One Cryptocurrency Stock To Look At: Argo Blockchain PLC (ARB)

  • May 21, 2019 BST
  • Team Kalkine
One Cryptocurrency Stock To Look At: Argo Blockchain PLC (ARB)

Argo Blockchain PLC (ARB) is engaged in cryptocurrency mining services. It offers mining as a service (MaaS) and a cloud-based platform. The company enables users to proficiently mine Ethereum and other altcoins from their mobile device or computer. With just a transparent monthly fee and a click of a button, the group users can directly select, which coin they need to mine. The company offers direct access to Argos’s cutting-edge mining rigs, which like to perform the complex crypto-mining operations for users and then immediately deposit all the coins mined into the customer’s digital wallets.

Operational Update (as on 8th May 2019)

The price of Bitcoin has surged by 15 per cent from April 15, 2019, to May 7, 2019. Argo's balance sheet by the end of quarter two, which at £4,532 per BTC (being the prevailing market price as at 7 May 2019) equals approximately £1.81 million. The company’s directors estimate that mining costs will increase to approximately £300 thousand for the quarter. The Company has recently contracted to purchase 1,000 S17's for a total consideration of £1.7 million to be set into production in early July.

Financial Highlights (FY2018, £)

(Source: Preliminary Result, Company Website)

The company’s revenue stood at £0.76 million, driven by the start-up of mining services from mid-2018. Pre-tax loss was £4.1 million, due to the costs of the start-up of the business; the professional costs and related costs of achieving the Group's listing on the Official List of the UK Listing Authority by way of a standard listing; the rollout of the infrastructure to support the MaaS subscribers; maintaining the Group's listing; and include directors' and employees fees and salaries; general administration costs and professional fees. At the end of the financial year 2018, the cash stood at £16 million.  Despite the challenging market conditions, the company sold more than 10 thousand monthly packages by the year-end, exceeding internal growth targets. Successfully launched and rolled out consumer-facing mining as a service platform (MaaS) with two operational centres in Canada. Achieved London Stock Exchange listing in August 2018, the first crypto-mining business to float on one of the world's leading exchanges. The company’s early success was achieved in the face of the deteriorating market conditions throughout the year, which saw cryptocurrency prices slump by as much as 80 per cent with Bitcoin down from $13,791 USD to $3,768 between January 1, 2018, to January 1, 2019.

Share Price Performance

Daily Chart as at May-21-19, before the market closed (Source: Thomson Reuters)

On May 21, 2019, at the time of writing (before the market closed, at 8:35 am GMT), ARB shares were trading at GBX 5.9, down by 5.6 per cent against its previous day closing price. Stock's 52 weeks High and Low is GBX 17.40/GBX 2.55. At the time of writing, the share was trading 66.09 per cent lower than the 52w High and 131.37 per cent higher than the 52w low. Stock's average traded volume for 5 days was 7,012,305.00; 30 days – 2,374,820.83 and 90 days – 2,267,711.97. The average traded volume for 5 days was up by 195.28 per cent as compared to 30 days average traded volume. The outstanding market capitalisation was around £18.35 million.

Conclusion

The company believes that e-cryptocurrency market has a considerable long-term potential to become a major asset class and a store of enduring value. The technology underlying crypto-mining is also moving between Proof of Work and Proof of Stake. Argo moved quickly to implement its strategy refocus, streamline the business and cut costs. The MaaS operation has ceased and existing infrastructure and capital have been redeployed for mining on Argo's own account, effective from April 1, 2019. The staff numbers have been cut by 40 per cent and the marketing and customer support functions were significantly reduced and reassigned. The company has also renegotiated its major input costs, contributing to an overall saving in ongoing mining operational costs by 35 per cent. The Group’s EBITDA break-even on a monthly basis from the second half of 2019 at current cryptocurrency market prices. The company board strongly believes that Argo's refreshed strategy, strong balance sheet, business agility and technology experience provide a strong foundation to ride out of the current challenging market conditions and deliver long term shareholder value.

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