Bitcoin miner Riot Platforms secures $100 million credit agreement with Coinbase Credit, utilizing bitcoin as collateral to support its expansion.
Riot Platforms Secures $100M Bitcoin-Backed Credit Line From Coinbase
Bitcoin miner Riot Platforms has secured a $100 million credit agreement with Coinbase Credit, using bitcoin as collateral to secure short-term funding for its ongoing expansion.
The publicly traded mining firm said it would draw on the facility over the next two months. The deal offers Riot, which currently holds 19,223 BTC worth over $1.8 billion, a line of credit that avoids issuing new shares.
Key Benefits and Terms
The loan comes with a variable interest rate: borrowers will pay at least 7.75% annually, calculated as the greater of 3.25% or the federal funds rate upper bound, plus 4.5%. The loan term is 364 days, though Riot may seek a one-year extension if Coinbase agrees to it.
The credit facility is secured by a portion of Riot’s total bitcoin reserves. The firm said it will use the funds “to pursue key strategic initiatives and for general corporate purposes.”
Diversification and Growth
This credit facility is a key part of our efforts to diversify sources of financing to support our operations and strategic growth initiatives, with a view towards long-term stockholder value creation,” said CEO Jason Les in a statement.
Coinbase has been making other similar deals. Just last week, healthcare technology firm Semler Scientific (SMLR) announced it reached an agreement with Coinbase to borrow cash via a loan secured by its bitcoin holdings.
Coinbase is a San Francisco-based cryptocurrency exchange platform founded in 2012. It allows users to buy, sell, and store over 50 'cryptocurrencies' , including Bitcoin, Ethereum, and Litecoin. The platform has gained popularity due to its user-friendly interface, high security measures, and regulatory compliance. As of 2022, Coinbase has over 73 million registered users worldwide. In April 2021, the company went public with a valuation of $100 billion, making it one of the largest initial public offerings (IPOs) in history.
Hut 8 (HUT), another bitcoin miner, has also leveraged a bitcoin-backed credit facility with Coinbase in the past.
