TLDR:
- Riot Platforms stock fell 14% on Monday following Bitcoin’s retreat from $100,000 and announcement of a $500M convertible note offering
- The offering was later upsized to $525M with 0.75% convertible senior notes due 2030, with net proceeds expected around $511.5M
- The company plans to use proceeds primarily to purchase additional Bitcoin for its holdings
- Riot currently holds 11,425 Bitcoin, making it the third-largest publicly traded corporate Bitcoin holder
- The decline mirrors broader weakness in crypto-related stocks, despite Bitcoin trading near $99,940
Crypto mining company Riot Platforms saw its stock tumble 14% on Monday after announcing plans to raise over $500 million through convertible notes, aimed at expanding its Bitcoin holdings. The decline came as Bitcoin retreated from recently reaching the $100,000 mark.
The Texas-based mining company revealed it would raise capital through a private offering of convertible senior notes due in 2030. Initially set at $500 million, the offering was later upsized to $525 million, with the notes carrying a 0.75% interest rate.
Riot expects to receive approximately $511.5 million in net proceeds from the offering, which is scheduled to close on Wednesday. The company stated it intends to use these funds primarily to purchase additional Bitcoin for its treasury.
The announcement triggered a sharp selloff in Riot’s shares, which closed at $10.92 on Tuesday, marking a 2.63% decline for the day. This followed Monday’s steeper drop of 14%, notably underperforming compared to the S&P 500’s modest 0.6% decline.
The company’s latest monthly report showed it mined 495 Bitcoin in November, representing a slight decrease of 2% from October’s production. As of November’s end, Riot held 11,425 Bitcoin in its treasury, positioning it as the third-largest publicly traded corporate Bitcoin holder.
Initial purchasers of the notes will receive a three-day window to acquire up to an additional $75 million worth of the securities. The notes, which mature on January 15, 2030, can be converted to equity under specific conditions.
The timing of Riot’s fundraising effort coincides with Bitcoin’s recent milestone of breaking through $100,000, though the cryptocurrency has since pulled back below that level. At the time of the announcement, Bitcoin was trading at approximately $99,940.
This financing approach mirrors similar strategies employed by other crypto mining companies. Marathon Digital, one of Riot’s main competitors, recently announced its own plans to raise $700 million through a similar private offering of convertible notes.
Riot maintains a substantial mining operation with a hashrate of 25 EH/s, which the company’s Vice President of Research, Pierre Rochard, highlighted as a key competitive advantage. This infrastructure allows Riot to bridge fixed-income investments with Bitcoin market opportunities.
The move comes during a period of increased activity in convertible note offerings within the crypto mining sector. Several companies have successfully raised capital through this method, particularly when Bitcoin was approaching the $100,000 milestone.
The broader crypto-related equities market also experienced pressure, with companies like Coinbase, Marathon Digital, and CleanSpark seeing declines. This market response suggests investors may be cautious about large capital raises aimed at Bitcoin acquisition as the cryptocurrency trades off its recent highs.
Starting January 20, 2028, Riot will have the option to redeem some or all of the notes for cash, provided at least $50 million remains outstanding in the case of a partial redemption. Upon maturity, noteholders will have the choice to convert their holdings into Riot’s common stock or a combination of cash and shares.
The company’s stock performance reflects the volatile nature of crypto-mining investments, which often move in tandem with Bitcoin prices. The latest capital raise represents one of the larger funding rounds in the crypto mining sector this year.
The offering is being made to qualified institutional buyers under Rule 144A of the 1933 Securities Act, highlighting the sophisticated nature of the investment opportunity and the company’s focus on institutional participation.
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