Coinbase Plans $1B Bond Sale That Avoids Hurting Stock Investors, Copying Michael Saylor's Successful Bitcoin Playbook

The only publicly traded cryptocurrency exchange in the U.S., Coinbase (COIN), announced a plan to cash in on the recent rally in digital assets by raising $1 billion through selling convertible bonds, avoiding an equity sale that could hurt its stock price and also following the path Michael Saylor's MicroStrategy has taken to fund its crypto aspirations.

Coinbase said on Tuesday that it will offer the unsecured convertible senior notes via a private offering. Convertible bonds can be turned into shares of the issuing company (or cash) at a certain point. For the notes Coinbase plans to offer, that conversion year is 2030. Had the company chosen instead to raise money by selling new Coinbase shares, that would dilute the ownership interest of existing shareholders – something investors may view unfavorably.

By tapping the debt market to fund its crypto business, Coinbase is pursuing a strategy Saylor has pursued at MicroStrategy over the past few years. Saylor's company has purchased 205,000 bitcoin, which are now worth nearly $15 billion, much of which is funded by MicroStrategy's sale of more than $2 billion of convertible notes. Just this month, MicroStrategy sold $700 million of them, and there was enough demand that the company could sell more than the originally anticipated $600 million.