Bitcoin mining company MARA announces its intention to secure $850 million to expand its Bitcoin holdings. This announcement has caused a significant drop in MARA's stock price.
American Bitcoin miner MARA (formerly Marathon Digital) has announced a significant move to bolster its Bitcoin holdings. The company is raising $850 million through a private sale of zero-coupon convertible senior notes due in 2032, primarily to finance new Bitcoin purchases and partially repurchase existing debt.
The offering, targeted at qualified institutional buyers, includes an option for initial purchasers to buy an additional $150 million in notes shortly after issuance. The notes carry no regular interest, are unsecured senior obligations, and can be converted into cash, MARA common stock, or a combination thereof.
The funds raised will see about $800 million allocated to expand MARA's Bitcoin holdings, while up to $50 million will be used to repurchase 1.00% convertible notes due in 2026. This strategic purchase aligns with MARA's long-term corporate treasury approach to hold more Bitcoin on its balance sheet.
The Bitcoin mined by MARA is obtained through processing transactions on the Bitcoin network. As of Wednesday, MARA's stock was trading down more than 10%, at $17.80 per share, following the announcement. However, it's worth noting that MARA currently has 50,000 BTC ($5.9 billion at today's prices) on its balance sheet, making it the second-largest corporate holder of Bitcoin, according to Bitcoin Treasuries data.
The sale of senior convertible notes is a strategy used to raise capital without diluting the company's existing shareholders. MARA has implemented a capped call structure to mitigate potential shareholder dilution. The company's strategy is not to sell its crypto holdings and claims it never wants to sell new coins.
This move by MARA underscores the belief that Bitcoin's value will increase over the long term, providing better returns for shareholders. It's important to note that Bitcoin was recently trading for $117,782, experiencing a 1% decrease over a 24-hour period, according to CoinGecko.
The private offering by MARA is not aimed at retail investors, but rather at institutional buyers. Despite the recent decline, MARA has seen a growth of more than 25% over the last month. The funds raised through this offering will be used by MARA to buy more Bitcoin, strengthening its position in the digital infrastructure and mining sector.
- American Bitcoin miner MARA, following its announcement to raise $850 million through the sale of senior convertible notes, plans to allocate approximately $800 million towards expanding its Bitcoin holdings.
- The technology-driven finance industry continues to evolve, with MARA's strategic purchase of Bitcoin aligning closely with its long-term corporate approach to hold more crypto on its balance sheet.
- Besides financing new Bitcoin purchases, MARA is partaking in the ico (initial convertible note offering) to repurchase up to $50 million of its existing 2026 convertible notes.
- The company's belief in cryptocurrency's long-term value is further highlighted by its commitment to not sell its crypto holdings, maintaining its position as a major player in the Bitcoin mining sector.
