MARA, formerly known as Marathon Digital, has made waves by acquiring 6,474 Bitcoin through a $1 billion convertible notes offering. This move highlights a growing trend among publicly traded companies using Bitcoin as a treasury strategy, emulating MicroStrategy’s bold approach to corporate debt financing for crypto investments.
MARA’s Latest Bitcoin Purchase
On November 27, MARA updated investors about its recent Bitcoin acquisition:
- Purchase Details: MARA initially bought 5,771 BTC and added 703 more, averaging $95,395 per Bitcoin.
- Current Holdings: The company now holds 34,797 BTC, valued at approximately $3.3 billion.
- Funding Strategy: Proceeds from the 0% convertible notes offering were also used to repurchase $200 million of MARA’s 2026 notes. The remaining $160 million will be allocated for future Bitcoin purchases during market dips.
MARA’s approach mirrors MicroStrategy’s playbook, leveraging corporate debt to bolster Bitcoin holdings—a strategy that is gaining traction among other corporations.
MicroStrategy’s Bitcoin Playbook
MicroStrategy, a pioneer in corporate Bitcoin investments, has been aggressively buying Bitcoin since 2020. Its strategy includes using fiat-denominated debt to expand its Bitcoin treasury.
- Recent Activity: Between November 18 and 24, the company acquired 55,000 BTC at an average price of $97,862, bringing its total holdings to 386,700 BTC—the largest Bitcoin treasury among public companies.
- Funding Goals: MicroStrategy aims to secure $42 billion through its 21/21 plan over three years, primarily to purchase more Bitcoin and enhance its balance sheet.
- Market Reaction: Despite heightened investor interest, MicroStrategy’s shares fell by 25% on November 21, 2024, underscoring market concerns about its debt-heavy strategy.
Risks and Rewards of Bitcoin Treasury Strategies
While Bitcoin treasury strategies can offer significant returns, they come with inherent risks:
Benefits:
- Increased Returns: MARA reported a year-to-date per-share yield of 36.7% from its Bitcoin holdings.
- Long-Term Growth Potential: With a long repayment horizon (e.g., 2028 for MicroStrategy), companies can weather short-term volatility in Bitcoin’s price.
Risks:
- Volatility: Critics argue that acquiring Bitcoin through debt financing exposes companies to significant risks if Bitcoin’s price drops sharply.
- Investor Concerns: Skeptics have labeled MicroStrategy’s strategy as risky and potentially unsustainable, with some warning of a potential “bubble” effect.
