Coinbase to Raise $1 Billion with Convertible Notes as Bitcoin Soars

Coinbase recently announced its plan to raise $1 billion through convertible notes, a move that comes amid bitcoin reaching new heights and US bitcoin ETFs setting records. This financial strategy was revealed on Tuesday, with the notes set to mature by 2030 and targeted at institutional investors.

The company also plans to offer an additional $150 million in notes if there's an oversubscription, allowing these notes to be converted into cash, shares of Class A stock, or a mix of both. Coinbase aims to allocate the funds from this offering towards general corporate needs and to settle existing debts, including convertible senior notes and senior notes due between 2026 and 2031.

Furthermore, a part of the proceeds might be used for investing in or acquiring other companies, products, or technologies that align with Coinbase's strategic vision. Following this announcement, Coinbase's stock saw a decrease of about 2.5% after hours, trading at $249 per share, which is close to its 52-week high. Despite this, Coinbase has experienced a significant growth of 308% over the past year, with an 82% increase in the last month alone.

This action by Coinbase mirrors a recent initiative by MicroStrategy, which also launched a convertible note offering aimed at raising funds. Co-founded by Michael Saylor, MicroStrategy initially announced a $600 million offering, which was later increased to $700 million, with plans to utilize these funds for corporate purposes and further Bitcoin purchases.

The value of both Coinbase and MicroStrategy stocks has been positively influenced by the success of bitcoin ETFs and the cryptocurrency's record-breaking performance, marking new all-time highs in the past week.