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Can the Argo Blockchain (ARB) share price keep soaring?

Hardware at Argo Blockchain's mining facility at Baie Comeau, Canada
Image: Argo Blockchain

The Argo Blockchain (LSE: ARB) share price is steadily rising again after falling for much in 2021. Since hitting penny stock territory below £1 in late July, the cryptocurrency miner has bounced. Indeed, it’s just reached three-and-a-half month highs above 150p.

So, can the ARB share price keep rising? And as long-term investor should I buy shares in the business today?

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There’s several reasons why this UK tech share could prove to be a savvy investment today, I feel. These include:

  • Fresh growth finance raised: Argo Blockchain’s share price has been helped by news that it’s raised more money to fund its operations. First it announced that it has agreed an extra $25m loan from existing lender Galaxy Digital LP. And last week it said it had sold 7,500,000 American Depositary Shares related to its planned listing on NASDAQ. It hopes this could help it raise a shade above £100m. This is critical as the business pursues its ambitious growth strategy.
  • New mine construction: It’s on a fundraising frenzy at the moment to continue construction of its state-of-the-art mining facility in Texas. The company broke ground on the facility in July and it hopes to have it up and running in 2022. The so-called Helios project is tipped to supercharge Bitcoin production. So signs of strong progress on its creation would give ARB’s share price extra fuel.

Big Bitcoin logo.

Will Argo Blockchain’s share price slump?

All that being said, I’m afraid Argo Blockchain remains a risk too far for me. My main concern the future of cryptocurrencies as an asset class. And the fact that digital currency mining is all that this UK share does is an issue.

Regulators and lawmakers remain extremely hostile to the likes of Bitcoin. Just last week Gary Gensler, chair of the Securities and Exchange Commission, pledged to crack down on the “wild west” of cryptocurrencies. This is hardly comforting news given the slew of worrying developments elsewhere. They include China clamping down on the mining and trading of virtual currencies. And massive fines have been slapped on digital cryptocurrency exchanges.

It’s also possible that interest in cryptocurrencies (and by extension Argo Blockchain) could fall. That could come as concerns over the environmental impact of mining these assets grows. A report in the journal Resources, Conservation and Recycling estimated that Bitcoin creates 30.7 metric kilotons of waste a year (as of May). This is equivalent “to the amount of small IT and telecommunication equipment waste produced by a country like the Netherlands.”

The study added that the amount of Bitcoin waste could grow to an annual 64.4 metric kilotons+. That’s if prices return to levels recorded at the start of 2021. This represents a major threat to the long-term Argo Blockchain share price. It ongoing rise could end as responsible investing becomes more important to people. Its story is compelling, but it’s not one I’m prepared to invest in for the time being.

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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.

The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of investment advice. Bitcoin and other cryptocurrencies are highly speculative and volatile assets, which carry several risks, including the total loss of any monies invested. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

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