TL;DR
- Riot Platforms signed a $100 million credit line with Coinbase Credit, using part of its bitcoin reserves as collateral.
- The agreement allows the mining company to access liquidity without issuing new shares, preserving its equity value and strengthening its operational position.
- The line, with a minimum annual interest rate of 7.75%, will remain available for two months and can be extended for up to an additional year if both parties agree.
Riot Platforms announced the signing of a $100 million credit line with Coinbase Credit, the financing division of the well-known exchange.
This agreement allows the company to access funds backed by part of its Bitcoin reserves without the need to issue new shares, a strategy aimed at maintaining the value of its equity capital and securing liquidity for upcoming projects.
How Does the Loan Offered by Coinbase Work?
The loan is structured as a multi-draw credit line, available during the two months following the signing. Riot clarified that it will allocate these funds to strategic initiatives and general corporate needs, including financing operations and potential expansions.
The minimum annual interest rate established is 7.75%. This percentage is calculated by adding 4.5% to the higher value between the current federal funds rate and a floor of 3.25%. The line has an initial term of 364 days, although it may be extended for an additional year if both parties agree.
Currently, Riot Platforms manages a reserve of 19,223 BTC, equivalent to over $1.8 billion. Only a portion of this capital will remain as collateral to back the loan, a decision that grants them flexibility and operational margin while preserving most of their assets.
Coinbase Credit has closed similar agreements in recent months, such as the loan to technology firm Semler Scientific and a previous credit line granted to miner Hut 8.
Riot Platforms: An Industry Built Around Bitcoin
Riot Platforms currently operates mining farms in Texas and Kentucky and maintains electrical engineering operations in Denver and Houston. The company aims to establish itself as a provider of Bitcoin-based digital infrastructure, relying on a vertically integrated strategy that covers everything from mining to the manufacturing of electrical components.
The financing agreements offered by Coinbase provide new funding alternatives in the crypto industry, where the search for flexible capital without selling reserves has become an increasingly desirable option for companies
