Cryptocurrency miner CleanSpark will raise $550 million through a private convertible note offering with a 2030 maturity date. Pricing is already completed. This funding strategy has become familiar among miners, as it follows similar offerings from CleanSpark’s biggest competitors.

Cash for practical purposes

The senior convertible note offering is expected to close on Dec. 17. Initial purchasers will have a 13-day option to buy additional notes up to an aggregate amount of $100 million. CleanSpark expects net proceeds to reach around $535.9 million after discounts and expenses, or $633.6 million if the additional purchase option is fully exercised.

No regular interest will be paid on the notes. They mature on June 15, 2030.

The company will have the option to redeem the notes starting on June 20, 2028. The notes will be converted into cash, common stock or a combination of the two, at the company’s election.

The initial conversion rate will be equivalent to $14.80 per share, representing a 20% premium on the common stock price on The Nasdaq Capital Market at the close of trading on Dec.12 ($12.33).

There are around $221.5 million in costs associated with the offer. The company will set aside around $145 million for the repurchase of its common shares from noteholders. Another $76.5 million will go to the cost of capped call transactions entered into with unnamed financial institutions.

A capped call transaction is a hedging strategy that would limit the price per share at conversion.

Aside from those costs, the proceeds of the note sale will go to the full repayment of outstanding debt under the company's line of credit with Coinbase, as well as capital expenditures, acquisitions and general corporate purposes.

CleanSpark announced in its third-quarter financial report that it had taken a $50-million revolving credit line from Coinbase, collateralized by a portion of its Bitcoin ( BTC ) holdings.

Related: Buying the top forever: MicroStrategy bags 21.5K Bitcoin at peak prices

How the pure players play

Eight publicly traded Bitcoin miners and data centers have  issued convertible bonds since June . 

CleanSpark is a “pure-play” miner, like Riot Platforms and MARA , so called because they have not diversified any of their computing capacity into artificial intelligence or other high-demand uses. Unlike Riot and MARA, however, CleanSpark has not indicated any plans to bulk up its BTC holdings.

CleanSpark to raise $550M via bond, not buy BTC with proceeds image 0

Source: Rex Finance

MARA issued $1 billion in convertible notes in November. They mature on March 1, 2030. As of Dec. 9, MARA held 40,435 BTC .

Riot announced plans on Dec. 9 to raise $500 million the same way. Its notes mature on Jan. 15, 2030. Riot held 16,728 BTC as of Dec. 12.

CleanSpark held 9,297 BTC as of Nov. 30.

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