According to the company, it sold off 3,843 Antminer S19J Pros for $5.6 million as against the 3,400 it planned to sell for $7 million.
London-headquartered Bitcoin mining firm Argo Blockchain Plc (LON: ARB) is facing a very distressing time in its history with its shares plunging as low as 37.5% at the time of writing to 9.75 pence.
Argo Blockchain’s investors were riled on Monday when the company revealed that its expectations to get bankrolled by an investor did not work out, cutting its access to operating capital in the short term.
“As previously disclosed, the Company signed a non-binding LOI with a strategic investor to raise approximately £24 million ($27 million) via a subscription for ordinary shares. The Company no longer believes that this subscription will be consummated under the previously announced terms. Argo is continuing to explore other financing opportunities,” the company wrote in a statement issued to the London Stock Exchange (LSE).
The firm did not reveal the exact reasons why the deal fell through but reassured its investors that it is exploring other alternatives to secure liquidity. Amongst the alternatives, it highlighted the sales of its existing Bitcoin mining machines.
According to the company, it sold off 3,843 Antminer S19J Pros for $5.6 million as against the 3,400 it planned to sell for $7 million. Herein lies the dilemma, the prices of assets in the industry it currently represents are dropping at an alarming rate and the cost of operations has continued to rise steeply.
The major players in the crypto mining industry in particular have a lot of headwinds to deal with including the soaring energy prices affecting those that are operating from Europe, and the inflationary growth, enmeshed with interest rate hikes that have generally impacted the access to capital.
Bankruptcy in View for Argo Blockchain
That Argo Blockchain is in a state of distress is no longer a hidden truth and failure to secure funding as a matter of urgency can make its cash flow negative as revealed in its statement. Should this happen, the firm may be forced to file for bankruptcy.
“While Argo is exploring other financing opportunities, there can be no assurance that any definitive agreements will be signed or that any transactions will be consummated. 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,” the company said.
Besides Argo Blockchain, other key players in the crypto mining ecosystem have had it rough all along with the likes of Core Scientific Inc (NASDAQ: CORZ) hinting at bankruptcy a few days ago, forcing analysts to downgrade the firm’s shares. While the shares of Core Scientific are down by 97% this year, those of Argo Blockchain have slumped by more than 92% in the year-to-date period.
With bankruptcy riling the crypto mining ecosystem, just as it did for lending firms, investors may be forced to redirect their funds with the warnings being published by the most robust operators in the space.
Benjamin Godfrey is a blockchain enthusiast and journalists who relish writing about the real life applications of blockchain technology and innovations to drive general acceptance and worldwide integration of the emerging technology. His desires to educate people about cryptocurrencies inspires his contributions to renowned blockchain based media and sites. Benjamin Godfrey is a lover of sports and agriculture.
