Argo Blockchain PLC (LSE:ARB, OTCQX:ARBKF, NASDAQ:ARBK, ETR:0XP) has turned to a strategic investor for an injection of £24mln of new funds to offset a cash crunch caused by soaring energy prices and the slide in the value of bitcoin.
As well as the funding round, the bitcoin miner said it is selling 3,400 of its mining machines to raise a further £6mln, while its facility at Helios, Texas, is being switched off during periods of peak power prices.
A leasing deal with NYDIG has also been amended to release a further £5mln, while the amortisation schedule for existing loans has been changed with repayment now linked to network mining profitability.
In an update on 9 September 2022, Argo noted headwinds from the price of both natural gas and electricity caused by the geopolitical situation in Europe and low levels of natural gas storage in the US.
“These factors, coupled with the decline in the price of Bitcoin since March 2022 and the increased mining difficulty, have reduced the company’s profitability and free cash flow generation,” it said in today’s statement.
Going forward and on the assumption all of the proposed transactions are concluded, which includes a new power purchase agreement plus a round of cost-cutting, Argo said its working capital should be sufficient for at least the next 12 months.
Following the completion of the subscription, which is priced at 27.6p, the strategic investor will hold a 15.46% stake in the company, said the statement.
The investor will have the right to nominate two new non-executive directors to the board.