Riot Platforms uses Bitcoin to back short-term $100 million credit line from Coinbase

Bitcoin miner Riot Platforms has signed an agreement to borrow $100 million from crypto exchange Coinbase. The firm announced the deal in a press release, noting that it is using its Bitcoin as collateral for the loan.

According to Riot, the $100 million loan is a short-term facility that will be available over a period of two months. The publicly listed firm plans to spend the funds on strategic initiatives and general business purposes.

Speaking on the loan, Riot CEO Jason Les said it is part of the firm’s efforts to diversify its funding sources and finance operations. He noted that this is the first Bitcoin-backed loan that the company is getting, and it allows the company to access capital without diluting shareholder value.

He said:

“This credit facility is a key part of our efforts to diversify sources of financing to support our operations and strategic growth initiatives, with a view towards long-term stockholder value creation.”

Riot currently holds 19,223 Bitcoin and likely wants to sit on its holdings, especially as Bitcoin continues a resurgence that has seen it near $100,000 for the first time in more than a month. Other mining competitors have also been holding on to their BTC, with some like MARA Holdings even acquiring more.

Meanwhile, the credit facility comes with a variable interest rate of 7.75% annually, calculated based on the Fed’s interest rate or 3.25%, whichever is higher, plus 4.5%. Repayment is expected to be after 364 days, with an option to extend for another 364 days, subject to Coinbase approval.

Bitcoin miners facing pressure on multiple fronts

While Riot claims it is raising capital through the credit facility to maintain shareholder value, the move might also reflect the struggles miners are facing currently. According to the latest Bitwise report, Bitcoin miners are facing a new challenge in the form of tariffs.

The report noted that US mining firms account for 40% of global Bitcoin mining hashrate, and they now face tariffs varying between 24% and 46% to import machines from countries such as Malaysia, Thailand, and Vietnam. Riot had to accelerate the shipment of mining equipment to beat the initial tariffs deadline.

Bitcoin miners are always facing a series of challenges, with Bitcoin hash price, which determines the profitability of miners, falling below $50 while hashrate and mining difficulty are relatively high.

Beyond the problem with profitability, publicly traded miners are also seeing less interest from investors as new ways continue to emerge for those seeking exposure to Bitcoin. Spot exchange-traded funds (ETFs) and stocks of companies with corporate Bitcoin strategies offer other alternatives for these investors.

Coinbase is offering Bitcoin-backed loans to institutions

Meanwhile, Coinbase has been busy offering Bitcoin-backed credit facilities to public companies. Riot is the second company to get such loans in the past few weeks, with health tech and Bitcoin corporate treasury company Semler Scientific reaching a similar agreement last week.

Semler Scientific disclosed at the time that it would borrow money from Coinbase to buy more Bitcoin and add to its stash once it finalizes its settlement with the Department of Justice.

Coinbase had also given a $15 million loan to Bitcoin miner Hut 8 in January, increasing its credit facility to the company to $65 million. The funds were expected to be used for the firm’s general operations.

Interestingly, Coinbase is now planning to apply for a federal banking license in a move that could see it become like traditional commercial banks. The exchange confirmed it was considering it, even though it has not applied yet. If it does, it will not be the only one, as several other crypto firms are also looking to do the same thing.

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