Hut 8, a leading energy and AI computing company, has successfully refinanced its bitcoin-backed credit facility, opting for a more economical deal with FalconX. The new $200 million facility replaces the previous Coinbase Credit arrangement, resulting in a significant reduction in debt costs. By securing a fixed interest rate of 7%, down from 9%, Hut 8 has achieved a 200-basis-point improvement.

This strategic move is part of the company's efforts to minimize its cost of debt on bitcoin-backed credit and optimize its overall cost of capital. The refinancing deal also releases approximately 3,300 bitcoin from collateral, valued at around $260 million as of May 1, providing Hut 8 with increased flexibility to allocate capital towards its business growth. According to Sean Glennan, CFO of Hut 8, 'This refinancing strengthens our balance sheet by decreasing our cost of debt while simultaneously increasing Bitcoin held outside 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 firms as they strive to enhance their credit terms and free up more capital to pivot towards AI and move away from the volatility of 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 total potential value of up to $17.7 billion if all renewal options are exercised. Another miner, 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 of pledged collateral bitcoin.

This development signals growing lender confidence in the expanding data center business of these companies. Hut 8 shares experienced a rise of about 1.5% on Monday as bitcoin rallied above $80,000.