Hut 8 swaps Coinbase loan for cheaper FalconX deal, slashing borrowing costs as it bets big on AI

Hut 8 (HUT), a bitcoin miner turned energy and AI compute company, has refinanced its bitcoin-backed credit facility, replacing its existing Coinbase Credit arrangement with a new $200 million facility with FalconX.

With the new deal, Hut 8 cut its fixed interest rate to 7% from 9%, a 200-basis-point improvement, according to a press release. The move is part of the firm's focus on lowering its cost of debt on bitcoin-backed credit and broader cost of capital, the company said. The deal also frees up approximately 3,300 bitcoin that were previously pledged as collateral, worth roughly $260 million as of May 1, giving Hut 8 greater flexibility to deploy that capital.

"This refinancing strengthens our balance sheet by decreasing our cost of debt while simultaneously increasing Bitcoin held outside collateral covenants, resulting in additional liquidity to deploy into the growth of our business," said Sean Glennan, CFO of Hut 8.

"It advances our broader objective of optimizing the role of bitcoin on our balance sheet and lowering our cost of capital,” he added.

The trend of refinancing for better terms continues among mining firms, as they seek to improve their credit terms and free up more capital for their pivot to AI and move away from volatile bitcoin revenues in favor of long-term leases.

Last week, Hut 8 priced $3.25 billion of senior secured notes to fund construction of a 245-megawatt data center at its River Bend campus in St. Francisville, Louisiana, according to an April 28 SEC filing. The project, first announced in December, has a 15-year, $7 billion lease with AI infrastructure firm Fluidstack, backed by Google, with a total potential value of up to $17.7 billion if all renewal options are exercised.

Another miner, Riot, 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.

Hut 8 shares rose about 1.5% on Monday as bitcoin rallied above $80,000.

Read More: Riot extends $200 million Coinbase credit facility, and bitcoin weakness could mean more sales