Bitfury Group Commences Next Step of Non-Dilutive Distribution of Cipher Mining Inc. Shares

Rhea-AI Summary

Bitfury Group has announced the allocation of approximately 18.5 million shares in Cipher Mining, Inc. (NASDAQ:CIFR) to a share reserve for Bitfury's employees, consultants, and advisors. Bitfury plans to sell about 9.2 million shares on the open market, remitting the proceeds to beneficiaries periodically. This strategic sale aims to reduce Bitfury's ownership concentration in Cipher and increase the free float of CIFR stock. Post-sale, Bitfury's ownership in Cipher will drop from 22.1% to 19.1%. The remaining 9.3 million shares will benefit other Bitfury beneficiaries, as decided by management. This move is expected to strengthen Cipher's market positioning and reward Bitfury's contributors.

Positive

• Allocation of 18.5 million shares to Bitfury beneficiaries demonstrates a commitment to rewarding contributors.
• Strategic sale of 9.2 million shares aims to reduce Bitfury's ownership concentration, potentially increasing market liquidity.
• Bitfury's post-sale ownership in Cipher drops to 19.1%, diversifying its stake and reducing control.
• Increase in Cipher's free float from 61.7% to 64.6% could attract more investors.
• CEO's statement reflects bullish sentiment on the mining sector and future opportunities for Cipher.

Negative

• Sale of shares by Bitfury could create pressure on CIFR stock price.
• Potential dilution of ownership for existing shareholders not involved in Bitfury's incentive plans.
• Uncertainty surrounding the timing and impact of share sales on the open market.
• Bitfury's control and involvement in share discretion may lead to future governance issues.

Insights

Financial Analyst

Bitfury Group's decision to allocate and begin a strategic distribution of 18.5 million shares of Cipher Mining Inc. is notable for a few reasons. Firstly, the non-dilutive nature of this distribution means it won’t introduce more shares into the market, which could otherwise dilute the value of existing shares. Instead, it merely reallocates existing shares, maintaining overall share quantity.

In terms of free float, this move increases the number of shares available for trading by 9.2 million shares, thus enhancing liquidity. Increased liquidity can often lead to reduced stock price volatility, making it more attractive for investors. However, the gradual selling strategy—up to 5% of Cipher’s 30-day average daily trading volume—indicates Bitfury's intent to avoid market disruption. This controlled approach helps mitigate any potential sharp declines in Cipher's stock price from sudden, large block sales.

Bitfury’s reduction in ownership from 22.1% to 19.1% (excluding the shares held by V3 Holding Limited) might be perceived as a significant strategic shift. This divestment could be seen as Bitfury aiming to diversify its assets or reduce risk exposure associated with holding a substantial share of Cipher. For retail investors, understanding this context is key: while reducing concentrated ownership can indicate reduced interest or satisfaction with the investment, it also reflects strategic rebalancing. Long-term investors should consider if this move aligns with Bitfury's overall corporate strategy and market conditions.

Tech Expert

Bitfury’s distribution of Cipher Mining shares comes in an environment where blockchain technology and cryptocurrency mining are gaining traction yet facing regulatory uncertainties. By reallocating shares to employees, advisors and consultants, Bitfury incentivizes its key stakeholders, potentially leading to enhanced innovation and commitment within the company. This employee-centric move could foster a culture of dedication and long-term engagement, important for a tech company operating in such a rapidly evolving sector.

Moreover, the blockchain and crypto mining sector's performance heavily depends on technological advancements and regulatory developments. Bitfury's distribution plan and its CEO's bullish stance on mining suggest a strategic bet on the sector's growth. However, investors should be aware of the inherent volatility and the regulatory scrutiny faced by this industry. The strategic divestment indicates confidence but also a desire to hedge against potential risks. For retail investors, it’s important to monitor how Bitfury and Cipher navigate these industry-specific challenges and capitalize on emerging opportunities.

AMSTERDAM, May 16, 2024 /PRNewswire/ -- Bitfury Group ("Bitfury" or the "Company"), a leading full-service blockchain technology company, today announced that it has allocated the remaining part of approximately 18.5 million shares held by Bitfury in Cipher Mining, Inc. (NASDAQ:CIFR) ("Cipher") in accordance with plans that were previously outlined into a share reserve for the benefit of both current and former Bitfury employees, consultants, and advisors (or "Bitfury Beneficiaries") who participate in long term incentive plans maintained by Bitfury.

Subject to the ongoing discretion of Bitfury's management, Bitfury expects to sell from time to time approximately 9.2 million shares of Cipher's common stock allocated to the share reserve on the open market and plans to proportionally remit cash proceeds from such sales, if any, to certain of the Bitfury Beneficiaries on a periodic basis. Bitfury expects to sell these shares strategically over the next few months, in quantities up to 5% of Cipher's trailing 30-day average daily trading volume on each particular day of sale. The other part of approximately 9.3 million shares of Cipher's common stock included in the share reserve has been allocated for the benefit of the remaining Bitfury Beneficiaries and is expected to be disposed for the benefit of, or transferred, in whole or in part, to, the remaining Bitfury Beneficiaries at the discretion of Bitfury management in the future.

Bitfury expects that this strategic divestment will have the added benefit of further reducing Bitfury's ownership concentration in Cipher and increasing the free float of Cipher's common stock. Presuming the sale in full of the approximately 9.2 million of the 18.5 million shares included in the allocation, Bitfury would beneficially own approximately 19.1% of Cipher's outstanding shares of common stock as of the date of this press release, or approximately 35.4% including the shares owned by Bitfury's majority shareholder, as demonstrated by the following table (share numbers in millions).

	Prior to proposed sale of approx.  9.2 million shares		Following proposed sale of approx. 9.2 million shares
	(shares)	( %)	(shares)	( %)
Bitfury	68.5	22.1 %	59.3	19.1 %
V3 Holding Limited (1)	50.3	16.2 %	50.3	16.2 %
Free Float	191.2	61.7 %	200.4	64.6 %
Total Shares Outstanding (2)	310.0	100.0 %	310.0	100.0 %

(1) V3 Holding Limited is the majority owner of Bitfury and may be deemed to share beneficial ownership of the common stock beneficially owned by Bitfury. The numbers presented in this row count only shares owned directly by V3 Holding Limited, excluding beneficial ownership of shares owned by Bitfury.

(2) Based on 310,029,275 shares of common stock outstanding as of May 6, 2024, as disclosed in Cipher's Quarterly Report on Form 10-Q filed with the SEC on May 7, 2024.

Val Vavilov, CEO of Bitfury, commented on today's news, "After the completion of this plan, we're glad that we will be able to reward both current and former employees, consultants, and advisers who helped us reach this point in Bitfury's journey and played a role in incubating Cipher. We remain bullish on the mining sector and believe with the strategic execution of this distribution Cipher will be well positioned to capitalize on the opportunities ahead."

About Bitfury
Bitfury is the world's leading full-service blockchain technology company. Since our founding in 2011, Bitfury has built on its heritage as one of the earliest Bitcoin miners and providers of Bitcoin mining equipment to develop a suite of infrastructure products and services that power the Web 3.0 ecosystem and make digital assets safe, sustainable, and useful. From hardware to security to software, our businesses leverage today's cutting-edge technologies to solve the most pressing challenges of tomorrow.

To learn more about Bitfury, please visit https://bitfury.com/

Forward Looking Statements

This press release contains certain forward-looking statements within the meaning of the federal securities laws of the United States. Any statements made in this press release that are not statements of historical fact, including statements about the Company's plans and intentions regarding its ownership of Cipher common stock, sales of Cipher common stock, and allocations of Cipher common stock, and statements about our beliefs and expectations regarding Cipher's future results of operations and financial position, business strategy, and timing and likelihood of success, are forward-looking statements and should be evaluated as such. Forward-looking statements include information concerning possible or assumed future results of operations, including descriptions of our business plan and strategies. These forward-looking statements can sometimes be identified by the words "may," "expects," "intends," "believes," "future," "prospects," and similar expressions (including the negative versions of such words or expressions).

These forward-looking statements are based upon estimates, assumptions, expectations, projections and beliefs as of the date of this press release that, while considered reasonable by the Company and our management, are inherently uncertain. Such forward-looking statements are subject to risks, uncertainties, and other factors that could cause actual results, performance or achievements to differ materially from the results, performance or other expectations expressed or implied by such forward looking statements. New risks and uncertainties may emerge from time to time, and it is not possible to predict all risks and uncertainties. Many factors could cause actual future events to differ materially from the forward-looking statements in this press release, including but not limited to the risks and uncertainties described in the

"Risk Factors" section of Cipher's Annual Report on Form 10-K filed with the Securities and Exchange Commission ("SEC") on March 5, 2024, and in Cipher's subsequent filings with the SEC. These filings identify and address other important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statements. Forward-looking statements speak only as of the date they are made. Readers are cautioned not to put undue reliance on forward-looking statements, which speak only as of the date they are made. The Company assumes no obligation and, except as required by law, does not intend to update or revise these forward-looking statements, whether as a result of new information, future events, or otherwise.

Bitfury Media Contact
bitfury@mgroupsc.com 

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SOURCE Bitfury

FAQ

What is the impact of Bitfury's sale of CIFR shares?

Bitfury's sale aims to reduce ownership concentration and increase CIFR's free float, potentially enhancing liquidity but also creating pressure on the stock price.

How many CIFR shares will Bitfury sell?

Bitfury plans to sell approximately 9.2 million CIFR shares over the next few months.

What is the expected reduction in Bitfury's ownership in Cipher Mining?

Bitfury's ownership in Cipher Mining is expected to decrease from 22.1% to 19.1%.

Who will benefit from the sale of CIFR shares by Bitfury?

Proceeds from the sale will benefit current and former Bitfury employees, consultants, and advisors participating in Bitfury's long-term incentive plans.

What is the current free float of CIFR stock and how will it change?

The current free float of CIFR stock is 61.7%, which is expected to increase to 64.6% following the sale.

What is the significance of increasing CIFR's free float?

Increasing CIFR's free float can attract more investors by improving liquidity and marketability of the stock.