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Why I think the Argo Blockchain share price could keep climbing

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The Argo Blockchain (LSE: ARB) share price has increased in value by over 400% year-to-date. Over the past 12 months, shares in the company are up over 6,000%.

I think there could be further gains on the horizon. Today I’m going to explain why I hold this view. 

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Argo Blockchain share price outlook

Whenever I have covered the company in the past, I have always tried to make it clear that I believe Argo could generate significant returns for investors if the corporation achieves its growth goals. Indeed, one of the big problems with investing in growth stocks is that many fail to live up to lofty growth targets. 

However, this does not seem to be the case with the cryptocurrency miner. 

According to its latest trading update, the company’s revenues hit £6.6m in March this year, up from £4.3m in February. The amount of Bitcoin and equivalents (BTC) mined climbed to 165 from 129. Based on these figures, the group generated total revenues of £13.4m for the first quarter of 2021 as a whole.

Further, Argo said it generated the income at an average monthly mining margin of around 84%. The mining margin increased slightly from 81% in February. It was 80% for the whole quarter. 

On top of these record mining revenues, at the end of March, the company held 764 BTC. 

Commenting on these figures, CEO Peter Wall said: “These numbers are incredible, and they highlight our continued commitment to smart growth, efficiency, and delivering meaningful value to our shareholders.

I am inclined to agree with this statement. The firm is producing value for investors. While it could be argued that the Argo Blockchain share price has gotten ahead of itself recently, the company now seems to be growing into its valuation

Risks and headwinds 

The organisation has also announced another incredibly encouraging development in the past few weeks. It is working with blockchain technology firm DMG to build the world’s first clean energy mining pool, Terra Pool. This could be a revolutionary development not just for Argo but for the crypto industry in general.

One of the main criticisms levelled against the crypto industry is its high power consumption. Critics point to the fact that each Bitcoin transaction has a carbon footprint equivalent to 900k Visa transactions. If Argo can help solve this issue with renewable energy, it could help transform the industry. 

Considering all of the above, I’m optimistic about the outlook for the Argo Blockchain share price. As such, I would add the stock to my portfolio. 

That said, this company does face some significant risks. Several countries worldwide are considering banning Bitcoin, and the cryptocurrency has a terrible reputation for fraud. It’s estimated over £120m was stolen in the UK last year through cryptocurrency scams. These headwinds could prevent the widespread adoption of Bitcoin in the long term, which would hurt the price. That would make it harder for Argo to grow.

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Rupert Hargreaves 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.

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