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HomeBitcoinA loan from Coinbase to Bitcoin Miner Hut 8 of $50 million

A loan from Coinbase to Bitcoin Miner Hut 8 of $50 million

A $50 million loan has been given to Hut 8 Mining Corp. by Coinbase Global Inc. The massive Bitcoin mining company receives much-needed financial respite from this acquisition. According to Bloomberg, the loan provides a lifeline, particularly as Hut 8 prepares for the upcoming “halving.”
The “halving” is a planned occurrence on the blockchain of Bitcoin. Every four years, this occurrence reduces by half the amount of tokens given to miners. By 2024, there will be a 6.25 to 3.125 Bitcoin reduction in the payout for each unit of data processed on the network.

The loan facility has been well-received by Hut 8 CEO Jaime Leverton. According to her, it guarantees the continuance of their adaptive Bitcoin treasury management approach. Hut 8 has maintained possession of the coins they have mined thanks to this tactic despite a market slump.

This strategy does, however, provide certain difficulties. Miners are forced to look for more income by hanging onto their Bitcoin. This needs for liquidity is more pressing than ever in a difficult climate with rising electricity prices, more intense competition, and growing debt.

The mining industry’s ability to borrow money through debt finance has also decreased. This is because several crypto lenders filed for bankruptcy following several market meltdowns in the preceding year.

After 364 days have passed since the initial borrowing date, Coinbase’s loan will expire. If the federal funds rate is higher than 3.25%, interest on the borrowed money will be charged at that rate plus an extra 5.0%.

Hut 8’s stock has soared since this news was announced. Following an over 90% decline in 2022, the shares have more than quadrupled this year.

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