Argo Blockchain Runs Out of Cash; Will it be forced into bankruptcy?
On December 12, Argo Blockchain, a large-scale cryptocurrency mining and smart contract service provider, made a formal announcement that it is “at risk” it may not have enough funds on hand to continue operating the business for the coming month.
The blog post states that the company is in preliminary talks with a third party to sell some assets and enter into a financing agreement for equipment, which it believes will help its balance sheet and liquidity.
As TronWeekly recently reported, Compass Mining’s director of content Will Foxley tweeted a screenshot of Argo Blockchain on December 9 regarding the company’s impending bankruptcy on December 12.
Two days ago, after accidentally revealing sensitive information about the bankruptcy, it has now officially announced that there is a possibility of such an action:
The Company hopes that it will be able to complete the transaction outside of a voluntary Chapter 11 bankruptcy filing in the United States, although there is no guarantee that the Company will be able to avoid such a filing.
To analyze these strategic opportunities, they hired investment bankers Stifel GMP and its subsidiary Miller Buckfire & Co., LLC, legal counsel McDermott Will & Emery LLP, and financial counsel Berkeley Research Group, LLC.
The company also clarifies that on December 9, trading of its securities on the London Stock Exchange and Nasdaq was suspended due to the accidental disclosure of information claiming that the company was to declare Chapter 11 bankruptcy. “Shareholders should note that the company has not filed for bankruptcy at this time.”
Argo Blockchain suffers from financial problems
Previously, Argo had already warned that it was in danger of ceasing operations due to a lack of funds. According to a report on October 31, the cryptocurrency mining company was now looking for new funding options after failing to secure significant funding from a key investor.
According to the press release:
The company signed a non-binding LOI with a strategic investor to raise approximately £24 million ($27 million) via the subscription of ordinary shares. The Company no longer believes that this subscription will be completed under the previously announced terms.
At that time, the company has also taken steps to protect cash and further maximize liquidity. For cash profits of $5.6 million, the company sold 3,843 brand new, unopened Bitmain S19J Pro machines, totaling 384 PH/s of total hashrate capacity.
These devices were the last batch of the first Bitmain purchase, and installation was planned for October 2022. The company’s total hashrate capacity thus remains at 2.5 EH/s.
Due to the lack of funding, Argo has taken steps to protect its funds and maximize liquidity. In the past, the company has actively sold its mined Bitcoin assets to reduce its debt to crypto investment company Galaxy Digital.
After selling 637 BTC in June 2022, Argo sold another 887 BTC in July. They then joined a large group of cryptocurrency mining companies that decided to sell their own BTC during the bear market of 2022.
