Riot Platforms Joins Crypto Firms in Debt-Fueled Bitcoin Buying

Key Takeaways

• Riot Platforms seeks to raise $500 million through a convertible note offering.
• The primary purpose of these funds is to acquire additional Bitcoin.
• Riot joins MARA, MicroStrategy, and Metaplanet in utilizing convertible notes to finance Bitcoin purchases.

Riot Platforms is doubling down on Bitcoin (BTC). The mining giant is launching a $500 million convertible note offering to expand its treasury.

The move comes as a growing number of companies in the crypto industry are turning to debt financing to buy more Bitcoin.

Riot Launches Note Offering

Riot Platforms plans to offer $500 million in aggregate principal amount of convertible senior notes due 2030 through a private placement.

The offering will be reserved for institutional investors, and the initial purchasers will be granted a three-day option to buy up to an additional $75 million in aggregate principal amount of the notes.

The offering’s completion, timing, and terms are uncertain and contingent on market and other conditions.

Riot plans to use the proceeds from the offering to acquire additional Bitcoin and for general corporate purposes.

How Notes Work

The investors can ask to convert the notes into cash, Riot‘s common stock, or a combination of both, as Riot determines.

Conversion prior to June 15, 2029, will only be allowed under certain conditions and within specified timeframes.

After that date, conversion may occur at any time until the second trading day before their maturity.

Riot anticipates that the reference price used to calculate the initial conversion price will be based on Riot‘s common stock’s U.S. composite volume-weighted average price until the Market Center Official Close on the pricing date.

The Convertible Notes Strategy

Riot Platforms is the latest in a series of crypto-focused companies leveraging convertible notes to fund Bitcoin purchases.

MARA, the largest publicly traded Bitcoin mining company, also recently expanded its convertible notes offering from $700 million to $1 billion.

More than half of the proceeds from its previous $1 billion note issuance were used to purchase Bitcoin.

Similarly, MicroStrategy announced plans to issue $1.75 billion in 0% convertible senior notes maturing in 2029.

It also provided an option for initial purchasers to acquire an additional $250 million in notes.

Metaplanet, a company listed on the Tokyo Stock Exchange, revealed plans to issue 1.75 billion yen (approximately $11.3 million) in one-year bonds at a 0.36% interest rate. The company will use proceeds for Bitcoin acquisitions.