Riot Platforms has modified its $200 million credit agreement with Coinbase Credit, as disclosed in an 8-K filing, replacing the variable interest rate with a fixed one to enhance cost predictability. Concurrently, the company is selling off its bitcoin holdings, with its reserve decreasing to 15,680 BTC as of Tuesday from 19,368 BTC at the beginning of the year, according to bitcoin treasuries.net. The transition to a fixed interest rate provides stability as Riot transitions into artificial intelligence and high-performance computing infrastructure. The revised agreement maintains the same loan size and collateral structure, with the credit facility secured by Riot's bitcoin, USDC, and cash held in Coinbase Custody.
The maturity date has been extended by 364 days, with the option to prolong it by an additional year, subject to the lender's approval. The loan operates under a loan-to-value framework, which may necessitate additional collateral if bitcoin's price experiences a sharp decline. The framework includes a tiered structure, where a top-up is triggered if the loan-to-value ratio exceeds 70% and liquidation occurs at 80%.
Consequently, if bitcoin's price continues to weaken, Riot may need to further deplete its bitcoin reserve to support its pivot into AI and HPC. Riot's shares have dropped approximately 9% on Tuesday to below $17. The company is scheduled to release its Q1 earnings report on April 30.