- Argo was to raise £ 24 million in debt; the company recently sold new miners.
- Earlier, Argo sold BTC to stay afloat; now it is selling mining machines.
- Argo may be facing the same fate as its US counterparts.
The crypto winter onslaught continues…
Shares of Argo Blockchain PLC fell sharply after the company informed shareholders that a deal to raise £ 24 million from a “strategic investor” was canceled.
In a press release dated October 31st, the mining company revealed that a “non-binding LOI” to raise £24 million ($27 million) “via subscription of shares” would not be executed “under the previously announced terms.”
According to the press release, in order to increase liquidity and “preserve cash,” Argo sold 3,843 new-unused Bitmain S19J Pro machines which offer approximately 384 PH/s of total hashrate capacity for £4.8 million ($5.6 million). The company’s hashrate remains at 2.5 EH/s. When the announcement regarding the sale of machines was made earlier this month, AGRO shares fell by 14%.
The company warned that it is looking for investors to fund its everyday operations (for next twelve months from the date of publication)
Argo did not state why the deal was shelved. In June Argo sold 637 Bitcoins (at an average price of $24,000 or a total of $15.6 million, to meet operating expenses. Meanwhile, in the same month it mined only 179 coins. However, the company had mined 55 more coins in June than May (124).
Several mining firms are selling BTC to stay in business
Argo is not the only company that sold more coins than it mined. Arcane research reported that in May BTC miners Marathon digital and Riot Blockchain dumped more BTC than they mined.
Bitcoin’s stagnant price; rising energy costs; rising hashrates; a grim macro-economic outlook – collectively called ‘crypto winter’ – is hurting mining firms the most in the crypto industry.
Earlier this year, Compute North filed for bankruptcy for the same reasons. Core Scientific warned investors that it was struggling to stay afloat and may have to file for bankruptcy by year end. Core Scientific sold 7,202 Bitcoins while it held only 1,959 coins.
Given that US-based mining companies are struggling to operate it has become essential to reevaluate Bitcoin’s future as a proof-of-work cryptocurrency. Research from the Judge Business School of Cambridge University shows that the US has the highest share of Bitcoin mining hashrate (over 35%) and is also the biggest location in terms of mining infrastructure. Also, Bitcoin accounts for over 50% of the total energy consumed in energy consumed in mining operations.
Several small-scale mining corporations shut shop after Ethereum announced the transition of Ether’s algorithm to a proof-of-stake based crypto. The Merge reduced Ethereum’s electricity usage by 99.98%.
Bitcoin mining corporations that depend on renewable energy have greater chances of surviving than those that run on non-renewable sources like coal and gas. Bitfarms ltd. and Hive Blockchain technologies use green energy sources. Nevertheless, Bitcoin’s price and energy costs are the main two factors that can determine whether a company can survive the crypto winter.
In September, the Whitehouse issued an executive order which directs federal agencies to monitor the crypto industry’s energy usage and encourage transparency. Moreover, the Securities and Exchange Commission (SEC) is on an enforcement spree. Essentially, there is regulatory ambiguity and government policies are compelling firms to find sustainable mining methods.
- Crypto Mining Tax Introduced by The Biden Administration - May 4, 2023 12:00 pm EDT
- RPL Price Prediction: Rocket Pool to Propel Near Recent Peak - May 4, 2023 10:00 am EDT
- $22M crvUSD Minted Since its Mainnet launch by Curve Finance - May 4, 2023 9:30 am EDT