According to an 8-K filing, Riot Platforms (RIOT) has modified its $200 million credit line with Coinbase Credit, replacing a floating rate with a fixed rate, providing greater cost predictability while the company continues to reduce its Bitcoin holdings.
The move to fixed rates provides predictability as Riot moves toward artificial intelligence (AI) and high-performance computing (HPC) infrastructure. At the same time, the company is continuing to reduce its Bitcoin stack. As of Tuesday, the company held 15,680 BTC, down from 19,368 BTC at the beginning of the year, according to data from bitcointreasuries.net.
The updated agreement shows that the loan size and collateral structure remain unchanged. Riot’s cash holdings in Bitcoin, USDC and Coinbase Custody secured the credit facility. But the term has been extended by 364 days, with the option to extend for another year with lender approval.
The loan operates under a loan-to-value (LTV) framework that can force a collateral call if the price of Bitcoin drops significantly. The loan operates under a tiered loan-to-value framework. Under normal circumstances, top-ups are triggered if the loan-to-value ratio exceeds 70%, and liquidation begins at 80%.
Therefore, if Bitcoin continues to weaken and fund its AI/HPC pivot, Riot may continue to drain its funds
Riot shares fell about 9% on Tuesday, falling below $17. The company will report first-quarter earnings on April 30.