Hut 8, a company transitioning from bitcoin mining to energy and AI computing, has successfully refinanced its bitcoin-backed credit facility. The new $200 million agreement with FalconX replaces the previous Coinbase Credit arrangement, resulting in a reduced fixed interest rate of 7% from 9%.
This 200-basis-point decrease is part of the company's effort 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 move provides Hut 8 with greater flexibility in deploying its capital. According to Sean Glennan, CFO of Hut 8, "This refinancing strengthens our balance sheet by decreasing our cost of debt while increasing the amount of 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." This trend of refinancing for better terms is also observed among other mining firms as they strive to improve their credit terms and free up more capital for their transition to AI and shift away from the volatility of bitcoin revenues in favor of long-term leases.
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 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 its expanding data center business. Hut 8 shares experienced a 1.5% increase on Monday as bitcoin prices surpassed $80,000.