Marathon buys $250 million worth of Bitcoin

Marathon Digital Holdings (MARA), the largest publicly traded mining company in the sector, has purchased approximately $249 million worth of Bitcoin (BTC). The move comes after the company made a $300 million senior notes offering.

In other words, Marathon issued debt in the market to increase its Bitcoin cash even with the market downturn. The strategy is similar to that adopted by other companies, such as MicroStrategy and the Japanese Metaplanet.

Marathon raises debt to buy Bitcoin

According to the company, which announced the purchase on Wednesday (14) August, Marathon (ticker: MARA) announced the completion of a private offering of convertible senior notes. The papers offer interest of 2.125% and mature in September 2031.

Only qualified institutional investors were allowed to participate in the offering, in accordance with Rule 144A of the Securities Act of 1933. However, the restriction did not prevent high demand for the notes, which quickly sold out.

In addition to the $250 million sale, Marathon also offered an additional $50 million in notes. Investors have taken a big gamble on the company and have also purchased all of these options.

This brings the total supply to $300 million, with net proceeds of approximately $292.5 million after deducting discounts and commissions. This means Marathon still has $42.5 million worth of BTC to purchase.

Between August 12 and 14, Marathon Digital used part of the proceeds to purchase approximately 4,144 BTC at an average price of $59,500 each. This purchase increased the company’s strategic Bitcoin reserve to over 25,000 BTC.

This recent accumulation follows a previous one in July, where the company secured 2,282 BTC valued at $124 million. The company plans to use the remaining funds for more Bitcoin purchases and general corporate purposes, which could include strategic acquisitions, asset expansion, working capital, and debt repayment.

Understand the offer

Beginning September 6, 2028, Marathon has the option to redeem the notes for cash if its stock price reaches at least 130% conversion within a defined period.

On the other hand, noteholders have the right to require Marathon to repurchase all or part of their notes for cash on March 1, 2029. But the company can convert part or all of the value of the notes into shares.

Until March 1, 2031, Marathon will allow conversion under certain conditions and during specific periods. However, after that date, conversion can occur at any time up to two business days before the due date.

Finally, the company set the initial conversion rate at 52.9451 common shares per $1,000 principal amount, equivalent to approximately $18.89 per share, with the rate subject to adjustments based on the occurrence of certain events. At the time of writing, the mining company’s shares are worth $16.05.

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