TLDR
- Bitfarms stock jumps, then dives after $300M convertible note reveal.
- New $300M debt raise fuels dilution fears and sharp after-hours drop.
- Convertible notes spark volatility as Bitfarms eyes growth funding.
- Investors react swiftly to Bitfarms’ bold 2031 note issuance plan.
- $300M note deal sends Bitfarms on a wild trading day of highs and lows.
Bitfarms Ltd. (NASDAQ/TSX: BITF) surged during regular trading hours, closing at $6.47 with a strong 9.85% gain. However, after-hours trading reversed the momentum sharply as the stock dropped 5.87%, ending at $6.09.
Bitfarms Ltd. (NASDAQ/TSX: BITF)
The sudden swing came after Bitfarms revealed plans for a significant capital raise through convertible senior notes.
The company intends to offer $300 million in convertible notes due 2031, adding pressure to the stock late in the day. It may also offer an additional $60 million in notes within 13 days of issuance, depending on purchaser interest. This offering remains subject to conditions including market stability and regulatory approvals from Nasdaq and the Toronto Stock Exchange.
BITF stated that the notes will be senior unsecured and bear interest semi-annually starting July 15, 2026. The maturity date is fixed at January 15, 2031, unless earlier converted, repurchased, or redeemed. Before October 15, 2030, the notes will only be convertible under specific terms and timeframes.
Structure and Terms of the Convertible Notes
The Convertible Notes will convert into cash, common shares, or a mix of both, at Bitfarms’ discretion. Final terms, such as interest and conversion rate, will be decided during pricing talks with the initial buyers. This structure may introduce future dilution but allows flexibility for Bitfarms in managing debt.
Bitfarms will use the proceeds for general corporate activities and to cover costs of hedging strategies. The company will enter into capped call transactions, reducing potential share dilution and limiting excess cash exposure upon note conversion. These hedging actions aim to protect Bitfarms while maintaining equity value.
Capped call transactions will involve buying derivatives linked to BITF shares, which may influence market prices. These counterparties may adjust hedges before maturity, potentially affecting common share values. Bitfarms highlighted that these adjustments could increase or lessen price fluctuations during conversion periods.
Regulatory Compliance and Offering Conditions
Bitfarms confirmed the notes and shares will not be registered under U.S. or Canadian securities laws. Sales in the United States will be limited to qualified institutional buyers under Rule 144A. Canadian offerings will comply with exemptions from prospectus requirements in applicable jurisdictions.
The company will rely on an interlisted issuer exemption under the Toronto Stock Exchange Company Manual. All securities involved will be subject to a statutory hold period under current legislation. Completion of the offering depends on approvals and prevailing market conditions, with no guaranteed timeline.
Bitfarms clarified that this announcement is not a formal offer or solicitation to buy or sell securities. The firm’s strategic focus remains on expanding its digital infrastructure while managing financial exposure. Market participants responded strongly to the news, driving notable stock volatility through the day and after hours.
