Key Takeaways
- The facility is set for an initial term of 364 days, with an option for a one-year extension subject to Coinbase’s approval.
- The loan’s interest rate is variable and determined by the greater of two benchmarks: 3.25% or the Federal Reserve’s upper bound, with an additional 4.5% added on top
Leading bitcoin mining firm, Riot Platforms has secured a $100 million credit facility from Coinbase Credit, the lending division of crypto exchange Coinbase. The agreement is structured as a short-term loan backed by a portion of Riot’s Bitcoin holdings and aims to support the company’s ongoing expansion efforts.
The facility is set for an initial term of 364 days, with an option for a one-year extension subject to Coinbase’s approval. Riot said it plans to draw on the credit line over the next two months, using the funds for corporate operations and strategic initiatives. This move allows the company to raise capital without issuing new equity, helping avoid shareholder dilution.
“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 Jason Les, CEO of Riot Platforms, in a statement.
The loan’s interest rate is variable and determined by the greater of two benchmarks: 3.25% or the Federal Reserve’s upper bound, with an additional 4.5% added on top. Based on the current federal funds rate, the borrowing cost stands at a minimum of 7.75% annually but could rise if interest rates increase. Riot’s latest move underscores the growing trend of using Bitcoin reserves as leverage for operational capital, a strategy gaining traction among firms in the digital assets sector.
As of April, Riot holds 19,223 Bitcoin—making it one of the largest corporate holders globally. The company’s holdings are valued at approximately $1.8 billion based on recent market prices, and a portion of these assets will serve as collateral for the loan. Riot confirmed that the funds will be directed toward key business goals, including expansion and general expenditures.
Shares of Riot Platforms rose more than 8% on the day of the announcement, trading on the Nasdaq under the symbol RIOT. The broader uptick in crypto-related stocks coincided with a market rally, though Riot’s stock remains down over 40% for the year, reflecting the broader downturn in cryptocurrency prices and global economic tensions.
Bitcoin itself is currently trading near $93,000, roughly 15% off its recent high following the inauguration of U.S. President Donald Trump. The close correlation between the price of Bitcoin and the performance of mining firms like Riot continues to define the sector’s volatility, a pattern observed since at least 2020.
Despite the recent pullback, Riot concluded 2024 with record financial results. The firm reported $376.7 million in total revenue and $109.4 million in net profit, benefiting from post-halving operational efficiencies.
The partnership with Coinbase marks Riot’s first credit arrangement backed directly by its Bitcoin treasury. Similar financing deals are becoming more common: just last week, Semler Scientific, a healthcare technology firm, announced a comparable loan agreement with Coinbase.
