Bitcoin

Coinbase Global Inc. has extended a $50 million loan to <a href="https://ultramining.com/news/en/hut-8-mining-encounters-hurdles-power-shortages-and-equipment-failures-slow-down-crypto-operations/">Hut 8 Mining</a> Corp. This deal provides much-needed financial relief for the Bitcoin mining giant. The loan offers a lifeline, especially as Hut 8 braces for the impending 'halving', according to <a href="https://www.bloomberg.com/news/articles/2023-06-26/coinbase-loans-crypto-miner-hut-8-50-million-to-hedge-halving#xj4y7vzkg">bloomberg.</a>&nbsp;&nbsp; 
The 'halving' is a preprogrammed event on Bitcoin's blockchain. This event cuts the number of tokens awarded to miners by half every four years. In 2024, the reward per unit of data processed on the network will reduce from 6.25 to 3.125 Bitcoin. 
Hut 8 CEO Jaime Leverton has welcomed the credit facility. She says it ensures the continuity of their dynamic Bitcoin treasury management strategy. This strategy has seen Hut 8 hold onto the coins they mine despite a market downturn. 
However, this approach also brings challenges. By holding onto their Bitcoin, miners are compelled to find extra cash elsewhere. This need for liquidity is particularly urgent in a challenging environment of rising power costs, increased competition, and mounting debt. 
Moreover, the mining industry's capacity to raise capital from debt financing has dwindled. This is due to the bankruptcy of multiple crypto lenders after numerous meltdowns in the previous year. 
Coinbase's loan will mature after 364 days from the first borrowing date. The borrowed amount will accrue interest at either the federal funds rate or 3.25%, whichever is greater, plus an additional 5.0%. 
This news has sent Hut 8's shares skyrocketing. The shares have more than tripled this year, rebounding from a nearly 90% drop in 2022. 
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Coinbase Lends $50M to Bitcoin Miner Hut 8

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