Cryptocurrency miner Argo Blockchain PLC - ADR (NASDAQ:ARBK) on Monday warned its shareholders of an imminent collapse if it failed to garner further financing, leading to its stock price nose-diving by over 50% amid a slump in the digital assets market.
In a letter to its shareholders, the firm stated that it was looking to raise about 24 million British pounds ($27 million) via a subscription for ordinary shares, however, “the company no longer believes that this subscription will be consummated under the previously announced terms.”
Argo blockchain added that it continues to explore financing opportunities from other investors.
The company is looking at other financing possibilities, but there is no guarantee that it will finalize any arrangements or sign any binding contracts.
Argo added that for at least 12 months beyond the date of the announcement, the company will continue to try to raise enough money.
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Argo will become cash negative if funds are not raised
If Argo cannot secure financing during this time, it will be forced to scale back or even stop operations.
“Should Argo be unsuccessful in completing any further financing, Argo would become cash flow negative in the near term and would need to curtail or cease operations,” the company stated.
Argo has been taking measures to protect funds and maximize liquidity despite the lack of financing.
Last batch of equipment sold for $5.6M
The last batch of the initial Bitmain order, 3,843 brand-new Bitmain S19J Pro miners, which were supposed to be installed in October 2022, were sold by the company for $5.6 million.
The maximum hash rate that Argo can process remained at 2.5 exahashes per second.
In the past, Argo has actively sold its mined Bitcoin (CRYPTO: BTC) assets to reduce debt owed to Michael Novogratz's cryptocurrency investment company, Galaxy Digital.
After selling 637 Bitcoin in June 2022, Argo sold a further 887 Bitcoin in July.
Argo, along with Bitfarms, Bitcoin miner Core Scientific Inc (NASDAQ:CORZ), and Riot Blockchain Inc (NASDAQ:RIOT), became one of many cryptocurrency mining companies that decided to sell independently-mined Bitcoin during the bear market of 2022.
Core Scientific issued a bankruptcy warning in documents filed with the Securities and Exchange Commission on Oct. 26.
The company claimed unfavorable business developments like low Bitcoin pricing, rising electricity rates, and other problems.
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