In early December, the first cryptocurrency company made its debut on the Abu Dhabi stock market, receiving a warm welcome from investors. Two months later, Phoenix Group UAE, specializing in the mining of cryptocurrency assets, published its 2023 report. Despite a significant drop in revenue, it achieved an increase in net profit.

Phoenix Announces 2023 Results: Revenues Down, Profits Up

The unaudited preliminary results released this week show that the digital asset miner significantly increased the value of its assets compared to 2022, growing from $230 million to $834 million.

Although revenues for 2023 were almost three times lower than in 2022, dropping to $288 million, the company improved its operating profit, which grew 50% to $208 million. The net profit for the reported period was nearly $221 million, with earnings per share modestly increasing from $0.03 reported in 2022 to $0.04.

But, where did such a significant jump in profit come from, with a very strong limitation of revenues? We looked for information on this in the company itself. Its representatives stated this was due to a "one-time contract," which distorted the company's expected cash flows.

"We saw significant organic growth of 20% beyond that outlier, demonstrating the strength of our core business," the company commented in an e-mailed statement to Finance Magnates. "This is further reflected in our impressive year-on-year growth in key areas such as self-mining which saw an increase of 480%."

The company also mentions an increase of 119% in hosting service revenues in the report. This was made possible by establishing cooperation with "high-net-worth individuals," creators of mining equipment and power supply companies.

"Our success has been impressive, but 2024 promises to be truly transformative," said Seyed Mohammad Alizadehfard (Bijan), the Co-Founder and CEO of Phoenix. "With ambitious plans and an unwavering commitment to excellence, the group is poised to redefine success, not just in the UAE, but on a global scale."

Earlier this year, the company announced that it had entered into an agreement with Bitmain, a manufacturer of cryptocurrency miners, to purchase machines for mining cryptocurrencies . The deal was valued at $187 million.

Shareholders Show Lack of Optimism

Although the Phoenix Group UAE IPO was met with a warm reception from shareholders and the company raised $370 million, it has been on a downward trend since then. From the highs reached on December 8, shares lost about 20% to Wednesday's minimums (tested after the publication of the report).

The company's representatives claim that the decline in valuation may be caused by "various factors." However, they remain convinced of the "long-term growth prospects based on strong financials and strategic partnerships."

The company's IPO came at a time when other publicly listed firms in the digital asset mining sector were starting to transition their machines away from crypto mining and towards providing computing power for the artificial intelligence industry instead. In 2022, total revenues for the cryptocurrency mining industry dropped to $6 billion, a significant drop from the all-time high of $12 billion generated in 2021.

We will have to wait until March for the full and audited results of the company when we will learn the exact structure of revenues, costs and the condition of the enterprise. As Phoenix claims, the report "will further demonstrate the underlying value" of the company.