MARA purchases 6,474 Bitcoin with convertible notes offering

Mining company MARA, formerly Marathon Digital, updated investors on November 27, outlining its acquisition of 6,474 Bitcoin (BTC) through its recent 0% $1 billion convertible note offering.

According to the announcement, the company purchased an additional 703 Bitcoin following the initial purchase of 5,771 BTC at an average price of $95,395 per coin. The year-to-date, per-share yield of MARA’s BTC is 36.7%, and MARA currently holds roughly 34,797 Bitcoin in its treasury, valued at approximately $3.3 billion.

MARA also purchased a portion of its 2026 notes for $200 million and will use the roughly $160 million remaining from the convertible debt raise to purchase more Bitcoin at more attractive levels during price dips.

The mining company’s recent $1 billion convertible debt offering takes a page out of MicroStrategy’s playbook of issuing corporate debt to acquire more BTC — a strategy that is growing in popularity among corporate institutions.

Related: Crypto miner MARA wants US moving quicker to gobble up Bitcoin

MicroStrategy’s Bitcoin treasury play

MicroStrategy has been purchasing Bitcoin since 2020. The company’s most recent debt raise was a $3 billion senior convertible note issue at 0% interest.

The capital raise is part of the company’s ambitious 21/21 plan to secure $42 billion in funding over the next three years to purchase more Bitcoin and strengthen its balance sheet.

Despite the plan to use fiat-denominated debt to acquire Bitcoin, and heightened investor interest in the company, the price of Microstrategy’s shares sank by approximately 25% on November 21, 2024.

The company purchased approximately 55,000 Bitcoin between November 18 and November 24 at an average purchase price of roughly $97,862 per BTC. This puts MicroStrategy’s total Bitcoin holdings at roughly 386,700 BTC — making the company one of the largest holders of Bitcoin.

However, MicroStrategy’s critics say the acquisition of Bitcoin through debt financing is a risky and unsustainable strategy — prompting some to question whether MicroStrategy is a bubble.

MicroStrategy could face financial trouble if the price of Bitcoin sharply declines, but won’t face repayment obligations until 2028 — which should provide the company with a long runway to mitigate short-term market downturns.

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