The shares of Argo Blockchain, one of the largest crypto mining companies, have plunged today by more than 11%. The shares have been downtrend since the company announced that a scheduled $27 million funding round would not happen.
Argo Blockchain’s $27M funding round suspended
Argo Blockchain is a crypto mining company listed on Nasdaq and the London Stock Exchange. The company told its shareholders that it intended to raise more funds by selling shares. Still, the funding round would no longer be completed under the terms that had been indicated previously.
After the statement was issued, the shares took a nosedive, dropping double-digits on the London Stock Exchange and Nasdaq. The statement said that Argo Blockchain was looking into other financing options. However, it said that it could not guarantee that any definite agreements would be signed and that new transactions would be offered.
The statement added,
Should Argo be unsuccessful in completing any further financing, Argo would become cash flow negative in the near term and would become cash flow negative in the near term and would need to curtail or cease operations.
According to an announcement released in early September, the company was planning to secure $27 million in funding. At the time, the company said that the funding would be part of the measures that it was taking to strengthen its balance sheet.
While releasing the statement last month, the company said it had secured a non-binding agreement deal with an unnamed investor. It said the investor had pledged to purchase up to 87 million shares at $0.32 or £0.276 each.
The company has not issued any comprehensive statement on why the funding round would not go as planned. However, the company has already said it was taking measures to preserve its cash holdings. One of the ways that it plans to do this is by preserving cash after selling off mining equipment.
The mining company recently sold off 3,843 new-in-box Bitmain S19J Pro mining equipment. The company sold the equipment for $5.6 million. Like the other crypto mining firms currently cash-strapped, Argo has also been selling off its Bitcoin reserves.
The Argo blockchain mining company was created in 2017, and over the years, it has promoted itself as an eco-friendly miner. The company’s mining facilities focus on deriving energy from wind, solar and hydro sources.
However, its focus on renewable energy sources has not protected the firm from suffering from rising energy costs globally. Earlier this month, the company said it was reducing operations at the Helios facility based in Texas amid a rise in electricity prices.
Bitcoin miners are in financial distress
The majority of companies operating Bitcoin mining sites are currently in financial distress. Argo is joining the list of miners struggling to sustain their operations amid rising energy costs and the mining difficulty.
Core Scientific, one of the largest miners, warned that it could file for bankruptcy if it runs out of cash. The admission sent the company’s shares plunging. In September, Compute North filed for bankruptcy.
Miners are struggling because of the notable plunge in Bitcoin prices this year, while the mining difficulty has continued rising to new all-time highs. Only miners with advanced mining equipment stand a chance of surviving.
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