Coinmint is Leveraging Junk Bonds in a Bid to Fund a New Crypto Mining Business
Coinmint LLC Utilizing Junk Bonds in a Bid to Fund a New Mining Operation
Coinmint LLC has turned its attention to junk lending so as to be able to finance its latest mining operation. It is expected that this project will be used to repurpose an industrial site that had been shut down a while back.
The company is currently trying to convert an aluminum smelter into a large cryptocurrency mining operation. It hopes the debt market will help it finance the operation that is currently ongoing in Massena, New York. The industrial site was previously owned and operated by the Alcoa Corp, and is located south of the US-Canada border.
The Industrial Junkyard
According to a recent report appearing on Forbes online magazine, the company is looking to borrow as much as fifty million dollars over a period of five years. These funds will be used to purchase as well as facilitate the installation of servers on the sprawling thirteen-hundred-acre industrial site.
Over the summer, Coinmint LLC had announced that it was willing to pump in as much as seven hundred million dollars into the cryptocurrency mining operation. Although the capital to be injected by the company is indeed staggering, the amount that it seeks to borrow is quite small compared to the standards set by the credit market.
In addition, the interest rates that are being floated are highly-likely to attract the eyes of potential lenders who may be interested in helping finance the project. In a bid to attract more financiers, the company has proposed to pay an interest of up to 12 percent per year for what they are calling the senior secured revolving loan facility.
The reason why this rate is likely to entice lenders is that it is higher than the normal average paid out for junk bonds in the United States. Prier Leary, the Coinmint LLC co-founder highlighted the existing relationship between rates and risks when announcing the proposed rates.
He stated that creditors who were willing to go out of their comfort zones, they would be able to see the justification for the high rates being proposed for the new technology. He went on to state that when you look at lenders who are trying to invest in a new tech space, they will always view companies in that space as being risky. As such, they will normally request for higher rates in return for their investments.
Mining in the Upper States
Owing to the expenses and temperature conditions required for a successful mining operation, New York and Canada have proven to be the go-to locations for people looking to get into cryptocurrency mining. In the past year, Bitcoinist has made it a point to report on the rates that have been implemented in New York for companies taking part in mining operations.
The revision of these rates has forced many companies to start shipping their operations out of the state. Quebec lifted a moratorium on cryptocurrency mining earlier this year, but not everyone is celebrating as smalltime miners lost out to the lobbying efforts applied by Bitmain.