Bitfarms increased its convertible loan from $300 million to $500 million to fund new projects. The company sought extra cash to pay for upcoming builds, but the stock fell as much as 19% on the same day, pressuring anyone holding the shares directly or via funds. Investor demand drove the upsizing even as traders focused on potential dilution.
The notes are senior debt paying 1.375% annually and maturing in 2031. Each $1,000 of principal may be exchanged into 145.6876 common shares, which equals about $6.86 per share according to the prospectus. A convertible note is an IOU that also gives the lender the right to turn the loan into stock later if the holder chooses.
Buyers snapped up the paper, prompting underwriters to raise the size, but traders fixated on the prospect of more shares appearing later. That fear reversed an 80% rally the stock had enjoyed during the prior month, turning momentum despite the company’s stronger cash position.
To limit dilution, Bitfarms purchased “capped call” contracts. These calls act like insurance by setting a ceiling on how high the conversion economics can go, thereby capping how many new shares the company must deliver, with the cap near 125% of the share price when the deal priced.
Management plans to use proceeds to build high-performance computer halls and add AI-focused gear. The firm will shift some power and machines away from Bitcoin mining toward AI work in pursuit of new revenue streams.
Stakeholders and implications
Different market participants read the same deal through their own risk-reward lens, shaping near-term trading and longer-term positioning.
Bitfarms exits the deal with a fuller wallet and a clear plan to chase AI revenue, while shareholders weigh that long-term promise against the near-term threat of a larger share pool. The next tests are whether the capped calls work as intended and whether new AI hardware earns its keep before 2031.
