Good morning!

We are expecting news in the next day or so from House of Fraser, where Sky News reports that PwC has been negotiating on behalf of its lenders and bondholders, trying to arrange a buyout.

In the absence of a deal, the company is likely to fall into administration and threaten 17,500 jobs. A reminder of how tough things are out there!

Talk soon


Today I have been looking at:

Argo Blockchain (LON:ARB)

  • Share price: 12p (+1%)
  • No. of shares: 294 million
  • Market cap: £35 million

Agreement to Expand Mining Capacity

This report normally talks about "good" companies but I feel compelled to mention this £25 million IPO, another symptom of the mass mis-allocation of capital associated with cryptocurrency.

It's shocking to me that some blue-chip institutions were coaxed into backing it.

Let's suppose this was a venture designed to mine a few altcoins (non-bitcoin cryptos). That would be risky enough.

Firstly, crypto miners have to compete with other miners, all of the time. Most of the biggest mining pools are in China, where hardware and electricity are extremely cheap. Every coin they mine is a coin not available to any other miner.

Argo today announces that it has secured energy at 3 US cents per kilo-watt hour, which is at least a good start.

Secondly, you have to accept wildly fluctuating crypto prices. The same as a physical gold mine, your asset will become unprofitable as soon as the market price drops below the cost to mine.

So right off the bat we have a leveraged play on the price of cryptos and on our ability to assemble enough cheap hardware and electricity. It's far riskier than simply buying a few altcoins and hoping for the best.

But even that proposition wasn't risky enough for Argo Blockchain. It has gone one step further and created the new concept of "Mining as a Service", invoking the bubble hysteria…

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