Coinbase Credit lends $50 million to Hut 8 to support Bitcoin cash

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Canadian Bitcoin (BTC) mining company, Hut 8 Mining, has secured a credit facility from a subsidiary of US-based cryptocurrency exchange, Coinbase.

Hut 8 officially announced on June 26 that it had entered into a $50 million credit agreement with Coinbase Credit as its lender. The credit facility involved Hut 8’s subsidiary, Hut 8 Holdings, as the borrower.

According to the announcement, the loan proceeds will be used for general corporate purposes. The credit facility provides a $15 million term loan which is expected to be funded at or subsequently after closing.

The loan also offers the possibility of obtaining an additional deferred draw term loan tranche of $20 million on a second borrowing between one and two months after closing. The facility also provides an additional drawdown option of an additional $15 million deferred draw term loan tranche.

The final tranche would be the third loan provided within 15 business days of the completion of the previously announced merger between Hut 8 and US Data Mining Group, also known as US Bitcoin, the announcement notes.

According to Hut 8 CEO Jaime Leverton, the credit facility provides the company with additional financial flexibility. He mentioned the importance of the credit facility in the context of the upcoming Bitcoin halving, which is expected to reduce the BTC miner block reward from 6.25 BTC to 3.125 BTC.

Leverton said:

At the same time, it ensures that we can maintain our aggressive Bitcoin cash management strategy ahead of the halving.”

Hut 8 became a prominent Bitcoin miner who continued to mine BTC despite the huge financial problems faced by the BTC mining industry. While some mining companies like Argo Blockchain were forced to sell portions of their BTC holdings amid the 2022 bear market, Hut 8 stuck to its longstanding HODL strategy.

Related: Bitcoin Miner Core Scientific Files Chapter 11 Plan

The Canadian company had a total of 9,133 self-mined bitcoins held in custody as of March 31, 2023, Hut 8 wrote in its Q1 2023 Financial Update. Prior to the halving, we will continue to focus on the strategically increasing our Bitcoin stack and on growing our HPC business, including exploring opportunities in the growing artificial intelligence market, the CEO said at the time.

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