Key Takeaways
- MARA, a leading public Bitcoin mining company, is planning a $2 billion stock sale and using proceeds to buy more BTC.
- MARA’s latest strategy mimics Strategy’s BTC buying plans.
- Strategy’s continued debt offering to buy more BTC has started to garner criticism.
Marathon Digital (MARA), the largest public Bitcoin mining company, is planning a massive $2 billion stock selling spree, a playbook used by Strategy, formerly MicroStrategy, to expand its Bitcoin treasury for years.
MARA is currently the second largest public Bitcoin holding company after Strategy.
MARA’s SEC Filing Shows $2 Billion Bitcoin Buying Plan
According to a Mar. 28 8-K filing with the Securities and Exchange Commission (SEC), the Florida-based Bitcoin miner is partnering with several major investment firms, including Cantor Fitzgerald and Barclays, to sell up to $2 billion worth of its stock “from time to time” under a new at-the-market offering.
“We currently intend to use the net proceeds from this offering for general corporate purposes, including the acquisition of bitcoin and for working capital,” MARA added.
MARA currently holds over 46,000 Bitcoin worth around $4 billion, and its latest stock offering to buy more Bitcoin aligns with its HODL strategy, which calls for keeping mined BTC and using additional funds to buy more.
The mining firm launched a $1.5 billion ATM program last year and sold $1 billion in zero-coupon convertible notes in November to increase its Bitcoin holdings. However, just like Strategy, the mining firm is on a Bitcoin buying spree with no upper limit.
The BTC buying by public companies such as MARA and Strategy comes amid a market downturn that is nearing a two-month streak that started in February.
Strategy’s Bitcoin Playbook Faces Criticism
Michael Saylor founded Strategy in 1989 and is considered a pioneer in using Bitcoin as a treasury hedge asset. The firm started buying BTC in 2020 and hasn’t stopped since then.
The Fortune 500 company initially bought BTC using hard cash and surplus capital. Still, its hunger for more Bitcoin has caused the firm to issue convertible notes, debts, and preferable stocks to accumulate more BTC.
Since last October, the company has sold $17 billion of common stock, $5 billion of convertible bonds, and $1.6 billion in preferred face value.
Although the strategy was once lauded as a BTC glitch, now it is facing more criticism with each new offering.
The Financial Times has called its stock and debt offerings a Ponzi scheme, while critics have called out the loophole Strategy uses to fill its Bitcoin coffers.
Jacob King, Founder and CEO of WhaleWire, outlined how strategy issues debt or equity to buy BTC, which drives BTC’s price higher.
This increases MSTR’s market cap, boosts its index weight, and attracts more investors. With a higher valuation, it issues more equity to buy even more BTC.
“The cycle only works if BTC keeps rising. If BTC stalls or crashes (which it will), the loop collapses. This is unsustainable and is a giant Ponzi.” King said
On the other hand, Strategy founder Saylor has assured that his debts won’t be called as they are convertible debts that can be paid off even if BTC goes to zero.
Prashant Jha is a seasoned crypto journalist based in Delhi, India, with a Bachelor’s Degree in Computer Science Engineering. Passionate about the evolving world of blockchain and cryptocurrencies, he has been a dedicated voice in the industry since 2018. Prashant’s expertise lies in regulatory reporting, where he unravels complex legal and financial developments with clarity and precision. Before joining CCN in 2024, he honed his craft at Cointelegraph, establishing himself as a trusted name in crypto journalism.
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