Key Takeaways:
The facility provides Riot with capital for strategic growth without issuing new equity, preserving shareholder value.
The loan bears interest tied to the federal funds rate.
Riot plans to use the funds to support key initiatives and general corporate needs.
Riot Platforms, Inc., a Bitcoin mining firm, announced on Wednesday that it has secured a $100 million credit facility from Coinbase Credit, Inc., a subsidiary of Coinbase Global.
The agreement marks Riot’s first bitcoin-backed credit facility and will support the company’s ongoing growth strategy.
Under the terms of the deal, Coinbase will provide Riot with a multiple drawdown term loan facility totaling up to $100 million.
The funds will be made available to Riot over a two-month period following the execution of the agreement, referred to as the “Effective Date.”
The company plans to use the proceeds to fund key strategic initiatives and general corporate activities.
“Riot has entered into its first bitcoin-backed facility, which provides us with non-dilutive funding at an attractive cost of financing,” said Riot CEO Jason Les in a press release.
“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.”
The loan structure allows Riot to draw on the facility as needed.
All borrowed amounts will accrue interest at an annual rate based on the greater of the federal funds rate (upper limit) or 3.25%, plus an additional 4.50%.
The facility is set to mature 364 days from the Effective Date, though Riot may request an extension for another 364 days, subject to Coinbase’s approval.
Riot to Secure Loan With a Portion of Its Bitcoin Holdings
As part of the agreement, Riot will secure the loan with a portion of its bitcoin holdings, reflecting a growing trend of institutional bitcoin-backed financing.
This approach allows the company to use its digital assets without issuing new equity, thereby avoiding shareholder dilution.
The move demonstrates Riot’s ongoing commitment to financial innovation and operational expansion within the digital asset mining space.
As the mining industry faces increased competition and capital demands, this financing approach offers Riot both liquidity and resilience.
Riot Platforms Diversifies Exploring AI Revenue
In February, Riot Platforms said it was exploring revenue diversification into artificial intelligence (AI) and high-performance computing (HPC), joining the growing trend of miners adapting their infrastructure for AI applications as Bitcoin network transactions hit a 12-month low.
On February 13, Riot Platforms announced that it was actively pursuing potential partnerships within the AI and HPC sectors.
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