- Bitfarms secured $300 million for its HPC project development at Panther Creek
- This marks the initial agreement between Bitfarms and Macquarie Equipment Capital
- The funding is divided into two tranches of $50 million and $250 million, with an 8% APR
- Interest payments for the first three months will be paid in kind (PIK), meaning that interest is capitalized instead of paid immediately
- Macquarie will receive warrants to purchase $5 million worth of Bitfarms shares at a 25% premium relative to the average share price over the last five days
- The second tranche will be available only after specific development milestones at Panther Creek are achieved and the agreement is re-signed
Bitfarms secured $300M for HPC project development at Panther Creek, in conjunction with Macquarie Equipment Capital, likely in preparation for the ever-increasing need for computing for the crypto and AI industries. According to the announcement, the amount will be split into 2 tranches, $50M and $250M, respectively, at 8% interest and a maturity of up to 2 years.
Details on Bitfarms & Macquarie Equipment Capital Funding
This is not $500M for AI development from Trump, but still, $300M is a pretty impressive sum, so it’s not surprising that it comes with some neat terms and conditions. To begin with, the data center is planned for use in computationally intensive industries like crypto and AI, which may suggest a likely continued demand according to large investors.
Also worth noting is the choice of location, as Panther Creek offers convenient access to two power sources at once, thus improving the potential continuity of the data center and reducing costs (CapEx and OpEx). However, as mentioned above, there is still risk diversification, so the $300M will be split into 2 tranches.
The second one in the amount of $250M will be available only after the evaluation of the work done on the data center development and if it is satisfactory the preliminary agreement will be renegotiated. Also, the total timeframe for the project completion is 2 years, which requires very well-organized and fast-paced work.
Bitfarms will not have to pay interest (8% per annum) directly, but instead, the first three months of the PIK assuming that interest is capitalized rather than paid immediately. Of course, this threatens a slight dilution of capital, but still, doesn’t ensure a critical threat for investors and is a pretty convenient solution. Macquarie is also insured by the fact that it will receive warrants to buy $5 million worth of Bitfarms shares at a 25% premium to the average share price over the last 5 days.
Conclusion
A big collaboration regarding two of the biggest tech trends of the 21st century is a pretty optimistic signal for both industries. However, we should still be careful and cautious, as this is still taking place against the backdrop of an extremely dynamic political and macroeconomic environment.
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