Marathon Digital Holdings, the largest publicly listed Bitcoin (BTC) miner on Wall Street (NASDAQ: MARA), has successfully closed a $300 million offering of convertible senior notes and used a significant portion of the proceeds to purchase Bitcoin.

Marathon Acquires $249 Million in Bitcoin

The company issued 2.125% convertible senior notes due 2031 in a private offering to qualified institutional buyers. The net proceeds from the sale amounted to approximately $292.5 million after deducting initial purchasers' discounts and commissions.

MARA announced that it had acquired approximately 4,144 Bitcoin for $249 million between August 12 and August 14, 2024. The purchase was made at an average price of $59,500 per Bitcoin, including fees and expenses.

Marathon Digital plans to use the remaining proceeds from the note offering for additional Bitcoin acquisitions and general corporate purposes, including potential strategic acquisitions and debt repayment.

“We currently own and operate approximately 54% of the 1.1 gigawatts of power in our diversified portfolio of digital asset compute,” commented Fred Thiel, MARA's Chairman and CEO. “We will continue making owned and operated sites a greater percentage of our fleet over time and expect to see cost savings on a cost per petahash basis as this occurs. Longer-term, our intention is to be amongst the lower cost operators in the industry."

The company is currently the largest cryptocurrency miner on Wall Street, with a market capitalization of nearly $6 billion. Clean Spark (NASDAQ: CLSK), which is in second place, is almost half its size. The market capitalization would have been higher if not for recent declines, which were triggered by a $138 million penalty imposed on the company by a court.

The verdict, issued in federal court, found that Marathon violated a non-disclosure and non-circumvention agreement with Michael Ho, the Director of Strategy at Marathon's direct competitor, Hut 8.

Marathon addressed the issue, stating that while they respect the decision, they are convinced that “the jury reached the wrong conclusion.”

“There was no wrongdoing on the company’s part,” Marathon Digital commented in a statement sent to Finance Magnates. “We also believe that the damages awarded have no legal basis. We intend to challenge this verdict and commence the appeal process as soon as practicable.”

Miners Defy Halving Odds

Despite the recent halving event, the mining industry remains generally robust. This week, two other Wall Street miners, HIVE Digital and TeraWulf, reported strong quarterly performances despite the downturn in BTC prices.

HIVE Digital Technologies disclosed a quarterly revenue of $32.2 million, with $29.6 million generated from digital currency mining and an additional $2.6 million from high-performance computing (HPC) operations. On the other hand, TeraWulf recorded a revenue of $35.6 million for Q2 2024, marking a 130.2% increase compared to the same period last year. The company's gross profit, excluding depreciation, climbed to $21.7 million, complemented by an Adjusted EBITDA of $19.5 million.

MARA’s Convertible Notes

The convertible notes, which will mature on September 1, 2031, offer holders the option to convert them into cash, shares of Marathon Digital's common stock, or a combination thereof at the company's discretion. The initial conversion rate is set at 52.9451 shares per $1,000 principal amount, equivalent to a conversion price of approximately $18.89 per share.

The company has built-in flexibility with these notes, retaining the right to redeem them for cash on or after September 6, 2028, subject to certain conditions. Noteholders, on the other hand, may require Marathon Digital to repurchase their notes on March 1, 2029, or upon specific fundamental change events.

This latest move by Marathon Digital underscores the growing trend of public companies investing in cryptocurrencies as part of their treasury management strategies. It also highlights the continued interest in Bitcoin despite its price volatility.

As of the close of trading on August 15, 2024, Marathon Digital's stock (MARA) was trading at $15.14, down 2.26% for the day.