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Despite the pandemic wreaking havoc on all significant economies, the price of Bitcoin has rallied and gone past US$ 55,000 mark. A lot of investors poured money into Bitcoin, considering it as a safe heaven, due to rising inflation and prevalent uncertainties due to the pandemic.
UK-based cryptocurrency miner Argo Blockchain, which mines Bitcoin, has been among the top gainers on the London Stock Exchange in the last one year. The stock price of the company has resonated strongly with the bitcoin. Investors looking for indirect exposure in cryptocurrencies might consider this stock in their portfolio. Let us have a closer look. It is to be noted here, Bitcoin was adopted by the global digital payments’ facilitator PayPal in October 2020. In the US, the public-listed company converted $425 million worth of cash reserves into Bitcoin, which offers a better store of value. The growing acceptance of Bitcoin is also a cause of its appreciation.
Argo Blockchain Plc (LON: ARB)
Blockchain and mining are closely interlinked. Blockchain refers to maintaining a decentralised record of verified transactions and storing data in blocks that are chained together. In simple terms, it is an elementary unit of the distributed ledger.
As a reward for completing blocks and verified transactions in a blockchain, the miners are rewarded with cryptocurrencies. This implies that miners can earn cryptocurrencies without paying for it. Argo Blockchain primarily mines bitcoin. Argo Blockchain is the only cryptocurrency mining company listed on the main market of the London Stock Exchange with a market capitalisation of £880 million.
ARB stock is up over 4,450 per cent in the past 52-week period and has outclassed the benchmark Index (FTSE-all Share Index). This implies that if you had invested £10,000 in the shares a year ago, the investment would now be worth about £455,000. On 10 March it closed at GBX 240.00.
(Source: EODHD/Others, Thomson Reuters, 1 Year price chart)
Also read: Bitcoin: A New Asset Class Or Greatest Bubble Of All Time?
How it operates
The UK-based Bitcoin miner has raised around £26.8 million through a placing of new shares from institutional and other investors to strengthen investment in Pluto Digital Assets and pursue strategic opportunities in cryptocurrency mining. Notably, Argo Blockchain is diversifying its mining capabilities by investing in early-stage companies such as Pluto Digital Assets.
The company aims to diversify its investments and mitigate risks within the cryptocurrency and blockchain ecosystem and, therefore, has invested in Pluto Digital Assets. Notably, bitcoin could be highly volatile, and therefore, UK financial regulator Financial Conduct Authority (FCA) has warned investors to be cautious before investing. The company’s aims to lead the sphere of new blockchain technologies, and its investment in Pluto is an example of its intent.
Copyright © 2021 Kalkine Media Pty Ltd.
Additionally, the fundraisings shall also help Argo expand its mining infrastructure and stay ahead of the competition. In February, Argo Blockchain intended to acquire land to develop a mining facility in Texas, US, in the next 12 months. Argo Blockchain signed an LOI (Letter of Intent) with New York-based DPN LLC.
Recently, Argo Blockchain purchased more than 300 acres of land in the western part of Texas. The key highlight of the Texas project is that it will use only renewable sources of energy to power the mining facility. It is important to note that the mining of cryptocurrencies is an energy intensive business that also requires a significant amount of supercomputing infrastructure. It is worth mentioning that it is a key milestone for the company.
The company has factored in sustainable development and clean energy in its nature of business. This move by the company would be advantageous in three ways.
- Firstly, bolstering mining infrastructure will help Argo in gaining market share along with a competitive edge compared to its peers and become a bigger player in the realm of cryptocurrencies.
- Despite the massive size of the mining facility, the operating costs would be lower as the facility would be powered by renewable energy leading the company to higher margins and better profitability in the long run.
- Thirdly, as we head further into a post vaccine world, more and more investors would look forward to investing in businesses that are sustainable and are less carbon intensive.
- Powering Texas-based mining facility with renewable energy places Argo right on the radar for sustainable investing.
The company has delivered improved performance in the month of January, with record mining revenue and profits. The company is certainly benefitted from a surge in bitcoin prices and improving market conditions. ARB’s wholly owned subsidiary, Argo Innovations Labs Inc, signed a Share Purchase Agreement (SPA) with GPU.one, data center provider in Canada, for the strategic purchase of two Quebec based data centers.
In January, the company had mined 93 BTC (Bitcoin or Bitcoin Equivalent) in contrast to 96 bitcoin or Bitcoin Equivalent in December 2020. Based on cryptocurrency prices and foreign exchange rates, Argo Blockchain’s mining revenue in January rose by over 52 per cent month-on-month; stood at £2.48 million (December 2020: £1.63 million). Also, Argo Blockchain’s mining revenue in February rose by 75 per cent month-on-month, at £4.34 million (January 2021: £2.48 million). The company recorded an impressive average monthly mining margin of nearly 81 per cent for February (January 2021: 71 per cent). Argo is expected to pay salary to CEO in BTC beginning this March.
(Data Source: LSE) Copyright © 2021 Kalkine Media Pty Ltd.
During February, Argo mined 129 BTC, which takes the total tally to 222 BTC mined year-to-date. By the end of February, Argo held 599 BTC.
Argo is set to revolutionise the payment and settlement systems that we know today. As of now, cryptocurrencies are looked upon as a speculative tool of investment.
