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Argo Blockchain raises funds to bolster mining capacity

Group plans to use proceeds for working capital and general corporate purposes
Argo Blockchain raises funds to bolster mining capacity
  • The cryptocurrency miner will use the proceeds for general corporate purposes
  • The FCA recently flagged concerns about the cryptocurrency market

Cryptocurrency miner Argo Blockchain (ARB) has raised £22.4m via a private placement just days after bitcoin served up a reminder of its inherent volatility, soaring past the $40,000 (£29,380) milestone before retracing some of its gains.

Argo, which floated in London in the summer of 2018, announced on 18 January that it would issue 28m shares at 80p each to certain institutional investors who had already subscribed to the placing.

The group plans to use the net proceeds “for working capital and general corporate purposes”, which it said included the expansion of its mining capacity in the first and second quarters of 2021, bolstering its installed computing power.

Argo says its goal is to run an “efficient mining infrastructure that supports the continued growth, innovation, and function of the world’s top blockchain networks”.

Blockchain refers to the technology underpinning the trading of bitcoin and other cryptocurrencies, removing the need for third-party banks and traditional financial infrastructure partners. As Argo explains it, cryptocurrency mining “is the process of verifying transactions and adding new blocks to a blockchain ledger”.

Argo’s share price has doubled since the start of this year. But, in keeping with the value of bitcoin – the world’s most prominent cryptocurrency – that ascent has been punctuated by ups and downs. After escalating from roughly 20p on Christmas Eve to an all-time high of 145p on 8 January, Argo’s shares have since endured a rather bumpy ride – changing hands at 91p at the time of writing.

The volatility of cryptocurrencies is one the reasons behind mounting concerns about the risks they pose to ordinary investors. The UK’s Financial Conduct Authority (FCA) warned earlier this month that consumers buying into high-return cryptocurrency “should be prepared to lose all their money”.

That said, some might argue that those seeking to engage with the crypto market would be better off looking into ‘pick and shovel’ plays – the stocks facilitating cryptocurrency transactions, rather than the digital assets themselves. For now, hold at 91p.