BTCS, a blockchain infrastructure technology firm, announced that it plans to acquire $57.8 million worth of Ethereum (ETH). It intends to leverage its increased ETH holdings to expand its node deployment, boost staking rewards, and optimize block production economics.
The company seeks to raise the necessary funds for this purchase by issuing convertible notes under an agreement with investment manager ATW Partners.
BTCS Makes Bold $57.8 Million Ethereum Bet
In the latest press release, BTCS revealed that it had issued the first batch (or tranche) of convertible notes worth $7.8 million. There is also scope for issuing more notes up to an additional $50 million.
Nonetheless, this requires mutual approval from BTCS and ATW Partners. The notes are convertible into common stock at a price of $5.85 per share, a 194% premium to BTCS’s stock price of $1.99 on May 13.
They have a two-year maturity, with a 5% discount on the original issue and a 6% annual interest rate. Investors also received warrants for the purchase of nearly 1.9 million shares of common stock at $2.75 per share.
BTCS CEO Charles Allen contributed $95,000 to the initial offering, with an additional $200,000 provided by a trust from which he benefits.
“Similar to how MicroStrategy leveraged its balance sheet to accumulate Bitcoin, we are executing a disciplined strategy to increase our Ethereum exposure and drive recurring revenue through staking and our block building operations—while positioning BTCS for meaningful appreciation should ETH continue to rise in value,” Allen said.
He believes this decision to acquire ETH comes at a crucial moment in the altcoin’s growth. BeInCrypto reported that the recent Pectra upgrade implementation boosted the Ethereum network, catalyzing an increase in the number of active addresses and the burn rate.
Moreover, the price also jumped to two-month highs, but a modest correction followed. According to BeInCrypto data, over the past day, ETH has dipped by 3.8%. At the time of writing, it traded at $2,545.
While Ethereum didn’t benefit from BTCS’ news, its own stock did. This reflected investor confidence in the company’s strategic pivot.
Google Finance data showed that the stock price jumped 5.5%. However, year-to-date, its value has declined by 14.9%.
Meanwhile, the announcement comes amid a broader trend of publicly traded companies diversifying their balance sheets with digital assets. However, BTCS’s approach positions it as a contrarian player in the space, diverging from the Bitcoin (BTC)-focused strategies adopted by firms like Strategy (formerly MicroStrategy), Metaplanet, and 21 Capital.
While these firms have benefited from BTC holdings, BTCS’s initiative, if successful, could influence other firms to explore alternative digital assets beyond Bitcoin. This could potentially reshape corporate treasury strategies.
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