Following MicroStrategy's lead, Coinbase announces a $1 billion bond sale

Coinbase, the largest cryptocurrency exchange in the United States, has decided to seize an opportunity to raise debt as its stock price reaches a 26-month high.

Following MicroStrategy's lead, Coinbase announces a $1 billion bond sale. Image: Tipranks

The move will see the major crypto exchange raise an additional $1 billion through a convertible bond offering to bolster operational funds, similar to MicroStrategy's recent moves to fund its Bitcoin ambitions.

This initiative not only strengthens Coinbase's financial position to cover existing debts and business expenses but also aims to avoid dilution of the company's stock price.

The bonds will mature in 2030, increasing the company's debt load to $4 billion.

At maturity, the bonds can convert into Coinbase's Class A shares or cash, or a combination of both. Additionally, investors have the option to purchase an additional $150 million in bonds during the initial 30-day offering period.

Following the bond sale announcement, Coinbase's stock price saw a slight increase of 0.78%, but later dipped over 2% in after-hours trading. Nevertheless, COIN has surged over 40% in the past year amid strong cryptocurrency price increases driven by the approval of Bitcoin spot ETFs by federal regulators.

Coinbase stock price movement in the past 24 hours. Source: Google Finance

Further discussing Coinbase, the exchange has been visibly recovering after a challenging period affected by cryptocurrency crashes in 2022 and ongoing legal battles. Coinbase's revenue last year was approximately $3.1 billion, down from $7.8 billion during the bull market of 2021, but has shown impressive growth since Q4/2023.

Last week, the publicly traded company holding the most Bitcoin after MicroStrategy also took a similar approach. MicroStrategy issued $700 million in bonds to acquire additional Bitcoin. Shortly thereafter, MicroStrategy purchased an additional 12,000 BTC, bringing their current holdings to 205,000 Bitcoin, valued at $14.81 billion at the time of writing.