Riot Platforms has modified its $200 million credit facility agreement with Coinbase Credit, as disclosed in an 8-K filing. The revised terms replace the floating interest rate with a fixed rate, providing greater predictability in borrowing costs. This development comes as the company continues to decrease its bitcoin holdings and shift its focus towards artificial intelligence and high-performance computing infrastructure.
By switching to a fixed interest rate, Riot gains greater certainty in its expenses as it expands into the AI and HPC sectors. Meanwhile, the company's bitcoin reserves have decreased, with 15,680 BTC held as of Tuesday, down from 19,368 BTC at the beginning of the year, according to data from bitcoin treasuries.net. The updated agreement maintains the same loan size and collateral structure, with the credit facility secured by Riot's bitcoin, USDC, and cash held in Coinbase Custody. However, the loan's maturity date has been extended by 364 days, with the option to extend it by an additional year, subject to lender approval.
The loan is subject to a loan-to-value framework, which may require Riot to provide additional collateral if the price of bitcoin drops significantly. Under this framework, a top-up is triggered if the loan-to-value ratio exceeds 70%, and liquidation occurs at 80%.
As a result, Riot may be forced to further deplete its bitcoin reserves if the cryptocurrency's price continues to decline, in order to fund its pivot into AI and HPC. Riot's shares have fallen by approximately 9% on Tuesday, to below $17.
The company is scheduled to report its Q1 earnings on April 30.