Argo Blockchain says it faces negative cash flow, shares fall 45%

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on Oct 31, 2022
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  • Argo Blockchain announced on Monday a previously-announced financing deal looks to have failed.
  • The company said in early October it had a LOI with a strategic investor to raise cash via a subscription deal
  • Argo shares fell sharply on Monday, tanking more than 45% amid news that the miner faces a negative cash flow.

Argo Blockchain (LSE:ARB), one of the leading Bitcoin (BTC/USD) miners in the world, has revealed its facing a potential negative cash flow if it doesn’t secure fresh financing in the short term to provide a financial buffer for its operations.

In early September, Invezz reported on Argo’s mining margin dropping to 20% amid the crypto price crash and higher electricity costs.

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Argo Blockchain might have to cease operations

Publicly-traded Argo Blockchain said in its latest update that its previously-announced financing deal is highly unlikely to be consummated within the circumstances envisioned at the beginning of October.

On 7 October 2022, Argo revealed it had signed a letter of intent with a strategic investor as it looked to raise £24 million ($27 million). The financing would have been via a subscription deal for miner’s ordinary shares. However, Argo now believes the plan has fallen through, a scenario that sees it currently exploring new financing opportunities.

Argo needs to secure working capital that should see it navigate the next twelve months.

If the plans to get new financing deals do not go through, then Argo faces a bleak near-term. The bitcoin miner could be forced to curtail operations, Monday’s update read.

“While Argo is exploring other financing opportunities, there can be no assurance that any definitive agreements will be signed or that any transactions will be consummated. Should Argo be unsuccessful in completing any further financing, Argo would become cash flow negative in the near term and would need to curtail or cease operations.”

The company’s update also includes confirmation of the sale of 3,843 Bitmain S19J Pro mining machines for approximately £4.8 million ($5.6 million) as it looked to acquire more cash. The sale means the cryptocurrency miner’s total hashrate capacity will not increase as projected, but rather remain at 2.5 EH/s.

The latest news comes as Argo shares fell sharply on Monday, with prices down by more than 45% at the time of writing. The miner’s stock has lost nearly 90% of its value year-to-date.