Argo Blockchain, a U.K.-based bitcoin mining company, has signed a $100 million deal with Galaxy Digital, a digital asset merchant bank, that could avert the mining firm’s potential bankruptcy.
The deal was announced this week and will see Argo receive $18.1 million in cash and over $81.5 million in Galaxy Digital shares. The shares will represent approximately 15% of the company, with the investment firm holding a seat on the Argo board.
The agreement is seen as an crucial lifeline for Argo, which had been struggling to stay afloat amid declining prices of cryptocurrencies. The company reported a total operating loss of $21.3 million in nine months of 2019 and was at risk of bankruptcy.
The agreement “will provide Argo with the necessary capital to continue its current expansion plan,” the firm said in a statement. Argo already operates over 100,000 bitcoin mining rigs in Quebec and Iceland, and is in the process of building more. The additional capital “will enable Argo to accelerate and de-risk further growth opportunities,” it added.
This rescue package from Galaxy Digital is expected to open up fresh doors for Argo’s growth. This is especially so as the deal gives Galaxy Digital Founder, Mike Novogratz, a seat on the board, ushering in his experience in cryptocurrency-related investments to the mix.
Galaxy Digital also appears to have rushed in with the package to firmly position itself in the bitcoin mining industry as well as build a substantial presence in the network by mounting a direct threat to rival firms.
Although Argo’s financial position is not likely to improve drastically in the near future given its reliance on volatile cryptocurrency prices, its partnership with a bank like Galaxy Digital turns out to be a positive move in the right direction. This deal will go a long way in solidifying Argo’s presence in the sector by weaning it away from its bankruptcy woes.
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