Coinbase Plans $2 Billion Note Sale to Fund Bitcoin Purchases and Business Growth

The timing comes after Coinbase’s stock dropped 15% following weak Q2 earnings results that missed Wall Street expectations. The exchange reported $1.5 billion in revenue, falling short of the $1.6 billion analysts predicted.

The offering includes $1 billion in notes due 2029 and another $1 billion due 2032. Initial buyers can purchase up to $150 million more of each series within 13 days, potentially bringing the total to $2.3 billion.

These senior unsecured notes will pay interest twice yearly and can convert into cash, Coinbase Class A stock, or a combination of both. The company plans to sell only to qualified institutional buyers under Rule 144A regulations.

Coinbase will also set up “capped call” agreements to reduce potential share dilution when note holders convert to stock. These protection measures limit how much the company might need to pay beyond the note’s original value.

Coinbase plans to use the money for several purposes. Part will cover the costs of those capped call protection agreements. The rest goes toward general business needs like working capital, equipment purchases, and potential acquisitions of other companies or technologies.

The exchange may also use proceeds to buy back its existing debt or repurchase shares of its own stock. This debt refinancing could help improve the company’s overall financial structure.

Most notably, Coinbase might become the first S&P 500 company to buy Bitcoin directly with money raised from private note sales. The exchange already holds 11,776 Bitcoin worth about $1.26 billion, making it the world’s 10th-largest public Bitcoin holder. The company added 2,509 Bitcoin worth over $288 million during the second quarter alone.

Coinbase stock fell another 3% in early trading after the announcement, dropping from around $318 to $308. The shares had already declined 25% from their recent peak before Tuesday’s news.

Wall Street analysts remain split on the company’s prospects. Benchmark maintained its “Buy” rating and raised its price target to $421, pointing to Coinbase’s growing influence with institutional customers. However, other firms like Mizuho upgraded their target to $267 while keeping a “Neutral” stance.

The mixed reactions reflect broader concerns about dilution from convertible notes, even with the company’s protective measures in place.

Coinbase joins other crypto companies using convertible notes to raise capital from traditional investors. MicroStrategy, now called Strategy, pioneered this approach and recently completed a $3 billion offering for Bitcoin purchases.

Bitcoin mining company MARA Holdings also raised $950 million through similar zero-interest convertible notes in July. These deals show how crypto firms increasingly tap traditional capital markets while avoiding immediate share dilution.

The convertible structure appeals to both companies and investors. Companies get funding without immediately issuing new shares, while investors can potentially benefit if stock prices rise enough to make conversion worthwhile.

Coinbase faces ongoing headwinds from reduced crypto trading activity. Transaction revenue dropped 39% from the previous quarter to $764 million, missing estimates by over $20 million. Retail trading volumes, typically more profitable than institutional trades, grew 16% yearly but still fell short of expectations.

However, the company showed strength in other areas. Revenue from stablecoins increased 38% year-over-year to $332.5 million. Subscription and services income grew 9% to $656 million, providing more stable revenue streams less dependent on trading volatility.

TIME magazine recently named Coinbase to its 2025 list of most influential companies, recognizing its role in shaping U.S. crypto policy. The exchange also secured important regulatory approvals in Europe and continues expanding its product offerings beyond basic crypto trading.

The $2 billion raise positions Coinbase for potential acquisitions and continued Bitcoin accumulation. The company recently announced plans to expand into tokenized real-world assets, derivatives, and prediction markets within its main app.

Success will depend on whether crypto markets recover and trading volumes increase. Coinbase’s heavy reliance on transaction fees makes it vulnerable to market downturns, though its growing stablecoin and subscription businesses provide some stability.

However, if crypto markets struggle or the stock underperforms, Coinbase will face substantial debt obligations when the notes mature in 2029 and 2032.