Riot Platforms has revised its $200 million credit agreement with Coinbase Credit, as disclosed in a recent 8-K filing. The revised terms replace the floating interest rate with a fixed rate, thereby enhancing cost predictability for the company.
Concurrently, Riot continues to decrease its bitcoin reserves as it transitions towards artificial intelligence and high-performance computing infrastructure. As of Tuesday, the company's bitcoin holdings stood at 15,680, marking a decline from the 19,368 bitcoins it held at the beginning of the year, according to data from bitcoin treasuries.net. The amended agreement retains the original loan size and collateral structure, with Riot's bitcoin, USDC, and cash held in Coinbase Custody serving as security for the credit facility. However, the maturity date has been extended by 364 days, with the option to further extend it by a year, subject to lender approval.
The credit facility operates under a loan-to-value framework, which may necessitate collateral top-ups if bitcoin's price experiences a sharp decline. Specifically, the framework includes a tiered loan-to-value structure, where a top-up is triggered if the loan-to-value ratio exceeds 70%, and liquidation occurs at an 80% ratio. Consequently, if bitcoin prices continue to weaken, Riot may need to deplete its treasury further to support its pivot towards AI and HPC.
Riot's shares have declined by approximately 9% on Tuesday, falling below $17, with the company scheduled to report its Q1 earnings on April 30.