- Shares in Hut 8 Mining (HUT) have fallen more than 32 per cent today as the recent surge in Bitcoin’s value comes to a grinding halt
- Bitcoin fell more than 20 per cent on Monday after soaring to record highs of of almost US$42,000 (C$53,600) in recent months
- Hut 8 had hoped to capitalise on the rally by raising up to C$77.5 million in an institutional placement
- The proceeds will be used to carry out infrastructure expansion, equipment purchases and the repayment of debt
- Hut 8 Mining is currently down 32.15 per cent to C$5.74 per share
Hut 8 Mining (HUT) has fallen more than 32 per cent today as the recent surge in Bitcoin’s value comes to a halt.
In its worst crash since March, Bitcoin fell more than 20 per cent on Monday from its recent high of almost US$42,000 (C$53,600), wiping almost US$10,000 (C$12,700) off its value.
While the drop doesn’t appear to be tied to a single event, many believe it’s as a result of simple profit taking. However, with a second impeachment of U.S. President Donald Trump on the cards, theories have also surfaced about a rise in general economic uncertainty.
Ethereum also fell 12 per cent, and smaller coins like XRP and Litecoin each dropped around 18 per cent. As a result, almost US$140 billion (C$178.75 billion) was shed from the collective cryptocurrency market cap, which tipped over US$1 trillion (C$1.28 trillion) for the first time last week.
Hut 8 had hoped to capitalise on Bitcoin’s rally by unveiling a C$77.5 million institutional placement this morning.
Under the terms of the offering, the Toronto-based Bitcoin miner said it would issue 15.5 million common shares at a price of C$5.00, each of which will come with one-half of a share purchase warrant.
Each whole warrant will entitle the holder to purchase an additional share at a price of C$6.25 over a period of two years from the date of issuance.
Hut 8 said the proceeds will be used for various corporate purposes, including infrastructure expansion, equipment purchases and the repayment of debt.
“Hut 8 is pleased to have been able to raise such a significant amount of capital from new U.S. institutional investors and is excited for its continued growth,” said Jaime Leverton, CEO of Hut 8 Mining.
While the resurgence in Bitcoin has helped to position it as more of a mainstream investment asset, many remain skeptical of its reliability.
Michael Hartnett, chief investment strategist at Bank of America Securities, noted that the cryptocurrency’s significant rally during the last half of 2020 may be another case of speculative mania, adding that it could be “the mother of all bubbles.”
He said the “violent” inflationary price activity that has boosted Bitcoin’s value in recent months “blows the doors off prior bubbles,” such as the Dotcom boom, China in the 2000s, and gold in the 1970s.
Hut 8 Mining is currently down 32.15 per cent to C$5.74 per share at 12:56pm EST.