acquisition of the Texas land was a “very solid deal”.

Argo Blockchain, which uses powerful computers to perform complex calculations in order to “mining” bitcoin, has installed the recent boom in the cryptocurrency. Its shares have increased from 6p to nearly 130p over the past year, putting it at £500m.

Shares rose 17 percent last month on unconfirmed reports that Musk’s Tesla Inc. had bought a stake in Argo Blockchain.

Those criticisms are the latest from Putman, who made headlines nearly three years ago with his attack on Babcock, Britain’s second-largest contractor.

In June, the short seller launched a scathing attack on an Anglo-American bid for a group of coal mines in South Africa.

In February, Argo Blockchain announced that it had agreed to buy 320 acres of land for $5 million in stock initially, rising to $17.5 million once other milestones were achieved.

The company later clarified that the land area in question was actually 160 acres. The deal was funded by proceeds of £49 million raised from shareholders in the first three months of the year.

Putman obtained an official appraisal of the land by a certified real estate appraiser in Texas, who concluded that the land was worth $168,000.

Prior to the report’s publication, an Argo Blockchain spokesperson said over the weekend: “We are aware of potentially unfounded allegations against Argo which are circulating in a leaked report by a well-known short seller. We have not seen this report and are therefore not in a position to consider its contents”.

After seeing the report, Wall, CEO and interim president, defended the price paid for the Texas land.

“We feel it was a good deal…because it wasn’t just a land acquisition, it was a project acquisition,” he said. “It was a turnkey project for shovels that allowed us to skip 12 to 18 months of work that Argo would have had to do, had we not gotten this project.”

Mr. Wall continued, “Our feeling was that the opportunity cost of waiting and trying to find our own plot to do all this huge work ourselves would be too great. The cost of waiting would be too great. We feel that was a very strong deal.”

The Boatman attack risked removing the shine from the plentiful results published by Argo Blockchain for the first six months of the year. Earnings before tax increased from £523,074 to £10.7 million on £31.1 million in revenue.

“We took advantage of the change in market conditions in the first half of 2021 to deliver robust growth in both revenue and profit, demonstrating that our smart growth strategy delivers shareholder value,” said Mr. Wall.

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