The Bitcoin mining industry is financing its expensive pivot to AI data centers with convertible debt that sometimes features a 0% coupon.
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Bitcoin () miners have raised $11 billion in convertible debt — corporate debt that is convertible to stocks — over the last year, amid a pivot into artificial intelligence data centers.
Miners completed 18 convertible bond deals following the that slashed the block reward by 50%, according to .
The average convertible bond issue more than doubled, with mining companies MARA, Cipher Mining, IREN and TeraWulf each raising $1 billion through single bond issues. Some offerings have featured coupons as low as 0%, signaling investors’ willingness to waive interest payments in exchange for potential equity upside.
In contrast, most convertible bonds issued by Bitcoin miners the preceding year ranged from $200 million to $400 million.
The mining industry to address revenue shortfalls following the April 2024 halving. Miners continue to struggle with a challenging business model, which is affected by tokenomics, trade policies, , and rising energy costs.
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Miner debt has , totaling $12.7 billion, according to a recent from investment manager VanEck.
However, VanEck analysts Nathan Frankovitz and Matthew Sigel noted that these debt levels reflect a fundamental problem in the mining industry — heavy capital expenditures on mining hardware that must be upgraded annually in some cases.
“Historically, miners relied on equity markets, not debt, to fund these steep capex costs,” they wrote, and called the significant hardware costs to remain competitive a “melting ice cube.”
The rising Bitcoin mining hashrate, the total amount of computing power securing the Bitcoin network, also continues to rise, forcing miners to as time goes on.
In October, US Energy Secretary Chris Wright a regulatory change to the Federal Energy Regulatory Commission (FERC) that would allow data centers and miners to .
This would allow these energy-intensive applications to satisfy their energy needs while they act as controllable load resources for the energy grid, balancing and stabilizing the electrical infrastructure during times of peak demand and curtailing excess energy during low demand.
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