Shares in Bitcoin miner IREN and treasury firm Kindly MD closed lower on Tuesday as both announced multi-million dollar convertible note deals amid a downturn in venture capital activity in the crypto sector.
IREN (IREN) shares ended Tuesday with a 6.81% gain but fell 4.9% in after-hours trading, settling at $58.66 following the company’s announcement of an $875 million convertible senior note offering.
Kindly MD, which merged with David Bailey’s Bitcoin company Nakamoto, also revealed on Tuesday that it entered into a $250 million five-year convertible note agreement with fintech firm Antalpha, which appeared to unsettle shareholders.
Kindly MD (NAKA) experienced a 0.97% decline on Tuesday, followed by an additional 2.83% drop to $0.99 in after-hours trading.
While digital assets remain appealing to institutional investors, Galaxy Research’s latest venture capital report indicated a 59% decrease in funding and a 15% drop in deal count compared to the prior quarter.
IREN raising capital for corporate activities
IREN intends to allocate part of the proceeds from the note offering for general corporate activities and working capital.
The company also aims to finance capped call transactions to safeguard against excessive new share creation when converting debt into stock, by placing a price cap limit.
Additionally, there is another $125 million of notes available for initial buyers, all of which can be converted into shares of the company.
The company stated that the call transactions are expected to mitigate the potential dilution of IREN’s ordinary shares upon any conversion of the notes.
Shareholders often worry that convertible note agreements could diminish the value and authority of the shares they already possess.
Nakamoto aims to acquire more Bitcoin
Antalpha and Kindly MD have signed a non-binding letter of intent for long-term financing, aiming to mitigate “dilution risk to its stockholders compared to standard convertible debt,” the company announced.
The funds are earmarked for expanding Bitcoin (BTC) holdings within the Kindly MD Bitcoin Treasury, as well as for general corporate purposes.
Funds raised from the financing are also planned to replace an existing $203 million Bitcoin-secured loan from Two Prime Lending Limited.
Related: Crypto treasury share buybacks could indicate a ‘credibility race’ is underway
Antalpha providing a Bitcoin-backed loan
While awaiting the completion of the convertible debt facility, Antalpha will extend a temporary Bitcoin-backed loan to Kindly MD.
Bailey stated that the collaboration “demonstrates the strength of Bitcoin companies supporting each other” and aims to fulfill “current financing needs while laying the groundwork for future structures tailored to the unique requirements of Bitcoin treasury companies.”
“This marks the initial step in what we anticipate to be a lengthy series of initiatives benefiting our portfolio, shareholders, and the overall Bitcoin ecosystem.”
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