Coinbase to Raise $2B Convertible Notes, May Fund Bitcoin

Coinbase has launched a private placement of $2 billion in senior unsecured Coinbase convertible notes, split into $1 billion tranches maturing in 2029 and 2032, with an upsell option of $150 million per tranche to reach $2.3 billion. The convertible notes offer semiannual interest and can convert into Class A shares or cash at predetermined conversion rates. Embedded call options and hedging tools aim to limit equity dilution and offset cash payments above principal. Proceeds will fund working capital, capital expenditure, debt buybacks, and potential acquisitions. Notably, these convertible notes may fund Bitcoin purchases, positioning Coinbase as the first S&P 500 firm to use debt for crypto acquisition. The debt-funded Bitcoin strategy follows a Q2 revenue decline and an 18% drop in Coinbase stock. Benchmark analysts maintain a buy rating, citing long-term growth catalysts. Coinbase also bolstered its Bitcoin reserves to 11,776 BTC.