Bitcoin mining company Argo Blockchain teeters on bankruptcy

Argo Blockchain is the next publicly listed Bitcoin mining company facing bankruptcy.

Argo Blockchain is the next publicly traded Bitcoin-mining company facing bankruptcy. The rising electricity costs and the abnormal hashrate make the case increasingly tricky.

Argo Blockchain is running into cash flow issues. As the company announced yesterday, Monday, October 31, a new investment round of 27 million US dollars is on the line. In a press release, the company, which is listed on both the London Stock Exchange and Nasdaq, wrote:

“As previously announced, the company has signed a non-binding letter of intent with a strategic investor to raise $27 million through a subscription of common stock. The company does not expect to proceed with this subscription under the previously announced terms. Argo is exploring other financing options.”

The board, however, pushes back against the bankruptcy threat — and is selling its assets. In total, 3,843 Bitmain S19J Pro miners have been brought to market for 5.6 million US dollars. According to Argo, this is the final batch of a larger ASIC order. The hashrate thus remains at 2.5 exahashes per second, which equals about 1 percent of the total hashrate.

Despite all efforts, Argo cannot guarantee the company’s survival. The company writes: "If Argo is left empty-handed in future funding rounds, Argo will generate negative cash flow and will halt its operations."

Shares of the company are trading at $1.97 in pre-market trade. That doesn’t put the company in penny stock territory yet. But it’s about 92 percent below its all-time high and is performing worse than Bitcoin.

Additionally, Argo sold large amounts of BTC to pay off a $50 million loan provided by Novogratz’s Galaxy Digital. According to the quarterly report, the company sold 887 BTC just in July — which logically fuels the market’s downward trend.

Miners shrinking: Core Scientific also takes a hit

Argo Blockchain isn’t the only publicly traded mining company hurting in the Bitcoin bear market. On October 26 it was revealed that Core Scientific (CORZ) also faces huge liquidity problems. In a report to the SEC, the company wrote:

“The company’s operations and liquidity have been severely impacted by the ongoing drop in Bitcoin price, rising electricity costs, the increase in global Bitcoin network hashrate, and the Celsius Networks dispute.” The Nasdaq-listed company’s stock stood at $0.20 at the time of writing.