Riot Platforms has modified its $200 million credit agreement with Coinbase Credit, as disclosed in an 8-K filing. The revision replaces a variable interest rate with a fixed one, enhancing cost predictability as the company shifts its focus towards artificial intelligence and high-performance computing infrastructure, while concurrently reducing its bitcoin holdings. The adoption of a fixed interest rate provides greater stability, aligning with Riot's strategic pivot into AI and HPC. Meanwhile, the company continues to decrease its bitcoin reserves, with its holdings standing at 15,680 BTC as of Tuesday, down from 19,368 BTC at the start of the year, according to data from bitcoin treasuries.net.
The revised agreement maintains the 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 loan's maturity has been extended by 364 days, with the option to extend it by an additional year, subject to lender approval. The loan operates within a loan-to-value framework, which may necessitate additional collateral if bitcoin's price experiences a sharp decline.
The framework includes a tiered structure, where under normal circumstances, a top-up is triggered if the LTV ratio exceeds 70%, and liquidation occurs at 80%. Consequently, Riot may continue to deplete its bitcoin reserves if the cryptocurrency's price continues to weaken, potentially funding its AI and HPC endeavors. 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.