Originally published on: August 14, 2024
Core Scientific, a prominent Bitcoin miner, witnessed a slight decline of just over 10% in its stock price following the announcement of its plan to offer up to $400 million in convertible senior notes to investors. This amount was increased from the initial $350 million announced just a day earlier.
A convertible senior note is a type of debt security that can be converted into equity at a later date and earns interest payments for the investor over time. This offering represents a form of debt for the company.
The stock of Core Scientific dropped to $8.46 per share on the Nasdaq, reflecting a 10% decrease. However, post-market trading saw a slight recovery of 1% to $8.55.
In a media release on Aug. 14, Core Scientific revealed that the $400 million worth of notes would be issued in a private offering exclusively to qualified institutional buyers.
Investors have the option to hold the senior, unsecured debt until maturity or convert it into shares, with interest payments being distributed semi-annually, as stated by the company.
Additionally, there is a provision in the offering for purchasers to buy an extra $60 million in notes that will mature on Sept. 1, 2029, unless earlier converted, redeemed, or repurchased, with a settlement scheduled for Aug. 19.
The net proceeds from this offering will be utilized by Core Scientific to repay all outstanding loans under its credit and guaranty agreement from Jan. 23, 2024, and redeem all outstanding senior secured notes due in 2028. The remaining funds will support general corporate purposes, including working capital, operating expenses, capital expenditures, acquisitions of complementary businesses, or other securities repurchases.
Despite facing challenges in the past, including bankruptcy and financial losses, Core Scientific remains optimistic about its future prospects. The company reported mining over 5,000 Bitcoin year-to-date, valued at over $300 million, with potential long-term contracts that could generate $6.7 billion over the next 12 years.
With an eye on the future and a solid business strategy in place, Core Scientific is poised to navigate the ever-evolving landscape of cryptocurrency mining and emerge as a key player in the industry. Stay tuned for more updates on this exciting journey in the world of blockchain and crypto.
