Argo Blockchain shares are down. Should I buy now?

Argo Blockchain shares have fallen 7% in the past five days and over 21% year to date. So is now the right time for me to buy in?

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Argo Blockchain (LSE: ARB) shares have had a tough time over the past 12 months. Today they’re worth 70p, but a year ago they were trading well over 200p. In addition to this, the shares are down 21% year-to-date. Considering all of this, is now a good time for me to be buying the shares? Let’s take a closer look at what’s been going on.

Recent performance

I think there are two reasons why Argo Blockchain shares have been underperforming recently. The first is due to concerns with the company’s mining rates. In February this year, the company reportedly mined 135 Bitcoin (or Bitcoin equivalents). This was a drop of 37 Bitcoin — or around £1.1m by my calculations — from the 172 mined in January. What’s more, in December 2021 Argo mined 214 Bitcoin, highlighting the disappointing trajectory of the past few months. Argo has attributed this drop to record high global hash rates, which essentially means a lot more power was required to mine the same amount of cryptocurrency.

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In addition to this, a macroeconomic factor affecting Argo Blockchain shares is the threat of rising global interest rates. When interest rates rise, people tend to lose confidence in higher-risk investments like growth stocks. The UK and US central banks have recently begun to hike rates, which is why I think we’ve seen a pullback in high-growth stocks such as Argo. Furthermore, analysts at Goldman Sachs have predicted a further six rate hikes this year, which is only going to make the situation worse for Argo and its share price.

Positives for the shares

The firm is currently in the middle of a large-scale upgrade in its mining capacity. In July 2021, it announced it had started construction of its new Texas mining facility, which is expected to be finished in October 2022. The facility will provide the firm with 200MW of extra power, which is over 130% of current levels.

In addition to this, Argo has announced a deal with Core Scientific in which it will exchange its current crypto mining computers for faster, more powerful alternatives. The new tech is also expected to make mining more environmentally-friendly, which could be key to boosting the firm’s ESG reputation.

Argo Blockchain shares currently trade on a forward price-earnings ratio of 7.1. P/E ratios that sit below 10 tend to signal good value. Combining this value with the growth plans the firm has, I think the current share price could offer a great entry opportunity for my portfolio.

Would I buy now?

Overall, I think that Argo Blockchain shares could give my portfolio some good exposure to the high-growth crypto world. However, the uncertain macroeconomic environment coupled with recent poor results deter me from buying shares for now. As such, this stock will remain on my watchlist for a while longer.

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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.

Dylan Hood 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.

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.

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