Hut 8 Secures $1 Billion Credit Line With 40% Liquidity Covenant

Bitcoin miner Hut 8 Corp. announced on Sept. 28 that it closed a four-year, $1 billion senior secured credit facility to back site development and collateral commitments. According to company regulatory filings, no funds were drawn when the credit agreement officially closed on Sept. 24.\n\n## Flexible Financing for Infrastructure Growth\n\nThe credit agreement includes a $1 billion letter-of-credit sublimit, allowing Hut 8 to guarantee interconnection deposits and commitments to equipment vendors and utilities without posting immediate cash collateral. The facility provides flexible funding options under a single corporate capacity pool, allowing the firm to either issue letters of credit or execute cash borrowings.\n\nOn its balance sheet for the period ending June 30, Hut 8 reported $233.6 million in cash, alongside separately designated restricted funds. The firm noted that the line will act as bridge financing during earlier project phases while management decides when to enter long-term project debt structures. Previously, Hut 8 secured $7.5 billion in non-recourse project financing for its River Bend and Beacon Point AI campuses, whereas this new facility creates parent-level and guarantor obligations.\n\n## Loan Terms and Covenant Restrictions\n\nUnder the terms of the agreement, cash borrowings using Term SOFR carry an initial margin of 1.75 percentage points over the benchmark rate. This margin will adjust between 1.50 and 2.00 percentage points based on the company's debt-to-market-capitalization ratio. The deal also places strict limitations on additional debt and encumbrances.\n\nAdditionally, the credit line introduces a minimum-liquidity covenant that takes effect for the quarter ending March 31, 2027. The requirement mandates maintaining liquidity at 40% of total commitments prior to a designated stabilization date, which drops to 25% afterward, supported by equity cure rights. As operational overhead remains a central focus across the industry, tracking credit terms is vital while miners face renewed margin pressure.\n\n## Key Takeaways\n\n* $1B facility: Four-year senior secured credit line closed on Sept. 24 with $0 drawn.\n* Dual usage: $1 billion sublimit covers letters of credit for utility and vendor deposits.\n* Variable pricing: Term SOFR initial margin set at 1.75%, ranging from 1.50% to 2.00%.\n* Liquidity rule: Minimum liquidity threshold set at 40% starting March 31, 2027, dropping to 25% post-stabilization.\n\n## Why It Matters\n\nThis credit line reflects how major Bitcoin mining companies are utilizing corporate debt structures to bridge development costs for power and data infrastructure. By substituting cash collateral with letters of credit, Hut 8 preserves cash reserves while building out its digital asset and AI footprint. However, the 40% liquidity covenant enforced in 2027 requires strict long-term capital discipline, leaving the parent firm exposed to market downturns if project monetization stalls.