Hut 8, a leading energy and AI compute company, has successfully refinanced its bitcoin-backed credit facility by signing a new $200 million deal with FalconX, replacing its previous arrangement with Coinbase. This new agreement reduces the fixed interest rate from 9% to 7%, marking a 200-basis-point improvement. According to the company, this move is part of its strategic effort to minimize its cost of debt on bitcoin-backed credit and overall cost of capital.
The refinancing also releases approximately 3,300 bitcoin, previously used as collateral, which is now valued at around $260 million as of May 1. This change gives Hut 8 greater flexibility to allocate this capital towards business growth. Sean Glennan, CFO of Hut 8, commented that "this refinancing strengthens our balance sheet by decreasing our cost of debt while increasing Bitcoin held outside collateral covenants, resulting in additional liquidity to deploy into the growth of our business." He further added that "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 traction among mining firms as they strive to optimize their credit terms and free up more capital for their shift towards AI and long-term leases, moving 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 Louisiana.
The project, announced in December, includes 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, also recently 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. Following the news, Hut 8 shares rose about 1.5% on Monday as bitcoin rallied above $80,000.