Today, crypto miner Bit Digital (NASDAQ:BTBT) is seeing some impressive price action. Unfortunately for investors in this Bitcoin (CCC:BTC-USD) mining play, this move is to the downside. Currently, BTBT stock is down more than 10% on a heavy volume day.
This move is a continuation of some rather bearish momentum for Bit Digital and its crypto-mining peers over the past month. Indeed, over the past month alone, BTBT stock has lost approximately half its value. That’s a rather steep decline in a short amount of time.
There are a number of reasons for this sector-specific decline. A number of crypto-mining crackdowns, most notably in China, have prompted investors to consider the digital-asset-mining space. Additionally, proof-of-stake validation models are surging in prevalence across the cryptocurrency sector. Accordingly, one has to wonder if proof-of-work mining will still be a thing over the long term.
Will bullish momentum finally return to the Bitcoin mining space? Or are investors looking for risk assets content with looking elsewhere? Time will tell.
Let’s dive into what’s behind today’s fall in Bit Digital.
BTBT Stock Down on Equity Offering
Today, Bit Digital announced a private placement to issue 13.5 million shares in a bid to raise $80 million. These shares will be issued alongside warrants for equity holders taking on the risk. The discount offered over where BTBT stock closed yesterday has led to today’s decline in Bit Digital’s stock price.
Any sort of large equity offering such as this sends a signal to the market. Typically, discounts are offered to entice private investors to take a piece of the action. However, investors may be wondering why public equity markets weren’t tapped for this raise.
In any case, Bit Digital will receive more liquidity as a result of this deal. While existing shareholders will be diluted, those bullish on the long-term outlook for Bit Digital may like the balance sheet room this deal provides.
The offering is expected to close Oct. 4, and investors appear to be bidding up shares from today’s lows. Indeed, BTBT stock has been a volatile one today, as investors look to price what the impact of this offering will be over the near-term stock price of this Bitcoin miner.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
