Riot Platforms (RIOT) has revised its credit agreement with Coinbase Credit, as disclosed in an 8-K filing, swapping a variable interest rate for a fixed one to enhance cost predictability as the company shifts focus towards AI and high-performance computing infrastructure while continuing to decrease its bitcoin holdings. The adoption of a fixed interest rate brings stability as Riot expands into AI and HPC. Concurrently, the company is reducing its bitcoin reserves, which stood at 15,680 BTC as of Tuesday, marking a decline from 19,368 BTC at the beginning of the year, according to bitcoin treasuries.net. The revised agreement retains the same loan size and collateral structure, with Riot's bitcoin, USDC, and cash held with Coinbase Custody serving as security for the credit facility.
However, the maturity date has been extended by 364 days, with the option to extend it by an additional year, subject to lender approval. The loan operates under a loan-to-value framework that necessitates collateral top-ups if bitcoin's price experiences a sharp decline. The framework is tiered, with a top-up triggered if the LTV ratio exceeds 70% and liquidation initiated at 80%.
Consequently, Riot may continue to deplete its treasury if bitcoin's weakness persists, funding its pivot towards AI and HPC. Riot's shares have declined by approximately 9% on Tuesday, falling below $17.
The company is scheduled to report its Q1 earnings on April 30.