As a seasoned researcher with a keen interest in the evolving landscape of cryptocurrency mining, I find myself intrigued by CleanSpark’s latest move to raise $550 million through a private convertible note offering. This strategy seems to be gaining traction among miners, and it’s fascinating to observe how these players are adapting their financial strategies to navigate the complex world of Bitcoin mining.
As a researcher, I’m sharing an update about CleanSpark, a cryptocurrency miner, which is planning to raise an impressive $550 million through a private convertible note offering. The maturity date for this investment is set in 2030, and the pricing details have already been finalized. This funding strategy seems to be a popular choice among miners, as it mirrors similar offerings from CleanSpark’s major competitors.
Cash for practical purposes
The senior convertible note sale is anticipated to be finalized on December 17th. For a period of 13 days following this date, initial buyers have the option to purchase extra notes, accumulating up to a total of $100 million. CleanSpark estimates that the net earnings from this deal will amount to approximately $535.9 million after accounting for discounts and expenses. If the additional purchase option is fully utilized, the total could rise to $633.6 million.
No regular interest will be paid on the notes. They mature on June 15, 2030.
Starting from June 20, 2028, the company can choose to exchange these notes for either cash, shares of common stock, or a mix of both.
To start with, the opening exchange rate is set at approximately $14.80 per share, which is a 20% increase compared to the closing common stock price on the NASDAQ Capital Market on December 12th ($12.33).
Approximately $221.5 million is tied up in expenses related to the offer. The company plans to earmark approximately $145 million for purchasing its common shares from noteholders. An additional $76.5 million will be spent on fees associated with capped call transactions made with undisclosed financial institutions.
A capped call transaction is a hedging strategy that would limit the price per share at conversion.
Beyond covering these expenses, the funds gained from selling the note will be utilized primarily for three key purposes: repaying the existing debt owed to Coinbase under the company’s line of credit, investing in capital expenditures, potential acquisitions, and meeting general corporate needs.
In simple terms, CleanSpark disclosed in their Q3 financial statement that they secured a $50-million flexible loan from Coinbase, which is backed by some of the company’s Bitcoin (BTC) reserves.
How the pure players play
Eight publicly traded Bitcoin miners and data centers have issued convertible bonds since June.
CleanSpark functions similarly to companies like Riot Platforms and MARA, often referred to as “single-focus miners,” because they exclusively use their computing resources for cryptocurrency mining, without branching out into areas such as artificial intelligence or other high-demand sectors. Unlike its counterparts Riot and MARA, CleanSpark has not publicly announced any intentions to significantly increase its Bitcoin holdings.
In November, MARA sold convertible bonds worth a billion dollars. These bonds will reach maturity on March 1, 2030. As of December 9, MARA was in possession of approximately 40,435 Bitcoins.
On December 9th, Riot revealed its strategy to amass $500 million by following a similar method. The maturity date for these notes is set for January 15th, 2030. As of December 12th, Riot was holding 16,728 Bitcoins.
CleanSpark held 9,297 BTC as of Nov. 30.
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2024-12-13 22:33