CleanSpark secures $100M Bitcoin-Backed Loan from Two Prime with approximately 7.7% Interest Rate

CleanSpark recently secured a significant financial boost by partnering with Two Prime for a $100 million bitcoin-backed revolving credit facility. This collaboration has increased CleanSpark’s total collateralized loan capacity to an impressive $400 million. The timing of this financing announcement closely follows CleanSpark’s expansion of its borrowing capacity with Coinbase Prime to $300 million. This influx of funds will support various initiatives such as data center expansions, bitcoin mining projects, and the development of high-performance computing strategies.

Gary Vecchiarelli, the CFO and president of CleanSpark, emphasized the company’s strategic approach to leveraging their treasury balance of nearly 13,000 bitcoins to drive growth responsibly. The agreement with Two Prime, finalized on Sep. 19, involves a one-year revolving loan secured by bitcoin at a collateralization level of 160% initially, translating to a loan-to-value ratio of 62.5%. This credit facility carries an annual interest rate of Term SOFR plus 3.55%.

The current 1-month Term SOFR rate stands at about 4.16%, resulting in CleanSpark paying an estimated interest rate of approximately 7.71% per annum on this facility. To mitigate risks associated with market fluctuations, the loan agreement includes clauses that allow the lender to demand repayment or replacement collateral if the value of the bitcoin collateral drops significantly within a 12-hour period. Moreover, specific collateral thresholds have been outlined, including Collateral Call Level at 135%, Liquidation Level at 125%, and Refund Level at 190%.

This significant financing arrangement marks a pivotal moment for CleanSpark as the company looks to diversify beyond its roots as a pure-play bitcoin miner. Earlier in the week, CleanSpark revealed the expansion of its credit facility with Coinbase by an additional $100 million, hinting at a potential strategic shift towards high-performance computing endeavors. This move aligns with the industry trend of mining companies like TeraWulf, Core Scientific, and IREN branching out into new revenues streams by focusing on AI and GPU-based workloads.

Overall, CleanSpark’s recent financial collaborations highlight the company’s commitment to strategic growth and expansion into emerging sectors, demonstrating a proactive approach to leveraging its digital assets to drive innovation and secure key investments for future endeavors.