Hut 8, a company that has evolved from bitcoin mining to energy and AI computing, has successfully refinanced its bitcoin-backed credit facility. The new $200 million facility, provided by FalconX, replaces the company's previous arrangement with Coinbase. As a result, Hut 8 has reduced its fixed interest rate from 9% to 7%, achieving a 200-basis-point improvement.

This move is part of the company's strategy to minimize its debt costs associated with bitcoin-backed credit and overall cost of capital. The new deal also releases approximately 3,300 bitcoin, previously used as collateral, which are now valued at around $260 million as of May 1. This provides Hut 8 with greater flexibility to allocate this capital.

According to Sean Glennan, CFO of Hut 8, 'This refinancing strengthens our balance sheet by decreasing our debt costs while increasing the amount of Bitcoin held outside of collateral covenants, resulting in additional liquidity to deploy into the growth of our business.' He further added, 'It advances our broader objective of optimizing the role of bitcoin on our balance sheet and lowering our cost of capital.' The trend of refinancing for better terms is gaining momentum among mining companies as they strive to improve their credit terms and free up more capital to pivot towards AI and move away from volatile bitcoin revenues. Recently, Hut 8 priced $3.25 billion of senior secured notes to fund the construction of a 245-megawatt data center at its River Bend campus in St. Francisville, Louisiana.

The project has a 15-year, $7 billion lease with AI infrastructure firm Fluidstack, backed by Google, with a potential total value of up to $17.7 billion if all renewal options are exercised. Another mining company, Riot, has also secured improved terms on its $200 million bitcoin-backed credit facility with Coinbase, lowering the rate to a fixed 6.15% from 8.3% and releasing 1,544 pledged collateral bitcoin. This development signals growing lender confidence in Riot's expanding data center business.

Hut 8's shares rose about 1.5% on Monday as bitcoin prices rallied above $80,000.