Is penny stock Argo Blockchain a cheap buy at 15p?

Penny stocks are notoriously volatile, and perhaps none more so than companies involved in cryptocurrency mining. London Stock Exchange– listed really Argo Blockchain (LSE: ARB) is a prime example.

The share price has more than doubled since early January, to reach 15p today. However, that’s still an 80% drop from where Penny’s stock was trading a year ago.

So, should I invest in this Bitcoin mining stock today? Here I am.

Bitcoin price recovery

The Argo Blockchain share price is linked to the price of Bitcoin. In this context, the most important factor behind the company’s positive start this year is the recovery of the crypto market, led by the 48% price rally of Bitcoin relative to the value of sterling in 2023.

The return to a ‘risky’ environment in the crypto market is good news for the company. Some analysts are bullish on Bitcoin’s prospects as the digital currency approaches its next halving event in 2024. Historically, halving events have been bullish for Bitcoin prices.

Bitcoin is a very volatile asset. This translates into similar volatility for Argo Blockchain shares. When times are good, this can result in huge gains, but when times are difficult, losses can be equally large. It’s a very high risk/reward stock in my view.

Positive momentum

In an encouraging new development, the company is getting back on track Nasdaq register. To maintain a place in the tech-heavy stock market index, closing bids for the company’s American depositary shares must remain above $1 for 30 days.

After last year’s brutal crypto season, Argo Blockchain broke this requirement. However, they regained compliance in January. This is important for the company’s reputation and for maintaining exposure to institutional investors.

Also, I like the long-term ethos. The company aims to support the adoption and verification of blockchain with 100% renewable energy sources by 2025. As the environmental impact of Bitcoin mining is a major weakness for investing in the industry, I am happy to see Argo Blockchain’s commitment to improving its ESG risk rating. .

Challenge

I am well aware that there is a huge risk facing these penny stocks. The collapse of cryptocurrency exchange FTX last year is proof that the sector can catch a fever. Indeed, Argo Blockchain avoided bankruptcy itself in December by selling its Helios mining facility to Galaxy Digital Holdings for £54m.

Additionally, the company currently lacks clear leadership following the resignation of founder and CEO Peter Wall. His departure comes at a bad time as US financial authorities seek aggressive regulatory action on the crypto market. As the road to the country’s banking system is closed, some fear that the entire industry could be threatened.

Should I buy shares of Argo Blockchain?

Argo Blockchain shares offer the potential for huge profits. The impressive performance this year so far proves it. The other side of the coin is the possibility of enormous losses, or even bankruptcy.

Overall, I see this penny stock as a very speculative investment. Currently, I am looking for a lower risk stock market opportunity, so I will not be buying Argo Blockchain shares today.

The content in this article is provided for informational purposes only. It is not intended to be, nor is it, any form of investment advice. Bitcoin and other cryptocurrencies are speculative and volatile assets, which carry several risks, including the total loss of the invested money. Readers are responsible for conducting their own due diligence and seeking professional advice before making any investment decisions