Riot Platforms, Inc. (NASDAQ: RIOT), a prominent Bitcoin mining company, has revealed plans to raise $525 million through a private offering of convertible senior debt. The debt, which carries an annual interest rate of 0.75%, will mature in 2030. This initiative underscores Riot’s commitment to bolstering its presence in the evolving cryptocurrency market.
Initially planned at $500 million, the offering was increased to $525 million due to strong demand. Additionally, Riot has granted purchasers the option to acquire up to $75 million in additional principal, potentially increasing the total proceeds. The offering is anticipated to conclude on December 11, 2024. Riot plans to allocate the proceeds primarily to acquire additional Bitcoin and for general corporate purposes. If the additional option is not exercised, the company estimates net proceeds of approximately $511.5 million.
The debt will pay interest semiannually, with payments due on January 15 and July 15 each year. Riot retains the option to redeem all or part of the debt for cash if its stock price reaches at least 130% of the conversion price. Investors can convert the debt into cash, shares of Riot’s common stock, or a combination of both, as determined by the company. The initial conversion rate has been set at 67.3 shares per $1,000 of principal, reflecting a 32.5% premium over Riot’s volume-weighted average stock price.
The announcement comes at a time of significant momentum in the cryptocurrency market. According to a report by JPMorgan, November saw a record-breaking surge fueled by the reelection of President Donald Trump, which sparked a bullish trend across the sector. The report highlighted a 45% increase in cryptocurrency market capitalization, reaching $3.3 trillion, alongside a doubling of trading volumes.
Riot has also reported substantial operational progress. In October 2024, the company mined 505 Bitcoins, representing a 23% increase compared to the previous month. By the end of October, Riot held a total of 10,928 Bitcoins.
Despite these advancements, Riot has faced financial challenges. Its stock price has fallen over 27% year-to-date, and third-quarter results missed expectations. The company reported $84.8 million in revenue, below the consensus estimate of $95.4 million, while its earnings per share loss of 54 cents exceeded the projected loss of 15 cents.
Nevertheless, Riot continues to attract investors seeking exposure to the cryptocurrency sector. The company’s stock is included in funds such as the Fidelity Crypto Industry and Digital Payments ETF (NASDAQ: FDIG) and the CoinShares Valkyrie Bitcoin Miners ETF (NASDAQ: WGMI).
On a positive note, Riot’s stock rose 1.52% to $11.38 in premarket trading on Tuesday, signaling renewed investor optimism. With this bold fundraising move, Riot Platforms reinforces its dedication to growth and innovation in the rapidly expanding digital asset space.