Hut8 Secures A $50M Credit Facility Backed By Bitcoin
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Hut 8, a Bitcoin mining company based in Canada, has obtained a $50M credit facility from Coinbase Credit. The latter is the subsidiary of the Coinbase cryptocurrency exchange based in the United States.
Hut 8 gets a $50M credit facility from Coinbase
The credit facility that is being launched by Coinbase will be used to achieve general corporate goals. The facility will be backed using the Bitcoin that is held by a cryptocurrency exchange.
Hut 8 shared a statement on this move, saying that the agreement involves a subsidiary firm known as Hut 8 Holdings, which will be the borrower. The credit facility in question is also comprised of a $15 million term loan that will be funded during the deal or after the deal has been closed.
Additionally, the credit facility will also offer an option to receive an extra $20M worth of delayed draw term loan tranche. The funding is attributed to a second borrowing that happened between one and two months after the deal was closed.
Hut 8 has also said that an option to receive an extra $15M delayed the draw term loan tranche through a third borrowing that will happen within 15 business days. The borrowing agreement will be achieved after the closure of a merger deal between Hut 8 and a US Data Mining Group known as US Bitcoin.
The merger deal between Hut 8 and US Bitcoin happened in February. The deal in question led to the creation of one of the largest crypto mining firms across North America. The US has also been leading in Bitcoin mining operations, with many miners moving to the country to tap the abundance of renewable resources.
The merger saw the new mining entity becoming one of the largest miners across the region in terms of the hash rate. The merged company currently shares the top position with companies like Marathon Digital and Riot Blockchain, per a filing with the US Securities and Exchange Commission (SEC).
Bitcoin halving event draws near
The Bitcoin community is eagerly waiting for the next Bitcoin halving event that will take place next year. The Chief Executive Officer at Hut 8, Jaime Leverton, noted that the credit facility will allow the mining company to achieve “additional financial flexibility.”
Leverton has also said that the credit facility will also guarantee that the company adopts a dynamic Bitcoin treasury management strategy as the halving event draws near. Bitcoin halving is a highly anticipated event that will reduce the rewards that are awarded to miners. During this event, the rewards given to miners will be slashed by half.
Bitcoin miners were dealt a blow by the crypto winter that happened last year. The crypto winter saw the prices of different cryptocurrencies plunging significantly. One of the largest crypto miners across the United States, Core Scientific, filed for bankruptcy towards the end of last year because of the crypto winter. The firm later filed for Chapter 11 bankruptcy.
