Cipher Mining’s stock price has tumbled by 6% despite most of the bitcoin mining stocks are seeing small gains on Wednesday.
Cipher Mining opened the market with a 6% gain and reached $2.85, but its stock price began falling shortly after its major shareholder Bitfury issued a note about a share distribution plan. It is changing hands at $2.57 as of writing.
According to Bitfury’s statement and Cipher’s filing with the SEC, Bitfury has won its shareholders’ approval to distribute 16.1 million shares of Cipher to Bitfury’s Series C investors.
“Following this initial step, Bitfury is exploring the opportunity to distribute approximately 126 million shares of Cipher to Bitfury’s remaining shareholders as a second step,” Bitfury said in the note.
If the second step is complete, Bitfury would still retain 50 million shares of Cipher and its stake would be reduced from 75% to less than 20%.
Bitfury said the purpose is to “reduce ownership concentration and create a more diversified and normalized shareholder base for Cipher” but it appears the plan is not well received by market participants so far.
The equity distribution plan comes two months after Bitfury sold 10 million shares of Cipher at a price of $2.93. In the November statement, Bitfury said it was holding 192 million shares of Cipher, representing 75.37%. It entered into a 60-day lock-up period, under which it may not sell or transfer any shares before Jan. 15.