Hut 8's Crypto Empire Expands With A $50M Boost From Coinbase

Digital asset mining company Hut 8 Mining Corp. (NASDAQ: HUT) announced on Monday it secured a credit facility of up to $50 million from Coinbase Global Inc.'s(NASDAQ: COIN) Coinbase Credit.

The credit facility will be used for general corporate purposes, providing the company with increased financial flexibility.

"This credit facility gives us additional financial flexibility. At the same time, it ensures that we can maintain our dynamic Bitcoin (CRYPTO: BTC) treasury management strategy going into the halving," Hut 8 CEO Jaime Leverton stated.

The credit facility included a $15 million term loan expected to be funded shortly after closing.

There was also the option of drawing an additional $20 million delayed-draw term loan tranche in a second borrowing between one and two months following closing.

Furthermore, there was an option of drawing an additional $15 million delayed-draw term loan tranche in a third borrowing within 15 business days following the completion of the previously announced merger between Hut 8 and U.S. Data Mining Group, Inc. 

These borrowings are subject to maintaining a specified loan-to-value ratio.

The borrowed amounts under the credit facility will bear an interest rate equal to the greater of the federal funds rate on the date of the applicable borrowing and 3.25%, plus 5.0%.

The credit facility matures 364 days after the date of the first borrowing.

Also Read: Digital Asset Investments Skyrocket: Bitcoin Dominates With $188M Inflows

The obligations under the credit facility are secured by the borrower's interest in certain Bitcoin held in the custody of Coinbase Custody Trust Company and are guaranteed by Hut 8 Mining Corp.

The U.S. Securities and Exchange Commission has leveled allegations against Coinbase, asserting that the company has been running an unregistered securities exchange.

This accusation is part of two high-profile lawsuits recently filed, with the other one targeting Binance.

As per the 2022 annual earnings report of the company, Coinbase Credit is identified as a subsidiary of the cryptocurrency exchange.

In an earlier document, it had been described as a "finance subsidiary."

Read Next: Cryptosat, Dfns Labs Break Boundaries With Crypto Keys In Low-Earth Orbit

Join Benzinga's Future of Crypto in NYC on Nov. 14, 2023, to stay updated on trends like AI, regulations, SEC actions & institutional adoption in the crypto space. Secure early bird discounted tickets now!

Photo: Shutterstock