Argo Blockchain shares: should I buy?

Last week, Argo Blockchain was the most bought stock on Hargreaves Lansdown. Edward Sheldon looks at whether he should buy for his own portfolio.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

New virtual money concept, Gold Bitcoins

Image source: Getty Images

Argo Blockchain (LSE:ARB) shares are getting a lot of attention right now. Last week, Argo – which has seen its share price nearly triple in 2021 – was the most purchased stock on Hargreaves Lansdown. 

Should I buy ARB shares for my own portfolio? Let’s take a look at the investment case.

Argo Blockchain: what’s all the fuss about?

Argo Blockchain is a technology company that is focused on large-scale cryptocurrency mining. For those who don’t know much about crypto-assets, this is essentially the process of using computers to solve complex algorithms and create new coins. 

Headquartered in London, Argo operates a number of strategically-located crypto mining facilities across North America. Its mission is to run an efficient mining infrastructure that supports the continued growth, innovation, and function of the world’s top blockchain networks.

After its recent share price rise, the company now sports a market capitalisation of nearly £350m.

Benefiting from the Bitcoin price

Argo posted a strong trading update last week. This is not so surprising given Bitcoin’s recent strength.

The company advised that during the month of December, it mined 96 Bitcoin or Bitcoin Equivalent (BTC). This took the total amount of BTC mined in 2020 to 2,465.

Based on crypto prices and foreign exchange rates, mining revenue for December was £1.63m, up from £1.48m in November. The average monthly mining margin was approximately 60% for the month, up from 57% in November.

Argo also stated that at the end of 2020, it held 209 BTC in Bitcoin and BTC equivalents, in accordance with its asset management strategy.

The Bitcoin market has entered 2021 on a roll, and we are very optimistic this year will continue to see an increasing mainstream adoption of cryptocurrency. We look to the future with much optimism“, commented Argo’s CEO Peter Wall. 

Looking at these results, the company appears to have momentum right now. 

Argo Blockchain shares: should I buy?

In my view, the investment case for Argo Blockchain shares boils down to one’s long-term view on crypto-assets such as Bitcoin.

If Bitcoin continues to gain acceptance as a legitimate asset (some investors see it as the new gold), and its price keeps rising, Argo Blockchain could do very well. If Bitcoin goes to $200,000, for example, Argo could make a lot of money.

However, if Bitcoin crashes again, like it did in early 2018, Argo could face challenges.

Personally, I’m not so convinced about Bitcoin’s long-term prospects. I am bullish on blockchain technology, in general. I expect to see the world’s central banks roll out digital currencies in the not-too-distant future.

However, I believe that cryptocurrencies such as Bitcoin are simply too volatile to ever be used as real currencies. Bitcoin, for example, was down around 25% yesterday at one point.

Given that Argo’s fortunes are tied to the performance of Bitcoin and other crypto-assets, I think this growth stock is best left alone right now.

In my view, there are much better (and safer) growth stocks to buy.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be considered so you should consider taking independent financial advice.

Edward Sheldon owns shares in Hargreaves Lansdown. The Motley Fool UK has recommended Hargreaves Lansdown. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Young mixed-race woman looking out of the window with a look of consternation on her face
Investing Articles

3 reasons I’d aim to earn extra income by investing £1,000 in dividend shares

Our writer has a lot of ideas to earn extra income. Here he explains why the one he likes the…

Read more »

One English pound placed on a graph to represent an economic down turn
Investing Articles

Stocks of the week: Aviva, Antofagasta, Just Group

My 'stocks of the week' take in those that have caught my eye in one way or another. All three…

Read more »

British Pennies on a Pound Note
Investing Articles

Selling for pennies, are Rolls-Royce shares a value trap?

Rolls-Royce shares have been falling in price. But does that make them good value now? Our writer considers what value…

Read more »

Playful senior couple in aprons dancing and smiling while preparing healthy dinner at home
Investing Articles

I’d drip-feed £350 monthly into a Stocks and Shares ISA to aim for a million

Reaching millionaire status with only £350 a month may sound ludicrous, but Zaven Boyrazian explains how it can be done…

Read more »

Young brown woman delighted with what she sees on her screen
Investing Articles

I raided the FTSE 100 for 2 cheap income stocks

After their share prices slid, I bought these two cheap FTSE 100 dividend stocks. At these low prices, their cash…

Read more »

Shot of a senior man drinking coffee and looking thoughtfully out of a window
Investing Articles

2 simple steps to earning £400 in monthly passive income

Building a monthly passive income stream doesn't have to be complicated, or require a lot of effort. Zaven Boyrazian explains…

Read more »

Female analyst sat at desk looking at pie charts on paper
Investing Articles

Here’s how I’d invest £10,000 for the next FTSE 100 bull market

Is the FTSE 100 heading for a new bull market? After the past decade we've had, investors could do with…

Read more »

Middle-aged white man wearing glasses, staring into space over the top of his laptop in a coffee shop
Investing Articles

With a spare £500 I’d buy these UK shares

A financial services giant, a FTSE 250 distributor, a FTSE 100 tech stock, and a gold miner are on the…

Read more »