What happened

Shares of SOS Limited (SOS -4.19%), an insurance-marketing business turned cryptocurrency miner, fell sharply on Thursday. The price of Bitcoin and Ethereum are down over the past 24 hours, so this is likely one contributing factor. But highfliers like SOS are generally selling off today. As of 12:45 p.m. EST, the stock was down almost 14%.

So what

There's possibly more that's pulling SOS stock down today. According to documents filed with the Securities and Exchange Commission yesterday, the company is offering more of its stock via warrants. American depositary receipts (ADRs) are the ones available for trading in the U.S., and certain investors recently exercised their warrants to acquire 23.88 million ADRs for just $4.05 each.

A visibly frustrated man faces a down, red stock chart in the background.

Image source: Getty Images.

By enticing these investors to exercise their warrants, SOS grossed $96.7 million. But the company is now giving these investors additional warrants good for 23.88 million more ADRs. These warrants can be exercised for $7 per ADR. While the company gets cash for launching its cryptocurrency business, these shareholders are sitting on big gains from the previously exercised warrants. With the market starting to pull back, it's plausible many of these investors are selling their recently acquired ADRs, putting additional downward pressure on SOS stock.

Now what

Even after falling today, SOS stock is still up close to 400% year to date. These kind of gains are atypical in the stock market, so a pullback isn't overly surprising. If I were a shareholder, I'd be focused on two things.

The first relates to its cryptocurrency mining. According to SEC filings, management believes it can mine 3.5 Bitcoin tokens and 63 Ethereum daily once equipment is fully deployed. However, investors need to remember these numbers are relative to the overall hash rates, a metric that tracks how much overall "computing power" these blockchain networks have. SOS could mine more or less depending on whether the overall hash rate increases or decreases (with a decrease in the hash rate allowing it to mine more).

For context, Bitcoin's hash rate has increased significantly in recent months as the price of Bitcoin has risen, and should only get more competitive if it keeps going up.

And second, I'd keep an eye on how quickly SOS management keeps dishing out warrants. This move dilutes shareholder value -- the company admits this is a risk to its ADRs in SEC filings. If things continue at this pace, it will be hard for shares to rise, at least in the near term.