Singapore-based cryptocurrency mining company Bitdeer Technologies Group has announced plans to raise $150 million through a public offering of convertible notes, which will mature in 2029.
The funds raised will be used to expand Bitdeer’s data centers and to advance the development of ASIC-based mining rigs, according to a press release issued on Thursday.
The convertible notes will be senior unsecured obligations of Bitdeer, meaning they will be prioritized over other debts in the event of financial difficulties.
Investment Options and Returns
Investors in the proposed notes will have the option to convert their holdings into Bitdeer’s Class A ordinary shares or to receive a combination of cash and shares.
The company has set the annual interest rate on the notes at 8.5%, providing investors with a steady return until the notes mature, are converted, redeemed, or repurchased.
Bitdeer's US$150 million convertible notes offer an 8.50% annual interest rate, payable semi-annually, and matures in 2029. Investors will have the flexibility to convert these notes into cash, Class A ordinary shares, or a combo of both before maturity. The initial conversion…
— Bitdeer (@BitdeerOfficial) August 16, 2024
Bitdeer, currently ranked as the 11th largest cryptocurrency mining firm by market capitalization with an approximate value of $870 million, according to CompaniesMarketCap, has announced a $150 million public offering of convertible notes set to mature in 2029. This move is aimed at expanding its data centers and advancing the development of ASIC-based mining rigs.
Despite its strong market position, the announcement of the convertible notes offering led to an immediate decline in Bitdeer’s stock price, which fell by over 18%. Over a broader five-day period, the stock dropped by 23%, from $8.26 on August 9 to $6.33 as of August 16, according to Google Finance. This decline mirrors a similar situation faced by Core Scientific, another crypto mining firm, which saw its stock price decrease by 10% following its announcement of a $400 million senior convertible notes offering on August 14.
Bitcoin Miners Facing ‘Capitulation’
Bitcoin miners are currently experiencing a critical phase known as “capitulation,” characterized by diminished profits amid a recent sell-off in the Bitcoin market. Capitulation occurs when miners reduce their operations or sell a portion of their mined Bitcoin and reserves to sustain their business or hedge against Bitcoin price fluctuations. A significant indicator of this phase is the decline in Bitcoin’s hashrate, which measures the total computational power securing the Bitcoin network.
However, Bitcoin miners are increasingly being viewed as attractive partners for building artificial intelligence (AI) data centers, leveraging their substantial power supplies and operational capabilities. A recent research report by broker Bernstein highlights that recent AI deals—such as Core Scientific’s 12-year agreement with CoreWeave and Coatue Management’s $150 million investment in Hut 8—are significant catalysts for the sector.
Bernstein has initiated coverage of Iris Energy and Core Scientific with outperform ratings and price targets of $26 and $17, respectively. Bitcoin miners currently control around 6 gigawatts (GW) of power capacity, with projections indicating up to 12 GW by 2027. This power capacity positions miners favorably in the “large load power interconnect queue,” enabling potential partners to expedite energy supply arrangements.
The analysts at Bernstein note that Bitcoin data centers are well-suited for retrofitting due to their high power density racks, robust cooling infrastructure, and overall operational capabilities.