Cipher Sets Up $35M Term Loan Facility with Coinbase

Cipher Mining (NASDAQ: CIFR) has expanded its existing line of credit with Coinbase and established a new term loan facility as the Texas Bitcoin mining firm looks to bolster its access to debt financing.

Cipher first entered into a line of credit agreement with Coinbase in August 2023, securing a limit of $10 million backed by its Bitcoin assets. As of September 30, the company had not drawn any funds from this facility.

In its latest quarterly filing on Wednesday, Cipher reported that after September 30, it increased the line of credit limit to $15 million and set up a new term loan facility with Coinbase for up to $35 million. It remains unclear whether Cipher utilized any of these loan facilities so far since October.

According to the filing, the borrowing rate for the credit facility is tied to the Federal Funds Target Rate – Upper Bound, with an additional 2.5%, and is calculated daily. Cipher incurs no commitment fees for any unused portion of the credit line.

Conversely, the term loan facility allows Cipher to access up to $35 million with a one-year term if drawn upon. The interest rate for this term loan will be set at the time of drawdown, with the stipulation that Coinbase reserves the right to terminate the term loan if Bitcoin’s price falls below $40,000.

Several major mining companies have turned to Bitcoin-secured financing this year, alongside the issuance of convertible notes, as previously reported. Meanwhile, these companies appear to have slowed shareholder dilution by raising less capital through equity financing since Q2. Cipher raised approximately $57.7 million through stock offerings in Q3, compared to $87 million and $66 million in Q2 and Q1, respectively.