PowerCompute, a Bitcoin treasury and mining company, added $3.765 million to its debt following an early reset of a Bitcoin collar arrangement with Arch Lending involving 307 BTC.
According to an Aug. 28 filing, the company's borrowing subsidiary, US Digital Mining and Hosting Co., elected to incorporate the unwind cost as added principal rather than settling it separately. The replacement 30-day collar balance rose to $21.89 million from $18.13 million, while the annual interest rate increased from 2% to 6.5%.
Details of the collar reset
PowerCompute terminated its prior collar on Aug. 25, 22 days into a period that began Aug. 3 and was scheduled to reset Sept. 2. The reference price at termination was $78,500, which exceeded the prior collar's $66,370 ceiling.
The new collar, effective Aug. 25 to Sept. 24, sets parameters for the next reset decision: a floor of $71,112, a ceiling of $75,000, and a knock-in barrier of $93,500. The arrangement will be tested once at 8:00 a.m. EST on Sept. 24.
How the mechanics work
Below the $93,500 barrier, PowerCompute retains all Bitcoin appreciation regardless of the reference price. If the Sept. 24 reference price reaches or exceeds $93,500, the ceiling applies to the entire period. At that barrier level, potential excess appreciation would be calculated as 307 BTC multiplied by the difference between $93,500 and the ceiling, though this amount would only be owed if the barrier is reached.
The facility remains secured by the 307 BTC collateral. The collar agreement bars ordinary margin calls and liquidations during the rolling period and tests only at the reset date unless PowerCompute chooses to exit early.
