Hut 8 Corp. secures $200 million revolving credit facility backed by Bitcoin

Hut 8 Corp. (NASDAQ:HUT), a cryptocurrency mining company with a market capitalization of $2.8 billion and showing impressive momentum with a 155% return over the past year, announced it has entered into a credit agreement providing for a revolving credit facility of up to $200 million, according to a press release statement based on a filing with the Securities and Exchange Commission. According to InvestingPro analysis, the stock appears to be trading above its Fair Value, despite its strong recent performance.

On Monday, Hut 8 MB One LLC and Hut 8 Mining Holding Corp., both wholly owned subsidiaries of Hut 8 Corp., signed the agreement with Two Prime Lending Limited, which will serve as lender and administrative agent. The facility carries an interest rate of 7.99% per annum and matures 364 days after the first borrowing date. This new facility adds to the company’s existing debt structure, which InvestingPro data shows remains moderate with a debt-to-equity ratio of 0.29.

The company said funds from the facility are expected to be used for general corporate purposes. Borrowings under the agreement are secured by Bitcoin held in custody with BitGo Trust Company, Inc. Two Prime’s recourse is limited to this collateral.

The agreement includes terms for margin calls. If the ratio of the fair value of the collateral to the outstanding principal falls to 135% or lower, a margin call event is triggered. In such a case, Two Prime may require additional collateral to restore the margin ratio to 160%. Only one margin call notice may be delivered per calendar day.

If the margin ratio reaches or exceeds 190% for three consecutive days and certain conditions are met, Hut 8 may request the release of a portion of the collateral.

The custodian is not permitted to lend, pledge, or otherwise use the posted collateral. In the event of default, Two Prime may exercise rights under New York’s Uniform Commercial Code, including using or selling the collateral to satisfy outstanding payments.

Hut 8 Corp. is incorporated in Delaware and its common stock trades on the Nasdaq Stock Market under the symbol HUT. The information is based on a press release statement and details provided in the company’s SEC filing.

In other recent news, Hut 8 Mining Corp. has announced several significant developments. The company filed a prospectus supplement for an at-the-market equity offering program, allowing it to offer and sell shares of its common stock with an aggregate offering price of up to $1 billion. This new program replaces a previous offering, which had registered up to $500 million in common stock. Meanwhile, analysts have adjusted their price targets for Hut 8 Mining. Clear Street raised its target to $33, citing the company’s expansion of four new U.S. sites, bringing its total platform potential to 2.5 gigawatts across 19 sites. Benchmark also increased its price target to $36, maintaining a Buy rating due to the same expansion plans. Canaccord Genuity similarly raised its target to $36, noting Hut 8’s substantial bitcoin holdings as a key factor. However, Rosenblatt lowered its price target to $23, despite maintaining a Buy rating, following mixed second-quarter results that showed significant gross margin expansion but disappointing revenue.

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