The Motley Fool

The Argo Blockchain share price is rising: should I buy now?

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.

A depiction of the cryptocurrency Bitcoin
Image source: Getty Images.

The Argo Blockchain (LSE: ARB) share price has shot up 8% in the past five days and is up over 20% in the past 30 days. The rise is due to news of a new $25m loan from Galaxy Digital LP. Let’s take a closer look at what this means for the crypto mining giant.

Expanding operations

On top of the recent loan, Argo secured a $20m loan agreement with Galaxy Digital LP in June. This means the company now has access to $45m of capital to ramp up operations. Argo has already announced its plans to build a 200MW mining facility on the 320-acre plot of land it purchased in March. This facility will be 10 times more powerful than its current facilities combined, which means Bitcoin mining will be heavily ramped up. This will drive up revenues and I would expect this to be reflected in the Argo Blockchain share price.

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic… and with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. And if you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio.

Click here to claim your free copy now!

Another positive I should consider about Argo is its commitment to the Crypto Climate accord. There have been recent concerns about the sustainability of mass crypto mining. For example, Elon Musk announced Tesla would be withdrawing Bitcoin as a payment option due to environmental concerns. Argo has announced its Texas ‘Helios’ facility will be run by majority renewable power. Moving forward, I think this places it in a more attractive business position, which I think will boost the Argo Blockchain share price in the future.

Share price risks

A very prominent risk for the firm is the heavily volatile crypto industry. In August Argo mined 206 BTC or BTC equivalents, a slight drop from the 225 mined in July. This drop doesn’t worry me, but what does is the wider crypto market, and how reliant Argo’s business plan is on it. Even if operational capacity doubles, if the crypto market should halve in value, Argo’s revenues aren’t going to increase. We have seen these kinds of movements in the crypto market before, so who’s to say it won’t happen again? If this was the case, the huge debt Argo has raised could become a serious problem.

Another risk to the Argo Blockchain share price is increased regulatory crackdowns that the wider crypto market has seen in the last few months. For example, in the first half of August, penalties adding up to over $120m were dished out to digital cryptocurrency exchanges. Several states across the US have also recently announced increased regulation. If this continues, it could place a lid on the growth of the crypto industry, which would directly impact Argo’s growth.

Overall, I would be sceptical about adding Argo Blockchain to my portfolio at the current share price. The business plan is solely reliant on the price of Bitcoin. I think this could backfire at some point in the long run. This doesn’t mean I don’t think the Argo Blockchain share price won’t move higher in the future. However, at present, it just seems too risky for my liking.

One Killer Stock For The Cybersecurity Surge

Cybersecurity is surging, with experts predicting that the cybersecurity market will reach US$366 billion by 2028more than double what it is today!

And with that kind of growth, this North American company stands to be the biggest winner.

Because their patented “self-repairing” technology is changing the cybersecurity landscape as we know it…

We think it has the potential to become the next famous tech success story.

In fact, we think it could become as big… or even BIGGER than Shopify.

Click here to see how you can uncover the name of this North American stock that’s taking over Silicon Valley, one device at a time…

Dylan Hood owns shares in Tesla Motors. The Motley Fool UK owns shares of and has recommended Tesla. 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.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.