Riot Platforms has revised its $200 million credit facility with Coinbase Credit, as disclosed in an 8-K filing, replacing the variable interest rate with a fixed one to enhance cost predictability as the company transitions into artificial intelligence and high-performance computing infrastructure, while continuing to decrease its bitcoin holdings. The adoption of a fixed interest rate provides greater stability for Riot as it shifts its focus towards AI and HPC infrastructure. Meanwhile, the company is persisting in reducing its bitcoin stash, with its holdings decreasing to 15,680 BTC as of Tuesday from 19,368 BTC at the beginning of the year, according to bitcoin treasuries.net.
The revised agreement indicates that the loan amount and collateral structure remain unchanged, 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 operates under a loan-to-value framework that necessitates collateral top-ups if bitcoin's price experiences a sharp decline. The loan is subject to a tiered loan-to-value framework, wherein, 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 treasury if bitcoin's price remains weak, thereby funding its AI/HPC pivot. Riot's shares have declined by approximately 9% on Tuesday to below $17.
The company is scheduled to report its Q1 earnings on April 30.