Blockchain mining firm Argo Blockchain has reported a $240 million loss in 2022, as a result of a drop in the price of Bitcoin and an increase in the global hash rate. Despite the significant drop in earnings, the London Stock Exchange-listed company is still in a more solid financial position after receiving help from Galaxy Digital, the Mike Novogratz-led investment firm.
Revenue and Mining Margin
Argo Blockchain recorded £47.4 million ($58.6 million) in revenue for 2022 despite the posted $240 million loss, with the price drop of Bitcoin being the biggest factor that impacted the company. The digital currency fell from over $50,000 at the beginning of that year to just over $16,000 last December, which affected the mining margin of the company. The mining margin dropped from 84% in 2021 to 54% in 2022.
Global Hash Rate
The rise in the global hash rate also impacted the Bitcoin mining industry, leading to a spike in the network’s mining difficulty level. Argo primarily conducts its mining activities in Texas, where rising power prices and impairment of assets further compounded the firm’s woes.
Surviving the Crypto Contagion
In 2022, Argo Blockchain performed comparatively better than most of its competitors. Some companies, such as Core Scientific and Compute North, filed for bankruptcy as they were unable to pay back their loans. Others had to sell all their BTC reserves, which was a significant deviation from their HODL (hold on for dear life) culture that they had always upheld.
Galaxy Digital’s Help
Last December, Argo Blockchain’s mining facility in Dickens County, Texas, was acquired by Galaxy Digital for £54 million ($65 million), and the company also provided Argo with a $35 million asset refinancing loan. This strategic move helped Argo to cut down its total debt to $76 million.
According to Argo Blockchain’s interim CEO, Seif El-Bakly, the company was able to overcome the difficult market conditions in the crypto industry and the global economy during the latter part of 2022, and has emerged as a much stronger player in the market with a more stable financial footing. However, the company is still facing a lawsuit filed in January by investors who alleged that the company’s initial public offering (IPO) was negligently prepared and failed to disclose crucial information.
In the highly volatile world of cryptocurrency, even established players like Argo Blockchain are not immune to market fluctuations. While the company faced significant challenges in 2022, it managed to survive the crypto contagion and emerge as a more financially stable player, thanks to the help it received from Galaxy Digital.
Looking ahead, Argo Blockchain can take steps to weather potential future polar scenarios, such as a further drop in Bitcoin prices or a rise in power prices in its key mining location. The company can explore diversifying its operations to other locations and alternative cryptocurrencies to mitigate risks. Additionally, it can work on strengthening its internal management and risk assessment processes to avoid legal issues like the ongoing IPO lawsuit.
All in all, Argo Blockchain’s journey in 2022 is a testament to the challenges and opportunities that come with being a part of the rapidly evolving crypto industry. The company has shown resilience and adaptability, and with strategic planning and smart risk management, it can continue to thrive in the years to come.
Giancarlo is an economist by profession with a career spanning nearly two decades. His professional journey has seen him assume vital roles in various government and private organizations such as the Department of the Interior and Local Government (DILG), the National Economic and Development Authority (NEDA), Megaworld Corporation, and the China Banking Corporation in the Republic of the Philippines.
In addition to his civic and corporate pursuits, his forward-thinking approach has led him to manage several prominent websites in the banking and finance sector, notably the Australia-based RateChoice, where he immersed himself in the world of emerging financial technologies and where he found particular interest in Bitcoin all the way back to 2013.
Prior to his addition to Blockzeit’s dynamic team, he held an essential role as Project Manager for initiatives encompassing blockchain, stablecoin, mining, special economic zone development, and iGaming. This noteworthy chapter in his career unfolded under the auspices of InPlan Consultancy Services, Inc., the think-tank of IMPERO Consortium Management Corporation headquartered in Manila, Philippines, and Tokyo, Japan. InPlan, led by a distinguished retired Cabinet member of the Philippines, collaborates directly with IMPERO’s core management team, contributing to strategic planning and business development endeavors.