Why Bitmine Immersion Technologies Sank by 10% on Monday

Key Points

• The ethereum-loving crypto company is pushing hard to be a major holder of a top coin.

• It continues to raise significant capital to aid it in this effort.

• 10 stocks we like better than Bitmine Immersion Technologies ›

Bitmine Immersion Technologies (NYSEMKT: BMNR) didn't have timing on its side with its latest round of capital raising. The cryptocurrency mining and holding company that concentrates on Ethereum saw its share price sag by more than 10% on Monday after it provided details of a share sale. That came on a trading day when the S&P 500 index closed up by 0.4%.

A big share and warrant sale

That morning, Bitmine divulged that it signed a purchase agreement for an institutional investor to buy slightly over 5.2 million shares of its common stock. That investor, which the company did not identify, is paying $70 per share for the stock.

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It is also receiving warrants to buy an additional pack of up to 10.4 million-plus shares at an exercise price of $87.50 apiece. Bitmine wrote that the "Potential future aggregate proceeds from the warrants represent approximately $913 million from cash exercises."

All told, the company added, the total take from these issues could be roughly $1.28 billion.

Future 5% holder?

Bitmine has set a goal of acquiring 5% of total available Ethereum. Helpfully, and also on Monday, it offered an update on its holdings of the popular cryptocurrency. It wrote in a press release that its portfolio of Ethereum now tops 2% of supply.

That amount has ramped up quite considerably of late. Fueled by $20 billion in equity financing, in late August, the company snapped up almost 200,000 Ethereum. Prior to that buy-in, Bitmine held less than 1%.

Unfortunately for the company, its twin announcements came on the heels of a broad cryptocurrency sell-off this past weekend, which leaked into Monday trading. Timing is often critical in the ever-volatile cryptoverse; the bright side of this is that investor sentiment on Bitmine could improve quite drastically once Ethereum starts to head north in value again.

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Eric Volkman has positions in Ethereum. The Motley Fool has positions in and recommends Ethereum. The Motley Fool has a disclosure policy.