Bitdeer Technologies, the Singapore-based bitcoin miner and AI data center firm, experienced a significant drop in its share price today following the announcement of a strategic financing initiative. The company revealed its intention to raise $300 million through a private sale of convertible senior notes due 2032. This financial move, coupled with the potential for equity dilution, immediately unsettled investors, causing Bitdeer’s stock to slide over 18% in pre-market trading and roughly 15% by the day's end, pushing it below the $8 mark for the first time since April.

The offering targets institutional buyers and includes an option for initial purchasers to acquire an additional $45 million in notes, potentially bringing the total capital raise to $345 million if fully exercised. These notes are designed to be convertible into cash, Class A ordinary shares, or a combination of both, at Bitdeer’s discretion. Convertible debt offerings often exert downward pressure on a company’s stock, as investors anticipate an increase in the outstanding share count, or dilution, should the stock price rise and noteholders choose to convert their holdings into shares.

To mitigate this perceived dilution risk, Bitdeer plans to enter into capped call transactions with various financial institutions. These hedging strategies are specifically structured to limit the number of shares that would need to be issued upon the conversion of the notes, although such mechanisms can sometimes introduce additional volatility in pricing. This proactive measure aims to reassure the market regarding the company’s approach to managing its capital structure.

In addition to the new notes offering, Bitdeer also disclosed a separate registered direct offering of Class A ordinary shares. This particular offering is directed at certain holders of its existing 5.25% convertible senior notes due 2029. The specific number of shares to be offered and their price will be determined at the time of pricing. The company clarified that this direct share offering and the associated note repurchases are contingent upon the successful completion of the new notes sale, though the new notes offering itself is structured to proceed independently.

The proceeds generated from both offerings are earmarked for several key strategic initiatives. Primarily, funds will be allocated to finance the aforementioned capped call transactions and to repurchase a portion of the outstanding 2029 notes through privately negotiated deals. Any remaining capital will be channeled towards the expansion of Bitdeer’s data center footprint, a critical component of its infrastructure services. Furthermore, funds will support the growth of its high-performance computing (HPC) and artificial intelligence (AI) cloud business lines, as well as the ongoing development of its proprietary ASIC-based bitcoin mining rigs, aligning with its longer-term strategic vision.

These financing activities underscore Bitdeer’s accelerating pivot from solely bitcoin mining towards a broader spectrum of infrastructure services. This strategic shift has been supported by recent robust financial performance. The company reported impressive fourth-quarter revenue of $224.8 million, marking a substantial 226% increase year-over-year. Moreover, Bitdeer achieved a net profit of $70.5 million for the quarter, a significant turnaround from a $531.9 million loss in the prior-year period. During the quarter, Bitdeer mined 1,673 bitcoin, supported by a managed hashrate of 71 exahash per second (EH/s), which included 55.2 EH/s of self-mining capacity. While the company held approximately 2,000 BTC on its balance sheet at year-end, more recent data suggests these holdings have decreased due to liquidations earlier in the year to fund expansion efforts.