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Argo Blockchain bankruptcy? ARB stock price plunges 60% as fundraising plan falls through

By Raphael Sanis

Edited by Charlie Mellor

11:15, 31 October 2022

Representation of a bitcoin miner standing on bitcoin in front a trading chart
Argo Blockchain is a bitcoin mining company that primarily uses renewable energy – Photo: Shutterstock

Argo Blockchain’s renewable bitcoin (BTC) mining business is no longer looking financially sustainable after the collapse of a fundraising method.

The mining company signed a “non-binding” letter of intent (LOI) with a strategic investor in early October to raise roughly $27m. However, it was revealed on 31 October that the agreement has fallen through.

Despite pursuing alternative fundraising methods, Argo’s stock (ARBgb) has fallen by 57% since early October. This followed news that the company was struggling with the crypto bear market.

Argo Blockchain (ARBgb) share price chart

Argo’s financial difficulties

On 7 October, Argo announced that it was pursuing several different fundraising methods to keep a positive bank balance. These were “intended to bring in additional capital to the business and ensure that the Company has the working capital necessary to execute its current strategy and meet its obligations over the next twelve months”.

The CEO Peter Wall revealed that Argo was struggling with the high electricity prices combined with the low BTC price. He said in a video posted on Twitter that this “resulted in a bit of a price crunch for Argo”.

Three different strategies were outlined in the statement to solve this. The LOI was signed to amend an equipment financing agreement, which was said to release $5.7m of restricted cash. It also revealed plans to sell 3,400 mining rigs for roughly $6.8m.

Finally, the most significant fundraising contribution was being sourced from a proposed shares subscription with a strategic investor. However, this $27m deal was recently revealed to have collapsed.

ETH/USD

3,418.73 Price
-0.750% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 21:00 (UTC)
Spread 6.00

DOGE/USD

0.12 Price
-2.060% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 0.0012872

XRP/USD

0.63 Price
+6.420% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 0.01168

BCH/USD

376.85 Price
-2.900% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 2.50

Argo said that it no longer believed that this agreement was valid on the previously announced terms and that the company was exploring other options. It also issued a bleak warning and said:

“Should Argo be unsuccessful in completing any further financing, Argo would become cash flow negative in the near term and would need to curtail or cease operations.”

ARB’s stock price

Despite a few peaks and troughs, Argo’s price on the London Stock Exchange has struggled since 2021, according to Capital.com’s trading platform.

This was fuelled recently following the news of Argo’s financial troubles. After reaching a slight peak of 35.5p on 4 October, its stock price has plummeted throughout the month.

The price fell to a low of 13.35p on 18 October, a drop of 62%. But it recovered slightly and closed 28 October at 16.25p.

Argo is still waiting for the full investor response to news of its fundraising deal falling through because it is dual listed on the NASDAQ and London Stock Exchange.

After falling to 4.13p shortly after the LSE opened today, Argo was trading at around 8.5p in London at the time of writing. At the same time in pre-market New York trade, Argo was trading at $1.21, down on its closing price of $1.97 on Friday.

Markets in this article

ARBgb
Argo Blockchain plc
0.1260 USD
0.015 +15.150%
BTC/USD
Bitcoin / USD
64591.75 USD
-180.35 -0.280%

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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