As the bear market and rising energy prices keep cryptocurrency miners under pressure, Blockchain giant Argo admits it is close to bankruptcy. The company is currently seeking solutions to avoid recourse to Chapter 11 of the United States bankruptcy law.
Argo Blockchain is on the verge of bankruptcy
In a statement released on Monday, Argo Blockchain, one of the world’s leading cryptocurrency mining companies, announced to be close to bankruptcy. However, the company would precisely like to avoid appealing to this famous Chapter 11 of the United States bankruptcy law. She would be like thisin advanced negotiations with a third party“, in order to raise liquidity through “the sale of certain assets“.
To carry out his rescue plan, Argo Blockchain hired the services of several experts in various strategic areas such as the law firm McDermott Will & Emery LLP for the legal part, or Berkeley Research Group for financial advice.
In addition, the company explains that last week “some drafts were inadvertently publishedon its website as a test page. As said drafts referred to potential bankruptcyArgo Blockchain’s share listing has been suspended on the London Stock Exchange and Nasdaq.
The stock was reopened for trading yesterday. By the way its price has been in free fall for almost two years. Its last all-time high on the LSE was reached in February 2021 at 339.81 pounds sterling, to evolve today around 4 pounds:
Figure 1 – Argo Blockchain share price at London Stock Exchange
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The state of the market does not help
In an ideal scenario, cryptocurrency miners accumulate during downturns, only to sell at market highs. But their current expenses, starting with electricity, force them to sell the product of their laboreven when they would have preferred it otherwise.
The problem arises when it is no longer profitable to mine, which can lead to machine downtime. This bear market phase may therefore prove to be particularly difficult for these players, as the price of Bitcoin (BTC) has been falling for more than a year now.
Note, however, that the mining difficulty on the Bitcoin blockchain, which is influenced by the mining power brought to the network, remains at historic levels despite a small drop in recent days according to the CoinWarz site:
Figure 2 – Bitcoin network mining difficulty
This metric still shows network resilience, a resilience that is also reflected in the computing power deployed. Indeed, although its evolution can be erratic over short periods, the hashrate is also at particularly high levels with nearly 310 ExaHash per second :
Figure 3 – Hashrate deployed on Bitcoin
To return to Argo Blockchain, its future remains uncertain for the moment, especially since the difficulties are not of today. It should also be noted that the company raised $27 million in funds last October, precisely to alleviate its financial problems.
👉 Also in the news – Will French crypto companies have to go out of business soon?
Sources: Argo Blockchain, TradingView, CoinWarz
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