Hut 8 secures 1 billion credit line, 40% liquidity red line

According to Woofun AI, Bitcoin mining company Hut 8 (HUT.US) announced on September 28 the closure of a four-year advanced secured credit line worth 1 billion US dollars, with the aim of enhancing financial flexibility during the project development period through an advanced guarantee mechanism.

The credit arrangement allows the parent company to borrow and issue a letter of credit during the construction phase to pay interconnection project security deposits and supplier payments, thereby releasing the pressure on cash collateral. According to data compiled by Woofun AI, there were no outstanding payments as of September 24, and the company's June 30 balance sheet showed cash reserves of US$233.6 million. This $1 billion credit line is part of the overall credit commitment and provides two ways to use bank credit: either withdraw cash or guarantee eligible debts, leaving the company with long-term financing options at an early stage to meet temporary funding needs.

In terms of the guarantee structure, Hut 8 Corp. acts as a borrower, and some restricted subsidiaries provide guarantees, and priority payments cover most assets, with the exception of the $7.5 billion non-recourse project financing for River Bend and Beacon Point AI data centers. If an SOFR loan is used, the initial interest rate is the base rate plus 1.75 percentage points, fluctuating between 1.50 and 2.00 percentage points with the debt-to-market value ratio, while the agreement limits additional debt and guarantees.

Starting from the quarter of March 31, 2027, the minimum liquidity requirement takes effect: 40% of the credit commitment amount must be reached before the stabilization date, then reduced to 25%, calculated according to the agreement and including the right to equity compensation. Ultimately, the size of debt at the parent company level will depend on the actual loan amount and the size of the letter of credit issued, marking the evolution of its capital structure from pure project financing to a mixed guarantee model.