The bear market continues to take its toll on the crypto ecosystem. Argo Blockchain, a Bitcoin mining company is facing huge economic difficulties that could lead to its bankruptcy. The measures taken so far by the company have proven ineffective. A very sad news for the cryptocurrency industry. But, there is one last chance to save the company.
Argo Blockchain at the end of the abyss
Argo Blockchain is not just anyone in the Bitcoin mining industry. The company represents a hashrate of 2.5 EH/s (exahashes per second). !
It is also listed on the London market and on the Nasdaq. Alas, Argo Blockchain has announced that it is facing significant economic difficulties. In its press release, Argo Blockchain says it is facing a real short-term funding problem due to over-leveraging and rising energy costs.
The company has taken a number of steps to strengthen its cash position. The company initiated a $27 million raise, but one of the major contributors pulled out. The company sold 3,843 mining machines representing about 384 PH/s of total hashrate capacity. This sale brought in US$5.6 million, insufficient to cover the economic deficit.
The company continues to explore other financing opportunities, but has no guarantees. It does not rule out any possibility, even bankruptcy. However, the company is fighting to ensure that the business continues to operate, at least for the next 12 months.
If Argo is unable to close another, our cash flow will become negative and we will have to reduce or cease operations. We are working to complete these financing transactions to provide sufficient working capital for our current needs and to continue our operations for at least the next twelve months from today.
Argo Blockchain is not the only mining company in trouble. A few days earlier, Core Scientific, another major mining player, declared itself in trouble.
In the U.S., Compute North filed for Chapter 11 bankruptcy protection after reporting that it owed $500 million to 200 creditors. Marathon Digital and Riot Blockchain, two large mining companies, are also suffering from the current situation.
A funding opportunity for Argo Blockchain
The situation Argo Blockchain is going through is sad, but reversible. Some players in the crypto ecosystem had already anticipated the economic difficulties that mining players are enduring during this crypto winter. One of them is Binance. Indeed, in an effort to help maintain a healthy crypto ecosystem, the exchange has set up a US$500 million fund to support the mining industry.
In light of current market conditions, Binance Pool is launching a $500 million loan project to support cryptomineers and digital infrastructure providers.Binance
Binance has, however, put in place conditions for accessing the loan. Among other things, the exchange requires an 18 to 24 month loan with 5% to 10% interest. In addition, the miner must provide collateral in the form of mining equipment or cryptocurrencies.
This week, Argo blockchain’s listed stock lost 50% on the London market. The situation is likely to continue to deteriorate for this and several other players. It is important that, following the example of Binance, crypto players come to the rescue of mining. We hope that Argo Blockchain will find funding or at least that the Bitcoin price will finally rise.
I dream of a world where every citizen has total control over themselves, including their finances. I believe that Bitcoin is one of the tools that will achieve this revolution. Since 2019, I am learning about this cryptocurrency and spreading the word around.