Mara Holdings (MARA -6.53%) is going all-in on the world’s top cryptocurrency, and many investors aren’t happy about it. The company’s stock closed Monday almost 7% lower following news that it would aggressively pursue more Bitcoin (BTC -1.78%) mining and purchasing, fueled partially by a new round of capital raising. This contrasted notably with the rise of the S&P 500 index, which ended the day more than 0.2% higher.
Busy Bitcoin bulls
It was a busy news days for Mara with the release of its monthly production update and the announcement of that financing.
As for the update, the company mined 907 Bitcoin in November, up a robust 26% over the October tally. Its hash rate — essentially the speed at which its machines collectively process the calculations required to mine the cryptocurrency — increased 15% to over 46 exahash (EH) per second.
In addition to mining Bitcoin, Mara also actively buys it. In November it loaded up on 6,474 Bitcoin, putting its year-to-date total at 12,965.
Neither buying nor mining is a low-cost activity, so the company is going to the well again for more funds. It announced a new issue of senior convertible notes, which are to be sold in a private offering. The aggregate principal amount of the issue is $700 million, and they mature in 2031. They are zero-coupon securities, meaning that they pay no interest if left unconverted.
It’s expected the initial buyers of the notes will be granted an option to buy an additional $105 million of the securities.
This should sound familiar to Mara watchers. The news comes less than a month after the company announced a similar flotation, which was soon upsized to $1 billion.
Faded rally
All of this would be highly encouraging to the market if Bitcoin were rallying like it has in recent weeks. But it isn’t. Recently, it slumped a bit to hover around the $95,000 level, apparently too shy to take the leap to $100,000 and beyond. Mara depends on the performance of Bitcoin, and when that performance is uninspiring, investors tend to shun the stock.
