Marathon
Digital Holdings, the largest publicly listed Bitcoin (BTC) miner on Wall
Street (NASDAQ: MARA), has successfully closed a $300 million offering of
convertible senior notes and used a significant portion of the proceeds to
purchase Bitcoin.
Marathon Acquires $249
Million in Bitcoin
The company
issued 2.125% convertible senior notes due 2031 in a private offering to
qualified institutional buyers. The net proceeds from the sale amounted to
approximately $292.5 million after deducting initial purchasers’ discounts and
commissions.
MARA
announced that it had acquired approximately 4,144 Bitcoin for $249 million
between August 12 and August 14, 2024. The purchase was made at an average
price of $59,500 per Bitcoin, including fees and expenses.
MARA secures $300M through an oversubscribed offering of convertible senior notes. With proceeds, we purchased 4,144 BTC (valued at approx. $249M), boosting our strategic bitcoin reserve to over 25,000 BTC. Learn more: pic.twitter.com/EKwKW6eSny
— MARA (@MarathonDH) August 14, 2024
Marathon
Digital plans to use the remaining proceeds from the note offering for
additional Bitcoin acquisitions and general corporate purposes, including
potential strategic acquisitions and debt repayment.
“We
currently own and operate approximately 54% of the 1.1 gigawatts of power in
our diversified portfolio of digital asset compute,” commented Fred Thiel,
MARA’s Chairman and CEO. “We will continue making owned and operated sites a
greater percentage of our fleet over time and expect to see cost savings on a
cost per petahash basis as this occurs. Longer-term, our intention is to be
amongst the lower cost operators in the industry.”
The company
is currently the largest cryptocurrency miner on Wall Street, with a market
capitalization of nearly $6 billion. Clean Spark (NASDAQ: CLSK), which is in
second place, is almost half its size. The market capitalization would have
been higher if not for recent declines, which were triggered by a $138 million
penalty imposed on the company by a court.
The
verdict, issued in federal court, found that Marathon violated a non-disclosure
and non-circumvention agreement with Michael Ho, the Director of Strategy at
Marathon’s direct competitor, Hut 8.
Marathon addressed
the issue, stating that while they respect the decision, they are convinced
that “the jury reached the wrong conclusion.”
“There
was no wrongdoing on the company’s part,” Marathon Digital commented in a statement
sent to Finance Magnates. “We also believe that the damages awarded
have no legal basis. We intend to challenge this verdict and commence the
appeal process as soon as practicable.”
Miners Defy Halving Odds
Despite the recent halving event, the mining industry remains generally robust. This week, two other Wall Street miners, HIVE Digital and TeraWulf, reported strong quarterly performances despite the downturn in BTC prices.
HIVE Digital Technologies disclosed a quarterly revenue of $32.2 million, with $29.6 million generated from digital currency mining and an additional $2.6 million from high-performance computing (HPC) operations. On the other hand, TeraWulf recorded a revenue of $35.6 million for Q2 2024, marking a 130.2% increase compared to the same period last year. The company’s gross profit, excluding depreciation, climbed to $21.7 million, complemented by an Adjusted EBITDA of $19.5 million.
MARA’s Convertible Notes
The
convertible notes, which will mature on September 1, 2031, offer holders the
option to convert them into cash, shares of Marathon Digital’s common stock, or
a combination thereof at the company’s discretion. The initial conversion rate
is set at 52.9451 shares per $1,000 principal amount, equivalent to a
conversion price of approximately $18.89 per share.
Our latest blog post: Capitalizing on Market Opportunities: @MarathonDH Strategic Bitcoin Acquisition Through Long-term Convertible Debt $MARAhttps://t.co/ke5qsbDBIv https://t.co/UJ1S4sGckF
— Robert Samuels (@RobSamuelsIR) August 14, 2024
The company
has built-in flexibility with these notes, retaining the right to redeem them
for cash on or after September 6, 2028, subject to certain conditions.
Noteholders, on the other hand, may require Marathon Digital to repurchase
their notes on March 1, 2029, or upon specific fundamental change events.
This latest
move by Marathon Digital underscores the growing trend of public companies
investing in cryptocurrencies as part of their treasury management strategies.
It also highlights the continued interest in Bitcoin despite its price
volatility.
As of the
close of trading on August 15, 2024, Marathon Digital’s stock (MARA) was
trading at $15.14, down 2.26% for the day.
This article was written by Damian Chmiel at www.financemagnates.com.
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