MARA Ups Convertible Notes Offering to $850M as It Prepares To Buy More Bitcoin

Key Takeaways

• MARA upsizes its convertible note offering by $150 million, signaling confidence in its strategy.
• The expanded offering responds to strong investor demand, reflecting heightened interest in MARA’s growth plans.
• Following MicroStrategy’s lead, MARA uses debt financing to bolster its Bitcoin holdings.

Cryptocurrency mining firm MARA (formerly Marathon Digital) has increased its previously announced convertible note offering from $700 million to $850 million.

The convertible notes are currently offered through a private offering and will close by Nov. 20, later this week.

Mara To Use Majority Funds for BTC Purchase

MARA becomes the latest private firm to sell zero convertible notes to raise funds and use the proceeds to buy Bitcoin (BTC).

The convertible notes will mature by March 1, 2030, and can be converted into cash, shares of MARA’s common stock, or a combination of both at MARA’s discretion.

The initial conversion price is roughly $25.91, 42.5% more than MARA’s current stock price of $18.18. 

An estimated $833 million will be raised from the sale, of which $199 million will be used to buy back MARA’s $212 million in outstanding convertible notes due 2026. The remainder will be used for general business needs, asset expansion, and Bitcoin purchases.

Thus, MARA plans to invest nearly $600 million of the proceeds to buy additional Bitcoin, a strategy popularized by MicroStrategy and followed by Metaplanet.

The Infinite Money Glitch?

MicroStrategy was a pioneer in using debt issuance to fund its Bitcoin acquisitions, leveraging senior convertible notes to buy Bitcoin. The company now carries $4 billion in debt, while its stock has surged to a $43 billion valuation, with its BTC holdings surpassing $20 billion.

By issuing debt securities at premium prices and channeling the proceeds into Bitcoin, MicroStrategy has sparked what some call an “infinite money glitch” — a cycle where increasing BTC holdings boost the company’s stock value, in turn driving up its valuation. However, this strategy is not without risks. While it works in a bull market, the approach can falter during a bear market, where falling stock valuations can create challenges.

MicroStrategy is not the only company that employs this strategy. Other companies, like MARA, have followed suit, aiming to capitalize on the bull market. MARA, the second-largest publicly traded Bitcoin holder, boasts over 27,000 BTC. With the new convertible note offering, the company’s Bitcoin holdings could grow by more than $600 million.