Argo Blockchain PLC

Argo Blockchain PLC (NASDAQ: ARBK) is a United Kingdom-based blockchain technology company. The Company is a global data center business that provides a platform for cryptocurrency mining operations. The principal activity of the Company is that of Bitcoin mining. The Company has mining facilities in Quebec, mining operations in Texas, and offices in the United States, Canada, and the United Kingdom.

Recent Financial and Business Updates:

• Noteworthy Financial Achievements in US Dollars: During Q3 of 2023, the company attained significant financial milestones in US dollars, accumulating USD 4.4 million in power credits through strategic economic curtailment measures at Helios during periods of heightened electricity prices. This strategic initiative substantially enhanced the mining margin, soaring from 36% in Q2 2023 to an impressive 58%. Moreover, there was a substantial 33% reduction in the average direct cost per Bitcoin mined, decreasing from USD 17,566 in Q2 2023 to a more efficient USD 11,736 in Q3 2023. Concurrently, the company effectively reduced recurring non-mining operating expenses by 11%, showcasing adept financial management.
• Positive Adjusted EBITDA and Revenue Generation: The quarter concluded with a positive Adjusted EBITDA of USD 3.1 million, contributing to a robust total Adjusted EBITDA of USD 5.4 million for the nine-month period ending September 30, 2023. Mining activities resulted in the extraction of 370 Bitcoin and Bitcoin Equivalents, generating noteworthy revenue of USD 10.4 million. Despite challenges, the company demonstrated financial strength by reducing debt owed to Galaxy Digital from USD 32 million to USD 27 million, ending the quarter with USD 70 million of outstanding debt. However, a one-time non-cash charge of USD 1.2 million, attributed to prior period sales taxes based on new regulations, resulted in a net loss of USD 9.9 million for Q3 2023.
• Operational Advancements and Asset Optimization: Operationally, the company successfully deployed its BlockMiner machines strategically, boasting a combined capacity of approximately 0.3 EH/s across its two Quebec facilities. This deployment significantly increased the total hashrate capacity to an impressive 2.8 EH/s. Concurrently, the company actively pursued discussions to divest non-core assets, demonstrating a commitment to strategic optimization. Exploring further options for debt reduction underscores the company's dedication to operational excellence and prudent financial management.
• Strategic Vision for Long-Term Sustainability: These financial and operational achievements underscore the company's strategic vision for long-term sustainability and growth. Through adept financial management, operational enhancements, and strategic asset divestments, the company not only navigated challenges but also positioned itself for a resilient future. The commitment to debt reduction, asset optimization, and adoption of technological advancements reflects a comprehensive approach aimed at ensuring the company's sustained success in the dynamic cryptocurrency landscape.
• Argo Blockchain's January 2024 Operational Update: Overcoming Challenges and Demonstrating Resilience in Cryptocurrency Mining: Argo Blockchain plc, a leading global cryptocurrency mining firm listed on the LSE (ARB) and NASDAQ (ARBK), released its operational update for January 2024, reporting the mining of 124 Bitcoin at a rate of 4.0 Bitcoin per day. This represented a 20% decrease in daily Bitcoin production from the previous month, primarily attributed to a 16% reduction in Bitcoin-denominated hashprice, influenced by lower transaction fees and higher network difficulty. Additionally, weather-related curtailments in Quebec and at the Helios facility in Texas negatively impacted Bitcoin production. Despite these challenges, mining revenue for January 2024 amounted to USD 5.3 million, marking a 19% decrease compared to the preceding month's revenue of USD 6.6 million. The company highlighted the offsetting impact of power credits generated during economic curtailments, contributing to the overall operational performance.

Technical Observation (on the daily chart)

The Relative Strength Index (RSI), calculated over a 14-day span, stands at 41.37, currently consolidating, signifying the likelihood of either more consolidation or an upward momentum. Adding to this, the stock presently finds itself positioned below both the 21-day and 50-day Simple Moving Averages (SMA), which could function as a dynamic short-term resistance levels. Now, the stock's price is currently near a support zone of USD 1.40-USD 1.60, with expectations of an upside movement from the support levels.

As per the above-mentioned price action, recent key business and financial updates, momentum in the stock over the last month, and technical indicators analysis, a ‘Speculative Buy’ rating has been given to Argo Blockchain PLC (NASDAQ: ARBK) at the current market price of USD 1.57, as of March 26, 2024, at 07:30 am PDT.

Individuals can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario.

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.

How to Read the Charts?

The yellow colour line reflects the 21-period simple moving average (SMA) while the blue line indicates the 50- period simple moving average (SMA). SMA helps to identify existing price trends. If the prices are trading above the 21-period and 50-period moving average, then it shows prices are currently trading in a bullish trend.

The orange colour line in the chart’s lower segment reflects the Relative Strength Index (14-Period) which indicates price momentum and signals momentum in trend. A reading of 70 or above suggests overbought status while a reading of 30 or below suggests an oversold status.

The red and green colour bars in the chart’s lower segment show the volume of the stock. The volume is the number of shares that changed hands during a given day. Stocks with high volumes are more liquid than stocks with lesser volume as liquidity in stocks helps with easier and faster execution of the order.

The Orange colour lines are the trend lines drawn by connecting two or more price points and used for trend identification purposes. The trend line also acts as a line of support and resistance.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock. 

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock. 

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices. 

Abbreviations

CMP: Current Market Price

SMA: Simple Moving Average

RSI: Relative Strength Index

USD: United States dollar

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is March 26, 2024. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: The report publishing date is as per the Pacific Time Zone.