DMG Blockchain Solutions Inc. has established a banking relationship with Sygnum Bank, a Swiss crypto-focused financial institution. Sygnum will provide DMG with a $9 million credit facility to expand its mining operations ahead of the upcoming Bitcoin halving in April 2024.
The financing will allow DMG to fulfill its purchase agreement with Bitmain Technologies for 4,550 Bitcoin miners, worth $12.1 million, without selling its existing reserves. DMG believes the modest debt financing will optimize its balance sheet by maintaining its bitcoin holdings while reducing its weighted average cost of capital.
In addition to pledging 237.8 Bitcoins as collateral against the loan, DMG plans to allocate some cash towards the Bitmain purchase. The credit facility carries an annual interest rate of 7.8% with no set repayment term. However, Sygnum can call the loan at any point requiring immediate repayment.
DMG CEO Sheldon Bennett and Sygnum Bank Head of DLT & Corporate Clients Néstor Palao expressed enthusiasm about the new banking partnership. They highlighted the alignment of DMG’s and Sygnum’s missions around decarbonizing the Bitcoin ecosystem.
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