Argo Blockchain (LON: ARB) share price has underperformed other Bitcoin mining stocks as concerns about its future continue. The stock was trading at 8.85p on Monday, about 58% below the highest point this year. It has underperformed other mining stocks like Riot Platforms, Marathon Digital, Core Scientific, and Hut 8 Mining.
Argo Blockchain earnings aheadBitcoin mining companies are doing well this year, helped by the rising cryptocurrency prices. BTC price has jumped from the post-FTX collapse low of $15,900 to today’s $37,000. It has surged by over 100% from the lowest point this year.
Higher Bitcoin price is a good thing for mining companies for several reasons. First, strong BTC prices lead to improved market sentiment. Similarly, companies like Glencore, Anglo American, and BHP do well when commodity prices are surging.
Second, Bitcoin mining companies like Argo Blockchain and Riot Platforms have Bitcoin holdings in their balance sheet. As a result, higher BTC prices lead to more unrealized profits for these firms.
Third, and most importantly, these companies sell their mined Bitcoins for a bigger profit when prices are rising. For example, these companies were selling Bitcoins for less than $16,000 in the same period last year. Now, they are selling for over $37,000.
Further, higher Bitcoin prices lead to higher demand for cryptocurrencies. As a result, these companies are now selling at a premium now that supply in exchanges has dropped to the lowest point in over five years.
The next catalyst for the Argo Blockchain share price is the company’s earnings, which are scheduled for Tuesday. These results are expected to show higher revenues and potentially narrow losses.
Argo Blockchain mined 143 Bitcoins in October, generating a $4.3 million revenue. It mined 136 coins in September and 105 coins in August. Therefore, its revenue for the third quarter, the company’s revenue will be about $10.6 million.
October Monthly Ops Update:
🔸Mined 143 BTC (4.6 per day), a 2% increase over the prior month
🔸Increase in BTC mined largely driven by reduced economic curtailment in TX
🔸Revenue of $4.3m, a 19% increase over the prior month#ARB $ARBK
Full RNS: https://t.co/sPpRBKozIZ
The concern for Argo Blockchain is that its balance sheet remains quite constrained. In July, the company diluted its shareholders by raising $7.5 million in a share sale. This capital-raising event came a few months after the company avoided bankruptcy by selling its Helios mining operations.
Argo Blockchain share price forecast
Turning to the daily chart, we see that the ARB stock price has moved sideways in the past few months even as Bitcoin has surged. It has continued to consolidate at the 50-day moving average.
ARB’s volume has continued slipping in the past few months as investors have switched to other Bitcoin mining stocks like RIOT and Cipher. The Average True Range (ATR), a good measure of volatility, has slipped to 1.
Therefore, I suspect that the shares will likely remain in this range after earnings. The key support and resistance points to watch will be at 6.15p and 10.88p.
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