Bitcoin Miner Argo Blockchain Loses More Wall Street Bulls After Financial Woes

Two analysts downgraded their recommendations on Argo's shares.

AccessTimeIconNov 1, 2022 at 3:56 p.m. UTC
Updated May 9, 2023 at 4:01 a.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now

Wall Street is increasingly concerned about the future of bitcoin miner Argo Blockchain. Two sell-side analysts downgraded their stock ratings this week as the London-based company faces liquidity issues during a bear market that is crushing the industry.

Argo Blockchain said Monday a deal to sell $27 million of equity to fund operations had fallen through. The miner, which has been hit by low bitcoin prices and high energy costs because it doesn't have a fixed-rate electricity agreement, said it might soon have negative cash flow. That means it may be spending more than it receives on a regular basis.

  • Chandler Guo on Ethereum Mining: It’s ‘Hard Work’
    01:13
    Chandler Guo on Ethereum Mining: It’s ‘Hard Work’
  • Chandler Guo on China’s Crypto Mining Outlook
    01:27
    Chandler Guo on China’s Crypto Mining Outlook
  • Tough Time for Miners: NY Passes Moratorium; Riot Blockchain Sells More Bitcoin
    07:57
    Tough Time for Miners: NY Passes Moratorium; Riot Blockchain Sells More Bitcoin
  • NSC Director: Biden Administration Hasn’t Determined Holistic Policy Approach to Virtual Currency
    06:22
    NSC Director: Biden Administration Hasn’t Determined Holistic Policy Approach to Virtual Currency
  • Investment bank Canaccord Genuity cut its rating to hold from buy, and lowered its target for the company's American Depositary Shares (ARBK) to $1 from $10. Jefferies also downgraded the company to hold from buy, and lowered the price target to $1.10 from $13. Each ADS represents 10 ordinary shares.

    "If indeed it can secure the financing to negotiate a power purchase agreement [PPA], we believe Argo's flagship Helios facility could be better monetized," Canaccord analyst Joseph Vafi told clients in a research note. "But given current macro uncertainty and until Argo can get to the other side of where it is now, we are downgrading shares to hold," Vafi wrote.

    Meanwhile, Jefferies analyst Jonathan Petersen said that "locking in a PPA is the most important next step for ARBK and would likely act as a positive catalyst for the stock." In addition, Argo being able to lower its debt load would add "significant flexibility in these volatile times," Petersen said in a note to clients.

    Argo (ARB) shares on the London Stock Exchange started plunging in early October, when the firm announced a set of strategic actions, including the sale of bitcoin mining rigs, to fulfill its obligations and execute its strategy. DA Davidson's Chris Brendler downgraded the stock to neutral in late October, along with Core Scientific (CORZ), which has also warned it is at risk of bankruptcy.

    The miners' stock is down about 80% since Oct. 6 to 7.25 British pence (83 U.S. cents). The ADSs were recently trading at 91 cents.



    Disclosure

    Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

    CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.

    Eliza Gkritsi

    Eliza Gkritsi is a CoinDesk contributor focused on the intersection of crypto and AI.

    Author placeholder image

    Michael Bellusci is CoinDesk's crypto reporter focused on public companies and digital asset firms.


    Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.