The Argo Blockchain share price: will it keep falling?

A lot of shares have had a rocky start to 2022. That includes data centre owner and crypto miner Argo Blockchain (LSE: ARB). After falling this month, the Argo Blockchain share price now sits 14% lower than it did a year ago.

Is a recovery in sight? Or could the risk of further falls mean I should consider selling my Argo shares?

Mounting pressures

I think the price fall reflects Argo’s role as a crypto miner. Investors worry that mounting regulatory pressures could see further falls in the price of cryptocurrencies like Bitcoin.

I see that as a definite risk. Some countries have banned crypto mining. I expect further restriction on trading too. Even in nations where crypto mining and trading continue, there are mounting calls for them to be more heavily regulated. That could hurt crypto prices — and the Argo Blockchain share price.

Bull case

But things will not necessarily pan out that way. At the moment, the crypto landscape is still a bit like the Wild West. Bringing in new rules and sheriffs could scare people off, leading to prices collapsing. From a different perspective, it might simply be a step towards integrating crypto more closely within the global financial system. If regulation offers stability and consistency, it could actually end up being good for crypto price stability, by improving market transparency.

On top of that, Argo is investing heavily in its big new mining facility. I see it as no accident that the complex is located in the American state of Texas, long associated with a strong ethos of freedom. While other countries and states clamp down on crypto mining, I do not think Texas will be keen to do that. So a broad clampdown worldwide could actually help Argo by giving it a competitive advantage thanks to its large plans for the Texas operation.

Where next for the Argo Blockchain share price?

Argo’s share price is clearly influenced by broad factors beyond its control, especially the price of Bitcoin and other cryptocurrencies. So if Bitcoin falls, I definitely think Argo shares could keep following it down. On top of that, investor concerns about the potential cost of kitting out the Texas facility could exert more downward pressure on the shares.

In the longer term, however, I think markets may value Argo with more regard to its specific business not just the pricing of crypto in general. I think the Texan data centre could turn out to be a source of competitive advantage. I also think the company’s data centres – which have uses beyond crypto mining – are a potentially lucrative source of income. Many companies continue to increase their needs for data storage, which could help support industry profitability.

My next move

I expect the Argo Blockchain share price to continue to be volatile, especially if crypto pricing moves around dramatically. The shares could keep falling. But I am buckled in for the ride and continue to see long-term reasons for optimism when it comes to Argo. I will not be adding to my position, but nor do I plan to sell at the moment. For now, I am waiting to see how progress at the Texan facility impacts the share price in coming months.

Christopher Ruane owns shares in Argo Blockchain. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.