- Investors express worries over many BTC mining companies diluting their shares.
- The recent market downturn and BTC price decline have affected many mining companies’ operations.
- Investors worry the share dilution may affect the worth of their stakes in these companies.
Prolonged market imbalance and recent downturn have forced Bitcoin Mining Companies to dilute their shares, raising investors’ concerns, according to a Bloomberg report. While many mining companies see the dilution of their shares as a lifeline, investors aren’t that convinced.
The report details that BTC mining stocks’ meteoric positive performance has recently taken a nose dive. The 12 major publicly traded mining companies raised about $440 million in the second quarter through stock sales. Cumulatively, the companies have raised over $4.9 billion since the start of 2021, according to the report.
However, the bearish form of the stocks is a result of the recent downturn, which has seen BTC lose a significant percentage of its price this month. As a result, many of the stocks that saw increased interest, even from institutions in the traditional market, are in poor shape. Worse, the slew of crypto lending institutions that have collapsed since last year’s crypto winter means the company has few options to consider, with two of the largest mining companies having declared bankruptcy.
As per the report, diluting their shares, which means issuing more shares in addition to existing ones, is one of the lifelines for the companies. On the other hand, weary investors view the moves as a sign that the companies may be struggling, affecting their shares’ worth.
Expressing fears about the dilution, Mark Jeftovic, who holds stakes in several mining companies, said some of the mining companies are diluting shares at an excessive rate. “If they are diluting you faster than Bitcoin is going up, then you are going the wrong way on a treadmill,” he added.
However, confident investors believe the share dilution may not be negative, considering the current state of the market. To ease investors’ concerns, Marathon Chief Executive Officer Fred Thiel reassures that the company isn’t diluting shares to maintain operating expenses. Instead, he says the company has, in dire cases, been selling its Bitcoin holding to cover costs.
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