Core Scientific Eyes $350M Notes to Repay Bitcoin Mining Debt

Bitcoin mining and data center giant Core Scientific is planning to offer $350 million in convertible senior notes as part of its strategy to repay existing outstanding loans.

The firm announced on Tuesday that the notes will be senior, unsecured obligations of the company, accruing interest payable semi-annually, with a maturity date of September 1, 2029.

The interest rate and initial conversion rate have yet to be finalized. Core Scientific also plans to grant the initial purchasers an option to buy up to an additional $52.5 million in notes within 13 days of the initial issuance.

The plan to issue new convertible notes comes just a month after Core Scientific completed a mandatory conversion of $260 million to reduce the outstanding debt on its balance sheet. For context, the firm paid an interest expense of $14.7 million in Q2 alone.

According to the release, Core Scientific intends to use the proceeds from the new offering to repay its remaining outstanding loans under a credit and guaranty agreement from January 2024 and to redeem all of its senior secured notes due in 2028.

Any remaining proceeds will be allocated for general corporate purposes, such as working capital, operating expenses, capital expenditures, potential acquisitions, or other repurchases of its securities.

Core’s stock price dropped by 9.19% during the pre-market hours on Tuesday following the news.

Core’s plan comes shortly after its bitcoin mining rival, Marathon, announced the pricing of its “oversubscribed” $250 million in convertible notes, which carry an annualized interest rate of 2.125%.

However, unlike Core’s issuance, Marathon plans to use the majority of the raised debt to acquire additional bitcoin.