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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.

 

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Please note this article does not constitute investment advice. Investors are encouraged to do their own research beforehand or consult a professional advisor.

James Norris

James Norris

James is a highly experienced writer and editor, gained from more than 20 years in the financial services industry, in particular wealth management and asset management.

He initially worked as a financial journalist for a number of leading media brands, including the FT Group, Financial News, Euromoney and Incisive Media, covering most aspects of the asset management industry. More recently, James switched to work as an in-house content specialist for fund management and wealth management groups, including JP Morgan Asset Management, Quilter Cheviot Investment Management, AXA Investment Managers and Invesco Perpetual.

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