US-listed cryptocurrency exchange Coinbase announced today that it will expand the issuance of $1.1 billion in convertible senior notes, increasing the size from the previously announced $1 billion. With the entry into the cryptocurrency bull market, Coinbase is following the strategy implemented by MicroStrategy in the past few years, raising funds for its cryptocurrency vision through the issuance of corporate bonds. Convertible bonds can be converted into company stock or cash, or a combination of both, under certain conditions, avoiding the dilution of existing shareholders’ ownership through the sale of new shares, which would affect the stock price.
As the company with the highest holding of Bitcoin, MicroStrategy has so far purchased 205,000 Bitcoins, currently worth over $15 billion, with the majority of the purchase funds coming from the issuance of over $2 billion in convertible bonds by MicroStrategy. The company announced today that it will issue an additional $500 million in convertible senior notes for further Bitcoin purchases.
Coinbase is issuing $1.1 billion in unsecured convertible bonds through private placement to qualified institutional buyers. The bonds will mature in 2030 and have a coupon rate of 0.25%. The sale is expected to be completed on March 18, 2024, bringing Coinbase approximately $1.08 billion to $1.24 billion in net proceeds.
Regarding the use of funds raised through this bond issuance, Coinbase plans to use them for debt repayment, redemption and repurchase of previously issued convertible bonds before maturity, as well as for other general corporate purposes. It is also possible that the funds will be used for investment or acquisition of other companies, products, or technologies.
There is speculation in the market that Coinbase may follow the footsteps of MicroStrategy and make large Bitcoin purchases. Data shows that Coinbase, which ranks fourth in terms of Bitcoin holdings among listed companies, currently holds 9,480 Bitcoins, valued at nearly $691 million, with a cost of approximately $117 million and a floating profit of $574 million.
In addition, as Bitcoin has surged by 69.75% so far this year, Coinbase’s stock price has also risen accordingly. COIN has risen by over 60% this year, with a closing price of $251.73 today, and a market value exceeding $60.9 billion.
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