Shares of Bitcoin miner IREN and treasury firm Kindly MD experienced losses on Tuesday after both announced multimillion-dollar convertible note deals amid a decline in venture capital activity within the crypto space.
IREN (IREN) ended Tuesday’s trading session up by 6.81%, but fell by 4.9% in after-hours trading, settling at $58.66, following the company’s announcement of an $875 million convertible senior note offering.
Healthcare firm Kindly MD, which merged with David Bailey’s Bitcoin enterprise Nakamoto, also disclosed on Tuesday that it opted for a $250 million, 5-year convertible note arrangement with fintech company Antalpha, causing additional concern among investors.
Kindly MD (NAKA) recorded a 0.97% decrease during the day and fell another 2.83% in after-hours trading, reaching $0.99.
While digital assets still capture the interest of institutional investors, Galaxy Research’s latest venture capital report revealed a 59% decline in funding and a 15% decrease in deal count compared to the previous quarter.
IREN raising funds for corporate use
IREN plans to allocate a portion of the proceeds from the note offering for general corporate expenses and working capital.
Additionally, the company seeks to finance capped call transactions to guard against excessive new share issuance when the company’s debt is converted into stock through a price cap limit.
There are also an extra $125 million of notes available for initial purchasers, all of which can be converted into company shares.
The firm mentioned that the call transactions are expected to lessen potential dilution of IREN’s common shares upon any conversion of the notes.
Shareholders often express concern that convertible note agreements could devalue their current stock holdings.
Nakamoto aims to acquire more Bitcoin
Antalpha and KindlyMD have entered a non-binding letter of intent for long-term financing to minimize the “dilution risk to its shareholders compared to traditional convertible debt,” according to the company.
The funds are earmarked for increasing Bitcoin (BTC) holdings in the KindlyMD Bitcoin Treasury, alongside general corporate purposes.
Funds raised through financing are also planned to replace an existing $203 million Bitcoin-secured loan from Two Prime Lending Limited.
Related: Crypto treasury share buybacks could signal a ‘credibility race’ is on
Antalpha also supplying Bitcoin-backed loan
Pending the completion of the convertible debt facility, Antalpha will provide a temporary Bitcoin-backed loan to KindlyMD.
Bailey stated that the collaboration “illustrates the strength of Bitcoin companies supporting other Bitcoin companies,” and aims to tackle “immediate financing needs while laying the groundwork for future frameworks tailored to the distinct needs of Bitcoin treasury firms.”
“This marks the initial phase in what we anticipate to be a long series of initiatives benefiting our portfolio, our shareholders, and the Bitcoin ecosystem overall.”
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