On December 12th, Argo Blockchain, a large-scale supplier of services for mining cryptocurrencies and smart contracts, made a formal announcement that it “is at risk” it might not have enough funds on hand to continue running its business in the coming month.
In the blog post, it is said that the company is in preliminary talks with a third party to sell some assets and enter into a financing deal for equipment, which it feels would help its balance sheet and liquidity.
As TronWeekly recently reported, compass Mining’s content director Will Foxley tweeted a screenshot of the Argo Blockchain on December 9th concerning the company’s impending bankruptcy on December 12th.
However, two days ago, after accidentally disclosing sensitive information about its bankruptcy, it now officially announced that there is a possibility of such action:
The company is hopeful that it will be able to consummate the transaction outside of a voluntary Chapter 11 bankruptcy filing in the United States, although there is no assurance that the company can avoid such a filing.
In order to analyze these strategic possibilities, they hired investment bankers Stifel GMP and its subsidiary Miller Buckfire & Co., LLC, legal counsel McDermott Will & Emery LLP, and financial counsel Berkeley Research Group, LLC.
The company also clarifies that on December 9th, trade in its securities on the London Stock Exchange and Nasdaq was suspended due to accidentally disclosed information claiming that the company was going to declare Chapter 11 bankruptcy. “Shareholders should note that the company has not filed for bankruptcy at this time.”
Argo Blockchain Suffering From Financial Issues
Previously, Argo had already warned that it was in danger of stopping operations owing to a shortage of funding. According to a report on October 31st, the cryptocurrency mining company was now looking for new financing options after failing to get significant funding from a key investor.
According to the press release statement:
The company signed a non-binding LOI with a strategic investor to raise approximately £24 million ($27 million) via a subscription for ordinary shares. The company no longer believes that this subscription will be consummated under the previously announced terms.
At that time, the company has also taken action to protect cash and further maximize liquidity. For cash profits of $5.6 million, the company sold 3,843 brand-new, unopened Bitmain S19J Pro machines, totaling 384 PH/s of total hashrate capacity.
These units were the final batch of the first Bitmain purchase, and installation was planned for October 2022. The company’s overall hashrate capacity thus stays at 2.5 EH/s.
Due to the lack of funding, Argo has been taking steps to protect its funds and maximize its liquidity. In the past, the company has actively sold its mined Bitcoin assets to reduce debt owed to crypto investment company Galaxy Digital.
After selling 637 BTC in June 2022, Argo sold a further 887 BTC in July. It subsequently joined a large group of cryptocurrency mining companies that decided to sell their own BTC during the bear market of 2022.