Riot Platforms has revised its $200 million credit agreement with Coinbase Credit, as disclosed in an 8-K filing, transitioning from a variable to a fixed interest rate to enhance cost predictability as the company expands into artificial intelligence and high-performance computing infrastructure, while simultaneously reducing its bitcoin holdings. The adoption of a fixed interest rate provides Riot with greater financial stability as it diversifies into AI and HPC. Meanwhile, the company continues to decrease its bitcoin reserves, with its holdings dropping to 15,680 BTC as of Tuesday, compared to 19,368 BTC at the beginning of the year, according to bitcoin treasuries.net.
The revised agreement maintains 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 further extend it by a 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 under normal circumstances, a top-up is required 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 remains weak, using the proceeds to fund its AI and HPC initiatives. Riot's shares have declined by approximately 9% on Tuesday, falling below $17. The company is scheduled to release its Q1 earnings report on April 30.