The UK tightens its cyber defences
1st September 2022 |
A cyber-attack is an unauthorised attempt to gain access to a computer system with the intent to cause harm.
The BBC website has a specialist cyber-attack news page, providing the latest details on high-profile system hacks. In our view, to have a news page dedicated to cyber-attacks alone shows just how prevalent these attacks are. You can view the news page here.
From healthcare systems to airlines, and even local councils, cyber-attacks are affecting industries across the board, and continue to pose a huge threat to the business world.
For example:
- 66% of small- to medium-sized businesses have experienced a cyber-attack in the past twelve months
- Almost half of small- to medium-sized businesses say their cyber defences are not strong enough to prevent attacks
- Last year, a cyber-attack was made once every 11 seconds.
Cyber-attacks can have disastrous consequences for companies, leading to loss of funds, customer data breaches and reputational costs.
In fact, the average cost of a cyber-attack in 2022 is a whopping $22 million.
A recent high-profile cyber-attack involved the NHS. On 4 August 2022, an attack targeted its software provider company, Advanced, causing outages across the service, affecting patient referrals, ambulance dispatch and mental-health services.
Cyber-attacks are now becoming too problematic to ignore and we are starting to see governments take action to tackle them.
For example, in March this year, UK policymakers updated the Network & Information Systems (NIS) regulations, originally introduced in 2018, to bolster cybersecurity protections in the EU.
You can see the details here.
On 30 August, the UK government introduced arguably its toughest cybersecurity regulations, now calling for telecoms providers to put tougher cybersecurity protections in place.
The rules, introduced by the National Cyber Security Centre, will require network providers to protect the data processed by their networks and services as well as the software and hardware that is used to monitor their networks.
Failure to do this could lead to fines corresponding to 10% of annual revenues. Businesses are expected to follow protocols by March 2024.
Minister for Digital Infrastructure Matt Warman said the legislation will “create one of the world’s toughest telecoms security regimes”.
The UK has just under 6,000 telecom companies, so the legislation will likely have a significant impact.
While the UK’s response to cybersecurity threats has been fairly muted up to now, we think the new legislation could drive the adoption of further cybersecurity regulations across other industries.
More importantly, the legislation will encourage the uptake of cyber defence solutions, as businesses seek to avoid the 10% fine.
We believe this brings Blancco Technology Group (LSE: BLTG) into focus.
Blancco is a provider of data erasure software. Its technology wipes sensitive data from devices leaving zero trace, thus putting it out of attackers’ reach.
We look forward to seeing how the company progresses in light of the new cybersecurity legislation.
We reiterate our BUY recommendation on the stock. You can find the original recommendation here.
Buy list update
Argo Blockchain (LSE: ARB)
Argo Blockchain is a miner of cryptocurrencies.
Like several other crypto-centric assets, its share price has plummeted following strong “risk-off” sentiment in the crypto market. In fact, its current share price of 40GBp reflects a loss of 71% in the buy list.
The company is nevertheless still making some commercial progress.
Argo mined 939 bitcoin for the six months to 30 June (H1 2022). This is a 6% increase on the year-earlier figure.
We can attribute this increased mining success to the opening of the company’s new Helios mining facility in Texas in May. Argo is hopeful of adding 20,000 S19J Pro machines to Helios by October this year.
However, the company’s revenues have fallen. For H1, Argo recorded revenues of £26.7 million, a 14% decline on H1 2021.
We’re not too concerned by this, because it doesn’t appear to be attributable to a systemic issue within the company. Argo puts the decline down to the falling price of bitcoin, and an increasing hash rate (or mining difficulty)ies.
What really matters is that, as of 30 June, Argo held 1,953 bitcoin, reflecting a 54% increase on the same period last year. Given the forthcoming installation of new mining rigs, we are anticipating an even higher bitcoin mining success rate at this point next year.
If our bitcoin price estimate of $1,000,000 sticks, Argo’s current bitcoin holdings would be worth almost $2 billion, assuming they remain fixed.
If bitcoin were to hit $250,000, the company’s current holdings would be worth around $500 million.
Let’s present another scenario: say Argo had 3,000 bitcoin this time next year, assuming a 50% growth rate in its current bitcoin holdings. Should bitcoin reach $250,000 at some stage, these holdings would be worth $750 million.
Given Argo’s current market cap of $204 million, and its share price of 40GBp, the upside potential is significant whichever way you look at it.
Current market conditions mean it might be a little while before Argo delivers value to shareholders. But in view of the increase in its mining capacity and bitcoin’s potential, we believe now could be an excellent time to take a position in the stock.
We reiterate our BUY recommendation. You can find the original recommendation here.
The Frontier Tech Investor “Top Three”
Sometimes it’s hard to decide on which stocks to invest in from our buy list.
Below is our Frontier Tech Investor “Top Three” section showing three stocks in open BUY positions. If you’re trying to figure out what to invest in next, these are three that we think are a great place to start.
This doesn’t mean our other stocks are no good: this is just a tool to help you spot the next Frontier Tech Investor stock that could be worthy of your consideration.
Volex (LSE: VLX) – Volex is a global manufacturer of power and connectivity products. This includes power cables, fibre optics and charging plugs. It might sound a little basic, but these are critical mechanisms which are powering some of the key technologies of the modern day. These technologies include electric vehicles (EVs), artificial intelligence (AI) and big data networks. Volex has huge credibility behind it, particularly as it does business with some of most widely recognised companies in the world, including Tesla. You can find the original recommendation here.
Team17 (LSE: TM17) – Team17 is a video game publisher. It has a large collection of games which contains some of the most popular games of the gaming world. One of these is Worms, the enthralling last-man-standing survival game born out of the nineties gaming boom. Team17 is keeping up with the times and offers its games across a number of contemporary technology platforms. It has even flirted with the idea of non-fungible tokens (NFTs), a megatrend which could revolutionise the gaming industry. At a time where sceptics think online gaming will come off the boil following the ease of lockdown restrictions, Team17 keeps gamers coming back for more. You can find the original recommendation here.
Pod Point Group (LSE: PODP) – The UK’s inadequate (for now) electric vehicle (EV) charging network is threatening to bring the EV transition to a halt. By 2032, the shortfall of EV charge points in the UK is estimated to reach 250,000. However, Pod Point’s innovative range of EV charging solutions could go a long way in ensuring this deficit is reduced. The company’s charging technology is fit for homes, public charging bays, lamp posts and commercial buildings, and can ensure that the EV transition reaches all areas of the UK. In our view, Pod Point can unlock the potential of the UK’s EV charging network. You can find the original recommendation here.
Sam Volkering
Editor, Frontier Tech Investor
Elliott Playle
Analyst, Frontier Tech Investor
