Is Argo Blockchain’s Improved Financial Position a Game Changer? Analysts weigh in

2022 ended with a bang too Argo Blockchain (ARBK). The last 5 sessions of the year saw shares climb 110% higher. Still, in an illustration of just how damaging the year was for the struggling crypto miner, even after the huge gains, shares still saw the year down 91%.

So, what happened to make stocks skyrocket? Well, the company seems to have been thrown a lifeline by a well-known crypto bigwig.

Galaxy Digital, billionaire Mike Novagratz’s crypto investment fund, will buy the company’s Helios mining facility in Dickens Country, Texas – which includes a 200MW submerged bitcoin mining facility in operation since May 2022 – for $65 million. The company will also be the recipient of a new loan of 35 million dollars with Argo’s mining hardware as collateral.

The deal includes the disposal of all current Argo debt, and the company will get a two-year hosting arrangement with Galaxy, with its fleet of 23,619 Bitmain S19J Pro machines set to continue running at the facility without interruption.

“The deal preserves the company’s current operating structure, relieves its debt burden and prevents a bankruptcy filing,” said Kevin Dede of HC Wainwright.

However, that doesn’t mean the company is out of the woods just yet. “Although the view of Argo’s balance sheet is now clearer,” Dede went on to say, “the company’s bottom line remains far less transparent. Argo has not disclosed its hosting costs, which we suspect remain variable since Galaxy does not yet have a PPA in place for Helios- facility, and we also have no insight into the new debt costs.”

As such, with no quarterly figures for September yet to see the light of day, and “little outlook” for Argos’ P/L, Dede prefers to stay on the sidelines for now. The analyst intends to reassess his model once the September figures are released, and the company can provide a “baseline for hosting cost calculations.” Consequently, Dede reiterated a neutral rating without giving a fixed price target for the shares. (To watch Dede’s track record, click here)

Elsewhere, the stock receives another 4 holds and 2 sells from the Wall Street experts, making the consensus view here a moderate sell. The average target is $0.81, suggesting that the stock will fall 25% lower in the coming months. (See Argo Blockchain stock forecast on TipRanks)

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