Riot Platforms Backs $100M Bitcoin-Backed Credit Line with Coinbase

Riot Platforms, a bitcoin mining company, has entered into an agreement to secure a $100 million loan from cryptocurrency exchange Coinbase. In a press statement, the company disclosed that they will be pledging their Bitcoin holdings as security for this borrowing arrangement.

According to Riot , the $100 million loan is a short-term facility that will be available over a period of two months. The publicly listed firm plans to spend the funds on strategic initiatives and general business purposes.

Speaking on the loan, Riot CEO Jason Les said it is part of the firm’s efforts to diversify its funding sources and finance operations. He noted that this is the first Bitcoin-backed loan that the company is getting, and it allows the company to access capital without diluting shareholder value.

He said:

“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.”

Riot currently holds 19,223 Bitcoin and likely wants to sit on its holdings, especially as Bitcoin continues a resurgence that has seen it near $100,000 for the first time in more than a month. Other mining competitors have also been holding on to their BTC, with some like MARA Holdings even acquiring more .

Meanwhile, the credit facility comes with a variable interest rate of 7.75% annually, calculated based on the Fed’s interest rate or 3.25%, whichever is higher, plus 4.5%. Repayment is expected to be after 364 days, with an option to extend for another 364 days, subject to Coinbase approval.

Bitcoin miners encountering stress from various directions

While Riot claims it is raising capital through the credit facility to maintain shareholder value, the move might also reflect the struggles miners are facing currently. According to the latest Bitwise report, Bitcoin miners are facing a new challenge in the form of tariffs.

The report noted that US mining firms account for 40% of global Bitcoin mining hashrate, and they now face tariffs varying between 24% and 46% to import machines from countries such as Malaysia, Thailand, and Vietnam. Riot had to accelerate the shipment of mining equipment to beat the initial tariffs deadline.

Bitcoin miners are always facing a series of challenges, with Bitcoin hash price, which determines the profitability of miners, falling below $50 while hashrate and mining difficulty are relatively high.

Aside from the issue of profitability, publicly traded mining firms are experiencing decreased investor interest due to emerging options for gaining exposure to Bitcoin. Spot exchange-traded funds (ETFs) and equities of corporations with Bitcoin-focused business strategies present alternative investment avenues for such investors.

Coinbase is providing Bitcoin-backed loans to institutional investors.

In the meantime, Coinbase has been providing Bitcoin-backed loan services to publicly traded firms. Riot becomes the second company in recent weeks to secure such financing; last week, health technology firm and Bitcoin-focused corporation Semler Scientific entered into an equivalent arrangement.

At the time, Semler Scientific announced that it plans to take out a loan from Coinbase to purchase additional Bitcoin and increase its holdings after it completes its agreement with the Department of Justice.

In January, Coinbase extended an additional $15 million loan to Bitcoin miner Hut 8, boosting its total credit facility to this company up to $65 million. These funds were anticipated to support the business’s day-to-day activities.

Interestingly, Coinbase is now planning to apply for a federal banking license This step might transform it into something akin to conventional commercial banks. The exchange verified they are contemplating this possibility, despite having made no application for it thus far. Should it proceed, it won’t stand alone since various other cryptocurrency companies are also exploring similar moves.

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