Why Argo Blockchain is the most popular stock in 2021 so far 

Cryptocurrency mining company Argo Blockchain is one of the most bought stocks so far this year on investing platform and trading apps.

Most probably wouldn’t have heard of it until recently, but the performance of bitcoin is hard to ignore after a huge run and at a time traditional assets are having to work harder to produce returns.

However, stark warnings continue to be issued from experts within the industry on the risks with investing in cryptocurrencies and companies associated with them.

Crypto mining company Argo Blockchain is one of the most bought stocks so far this year

The company’s shares were down 17 per cent yesterday but back up again by 3 per cent this morning to 93p, but sudden fluctuations in the crypto space are not uncommon and investors are continuing to jump on the bandwagon, hoping for a piece of the action. 

Its success – and failures – mirror that of bitcoin itself, which surged to record highs above $41,000 two weeks ago, and Argo Blockchain rocketed 218 per cent to 107p in the first week of trading in 2021.

The miner also broke records with trading volumes and new user numbers surging  1,500 per cent and 500 per cent respectively between August and December. 

In DIY investing platform Hargreaves Lansdown’s ‘Top of the Stocks’ data, which is updated weekly, Argo Blockchain is listed as fifth top bought stock during the week commencing 11 January at 2.42 per cent.

Meanwhile, competitor Interactive Investor said the company is its most bought investment on so far this year (to 18 January 2021). 

Buys in the company have increased by 2,993 per cent month-on-month over the same period in December and by 3,798 per cent year-on-year over the same period in January last year.

Myron Jobson, personal finance campaigner at Interactive Investor, thinks the spike in popularity coincides with the ‘meteoric rise of the price of bitcoin in recent history’. 

‘A blockchain mining company and bitcoin are poles apart, but the current popularity of Argo is indicative of a broader interest in crypto,’ he said.

‘For many mainstream investors, investment in the company is a speculative, high-risk play on cryptocurrency growth story, without having direct holding in cryptoassets.’

What is Argo and crypto mining?

Argo Blockchain is a crypto-mining service provider listed on the London Stock Exchange’s main market.

Founded in 2017 and based in the UK, the company operates a global data centre providing a low-cost and consumer-friendly service for the mining of leading crypto-currencies. 

Any decentralised cryptocurrency powered by a ‘Proof-of-Work algorithm’ can be mined. A few of the most popular coins to mine today are bitcoin, ethereum, and ZCash.

Argo’s cloud-based Mining as a Service platform is available to anyone, anywhere in the world on a monthly subscription.  

What is crypto mining? 

It is the process of verifying ‘blocks of transactions’ of a certain cryptocurrency and adding each new block to its network. 

Each block of transactions has a complex mathematical hash function associated with it that requires significant computing power to solve. 

The miner who solves the function first receives the cryptocurreny as a reward for supporting the network and adding a new block to the blockchain. 

A higher mining hash rate corresponds to increased mining success. 

A new safe haven…? 

Similarly, Argo Blockchain was the second most popular buy – behind Tesla – on trading app Freetrade during the first two weeks of 2021.

Buy orders rose by 17 per cent in week two, despite an already high base set at the turn of the year.

Dan Lane, senior analyst at Freetrade, said: ‘Investors nervous over equity markets flying high are turning to crypto as a kind of “millennial gold”, treating it as a new safe haven asset. 

‘And where they can’t get a hold of the asset itself, they’re turning to the next best thing – the miners. 

‘With the UK savings ratio hitting a record 29.1 per cent in September, investors might just be looking to bolster their Isas with whatever bitcoin or ethereum exposure they can – often miners are they only way to do this.’   

Demand for crypto has been driven by corporates pursuing alternative asset allocation strategies, diversification by institutional investors and the emergence of dedicated funds.

Noted investors Stanley Druckenmiller and Paul Tudor Jones have led hedge fund buying of the digital currency.

Meanwhile, there has also been interest generated by retail platforms such as Square and PayPal, who also saw a large uptick in investor demand at the start of the year.

Change in buy volume in the first two weeks of January on Freetrade for Paypal was 11 per cent and for Square, 15 per cent.

Meanwhile buy volume also increased by 98 per cent for CBOE, 78 per cent for Nasdaq and 35 per cent for Advanced Micro Devices – all tech names investing in crypto. 

Looking at total value of holdings in Argo Blockchain, 86 per cent of Freetrade customers with a position are between 26 and 55.

Lane added: ‘The longer crypto stays part of the conversation, and the more bigger firms explore blockchain and its potential usage, the more investors feel validated in gaining exposure to the asset, if even as a small part of a broader portfolio. 

‘Seeing the big names take positions in the most popular cryptocurrencies only makes investors feel even more vindicated.’

Interactive Investor's Myron Jobson said Argo Blockchain's spike coincides with Bitcoin's

Interactive Investor’s Myron Jobson said Argo Blockchain’s spike coincides with Bitcoin’s

…Or too good to be true? 

However, while bitcoin and related firms have, on the whole, continued their positive trajectory, investors will be aware of a similar event in 2017 which then saw the cryptocurrency come crashing down. 

There is much speculation bitcoin will become more mainstream, especially with more institutional investors becoming involved, but the future of cryptocurrencies remains highly uncertain. 

Susannah Streeter of Hargreaves Lansdown said: ‘Bitcoin’s price is being driven primarily by future price speculation rather than an underlying use-case. 

‘The Financial Conduct Authority clearly believes the crypto Wild West could be running out of control, and is warning that consumers risk losing all their money if they succumb to promises of fast and high returns.’

Jobson agreed that while it’s always tempting to follow the ‘this time it will be different’ monologue, the fact remains that the asset is notoriously volatile – and for many investors, the price swings have been simply too wild to stomach.

He added: ‘The seemingly budding popularity of cryptocurrency has forced the City watchdog to rightly issue a warning on the risks of investments advertising high returns based on cryptoassets. 

‘In its ascendency, bitcoin has also brought many lesser known cryptoassets out of obscurity. 

‘The worry is that FOMO (fear of missing out) investors, won’t look before they leap and, encouraged by glossy marketing hooked on the meteoric rise of Bitcoin, invest in cryptoassets which is a highly complex, high risk and relatively new area of investments.’ 

Unlike conventional stocks and shares investments, where there are some metrics like price-to-earnings ratio to help investors value stocks, valuing Bitcoin doesn’t work the same way. 

Things like the cost of transactions and mining bitcoin can give you an idea of what they’re worth, but this sort of information is not always easy to find 

Jobson added: ‘Cryptocurrencies are a relatively new entrant to the investment universe and therefore have not built up enough of a track record for any meaningful conclusions on trends and behaviour to be drawn. 

‘Whether bitcoin will continue to outperform remains to be seen. But whatever your approach to risk, crypto currency should only be a tiny proportion of a portfolio.’ 

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