London-based Bitcoin miner Argo Blockchain’s plans to raise funds from a strategic investor have fallen through.
In an announcement on Oct. 31, Argo said that the $27 million fundraise via ordinary shares would no longer go ahead as planned. The company said it plans to explore other financing opportunities, but will likely become “cash flow negative” if these avenues prove to be unsuccessful. In such a situation, Argo said it would need to cease all operations.
Argo sold 3,843 new-in-box Bitmain S19J Pro machines, which were originally supposed to be installed this month, for $5.6 million in an effort to preserve cash. As a result, the Bitcoin miner’s total hashrate capacity stands at 2.5 exahashes per second (EH/s).
After the announcement, the Nasdaq-listed Bitcoin mining firm saw its shares decline 41% on Monday. Argo is just one of the many Bitcoin miners that have fallen on hard times recently, with Bitcoin’s price decline and increased hashrate resulting in a higher cost of operations.
Last week, Core Scientific – a company believed to be the largest publicly traded Bitcoin miner – said it was facing the risk of bankruptcy and anticipateds that its cash reserves will be depleted by the end of this year. Core Scientific shares declined 78% after news of its potential insolvency risk was made public.
The predicament of Bitcoin miners in financial distress could also potentially impact the state of the market. According to data compiled by market analyst Sam Rule, most publicly traded Bitcoin mining companies have been steadily offloading their Bitcoin holdings over the last few months.
“Glassnode also estimates a large chunk of miner wallet balances to be around 78K BTC worth $1.5B,” said Rule, who believes these holdings could be unloaded onto the market as mining pressure continues to escalate.