Source: Cointelegraph
Original: “NASDAQ-listed BTCS Inc. Increases Ethereum (ETH) Holdings Through $57.8 Million Financing”
Public company BTCS Inc. announced a $57.8 million financing agreement with investment firm ATW Partners to purchase Ether, further expanding its blockchain infrastructure strategy.
The Rockville, Maryland-based company announced on May 14 that this move will enable it to scale up its validator node operations and generate sustainable income through Ether (ETH) staking.
BTCS CEO Charles Allen stated that this strategic initiative mirrors the well-known Bitcoin (BTC) accumulation model of Strategy (formerly MicroStrategy), aiming for long-term growth through Ethereum.
"We are executing a precise strategy to increase our exposure to Ethereum and drive sustainable revenue growth through staking and block-building operations," Allen said.
As part of the agreement, BTCS issued its first tranche of $780 million in convertible bonds and retained the option to draw an additional $50 million if both parties agree.
These bonds can be converted into BTCS common stock at a fixed price of $5.85 per share, nearly a 200% premium over the company's stock price of $1.99 on May 13.
The bonds have a two-year term and a 6% annual interest rate. This means that if the bonds are not converted into stock, BTCS must repay the loan within two years, while paying 6% interest annually during the bond's validity period.
In short, investors are betting that BTCS's stock price will rise. In exchange, the company receives funding support to expand its Ethereum business.
Investors also received options to purchase 1.9 million shares at $2.75 per share over the next five years. Although this price is significantly higher than the current stock price, it is lower than the conversion rate specified in the agreement.
This financing agreement follows the company's recent action of borrowing ETH through the lending protocol Aave. However, the company did not disclose how much ETH was acquired through this agreement.
At the time BTCS announced the purchase of ETH, the cryptocurrency had just recorded significant gains following the Pectra upgrade. On May 12, the market capitalization of Ether surged by 42%, surpassing the stock valuations of Coca-Cola and Alibaba. This value spike positioned Ether as the 39th largest asset globally by market capitalization.
Related: NFT founder accused of stealing millions from Bitcoin (BTC) project
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