Shares in Argo Blockchain (LSE: ARB, Nasdaq: ARBKF) have been under pressure this year, down 64% from their February peak of 284.00p to today’s 103.00p (as at 14 December). The other side of the picture is that the share price is up 206.8% YTD, thanks to the surge in the Bitcoin price at the beginning of the year. This was reflected in the interim 1H results, which showed revenues had increased by 180% to £31.1m (H1 2020: £11.1m).
Argo Blockchain operates a cryptocurrency mining platform in Canada and the US, with about 16,000 specialist mining rigs generating almost all (c.90%) of its revenue. However, Argo Blockchain should not be seen simply as a proxy Bitcoin investment. Argo Blockchain and Bitcoin prices both surged in the first quarter of this year and subsequently collapsed in the second. Since July, however, the two have diverged. Bitcoin has rallied from around $30,000 to come within touching distance of $70,000, while Argo Blockchain shares have stagnated, losing some 20% so far since July.
The investment case for Argo, according to in-house broker finnCap, is that “it differentiates because of its access to abundant, low-cost power [in the US and Canada], and the proprietary technology that its team has created to optimise its machines’ operations.” Argo’s future revenues will also depend on the economics of its new 200Mw mining facility in Texas, being built as part of a strategy to capitalise on the disruption caused to global Bitcoin mining when in May the Chinese Government and many Chinese provinces effectively banned Bitcoin mining.
Want the full story? Access all of The Armchair Trader's content for just £5.99 per month.
Get weekly investment ideas and tips that will take your investing to the next level. Sign up here.
Free 28 day trial. Cancel anytime.
Log In or Sign Up to Armchair Trader+
Already a member? Log in here:
Not a member yet? Sign up for your free trial or check out the benefits of membership.
Further content of this article is not available as it is for members only. Please visit the registration page for Armchair Trader Plus+ for further details on the benefits of becoming a member.