Bitcoin miner Argo Blockchain PLC’s shares are plummeting after the firm announced several measures, including issuing stock at a discount to an unnamed investor for $27 million, to ease liquidity pressures.
(Bloomberg) — Bitcoin miner Argo Blockchain PLC’s shares are plummeting after the firm announced several measures, including issuing stock at a discount to an unnamed investor for $27 million, to ease liquidity pressures.
The London-based mining company’s American depository receipts fell as much as 13% to $2.14 on Tuesday. The ADRs have dropped about 47% since the firm announced on Friday the issuance of the 87 million common shares, or about a 15% stake.
Argo also plans to amend loan agreements with its primary lender, New York Digital Investment Group, to unlock $6 million. Argo has $84 million outstanding loans with NYDIG, most of which are backed by mining machines. It will also sell 3, 400 mining machines for nearly $7 million, Argo’s CEO Peter Wall said in a video.
“We are going to bring in about 40 million bucks,” Wall said. “Assuming all of these transactions close as agreed upon in the letter of intent, we are confident that we have the liquidity and the balance sheet necessary to get us through the next 12 months.”
Bitcoin mining companies have been battered by low Bitcoin prices, soaring energy costs and more competition in the sector. Shares of public miners have been deep in the red this year. Argo has one of the largest Bitcoin mining farms in Texas with one facility planning to have 800-megawatt capacity. “The high power prices in Texas this summer really hurt us.” Wall said.
The company’s Bitcoin production also fell to 215 in September from 235 coins in the previous month, according to an operational update on Tuesday. The firm attributed the decrease to rising mining difficulty due to more computing power for the Bitcoin network.
Other miners have also raised money through new shares. Core Scientific signed a $100 million common stock purchase agreement with B. Riley Principal Capital II, while Iris Energy agreed to sell up to $100 million in equity to the same investment bank.
“We know that there is going to be some folks out there who are going to be upset because there is dilution and the deal was done at a rough 20% discount, but this is a really important strategic investor,’ Wall said. “It’s not fast money, it is not hedge fund, we are going to have them on the board and they are going to be part of the long-term vision for the company.”
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