Public mining companies are turning to debt financing to boost cash flow following the Bitcoin halving.
According to data from BlocksBridge Consulting based on earnings reports, nine out of the 13 United States-listed companies raised a combined $1.25 billion through stock offers during the second quarter of 2024. The list includes Bitdeer, Bitfarms, Cipher, CleanSpark, Core, HIVE, Marathon, Riot, and Terawulf.
In addition, Iris Energy reportedly raised $458 million over the previous quarter, bringing the total raised by miners to over $1.7 billion. An additional $530 million raised so far in the third quarter raises the sum to over $2.2 billion.
Core Scientific announced on Aug. 14 a $400 million private offering of convertible notes to qualified investors. According to the Bitcoin miner, the net proceeds will be used to pay off its “outstanding loans under its credit and guaranty agreement entered into on Jan. 23, 2024 and redeem all of its outstanding senior secured notes due 2028.”
A senior convertible note is a type of debt security that can be converted into equity at a later date.
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Another Bitcoin miner offering convertible notes to qualified institutional investors is Marathon Digital. The company announced a $250 million private offering on Aug. 12 to acquire more Bitcoin (BTC) and for “general corporate purposes,” including expenses on working capital, debt repayment, and other obligations.
“CleanSpark disclosed in its Q2 filing that it has entered into credit facilities with Coinbase for loans collateralized by Bitcoin,” noted BlocksBridge’s analysis, adding that Canaan also pledged 530 BTC during the second quarter to secure loans totaling $19.2 million with a maturity date of 18 months.
The latest Bitcoin halving took place in April, cutting in half miner rewards for adding a new block to the blockchain from 6.25 BTC to 3.125 BTC.
With reduced rewards, miners are facing tighter margins while the Bitcoin price has been is a downward trend. The cryptocurrency price plummeted from around $64,300 on April 20 to $56,866 at the time of writing, marking an 11.5% drop since the halving.
Miners are seeking to diversify their revenue streams to remain competitive. Core Scientific, for instance, has entered into a 12-year agreement with artificial intelligence cloud provider CoreWaeve to host its Nvidia graphics processing units (GPUs). The deal is expected to generate $6.7 billion in total revenue for Core.
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