Canada’s Hut 8 Mining Corp., the largest cryptocurrency miner, has secured a multi-million dollar credit facility from US cryptocurrency exchange lending firm Coinbase.
according to press release Today, June 26, Hut 8 announced that it, along with its subsidiary Hut 8 Holdings – the borrower – has secured a $50 million credit facility from Coinbase Credit Inc.
Credit Facility for General Purposes Only – Cottage 8
According to today’s statement, Hut 8 intends to direct loan proceeds from the $50 million credit facility toward general corporate uses only.
However, the line of credit is organized into three parts. It begins with the provision of a $15 million term loan which will be provided upon closing of the credit facility agreement or shortly thereafter.
On top of that, the credit facility also offers an option to take out an additional $20 million of Coinbase credit in the form of a loan tranche with a late withdrawal term, meaning Hut 8 can exercise more flexibility on when that specific loan will be received.
To be clear, Hut 8 is allowed to ask for $20 million at any time he sees fit; However, only within the first two months after the credit facility closes.
Finally, the line of credit agreement includes Hut 8’s option to borrow an additional $15 million for a late-draw term tranche loan in a third borrowing. However, this transaction can only take place 15 business days after the completion of the merger between Hut 8 and US Bitcoin Corp.
Hut 8 is preparing ahead of the Bitcoin Halving event
Commenting on this recently agreed credit arrangement, Hut 8 CEO Jaime Leverton shared the importance of the credit line for the mining company, especially with the upcoming Bitcoin halving event in 2024.
He said:
This credit facility gives us additional financial flexibility. At the same time, it ensures that we can maintain our dynamic Bitcoin halving treasury management strategy
A bitcoin halving is a pre-programmed event on the blockchain in which mining rewards are halved. It occurs every four years and is set to continue until the total Bitcoin supply has exhausted its maximum supply of 21 million tokens in the year 2140.
Bitcoin halving is designed to counter any inflationary impact on Bitcoin by reducing the number of tokens that a single miner can earn, thus preserving Bitcoin’s scarcity.
There is usually a lot of hype surrounding Bitcoin halvings due to the potential of these events to increase the price of BTC, as shown in previous occasions.
However, while halving events may have improved the price of bitcoin in the past, each present halving has unique circumstances — and bitcoin demand has been known to fluctuate. Thus, there is no guarantee that future halvings will affect the Bitcoin price. However, the 2024 halving event is set to reduce bitcoin rewards from 6.25 to 3.125 BTC.
BTC Trading At $30,192 on the one hour chart | Source: BTCUSD Chart On Tradingview.com
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