Argo Blockchain share price has come under intense pressure in the past few months even as Bitcoin surged to a record high. After surging to a high of $36.15 in January, the stock has plunged to $12.5 or by over 65%. It has underperformed other Bitcoin mining stocks like Marathon Digital and Riot Platforms.
Bitcoin halving ahead
Argo Blockchain is a fairly small Bitcoin mining company listed in the US and in London. It is a fairly embattled company that nearly went bankrupt in 2022 after it received a $100 million cash injection from Galaxy Digital.
The company’s stock has dropped sharply in the past few years as concerns about its business have remained. Most recently, it has crashed as investors assess the impact of halving on its business operations.
Bitcoin halving is a situation where the number of blocks produced are slashed into half. The expectation is that the number of new Bitcoins that enter the market will fall from over 900 per day to about 450.
This event will have a major implication on Bitcoin miners, which will mine fewer coins per day. Mining difficulty is also expected to increase sharply in the coming months. Data by YCharts shows that the mining difficulty has jumped to 83.95 from last April’s low of 43.
Bitcoin mining companies have spent the last few months preparing for this halving. The biggest ones have added more miners and boosted their efficiency. The goal is to ensure that they increase the number of coins mined every day after halving happens.
Argo Blockchain, which has a more stretched balance sheet, has started to struggle even before the halving event happens. The most recent report showed that the company produced 124 Bitcoins in January or 4 a day. That was 20% decline from December, which the company attributed to a drop in hash rate and weather-related factors.
Argo Blockchain produced 92.4 Bitcoins in February, another drop from the previous month. Its mining revenue during the month came in at $4.5 million.
Argo Blockchain has a weaker balance sheet than other big mining companies. Its held digital assets were equivalent to 14 bitcoin, down from 18 in the previous month.
What next for Argo Blockchain share price?
The upcoming Bitcoin halving event will likely put many smaller and inefficient mining companies at a disadvantage. In this case, I suspect that Argo Blockchain will be one of the top mining firms to come under pressure when it happens.
Technically, on the daily chart, the stock has now crashed below the 50-day and 100-day moving averages. The two averages are about to make a bearish crossover. The stock has also retreated below the key support at 13p, its lowest swing on February 2nd.
Therefore, the outlook for Argo Blockchain is extremely bearish, with the next target to watch being at 5.88p, its lowest level in June last year.
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