Marathon Digital Holdings Launches $250M Convertible Notes Offering

Marathon Digital Holdings Inc. is conducting a private offering of its convertible senior notes, for which it wants to raise $250 million.

Marathon Digital Holdings Inc. is offering convertible senior notes in a private offering to raise $250 million for increasing its Bitcoin holdings and other business strategies, a move that may also boost the cryptocurrency’s price in the short term.

The company is offering the notes to qualified institutional buyers, according to a statement late Monday. The notes are due Sept. 1, 2031, and will constitute unsecured senior obligations of the company.

Interest on the notes will be computed semi-annually, due, and payable on March 1 and Sept. 1 of each year, commencing March 1, 2025. The company may also grant the initial purchasers a 30-day option to purchase additional notes having an aggregate principal amount of up to $37.5 million immediately after the first issuance.

The notes are redeemable, at Marathon’s option, in whole or from time to time in part, for cash, Marathon common stock, or a combination of the two as the company decides. Marathon may redeem the notes beginning Sept. 6, 2028, so long as at least $75 million is outstanding. Note holders will have the right to cash buyback on March 1, 2029.

Marathon can use the proceeds from the offering for working capital, capital expenditures, and general corporate purposes, which may include acquiring additional Bitcoin or other digital assets. The company said it also plans to use a portion of the proceeds to repay outstanding indebtedness under its revolving credit facility.

“This offering enables strategic growth and diversification,” said Peter Thiel, CEO of Marathon, in the statement.

Marathon’s larger strategy involves enhancing its position in the Bitcoin market. The company’s goal is to continue increasing its digital asset holdings and expanding its mining operations, according to the statement.

The company began 2024 with a goal of producing 78 exahashes per second by the end of the year. It recently announced that it had achieved an operational hash rate of 103 EH/s in January, putting it on track to reach 133 EH/s by mid-2025.

Bitcoin was trading around $42,274 by late Monday, showing a gain of 1.3% over the past 24 hours, according to data from CoinDesk. The cryptocurrency is up more than 40% year to to-date.

Convertible bonds made a comeback in 2024 amid increased interest rates and a pickup in corporate deal flow. These bonds combine the features of a bond investment with the possibility of equity-like returns, which is helpful in a turbulent economy.

Convertible bonds as a type of security are becoming more popular on the global market, with the United States experiencing high activity, according to Dealogic. In 2024, the total volume of convertible bonds issued in the U.S. reached $126 billion, marking a significant increase from the previous year.

Bitcoin is also being integrated into the strategic reserves of more firms. Some big companies that have embraced Bitcoin include MicroStrategy Inc. and Tesla Inc. as part of their financial plans. The prospect of Bitcoin drives this trend as a store of value and an inflation hedge in a world of increasing economic risk.

One industry analyst saw the move as a sign that corporate America is becoming more confident in Bitcoin, which in turn might help to stabilize its price.

“Marathon’s actions could be an indication of enhanced corporate confidence in the cryptocurrency, thereby boosting its market value,” the analyst told CoinDesk.

The cryptocurrency market has grown tremendously in 2024, with Bitcoin’s price rising by more than 40%. This bullish trend has been influenced by several factors, including the Federal Reserve’s pivot on interest rates and the increasing demand for digital assets as an alternative investment class.

Marathon’s move to join the league of firms investing in Bitcoin was made when the digital currency was enjoying a bullish trend. This may, in turn, lead to more corporations embracing and investing in Bitcoin as an asset, thus making the market more stable and giving Bitcoin more value.

As more people access Bitcoin through products like spot ETFs, they assist corporations in managing their Bitcoin investments and overcoming barriers like accounting rules and price fluctuations.

According to a financial strategist, Marathon’s heavy investment can stabilize the Bitcoin market. “As more companies like Marathon are likely to commit more of their resources to Bitcoin, it may help establish the cryptocurrency as a standard financial asset, offering an excellent risk-reward proposition for institutional investors.”

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