Riot Platforms has revised its $200 million credit agreement with Coinbase Credit, as disclosed in an 8-K filing, switching from a variable interest rate to a fixed rate, which enhances cost predictability as the company transitions into artificial intelligence and high-performance computing infrastructure, while also reducing its bitcoin holdings. The adoption of a fixed interest rate provides stability as Riot shifts its focus towards AI and HPC.
Concurrently, the company is selling off its bitcoin reserves, with its holdings decreasing to 15,680 BTC as of Tuesday, down from 19,368 BTC at the beginning of the year, according to bitcoin treasuries.net. The revised 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. 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, which may require Riot to replenish its collateral if bitcoin's price drops significantly. The framework includes a tiered system, where under normal circumstances, a top-up is triggered if the loan-to-value 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 fallen by around 9% on Tuesday, to below $17. The company is scheduled to report its Q1 earnings on April 30.