Bitcoin miner Hut 8 secures $50M credit facility from Coinbase
Hut 8 Mining, a Bitcoin mining company based in Canada, has secured a $50 million credit facility through Coinbase Credit, a subsidiary of the largest cryptocurrency exchange in the United States.
The loan arrangement, which will mature 364 after the initial borrowing, will provide Hut 8 Mining with additional capital to be utilized for general corporate purposes, as well as its ongoing operations.
“This credit facility gives us additional financial flexibility. At the same time, it ensures that we can maintain our dynamic Bitcoin treasury management strategy going into the halving,” said CEO Jaime Leverton.
As part of the credit facility agreement, Hut 8 Mining will initially receive a term loan of $15 million, which is expected to be funded shortly after the closing of the deal. The credit facility also includes the option for an additional delayed-draw term loan tranche of $20 million, which can be accessed between one and two months after closing.
Furthermore, there is an option for a further delayed-draw term loan tranche of $15 million, which can be obtained within 15 business days after the completion of the merger between Hut 8 and U.S. Data Mining Group, Inc. The availability of these additional tranches is contingent upon maintaining a specified loan-to-value ratio, the statement reads.
Interest on all borrowed amounts under the credit facility will be calculated based on the higher of either the federal funds rate on the borrowing date or 3.25%, plus an additional 5.0%. The credit facility has a maturity period of 364 days from the date of the first borrowing.
The obligations under the credit facility are secured by the Bitcoin holdings held by the Canadian crypto miner in the custody of Coinbase Custody, and the loan is guaranteed by the company.
Bitcoin mining is a very competitive industry as miners worldwide are verifying transactions while securing the network for economic incentives. Global demand is also growing in lockstep with Bitcoin price.
Hut 8 Mining and U.S. Data Mining Group, Inc. (operating as “US Bitcoin Corp.”) have entered into a “merger of equals” agreement, resulting in the formation of a new entity named Hut 8 Corp. The newly established company, headquartered in the United States, will benefit from access to approximately megawatts of energy for its operations.
Upon the completion of the merger, shareholders of both Hut 8 and US Bitcoin Corp. will have an equal ownership stake in the new company, Hut 8 Corp. This merger aims to combine the strengths and resources of both companies, positioning the newly formed entity for growth in the cryptocurrency mining industry.