Argo Blockchain (LSE: ARB) has been tumbling since its high point in early 2021. It is still up around 3,000% in 12 months, mind, so the loss has to be seen in perspective. Still, the Argo Blockchain share price did fall 15% at one point on Monday, to open the week in negative territory. There was a bit of recovery by the end of the day, with ARB shares finishing on a 6% decline.
The shares peaked at 360p in March. So, on Monday’s close of 133p, we’re looking at a fall of 63% since since then. On that score, it’s a bit of a classic growth stock. If we get in early enough, we can make big gains. But if we’re too late for the peak, painful losses can come our way. What’s different about Argo Blockchain, though, is the magnitude of these early swings — I haven’t seen many that have soared this much in just 12 months.
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As usual, I didn’t spot the rapidly rising share price and get my head around it until too late. So there’s no point wondering what I did wrong to have missed out on the profits. With my cautious investing strategy, I’ll simply never be in on early gains like this. But I do buy growth stocks from time to time, usually when they reach their second or third growth cycles. So it’s very much worth my while trying to decide where the Argo Blockchain share price might go next.
Just like a gold miner?
Even though I wouldn’t buy Bitcoin or other cryptocurrencies, I would definitely not rule out buying ARB shares. It’s a bit like my approach to gold. I wouldn’t buy the metal itself, as it’s not a productive asset. But I would buy gold miner shares, as they produce new gold.
There is one major difference, though. The price of gold, upon which a gold miner’s share price ultimately depends, is far less volatile than the Bitcoin price. Over the past 12 months, Bitcoin has varied from a low of $8,975 to a high of $64,863. As I write, it’s hovering around the $32,500 level. The reason for the extreme volatility in the Argo Blockchain share price seems clear. It really does closely follow the Bitcoin price.
Is the Argo Blockchain share price attractive?
In its most recent update, Argo reported the mining of 166 Bitcoin or Bitcoin equivalent (BTC) for the month of May. That means the company had, up until then, mined 716 BTC year-to-date. And at the end of May, it held a total of 1,108 BTC. At the current Bitcoin price, that’s worth approximately $36m, or £25.8m. Based on Monday’s closing Argo Blockchain share price, the company is valued at £508m.
That’s a big multiple of the assets it holds. It is, of course, based on expectations for future mining volumes. That, and speculation over future Bitcoin prices. So is ARB a buy at today’s price? Well, blockchain technology is indeed exciting. But until blockchain assets stabilise (like a conventional currency, for example) and we get a clearer view of their future, it won’t be one for me.