MARA Holdings prepares next Bitcoin purchase
By Tristan
MARA Holdings, the public company with the second largest Bitcoin holdings, announced today that it intends to raise further capital by issuing convertible bonds to buy Bitcoin.
Specifically, the listed mining company wants to issue convertible bonds for 700 million US dollars, with a call option for a further 105 million US dollars. The securities, which carry an interest rate of 0 percent, will mature in 2031.
MARA intends to use USD 50 million of the proceeds to redeem outstanding convertible bonds early. The remaining funds will be used for the acquisition of additional Bitcoin and general corporate purposes.
MARA steps up a gear
Two weeks ago today, MARA announced that it would issue convertible bonds for up to 805 million US dollars at an interest rate of 0%. Shortly afterwards, the stock corporation increased the amount to 1 billion US dollars due to the high demand for the securities.
The majority of the funds went into Bitcoin purchases. MARA bought 5,771 BTC for more than 550 million US dollars - Blocktrainer.de reported. Shortly afterwards, the company announced that it had purchased a further 703 BTC with the proceeds, bringing the total to just under USD 620 million for the purchase of 6,474 BTC.
Due to the high demand for convertible bonds from companies pursuing a Bitcoin strategy, it is to be expected that the securities will be snatched out of MARA's hands and that the supply will even increase.
Convertible bonds allow lenders to participate in the success of a share with limited risk. At the maturity date of the securities, holders can receive back either a predefined number of company shares or the original loan amount. If the share performs well, this can be a rewarding deal, especially as if the share performs poorly, the downside is limited - provided the company remains solvent.
MARA currently holds around 34,794 BTC with a current value of just over 3.3 billion US dollars.
MicroStrategy, the largest corporate holder of Bitcoin, which has been using this type of capital raising method for Bitcoin purchases for some time, has a holding more than ten times as large.
For the CEO of MARA Holdings, Fred Thiel, MicroStrategy founder Michael Saylor seems to be a great inspiration.
In the announcement for the new convertible bond issue on the 𝕏 platform, Thiel tagged his supposed idol. Saylor responded by saying that the only thing better than Bitcoin is more Bitcoin.
The only thing better than bitcoin is more #bitcoin.
- Michael Saylor⚡️ (@saylor) December 2, 2024
Addendum
As expected, MARA Holdings' convertible bonds were oversubscribed. Accordingly, the company is increasing the offer to up to 1 billion US dollars. MARA announced this in a press release on the evening of December 2.
It also states that the lenders can exchange the 1,000 US dollar securities for 28.9159 MARA shares. For this to be a worthwhile transaction, the share price must be quoted above 34.58 US dollars at the time of expiry, which would mean a price increase of more than 35% from the current level.
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