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Here's Why Bitfarms Stock Was Down Big Today

By Keith Noonan – Aug 17, 2021 at 5:26PM

Key Points

  • Bitfarms paired its Q2 results with news of a substantial at-the-market stock offering.

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Despite the recent pullback, the cryptocurrency miner is still up roughly 186% year to date.

What happened

Shares of Bitfarms (BITF -1.06%) slumped in today's trading session following mixed second-quarter results that arrived with the announcement of a new share offering. The cryptocurrency mining specialist's stock ended the day down 15%, according to data from S&P Global Market Intelligence.

Bitfarms reported second-quarter earnings after the market closed on Aug. 16, delivering sales that topped the market's expectations but a wider than expected loss due to a reevaluation of the company's Bitcoin holdings. The company posted sales of $36.7 million in the period, which came in well ahead of the average analyst estimate's target for sales of $22.7 million. However, the company's net loss of roughly $3.68 million was roughly in line with the loss that it posted in the prior-year quarter, and management announced that it would be pursuing a major new stock offering. 

A Bitcoin logo.

Image source: Getty Images.

So what

Investors responded negatively to Bitfarms' plans for a new at-the-market stock offering. The company announced that it had entered into an agreement with H.C. Wainwright to sell stock raising gross proceeds of up to $500 million. The prospect of a substantial number of new shares hitting the market appears to have spooked shareholders. Management has said that it intends to use the capital raised in order to fund operations, pay down debts, and carry out acquisitions. 

Now what

With a current market cap of roughly $785 million, it's not surprising that shareholders winced at the prospect of the proposed $500 million at-the-market offering. On the other hand, Bitfarms is still rapidly scaling up its mining capabilities, and the new capital should help it continue to pursue aggressive expansion goals. From the beginning of this year through the end of 2022, the company anticipates that it will have increased its mining capacity roughly eightfold. 

Keith Noonan has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Bitcoin. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Bitfarms Ltd. Stock Quote
Bitfarms Ltd.
$0.61 (-1.06%) $0.01
Bitcoin Stock Quote
$16,502.95 (-0.04%) $-6.53

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