Bitcoin miner Argo Blockchain (ARB) faces challenging business conditions in 2022 marked by high energy prices, rising interest rates, and falling cryptocurrency markets.
The company sold its mining equipment, a 15% stake sale and bitcoin holdings to shore up its working capital until favorable economic conditions return.
With cryptocurrency miner Core Scientific becoming the latest to flag bankruptcy risks, investors have steered clear of the bitcoin mining sector in 2022.
As of October 28, 2022, London-listed shares of Argo Blockchain they have plummeted more than 80% so far this year. Will Argo Blockchain Stock Price Extend Its Liquidation? Here we take a look at what the Argo Blockchain stock sale means for the price.
What is Agro Blockchain?
Argo Blockchain is a cryptocurrency mining company based in London, England. The company’s primary listing is on the London Stock Exchange (LSE) under the symbol ARB.
In September 2021, Argo Blockchain listed its American Depositary Shares (ADS) on the US Nasdaq Stock Exchange under the symbol ARBKL.
Argo Blockchain started out as a mining-as-a-service company before shifting its strategy to owning and operating its own mining facilities. The company’s flagship mining facility is located in Texas, USA. It has two other mining facilities located in Canada.
Most of the company’s revenue is derived from transaction fees and cryptocurrency rewards generated through bitcoin (BTC) mining. Another Argo Blockchain crypto mine is the proof-of-work (PoW) cryptocurrency Zcash.
Argo Blockchain Stock Sale
Sector-Wide Slump Argo Blockchain is not the only bitcoin miner to see its stock drop in 2022. The entire cryptocurrency mining sector is currently facing its toughest test to date.
Bitcoin miners are in survival mode. They are actively cutting costs and restricting mining operations to weather this period of high electricity costs and low cryptocurrency prices.
US-listed bitcoin miner Core Scientific was the latest company to flag liquidity problems. The company said in an SEC filing in late October 2022 that it will default on upcoming equipment and financing payments due in October and November.
Core Scientific added that it could “seek relief under applicable bankruptcy or insolvency laws” as it expected “existing cash resources to be depleted by the end of 2022 or sooner.”
It’s not just high electricity prices and a bear market in cryptocurrencies that are hurting the biggest bitcoin mining companies. The global bitcoin network hash rate, which measures the difficulty of mining bitcoin, hit an all-time high in October 2022, reducing mining profitability.
Argo Blockchain reported that it mined fewer bitcoins in September compared to August due to an increase in average mining difficulty and reduced operations during periods of high electricity prices.
In recent months, Argo Blockchain has taken steps to shore up its balance sheet and stop a further decline in ARB’s share price.
According to an Oct. 7 press release, the company modified its existing equipment financing agreement with an affiliate of New York Digital Investment Group. The new deal freed up an additional £5 million ($5.7 million) in cash and modified debt payment terms.
Argo Blockchain also sold 3,400 new Bitmain S19J Pro bitcoin mining machines for £6 million while signing a profit-sharing agreement to house the mining equipment sold.
Additionally, Argo Blockchain raised £24m by selling 87m shares at £0.276 to an undisclosed investor who will hold 15.46% of the company following the deal. The cryptocurrency miner said:
“The Company believes that its working capital will be sufficient for its current requirements, that is, for at least the next twelve months from the date of this announcement.”
Analyst Expectations for Shares of Argo Blockchain
Investment firm Jefferies said in a note dated Aug. 25:
“ARBK is on track to roughly double its mining capacity by the end of 2022 (from YE21), and we forecast revenue will increase ~40% from FY21 to FY23. By owning its own mining facilities, ARBK will be able to keep operating costs low in the long run. In addition, ARBK’s focus on sustainable energy and the upside potential of DeFi investments set the company apart from its peers.”
Jefferies rated the share purchase, setting an Argo Blockchain price target of £41 for its listed sharesin London and $4.93 for its US-listed shares.
Four of the seven analysts rated the stock “hold” while the rest rated it “sell,” according to ratings compiled by MarketBeat as of June 28. Oct. The consensus price target for US-listed shares of Argo Blockchain was $10.50, ranging from a high of $27 to a low of $3.
Note that analyst predictions may be wrong Forecasts should not be used as a substitute for your own research Always perform your own due diligence before trading, looking at a wide range of analyst currencies, the latest news, technical analysis and fundamentals. such. Remember, past performance does not guarantee future returns, and never trade money that you cannot afford to lose.