Hut 8, a leading energy and AI computing firm, has successfully refinanced its bitcoin-backed credit facility by entering into a new $200 million deal with FalconX, thereby replacing its existing Coinbase Credit arrangement. This move has resulted in a significant reduction in the company's fixed interest rate, dropping from 9% to 7%, which translates to a 200-basis-point improvement, as stated in a recent press release.
By securing this new agreement, Hut 8 aims to minimize its debt costs associated with bitcoin-backed credit and its overall cost of capital. Additionally, the deal has freed up approximately 3,300 bitcoin, previously used as collateral, which are now valued at around $260 million as of May 1. This development provides Hut 8 with greater flexibility to allocate this capital towards its business growth. According to Sean Glennan, CFO of Hut 8, 'This refinancing decision 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.' Glennan 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 improved terms is becoming increasingly common among mining firms, as they strive to enhance their credit terms and free up more capital to support their transition to AI and shift away from the volatility of bitcoin revenues in favor of long-term leases.
Recently, Hut 8 successfully 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, as per an April 28 SEC filing. The project, initially announced in December, involves 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 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 of pledged collateral bitcoin, signaling growing lender confidence in its expanding data center business. On Monday, Hut 8 shares experienced a rise of about 1.5% as bitcoin surged above $80,000.