Riot Platforms has modified its 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. This move coincides with the company's strategic shift towards artificial intelligence and high-performance computing infrastructure, while it continues to decrease its bitcoin holdings.
As of Tuesday, Riot's bitcoin reserves had dwindled to 15,680 BTC, down from 19,368 BTC at the beginning of the year, according to bitcoin treasuries.net. The revised agreement maintains the original loan amount and collateral structure, with Riot's bitcoin, USDC, and cash held with Coinbase Custody serving as security. The loan's maturity has been extended by 364 days, with the option to further extend it by a year, subject to lender approval.
The credit facility operates under a loan-to-value framework, which may necessitate additional collateral if bitcoin's price drops significantly. Under this framework, a collateral top-up is triggered when the loan-to-value ratio exceeds 70%, and liquidation occurs at 80%. Consequently, 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.
On Tuesday, Riot's shares declined by approximately 9% to below $17, with the company's Q1 earnings report scheduled for April 30.