Marathon Digital Is Following MicroStrategy’s PlayBook to Buy Another $250 Million Worth of Bitcoin

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As a seasoned researcher with a keen interest in the cryptocurrency market, I find Marathon Digital Holdings’ recent moves intriguing. Having closely followed their journey since their inception, it’s clear that they are not just players, but pioneers in the Bitcoin mining industry. Their commitment to expanding Bitcoin reserves and adopting a full HODL strategy is a testament to their belief in Bitcoin’s long-term potential.

On August 12th, Marathon Digital Holdings Inc., a significant global Bitcoin mining company (NASDAQ: MARA), disclosed its intention to issue $250 million in convertible senior notes maturing in 2031, exclusively to institutional investors. This offering, contingent on market conditions and other variables, is being conducted under Rule 144A of the Securities Act of 1933.

In simple terms, the proposed notes by Marathon Digital function as senior debt obligations that don’t have any collateral. These notes will accrue interest every six months starting from March 1, 2025, and will be fully repaid on September 1, 2031. The holders of these notes can choose to exchange them for cash, shares of Marathon’s common stock, or a mix of both, at the company’s discretion. Before March 2031, the notes may be converted under specific conditions, but afterward, they will be freely convertible until just before maturity.

Marathon Digital offers initial buyers the chance to purchase an extra $37.5 million in notes within 13 days following the initial offering date. Furthermore, starting from September 6, 2028, Marathon has the power to buy back all or part of these notes, given that a minimum of $75 million of the principal amount remains outstanding if fewer than all notes are redeemed.

The business plans to mainly invest the funds raised from this sale in buying more bitcoins. Possible alternative uses might be for general business needs like maintaining cash flow, making strategic purchases, increasing current assets, or paying off debts.

To clarify, it’s worth pointing out that these notes and the Marathon’s common stock shares resulting from their conversion have not been registered under the Securities Act. Instead, they will only be made available to accredited investors via a private placement document (offering memorandum).

As a crypto investor, I’m thrilled about Marathon Digital’s announcement on July 25, where they declared the purchase of $100 million worth of Bitcoin, boosting their total holdings to more than 20,000 BTC. This action clearly demonstrates Marathon’s dedication to growing its Bitcoin reserves significantly. Moreover, the company has decided to embrace a full HODL strategy, meaning they plan to keep all the Bitcoins mined from their operations and occasionally make strategic purchases in the open market. In essence, they are holding on tightly to their Bitcoin investments for the long haul.

Fred Thiel, head of Marathon, expressed that the company firmly believes in Bitcoin’s future worth, hence their decision to adopt a complete “HODL” approach. He underscored that, in their opinion, Bitcoin stands out as the most promising asset for global reserve holdings. Thiel encourages governments and businesses to contemplate incorporating Bitcoin into their reserves.

As a financial analyst, I’m sharing my perspective on our decision to revisit Marathon’s previous strategy regarding Bitcoin, a move made possible by the current advantageous conditions for this digital currency. These favorable circumstances include growing institutional backing and an enhancing macroeconomic climate.

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2024-08-13 10:42