Argo Blockchain Stock Forecast: Is ARBK a Buy?

Written by Sean GraytokUpdated: 8th May 2022
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This Argo Blockchain Stock Forecast analyzes ARBK’s investment potential going forward. 

Argo Blockchain Stock Forecast 

Argo Blockchain is a global data center business that provides a platform for cryptocurrencymining operations.

The company is headquartered in London, UK, and currently has three mining facilities in Canada.

Argo recently began new construction on what will be its fourth facility in Dickens County, Texas.

Argo Blockchain has only been public on US exchanges for a few months.

It trades under the ticker “ARBK” on the Nasdaq Stock Exchange.

Argo Blockchain Stock Forecast: Investment Potential

#1. New Texas Facility

Argo is participating in the great mining migration to Texas — it is building a state-of-the-art mining facility in the Lone Star state.

The company will fill the new data center with 20,000 S19J Pro machines, which will increase its hashrate by more than 2 EH/s.

This fourth facility will bring Argo’s total hashrate to 3.7 EH/s once the machines are fully deployed.

A combination of favorable policy, a deregulated energy grid, and access to cheap renewable energy is attracting miners to Texas.

Argo will join other mining powerhouses that are aggressively expanding into the state, such as Core Scientific, Riot Blockchain, Compute North, and Blockcap.

#2. Not Selling Bitcoin

Traditionally, miners like Argo Blockchain were forced to sell most of their block rewards to pay down operational costs.

Today, well-capitalized publicly-traded miners can hodl their bitcoin and pay bills with fiat currency.

This dynamic has profound impacts on the bitcoin industry, considering miners are the only way new bitcoin enters the supply, and they aren’t selling bitcoin when they earn it.

The supply shock is incoming, or as Marlo Stanfield would say, “Price of the [BTC] going up.”

But this isn’t unique to Argo specifically.

However, there’s only a handful of well-capitalized operations in the position to do so. Argo appears to be one of them.

#3. Climate Friendly Focus

Argo is more overtly interested in ESG-friendly mining compared to its peers. It has published several documents on its “Green Mining” initiative and how Bitcoin’s energy use could be made more “green.”

It’s clear that Argo is positioning itself as a “climate-friendly” miner as a way to differentiate it from the competition.

That’s not to say the others aren’t focused on capturing renewable energy sources — as they’re financially incentivized to do so — but it’s not one of their primary selling points.

While we believe the mainstream ESG narrative around BTC mining is largely misunderstood, Argo may benefit from marketing itself this way — even if it’s just semantics.

Argo Blockchain Stock Forecast: The Moat

We believe that Argo is one of the few miners capable of surviving a brutal BTC bear market.

Here are some contributing factors to this belief:

Bitcoin Mining Nirvana + Clean Energy Focus + Spending USD

Argo’s CEO Peter Wall refers to the West Texas facility as “Bitcoin Mining Nirvana.”

Operating out of Texas will be a significant advantage for Argo because regulators are on its side, in addition to lower energy and production costs.

Mining companies that leverage Texas will enjoy profound advantages in the coming years.

Next, a green spin on mining may help Argo differentiate itself from its peers.

As previously mentioned, we believe the conversation around Bitcoin’s energy usage is far more nuanced than the way politicians and the mainstream media describe it.

Texas-based miners like Argo will show them that bitcoin mining can actually help the energy grid and can revolutionize the way we think about energy consumption.

Last, Argo can weather bitcoin markets with cash reserves and public capital instead of selling block subsidies.

The game has changed, and industrialized miners that can do this have advantages over ones that cannot.

Argo Blockchain Stock Forecast: Operations Update 

During the month of September, Argo mined 165 BTC, down from 206 BTC mined in August.

Argo recorded a mining margin of 84% for the month of September. At the end of the month, Argo Blockchain owned 1,836 bitcoin.

The drop-off in Argo’s production was due to mining difficulty adjustmentsthat make it harder to earn block rewards based on the network’s total hashrate.

Argo has yet to announce earnings as a publicly-traded stock in the United States.

However, it generated $43 million in revenue in the first half of 2021, doubling what it brought in over the full twelve months of 2020.

Argo Blockchain Stock Top Competitors

Let’s meet the publicly-traded companies that Argo competes with for block rewards:

  • Marathon Digital (MARA)
  • Hut 8 Mining (HUT)
  • Core Scientific (CORE)
  • Riot Blockchain (RIOT)
  • Bitfarms (BITF)

Additionally, Argo competes for public capital with other “crypto stocks” or ETFs that investors use as proxies to bitcoin:

  • Coinbase (COIN)
  • MicroStrategy (MSTR)
  • Grayscale Bitcoin Trust (GBTC)
  • Bitcoin Futures ETF

Considering bitcoin’s decentralized nature and the beautifully engineered incentives around mining, there’s plenty of opportunities to earn block rewards (about every ten minutes).

Argo Blockchain Stock Forecast: The Risks

Argo Blockchain was publicly traded on the London Stock Exchange before going public on the Nasdaq,

Argo discounted the Nasdaq rise by approximately 30% and decided not to have the over-the-counter shares automatically listed on the new exchange.

This was less than ideal for existing shareholders who watched their shares get diluted.

Additionally, there have been some delays on the Texas build-out.

Much of the Argo bull case rests on the new Texas facility — each new complication is bad news for the stock.

Argo Blockchain Stock Allocation in Your Portfolio

Here are some questions to consider when deciding on an allocation to Argo Blockchain stock:

  • Is Argo Blockchain better positioned than Marathon, Hut 8, and Riot Blockchain?
  • Will there be further delays at the Texas construction site?
  • Is the clean mining narrative relative to the stock’s success?
  • Will Argo Blockchain outperform bitcoin over the next five years?
  • Will Argo expand its margins by implementing new mining technologies?
  • Is it better to own bitcoin? Or both?
  • Will Argo Blockchain be able to hodl during bear markets?

There’s plenty of ways to invest in this space. Argo stock may align with one investor’s goals but severely violate another’s portfolio strategy.

Argo Blockchain Stock Forecast: FAQs

Is Argo worth buying?

Argo stock is worth buying if you’re bullish on Bitcoin and the mining business model. Most analysts have a price target for ARBK somewhere between $22 and $30 per share.

Is Argo Blockchain overvalued?

Argo Blockchain’s value depends on its ability to grow its hashrate and the amount of bitcoin it can put on its balance sheet. However, Argo’s business model is vulnerable to the volatility of bitcoin’s price. Argo can execute on all dimensions, but if BTC falls 40%, shares of Argo will fall too.

Why is Argo Blockchain going down?

Argo Blockchain could be going down for various reasons, such as the price of BTC falling or uncertainty around the construction of the company’s new facility in Texas.

Bottom Line: Argo Blockchain Stock Forecast

Argo is the smallest publicly-traded miner, but it has tons of potential. We look forward to watching the company grow its hashrate and earn BTC while securing the Bitcoin blockchain.

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This article is for informational purposes only, and it is not intended to be investment advice. Read our editorial guidelines and public equities research methodology to learn more about how we researched Argo Blockchain stock. 

Sean Graytok
Sean Graytok

Sean Graytok is our Co-Founder and leading expert in investing and financial management. His work has been cited in leading industry publications, such as InvestorPlace and Business Insider. Sean is interested in the people and technologies that are improving the world.