Crypto volatility forces Argo Blockchain to terminate mining contracts

15th Feb 2019 10:10

(Sharecast News) - Cryptocurrency mining service provider Argo Blockchain announced a refocus of its business strategy on Friday, in light of what it described as "continuing difficult trading conditions" in the cryptocurrency market, as digital currencies faced "severe" price pressure and volatility.The London-listed firm said that as a result of the challenging conditions, it had ceased accepting new mining subscriptions and would terminate all existing mining-as-a-service (MaaS) contracts by 1 April.It said the shift in strategy followed more than six months of better-than-expected growth achieved by Argo's consumer business since its launch last summer.Despite continuing demand for the services, the board said it was temporarily moving away from MaaS to mining directly for its own account.Existing customers would be informed shortly of their service termination.As part of the restructuring, the company said it was implementing "significant" cost-cutting, which was expected to lower its mining cost base, including ongoing expenses, by 35%.The redeployment of the mining infrastructure and capital was expected to be profitable following a material reduction in input costs achieved from suppliers.Argo said the restructuring measures and strategy refocus were expected to reduce the overall cash burn, and deliver EBITDA break-even in the second half of 2019.As of 14 February, Argo's net cash balance amounted to around £15m."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," said Argo Blockchain co-founder and director Mike Edwards."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."