Coinbase Provides Riot Platforms with a $100M Credit Line Secured by Bitcoin

Riot Platforms Secures $100 Million Credit Line from Coinbase, Backed by Bitcoin

Riot Platforms (RIOT), a prominent Bitcoin mining company, has finalized a $100 million credit agreement with Coinbase’s credit arm, pledging a portion of its Bitcoin reserves as collateral. This deal enables Riot to access short-term capital to support its ongoing expansion plans without the need to issue new shares.

The company announced in a press release that it intends to draw on the credit line over the next two months. Riot, which currently holds 19,223 BTC, valued at over $1.8 billion, can now secure liquidity to fund strategic projects and general corporate needs.

“This credit facility is an essential component of our strategy to diversify funding sources as we continue to expand our operations and create value for our shareholders,” said Jason Les, CEO of Riot Platforms.

The loan from Coinbase Credit carries a variable interest rate, with an initial rate of at least 7.75% annually. The rate is determined by whichever is higher: 3.25% or the upper bound of the federal funds rate, plus 4.5%. The loan is set to last for 364 days, with the possibility of a one-year extension if agreed upon by both parties.

This facility is secured against a portion of Riot’s bitcoin holdings, and the company plans to use the funds for key strategic initiatives and corporate purposes.

Coinbase has been involved in similar lending arrangements recently. Semler Scientific (SMLR), a healthcare technology firm, also reached a deal with Coinbase to secure a loan backed by its Bitcoin holdings just last week. Moreover, Hut 8 (HUT), another Bitcoin mining company, has previously used Coinbase’s Bitcoin-backed credit facilities for financing.