Argo Blockchain Shares Crashed 65% on Funding Deal’s Collapse

Key points:
Argo Blockchain shares crashed 65.2% after failing to secure new funding.
As a result, it was forced to sell its new mining machine to raise cash.
As a result, the Bitcoin miner’s future remains uncertain.

The Argo Blockchain PLC (LON: ARB) share price crashed 65.2% after announcing plans to raise £24 million ($27 million) from a strategic investor via a share subscription failed to materialise, forcing the company to sell more of its Bitmain mining machines.

As I have outlined in previous articles, Argo Blockchain made the grave mistake of holding on to its Bitcoin earlier this year and last year when Bitcoin prices were trading at peaks above $60,000 instead of selling some of the Bitcoin and pocketing some much-needed profits.

Also read: Top 5 Cryptocurrencies To Invest In.

With limited options, Argo now finds itself in a situation where it urgently needs to raise cash to fund its operations. Moreover, selling its Bitcoin holdings means that Argo foregoes any future potential profits if Bitcoin prices rally again, which is highly likely. Therefore, selling its mining machines might be a better option than selling its Bitcoin, which is what the company has done.

However, Argo was not the only company holding massive amounts of Bitcoin; most Bitcoin mining companies have been holding on to the Bitcoin they mine. Other non-mining companies, such as Tesla, had accumulated massive amounts of Bitcoin but were forced to liquidate their holdings at current prices to meet pressing cash needs.

Therefore, Argo’s decision to sell its 3,843 new-in-box Bitmain S19J Pro machines, with a total hashrate capacity of ~384 PH/s, to raise cash proceeds of ~£4.8 million ($5.6 million) was the best move it could make in a challenging situation. Hence, the firm’s total hashrate capacity remains unchanged at 2.5 EH/s.

Argo Blockchain also warned investors that it was looking for alternative means of financing its operations and that if it didn’t secure new funding, it would have to cease operations after becoming cash flow negative in the short term.

However, a rebound in Bitcoin prices could reverse Argo’s fortunes since it would attract new investors to the space, which could easily fund the company.

*This is not investment advice.

Argo Blockchain share price.