Coinbase extends credit lines to major Bitcoin mining companies
Coinbase extended several hundred million dollars in credit to major U.S. Bitcoin mining companies, filling a gap left by crypto lenders that collapsed in 2022, Bloomberg reports.
The exchange raised credit lines for CleanSpark and Riot Platforms to $200 million each in April and May. Hut 8 announced an expanded $130 million facility with Coinbase this week, alongside a separate $200 million credit line from Two Prime.
Coinbase reported record loan balances in its Prime Financing unit during the second quarter. The company is expanding lending to reduce its dependence on trading fee income, which fluctuates with market volatility.
Mining companies are seeking capital to build new facilities and add AI and data center operations to their sites. Hut 8 plans to develop four new U.S. locations with more than 1.5 gigawatts of total capacity.
Coinbase is increasingly becoming a first call in crypto lending,
CleanSpark raised its Coinbase facility on April 15, calling the deal part of its strategy to fund growth without issuing new shares. Riot CEO Jason Les said the expanded Coinbase credit provides "diversification of financing sources and a lower cost of capital" when announcing the May agreement.
Other financial firms are returning to crypto mining loans after the 2022 market downturn. Blockstream secured multibillion-dollar backing for institutional lending funds in March. Cantor Fitzgerald launched a $2 billion Bitcoin-backed financing program in spring 2024.
The 2022 crypto crash caused significant stress for miner loans backed by Bitcoin or mining equipment. Several lenders retreated from the sector, and BankProv stopped offering loans secured by mining machines after suffering losses.
Coinbase says demand for lending services is growing across corporate clients, miners, and market makers as the crypto industry rebuilds after the previous cycle's failures.
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