Canaan Pledged 530 Bitcoin for $22.3M Loans at 4.2% Interest Rate

Bitcoin miner manufacturer and mining operator Canaan Creative has secured two loans with gross proceeds totaling $22.3 million, offering insight into the current bitcoin mining loan market dynamics.

Canaan stated in its Q2 earnings report earlier last month that it pledged 530 bitcoin as collateral for net loan proceeds of $19.2 million maturing in 18 months but did not elaborate on specific terms.

In an interim financial statement filing on Tuesday, the company provided more details on the varying interest rates and loan-to-value (LTV) ratios, highlighting the risk appetite of lenders.

According to the filing, Canaan entered into master loan agreements with two unnamed lenders in June at a weighted average interest rate of 4.2%.

It borrowed $14.3 million USDT from the first lender, securing the loan with 330 bitcoin valued at $21 million. The loan carries a 2.75% interest rate and an LTV ratio of 68%, triggering margin calls if bitcoin’s price falls below $44,500.

The second loan, totaling $8.04 million, was secured with 200 bitcoin valued at $12.37 million. This lender charged a higher interest rate of 6.75% with an LTV ratio of 65%, requiring additional collateral if bitcoin’s price dips below $49,500. That was close to the local lows during bitcoin’s market tumble in early August.

As previously reported, while stock offerings remained the key financing tool for public mining operators during Q2, Marathon, Hut 8, Core Scientific, CleanSpark, Bitdeer, and Canaan have turned to debt financing options including issuing convertible notes and bitcoin-secured loans.