Riot Platforms has modified its $200 million credit facility agreement with Coinbase Credit, as disclosed in an 8-K filing. The revised terms replace a variable interest rate with a fixed one, providing greater predictability in borrowing costs.
This development comes as the company continues to divest its bitcoin holdings and shift its focus towards artificial intelligence and high-performance computing infrastructure. By transitioning to a fixed interest rate, Riot gains greater cost certainty as it expands into AI and HPC.
Concurrently, the company is reducing its bitcoin reserves, with holdings decreasing to 15,680 BTC as of Tuesday, down from 19,368 BTC at the start of the year, according to bitcoin treasuries.net. The updated 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. 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 is governed by a loan-to-value framework, which may necessitate additional collateral if bitcoin's price experiences a sharp decline. The framework operates on a tiered system, where a collateral top-up is triggered if the LTV ratio exceeds 70%, and liquidation occurs at 80%.
As a result, Riot may continue to deplete its bitcoin reserves if the cryptocurrency's price remains weak, in order to fund 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.