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The fourth largest publicly traded digital miner by market capitalization, Riot Platforms, prepares for the Bitcoin pattern. In that sense, the firm announced that it is preparing to raise $500 million dollars. This amount will be used to acquire Bitcoin and increase its hoarding.
According to a statement published this Monday, the company’s management will issue senior convertible notes through a private offering to qualified institutional investors. With this, as already mentioned, the company hopes to increase its holdings in the largest Cryptocurrency. This strategy of raising capital through debt issuance reflects that the company is affected by FOMO.
At this point, optimism about the price of BTC in the short and medium term pushes dozens of corporations to buy rapidly. Particularly, the incorporation of the currency into the strategic reserves of the United States becomes an enormous stimulus, since it would cause a strong appreciation of the price of the currency.
Thus, acquiring more Bitcoin becomes a priority for Riot. It is worth remembering that this is not the only Mining company issuing debt to purchase BTC. Recently, Marathon announced the successful raising of $850 million in a similar type of notes, but with zero interest.
At over $4 billion, Riot is one of the largest miners by market capitalization. Source: Companiesmarketcap.com
Miners have plans to acquire Bitcoin instead of selling
In the past, the great fear of crypto market investors derived from the possible sales of mining companies. During the period of consolidation of the sector, companies that adapted to this nascent industry tended to liquidate a large part of their production. The enormous influx of liquidity into the market caused great volatility in the BTC price.
The fact that most of the global hash power was concentrated in China made the matter much more delicate. However, with the rise of the industry within the United States, the institutional nature of mining companies began to become more evident.
Now, except for a black swan, there is no danger of a massive sale by the mining companies. Instead, operating expenses are covered through various forms of fundraising and limited BTC sales. By not representing a threat of excess liquidity to the market, miners ensure good terms of profit and productivity.
This maturity of the mining industry leads company managers to even acquire more Bitcoin. This causes significant buying pressure that further strengthens the companies’ prospects.
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