Argo, a UK-based provider of cryptocurrency mining services (LSE:ARB), announces a refocus of its business strategy in light of the continuing difficult trading conditions in the cryptocurrency market as digital currencies face severe price pressure and volatility.
As a result of the challenging conditions, the Company has ceased accepting new mining subscriptions and will terminate all existing mining-as-a-service (MaaS) contracts by 1st April 2019.
A potential shift in strategy
This shift in strategy follows more than six months of better-than-expected growth achieved by Argo’s consumer business since its launch in the summer of last year. Despite continuing demand for the services, the Company is temporarily moving away from MaaS to mining directly for its own account. Existing customers will be informed shortly of their service termination.
As part of the restructuring, the company is implementing significant cost-cutting which is expected to lower its mining cost base, including ongoing expenses, by 35%.
The redeployment of the mining infrastructure and capital is expected to be profitable following a material reduction in input costs achieved from suppliers.
The restructuring measures and strategy refocus are expected to reduce the overall cash burn and deliver EBITDA break-even in the second half of 2019. As of February 14th, the Company’s net cash balance amounted to approximately £15m.
Mike Edwards, co-founder and director of Argo, said: “We are being proactive and strategic in light of the tough industry market conditions by taking swift action to cut costs and refocus our strategy.”
“While it is disappointing to make this shift after delivering better-than-expected growth during our first six months as a consumer business, we need to be prudent and act decisively in order to ride out the downturn and be in a strong position when industry fundamentals improve.”
This isn’t the first time we’ve seen mining related crypto companies shut down due to the bear market. For those that aren’t aware, Argo went public on the London Stock Exchange last year.