CleanSpark, a prominent cryptocurrency mining company, has announced its intention to raise $550 million through a private convertible note offering. This funding strategy aligns with a growing trend among cryptocurrency miners.
The senior convertible notes will not yield regular interest payments, instead, they will mature on June 15, 2030, with CleanSpark retaining the option to redeem them starting June 20, 2028. Investors will have the opportunity to convert these notes into cash, common stock, or a combination of both. The initial conversion rate is pegged at $14.80 per share, reflecting a 20% premium over the common stock price on the Nasdaq Capital Market as of December 12, which was $12.33.
CleanSpark anticipates net proceeds from the offering to reach approximately $535.9 million after accounting for discounts and expenses. If the initial purchasers exercise their 13-day option to buy additional notes, the total could rise to $633.6 million. However, the company will incur around $221.5 million in costs associated with the offering, which includes setting aside approximately $145 million for the repurchase of its common shares from noteholders. Additionally, $76.5 million will be allocated to capped call transactions with unnamed financial institutions, a hedging strategy designed to limit the price per share at conversion.
The proceeds from this note sale are earmarked for several critical financial obligations. CleanSpark plans to fully repay its outstanding debt under a revolving credit line with Coinbase, which was collateralized by a portion of its Bitcoin holdings. Furthermore, the funds will be directed towards capital expenditures, acquisitions, and general corporate purposes.
As a "pure-play" miner, CleanSpark distinguishes itself from competitors by focusing solely on cryptocurrency mining without diversifying into other high-demand computing applications. This strategic focus has allowed CleanSpark to maintain a clear identity within the sector. In recent months, several publicly traded Bitcoin miners have turned to convertible bonds as a means of raising capital. CleanSpark's latest offering is a testament to the ongoing adaptation within the industry, as miners seek to secure their financial futures while managing the inherent risks associated with cryptocurrency investments.