A stock traded bitcoin miner, Digihost Technology, has announced a shares buyback program after the price more than crashed.
In the first buyback ever by a crypto company, Digihost announced they are to buy about 5% of the outstanding shares.
The company has 27,685,913 subordinate voting shares issued and outstanding, worth about $30 million, with it to purchase 1,219,762 shares.
Each share is currently going for about $1.4, down from $7.5 in November in one of the biggest plunge amid a market rout.
In their recent quarterly report they announced a profit however of half a million on revenue of $7.3 million.
Their profits are up 125% over Q1 2021, and revenue increased 53%. Even while bitcoin’s price has fallen therefore, they’ve managed to more than keep up.
“Digihost is commencing the Bid because it believes that from time to time the market price of its subordinate voting shares may not fully reflect the underlying value of the Company’s business, and that the repurchase of its subordinate voting shares at those times would be in the best interests of its shareholders,” said Michel Amar, Chairman and CEO of Digihost,
“Additionally, the Company has recently reduced its outstanding debt by USD $2M and intends to be completely debt free within the next 12 months,” he added.
At a simple valuation of 10x revenue, DGHI should be at a marketcap of $70 million. At 100x profits, that would make it $200 million.
But instead they seem to be priced based on the direct movements of bitcoin with it down more than BTC in a potential indication that there’s some market inefficiency in this still very new space of crypto stocks.
The buyback is to begin on May 25th, next Wednesday, with a mandate for it to last as much as an entire year.
What that will do to price remains to be seen, but finally we’re seeing the other side of crypto stocks where profits go to shareholders.