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I am pretty confident of that. How does that impact Argo Blockchain? Well i'm hoping that will be enough to get a decent uplift from these levels at the very least.
Let's say BTC goes to $100k by September. Difficulty would also rise by probably half as much so revenue would only increase modestly, probably to about cash flow break even but still massively loss making.
At this point Argo would probably be quite close to the bone in terms of cash position and then they would need to find close to $13m at the end of the year when their loan to Galaxy matures (with a further $38m debt remaining). They will also need to renew the hosting agreement.
So fundamentally speaking Argo is screwed. Could that sort of rise in BTC support a placing before the year end to keep Argo in business? Yeah it might but they'll need to raise far more than the previous placings to be able to cover the Galaxy payment and continue operating. A tall ask.
Realistically BTC needs to pop and go far past $100k in the next few months for Argo to still be going in its current form into 2025.
Argo has 4 main problems:
1. Hosting agreement with Galaxy is coming up. If not renewed what happens?
2. Secured debt with high interest rates.
3. Significant "non direct" costs vs revenue.
4. No clear way forward/roadmap for investors.
At best Argo's facilities and old gen machines are 'worth' ~$45m now and if up for sale at distressed prices barely half that. That's all Argo has + ~9m cash against debts of $50m and near term maturity on just over a quarter of that as well as loss making.
It wouldn't make sense to buy Argo for even 2p and for that entity to assume all the debt for what are old machines that will begin needing to be replaced in the coming years.
So HarChris are you finally going to dip your toe in and short Argo? if it's not even with 2p then it seems an open goal
i think what we need is lots of irrational retail punters flocking into argo and jumping on the crypto hype as bitcoin soars higher. these kind of punters rarely look or care about fundamentals. its sentiment driven. thats what arb needs to save the day. then if they get a decent rise can lock on some more cash to save its ****
I’m near as certain as I can be that Argo goes to zero within a year, or a few pence if they’ve diluted into oblivion to survive a bit longer but that doesn’t mean there isn’t some irrational temporary pump first that wipes me out.
So no but mainly because I’ve never shorted before and it requires a bit more technical ability than simply placing trades on HL !
Tech, yes agree that this might happen on bitcoin around 100k (if this happens). Although if they raised enough to clear the debt they are still stuck with the other 3 issues - so they'd likely have to raise $100mil to get anywhere. Unless they decide to pivot into another area somehow.
If you're near as certain as can be, do research and short it
You obviously didn’t read HarChris’s post properly as he gave very clear and reasonable answers as to why he won’t short Argo - which happen to be the same reasons I wouldn’t either even though I’m also as sure as I can be that the company has no future beyond about a year tops.
Thanks Hexam.
My point about not being worth 2p is I don’t think anyone would buy Argo for any price because you are taking on more debt than the machines and facilities are worth, there’s no logic to that besides taking a punt that btc will rise dramatically soon after sale and you’ll generate cash for the following two years.
The markets aren’t efficient at pricing companies so you can still trade at totally irrational valuations like Argo is and it does mean that you have the possibility of a turnaround if you can raise against that totally inflated valuation but that’s it.
Like CLSK has said they need ~$100m realistically and it’s impossible to imagine that’ll happen. At most maybe $20m at deeply discounted prices which will allow them to stumble on a bit longer once again but it’s all delaying the inevitable.
You obviously didn't read my message, if it's an open goal, put the extra effort in and short.
Micoley, why would someone short when BTC is near ATH? There's every chance it goes up before it goes down.
Just because apparently it's a cert that Argo is going down and not even worth 2p, HarChris is very regular on here and fairly negative so I'm saying if you are that confident then have a view on it, instead of sitting on the sidelines.
I'll try and simplify it for you then micoley.
I don't short full stop. It is too risky for me and I wouldn't know how to anyway.
But even if, as you say, I did put in the research on how to short I still wouldn't do it on ARB for the simple reason of however confident I am of the longer term future (or lack of it) for ARB I have no idea how the sp will move in the short term. The sp could easily double (or more) for any number of reasons - BTC surging massively, significant director buy-in, surprise new Galaxy deal, buyout rumours (an actual buyout seems highly implausible) or other 'rumours'.
Anybody with a short would be crucified even though none of the above is likely to help long term prospects much.
So I'd be an idiot to short something where I knew there is sizeable risk that I could lose big time in the short term.
In other words I don't think this in an open goal at all despite my bleak view on their long term prospects.
In fact I still have some investment here in the stubborn hope of a short-term spike for whatever reason but most has been moved to other bitcoin miners which are much safer (relatively speaking) investments, with actual growth possibilities and where thankfully I have already recovered all my losses from ARB (even if it goes to zero).
Absolutely no reason that Argo couldn't go to 20+ before it went to 2p, so that would not be good risk/reward.
Micoley would be good to get an alternative view on the bull case for Argo? The updates and financial statements make for grim reading, but perhaps you see something that others don't?
I'm not massively positive on Argo, I am holding some and do agree that the figures do look like grim reading but I'm more questioning the constant negative posts stating that it's the end and not having a position on it.
I think it's more a curio for some of us. I've rarely come across a company that has absolutely no fundamental investment case beyond the commodity they are mining going on a crazy ride in the very near term - that's unusual.
As for going to 20p+ now CLSK i'm rather doubtful of that. Each monthly update is going to put a dampener on shareholder enthusiasm and by the end of August the ugly interims will have to be released in which nothing can be hidden. I also think any rise would be pounced upon by management to get a placing away and instis are going to demand a discount with the business in such a perilous state as the hosting agreement and debt call draws closer.
I've just signed up on IG and doing a bit of research - maybe I will follow through for once micoley on this one :)
In a 100k bitcoin scenario I think Argo would go to 20p, and the buyers would not be reading any interim reports. Placing for sure but they'll need to be clever about it as it might be only one shot at it.
I think you can short Argo on IG.
You say that but be honest, nine months ago for example with BTC at $28k and Argo at 9.5p would you have thought a rise to $70k would see just 0.5p share price appreciation?
Six months ago Argo share price was 12.5p and BTC was ~$36k...
There isn't mindless cash being thrown at Argo anymore, investors are traders are aware that the risks aren't worth the reward.
It went up as high as 30p at the turn of the year (less than 6 months ago). So if you had a short you'd likely have been stopped out.
It's overvalued now as you say, but the market does what it wants, and this can move when it wants to.
Yeah but it does feel like there's a less and less buying pressure on the BTC spikes now as we get closer to the hosting agreement ending and probably because we've passed the halving - I don't think there's many on the sidelines ready to jump in on the slightest BTC rise like there used to be.
I know there's a lot of mindless investors out there but even they will be able to see that a fall in revenue per month from as high as $7m in March to just $2.9m in May signals the end is nigh.
You can never rule out anything on a share like Argo but I think it's at least reasonable at this stage to think that a steady climb to $100k in BTC over the next three months or so (and it would have to be within six months) wouldn't necessarily see the share price climb as high as 20p.
Bitcoin still to convincingly break last ATH. Market sentiment is absolute disinterest just now.
Don't forget the NASDAQ listing which could also pick up.
I think we see 20p before 2p.
I make you right. We are at the beginning of a crazy 12 months crypto bull market. I'll be surprised if Bitcoin doesn't smash $100k and beyond. Retail aren't even interested yet in ARB or Bitcoin. User interest and noise across the market is relatively quiet. We need to wait for the europhic blow off top where anything crypto related pumps hard. That will benefit Argo