Bitcoin mining companies have collectively raised an impressive $5.2 billion through convertible notes in recent months.

Convertible Notes Remain a Key Funding Vehicle for Bitcoin Miners

Bitcoin mining companies have turned to convertible notes in a bid to raise funding to acquire bitcoin and improve mining facilities. A report by The Minermag showed that since June 2024, a total of $5.2 billion has been raised through convertible notes by seven publicly traded bitcoin mining and data center businesses. 70% percent of this total amounting to $3.6 billion has been raised between Nov. and Dec. 2024.

Notable raises include MARA Holdings’ $850 million convertible bond issuance which it has used to acquire 1,423 bitcoin, Core Scientific’s $350 million convertible senior notes, Bitdeer’s $150 million convertible notes offering, and Blockstream’s $210 million convertible note financing round.

Convertible notes are a type of hybrid financing that enables businesses to borrow capital by issuing debt that can be converted into equity under certain circumstances. As part of the debt framework, these notes give investors regular interest payments. The convertible notes also contain conditions for debt-to-equity conversion to enable investors to profit from a company’s stock appreciation.

The two biggest publicly traded bitcoin mining firms by market capitalization at the moment are MARA Holdings ($8 billion) and Core Scientific ($4.6 billion), both of which have sizable fleets of bitcoin miners.

However, MARA keeps all of the bitcoin it mines every month. It is using convertible notes to pay for running costs and buy more bitcoin from the market. On the other hand, Core Scientific has expanded into artificial intelligence (AI) hosting and high-performance computing. Its previous HODL strategy has been abandoned and it no longer owns any of its mined bitcoin.

The outcome of MARA’s aggressive bitcoin acquisition strategy and Core Scientific’s diversification into AI hosting is still up in the air with the four-year crypto cycle playing a key role in the dynamics of the debt market.

Convertible notes illustrate growing investor optimism about the profitability and resilience of bitcoin mining companies, especially as bitcoin prices continue to attract bullish forecasts. However, debt instruments carry risks, as seen in past industry struggles during bearish cycles.

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