Key points
- The Argo Blockchain share price has increased by 1,260% over the past two years
- The trajectory of this stock is strongly correlated with the underlying performance of cryptocurrencies
- Revenue has grown massively in 2021
Many cryptocurrencies, including Bitcoin, have seen significant buying throughout 2020 and 2021. One way to gain exposure to these assets is by investing in crypto-mining stocks. Argo Blockchain (LSE: ARB) listed in August 2018 and has several facilities actively mining cryptocurrencies. This stock has enjoyed staggering growth over the past two years. If I had invested £1,000 in January 2019, what would my holding now be worth? Let’s take a closer look.
Heart-stopping share price growth
In January 2019, Argo Blockchain was still a new addition to the London Stock Exchange. Having IPO’d the previous August, its share price stood around the 6.9p mark. Fast-forward two years and the share price is now around 90p. The two years in between saw price action nearly topping the £3 level. In the space of two years, the increase in the share price is somewhere in the region of 1,260%.
Essentially, this means that if I’d invested £1,000 two years ago, it would now be worth £12,600! This is phenomenal growth by any standards. Of course, much has changed in this time. The pandemic gave rise to massive gains in the price of cryptocurrencies. Argo Blockchain’s price is closely, though not entirely, related to the price of cryptocurrencies. It should be noted, therefore, that the share price can endure massive fluctuations as the prices of cryptocurrencies rise and fall. Although the share price over two years increased 1,260%, over the course of one year the Argo Blockchain share price has declined 18.7%. This shows that gains may not be sustained annually, owing to the volatile nature of cryptocurrencies.
Where next?
In its interim report for the six months to 30 June 2021, Argo Blockchain posted encouraging results. Revenue had increased 180% to £31.1m, up from £11.1m for the same period in 2020. Furthermore, there was over 20 times growth in pre-tax profit to £10.7m. Another metric used in this industry to gauge progress is the number of Bitcoin mined per month. This number has increased 222% from December 2020 to December 2021, reflecting Argo Blockchain’s better mining capacity. Over the six months to December 2021, however, mining actually decreased 4.8%.
Argo Blockchain has also been raising funds to cover its Texas expansion and the cost of new mining machinery. The Q1 2021 update stated the company had received £49.2m from two different fundraisings. A listing in the US on the NASDAQ exchange in September 2021 will further strengthen the company’s financial position. The lack of long-term results currently makes Argo Blockchain difficult to value, but reference to sector competitors may provide some context. With a price-to-earnings (P/E) ratio of 41.59, Argo Blockchain sits between two competitors in the US. Riot Blockchain and Hive Blockchain have P/E ratios of 98.28 and 9.04 respectively.
It is undeniable that Argo Blockchain has registered fantastic growth over the past two years. As we have seen, however, the yearly share price performance is not as encouraging. Nonetheless, as long as cryptocurrencies remain strong, Argo Blockchain should continue to perform well. I will most certainly be buying up shares for my own portfolio.