I was able to do this. However, I couldn’t retain the tag based organisation.
The solution is slightly technical (yet very simple) and involves using a Command line. Download a backup of Simplenote and you get all .txt files.
Batch convert them into .md files using this command below once you’re at the right folder in the Command line.
find . -iname “*.txt” -exec bash -c ‘mv “$0” “${0%.txt}.md”’ {} ;
Original source