Shares of CleanSpark (CLSK 4.43%) crashed hard on Tuesday. The Utah-based energy-management and cryptocurrency-mining company is converting some of its massive stock gains since November into cash, diluting the value of existing shares. The stock was trading 21.8% lower at 11 a.m. EDT today.
In a flurry of regulatory filings on Monday night, CleanSpark said that it will sell 9.09 million additional shares on the public market, on or about March 18. The new shares were priced at $22, which works out to a $200 million cash infusion. The company will use the cash to expand its infrastructure, purchase more cryptocurrency mining machines, and for other general corporate purposes.
CleanSpark's stock immediately dropped down to the proposed price of the stock offering, reducing the company's market cap by $156 million. That's a reasonable adjustment and arguably a positive one, since the company is adding $44 million more than that in cash to its balance sheet. I also find it encouraging that it intends to funnel some of the extra cash into the development of products not related to its Bitcoin (BTC 0.63%) mining operations, such as the mVoult residential battery.
That being said, CleanSpark is still a risky stock trading at a nosebleed-inducing valuation. Share prices have skyrocketed 2,050% over the last year, largely thanks to surging Bitcoin prices. I'm more than happy to tap into the cryptocurrency market in different ways while watching thrill rides like CleanSpark from the sidelines.