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.
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.
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.