Riot Platforms, Inc. (RIOT) has successfully completed an upsized private offering, raising $525 million through 0.75% convertible senior notes due in 2030. Initially slated for $500 million, the offering was significantly increased due to high investor demand and is set to close on December 11, 2024. The offering also includes an over-allotment option, allowing the initial purchasers to acquire up to an additional $75 million in notes, further indicating strong market confidence in Riot’s future.
Strategic Use of Funds:
Riot Platforms plans to use the proceeds from this convertible senior notes offering to acquire more Bitcoin, a key aspect of its Bitcoin mining business strategy. The remaining funds will be allocated to enhance operational efficiency and support strategic initiatives designed for long-term growth and profitability.
The net proceeds from the offering are expected to be around $511.5 million if the over-allotment option is not exercised. The convertible notes will carry a 0.75% annual interest rate, payable semi-annually on January 15th and July 15th. The notes mature on January 15th, 2030, and Riot retains the flexibility to redeem all or part of the notes at par if certain market conditions are met, such as if the stock price exceeds 130% of the conversion price for a sustained period.
Conversion Options and Investment Flexibility:
Investors in these convertible notes will have the option to convert their holdings into Riot common stock, cash, or a combination of both, at Riot’s discretion. The initial conversion rate is set at 67.3 shares per $1,000 of principal, representing a 32.5% premium over the average price of Riot’s stock on the announcement date of the offering.
Market Context and Company Performance:
This substantial fundraising comes amid a bullish trend in the cryptocurrency market, with crypto market capitalization growing by 45% in November 2024, reaching $3.3 trillion, according to a JPMorgan report. While Riot Platforms reported third-quarter revenue of $84.8 million, slightly below the consensus estimate of $95.4 million, its Bitcoin mining output in October surged to 505 bitcoins, a 23% month-over-month increase. As of the end of October, Riot held a total of 10,928 bitcoins.
Despite missing EPS expectations for Q3, Riot’s strategic investment in Bitcoin and the successful note offering demonstrate strong market confidence in the company’s long-term growth potential in the competitive Bitcoin mining sector.
Investor Access and Market Performance:
Investors seeking exposure to Riot Platforms can access the stock through prominent ETFs, including the Fidelity Crypto Industry and Digital Payments ETF (FDIG) and the CoinShares Valkyrie Bitcoin Miners ETF (WGMI). After the announcement, Riot stock saw a premarket increase of 1.52%, trading at $11.38 per share.
This capital raise positions Riot Platforms to further accelerate its growth in the Bitcoin mining market, emphasizing its commitment to Bitcoin acquisition and ongoing business development, even as it navigates short-term challenges.
