Argo Blockchain Stock: Is Now the Time to Buy?

Last year wasn’t easy for Argo Blockchain stock. Even though today the price hovers around 73p, back in April 2021, the price was as high as 240p. Also, if we’re looking at year-to-date results, we can see the price further followed a bearish cycle plunging by 18.11%. Regardless, that kind of cycle would mean long-term profit for some investors in Argo Blockchain stock – if bought now.

Mining Rates Concerns

However, let’s look back at what could be the main reason for the underperformance of Argo Blockchain stock. First of all, there are particular worries regarding the mining rates drop. In February, 37 Bitcoin fewer were mined than in January. That represents a loss of £1.1 million in a month. Just two months before, in December 2021, there were 214 Bitcoins mined, meaning the price of electrical power spent was higher by more than one third.

In February, the Bitcoin network Hash Rate reached a new record of 248.11m terahashes per second (TH/s). That requires high processing power within the Bitcoin network. It also ensures that the Bitcoin blockchain is completely secured and depends on miners who are building the same chain.

Due to the highest global hash rates ever, the company had to spend much more power to mine the same amount of Bitcoin.

According to some basic macroeconomic rules, when an interest rate rises, so do borrowing costs. At the same time, market demand for high-risk stocks, such as Argo Blockchain, falls.

Last month, the Bank of England raised the Bank Rate by 0.25 points, from 0.50% to 0.75%. It blamed the "tightness of the labor market", "robust domestic cost and price pressures", and "the risk that those pressures will persist". Some analysts estimate the rate will grow by at least six times more this year, and, if that continues, the price of Argo Blockchain stock could drop even further.

Long-Term Opportunities

According to the company’s report, Argo Blockchain is working on its upgrade of mining capacity. Texas is one of the most important mining hubs in the US, using renewable energy sources, such as wind, to mine. That is why some members of the US Congress think that Bitcoin mining will play a crucial role in rebuilding energy independence within the US.

The company confirmed it is currently working on a massive upgrade of its mining capacity in Texas and hopes to end it in October this year. According to Argo, the new power plant could supply the company with 200MW of extra power, 130% more than current levels.

Also, the price of Argo blockchain stock could reverse its downward spiral since the company recently revealed its new agreement with Core Scientific about swapping thousands of Bitcoin miners as part of Argo's pivot to operating its own crypto mining farms.

This should also ensure more environmentally-friendly mining operations, which could be positive for the company’s environmental, social, and governance reputation.