MARA Acquires 6,474 Bitcoin Through Convertible Notes Offering

Marathon Digital Holdings (MARA), one of the leading Bitcoin mining companies, recently provided an update to investors on November 27 regarding its acquisition of 6,474 Bitcoin (BTC). The company purchased the Bitcoin through its 0% interest $1 billion convertible note offering.

In its announcement, MARA disclosed that it had initially acquired 5,771 BTC at an average price of $95,395 per coin. This was followed by an additional purchase of 703 BTC. With this latest acquisition, MARA’s total Bitcoin holdings now amount to approximately 34,797 BTC, valued at around $3.3 billion. This represents a 36.7% per-share yield for the company’s Bitcoin holdings year-to-date.

As part of the offering, MARA also repurchased a portion of its 2026 notes, totaling $200 million, and plans to use the remaining $160 million from the convertible debt raise to acquire additional Bitcoin during future price dips.

This move aligns with a growing trend of companies using corporate debt to bolster their Bitcoin reserves, a strategy popularized by MicroStrategy, which continues to lead the way in Bitcoin acquisitions.

MicroStrategy’s Bitcoin Strategy: A Model for Institutional Acquisitions

MicroStrategy, a business intelligence firm, has been at the forefront of the corporate Bitcoin treasury strategy, steadily increasing its holdings since 2020. Most recently, the company raised $3 billion through a senior convertible note offering with 0% interest. This capital raise is part of MicroStrategy’s ambitious “21/21” plan, which aims to secure $42 billion over the next three years to further expand its Bitcoin holdings and strengthen its balance sheet.

Between November 18 and November 24, 2024, MicroStrategy acquired approximately 55,000 BTC at an average price of $97,862 per coin, bringing its total Bitcoin holdings to around 386,700 BTC—making it one of the largest corporate holders of the digital asset.

However, the company’s aggressive Bitcoin acquisition strategy has not been without controversy. Critics argue that purchasing Bitcoin using debt financing is a high-risk strategy, particularly if the value of Bitcoin declines. MicroStrategy’s shares have also taken a hit, falling approximately 25% on November 21, 2024. Despite this, the company is not obligated to repay its debt until 2028, providing it with a significant window to weather any short-term market volatility.

The Growing Trend of Bitcoin Treasury Strategies

As of November 2024, 62 publicly traded companies have adopted a Bitcoin treasury strategy, according to a report by Bitcoin-only financial services firm River. This growing trend reflects the increasing institutional confidence in Bitcoin as both a store of value and a hedge against inflation.

Companies like MARA and MicroStrategy are leading the charge, demonstrating how Bitcoin can be integrated into corporate strategies for both balance sheet growth and potential long-term gains. However, the rising use of corporate debt to fund Bitcoin purchases raises questions about the sustainability of this approach, especially if the cryptocurrency market experiences a downturn.

In any case, the trend highlights the shifting landscape of institutional investment in digital assets, where Bitcoin is increasingly seen as a key asset class alongside traditional investments. As these strategies evolve, it will be interesting to see how companies navigate the inherent risks associated with Bitcoin's volatility, particularly when using debt to fuel expansion.