- Argo Blockchain stock price has dropped by over 25% this year.
- Other Bitcoin mining companies like Riot Blockchain and MARA have all soared.
- There are concerns about the future of Argo Blockchain.
Argo Blockchain share price has underperformed the other Bitcoin mining companies like Riot Blockchain, Marathon Digital, and Hut 8 Mining. The stock has dropped by more than 25% this year while Riot Blockchain and Marathon Digital have surged by over 100%.
Why is Argo Blockchain struggling?
Argo Blockchain is a small Bitcoin mining company that is dual-listed in London and in New York. The company has a market cap of over 35 million pounds, making it much smaller than the other mining firms.
Argo Blockchain’s business has not been doing well. It ended the first quarter with just $14 million in cash. It generated over $11.4 million in revenue as it mined 491 Bitcoins during the quarter. This was a much lower decline considering that it made over $19.1 million in Q1 of 2022.
According to the management, the company has a mining margin of 49%, meaning that the average direct cost per Bitcoin mined was about $11,811. Despite this, Argo Blockchain posted a net loss in the first quarter. It lost over $4.8 million during the quarter.
Therefore, Argo Blockchain share price has underperformed because of the deterioration of the company’s business. It even avoided going bankrupt in December because of its substantial debts at the time. It did that by raising over $100 million from Galaxy Digital.
While the management expects the company to turn a profit in the second quarter, I believe that other Bitcoin mining stocks like Riot Blockchain and Marathon Digital are much better. Better still, I believe that Bitcoin is a better investment.
Argo Blockchain share price forecast
The daily chart shows that the ARB stock price has been in a strong bearish trend in the past few months. It has moved below the important support level at $9.69, the lowest level on March 10th. As expected, the shares have moved below the 25-day and 50-day exponential moving averages (EMA).
The Average True Range (ATR) has moved to the lowest level in months. This is important since this is the most popular indicators of volatility in the market. The Relative Strength Index (RSI) has moved slightly above the oversold level.
Therefore, there is a likelihood that the Argo Blockchain stock price will continue falling as sellers target the next key support level at $8. A move above the key resistance at $9.70 will invalidate the bearish view.
