Riot Platforms, a Bitcoin infrastructure company, plans to use $500 million in convertible senior notes proceeds to bolster its Bitcoin holdings and to fund general corporate purposes. The release is effective December 9, 2024. This announcement is an example of the growing use of debt instruments to purchase cryptocurrency.
An additional $75 million purchase option is also exercisable within three days of the initial sale and is offered exclusively to accredited institutional buyers in a private offering. Investors get a dual chance to make money from these convertible notes, as they have the opportunity to either exchange their debt securities for equity in Riot Platforms.
In a Dec. 9 press release from the company, Riot said it intends to use the net proceeds from this offering to buy more Bitcoin.
Riot Platforms Expands Bitcoin Reserves with Debt
Riot Platforms joins a growing list of corporate entities using share-linked securities to boost Bitcoin reserves. Not to be outdone, another prominent Bitcoin miner, Marathon Digital Holdings, just hiked its note sale to $850 million, plus a $150 million option. The new move allows the firm’s Bitcoin reserves to grow to over $3.3 billion.
Japanese investment firm Metaplanet secured $45 million worth of Bitcoin, mostly via share sales, internationally. With the growing interest in Bitcoin as a reserve asset comes the suggestion for corporate landmarks to include the cryptocurrency. In this case, PayPal chief and cryptocurrency enthusiast Brad Garlinghouse urged Amazon to consider Bitcoin as part of its reserves, while Binance CEO Changpeng Zhao advocated Bitcoin as a payment option.
Michael Saylor, founder of MicroStrategy, popularized the idea of buying Bitcoin with debt instruments. Saylor, once a skeptic, even became a Bitcoin cheerleader, predicting that the cryptocurrency will eat away at a bigger and bigger component of global reserves of cash.
China’s SOS Limited and Genius Group are among other firms inspired by MicroStrategy’s extensive Bitcoin investments to follow suit. At the same time, Saylor and other Bitcoin proponents have implored U.S. policymakers to establish a national bitcoin reserve, arguing for bitcoin’s strategic value in an era marked by diminishing supply.
As the 2024 U.S. presidential winter approaches, Bitcoin supporters are cheering for a change in policy under President-elect Donald Trump, who has openly expressed support of the Bitcoin. Geopolitical competition over Bitcoin reserves is growing as countries wrestle for a portion of the cryptocurrency’s scarce supply, say analysts.
This is a watershed moment for the corporate world, as Bitcoin is being increasingly seen as a key asset in an increasingly worldwide asset move for corporate money. As attention around the world is attracted to the financial technology, the practice of funding Bitcoin acquisitions with convertible notes is ripe to continue to be a trend the financial world will endure for years.
