Marathon to Raise $250M via Convertible Notes for Bitcoin Purchase

The world’s largest Bitcoin mining company, Marathon Digital, announced plans to raise $250 million by issuing convertible senior notes. The company intends to use the proceeds primarily to expand its Bitcoin holdings and fund general corporate purposes, according to an official press release.

Details of the Offering And Marathon Strategic Bitcoin Acquisition

The notes will be offered to eligible institutional buyers under Rule 144A of the Securities Act of 1933. These notes are classified as senior obligations of the company and are unsecured.

This arrangement allows Marathon Digital to borrow money without putting up collateral, but it also means that holders would be among the first to be paid if the company were to face financial difficulties.

Notably, interest will be payable semi-annually from March 1, 2025, to September 1, 2031.

Additionally, institutional investors can purchase an additional $37.5 million principal amount of notes within 13 days of the initial issuance. Last year, Marathon Digital raised $750 million to ramp up its mining infrastructure and increase BTC mining rewards.

Following today’s announcement, Marathon’s stock experienced an 8.87% drop in pre-market trading, according to TradingView data.

Recent Bitcoin Purchases and Mining Capacity

The announcement comes after Marathon acquired $100 million worth of Bitcoin in late July, bringing its total holdings to over 20,000 BTC.

Today, we are announcing that MARA has purchased $100,000,000 worth of BTC. And effective immediately, we are once again adopting a full HODL strategy. Learn more about our #Bitcoin Strategic Reserve: pic.twitter.com/pYxiclOtQa

— MARA (@MarathonDH) July 25, 2024

This latest move is part of Marathon’s broader strategy to double its Bitcoin mining capacity in 2024, targeting a hash rate of 50 EH/s.

The company also plans to retain all Bitcoin mined in its operations and periodically make strategic open-market purchases of Bitcoin.

As of July 25, Marathon’s operations had achieved a hash rate of 24.7 EH/s, surpassing its competitors.

If the company reaches its 50 EH/s target, it will have more than doubled its hash rate since the beginning of 2024.

Marathon Digital’s decision to raise funds for Bitcoin acquisition comes amid a trend of firms raising funds to add Bitcoin to their balance sheets.

Many companies have reported gains from this strategy, citing macroeconomic conditions and other factors as motivations for holding the cryptocurrency.