PowerCompute’s $18.1M Bitcoin-Backed Refinancing With Arch

Public companies holding Bitcoin increasingly face the same capital-allocation question: how can they access liquidity without selling a strategic treasury asset?

PowerCompute, Inc. (Nasdaq: PWCM) recently answered that question by refinancing and consolidating approximately $18.1 million of existing debt through a custom Bitcoin-backed facility from Arch.

The transaction uses 307 Bitcoin from PowerCompute’s treasury as collateral. It replaces three existing facilities: an $11 million loan from Galaxy Digital and two loans totaling $7 million that helped finance PowerCompute’s Oklahoma and Mississippi facilities.

The new facility initially carries an interest rate of approximately 2% APR. That compares with a 12% rate on the two prior loans totaling $7 million. The refinancing allowed PowerCompute to address those obligations without an immediate sale of the pledged Bitcoin.

Transaction overview

Approximately $18.1 million of principal
307 BTC pledged as collateral
Approximately 2% initial APR
Generally non-recourse structure, subject to limited carve-outs in the facility documents
30-day rolling term with automatic renewal unless either party provides notice
Interest rate and collar levels reset at each renewal based on prevailing market conditions

The initial 2% rate should not be viewed as a permanent fixed rate or as the transaction’s only economic consideration. The facility incorporates a Bitcoin collar: a defined floor and ceiling for the collateral during each 30-day period. In exchange for downside protection and a lower cash interest rate, PowerCompute gives up appreciation above the agreed ceiling during that period.

That trade-off is what makes the structure work.

A financing structure built around PowerCompute’s treasury strategy

PowerCompute is a Bitcoin treasury and mining company expanding into high-performance computing and artificial intelligence infrastructure. Selling Bitcoin to refinance its debt would have reduced its exposure to an asset it considers strategically important. Leaving the existing facilities in place would have preserved that exposure but maintained a higher financing cost on part of its debt.

Arch designed a third option: use the Bitcoin as collateral while managing the price risk through a custom hedge.

“PowerCompute required a financing structure that reflected both its immediate capital needs and its long-term Bitcoin treasury strategy,” said Himanshu Sahay, Co-Founder and CTO of Arch.

The result is a facility designed to accomplish three objectives at once:

Consolidate multiple debt obligations into a single facility.
Reduce cash interest expense without requiring an outright sale of Bitcoin.
Preserve meaningful participation in Bitcoin’s value within a defined range.

How the Bitcoin collar works

A collar establishes a floor and a ceiling for the collateral over a set period.

If Bitcoin finishes a 30-day period between those levels, PowerCompute can repay or roll the facility under newly established terms. If Bitcoin finishes above the ceiling, the appreciation above that level goes to Arch. If the Bitcoin reference price is below the floor at maturity, PowerCompute may walk away, repay the loan and recover the collateral, or roll the loan by curing the shortfall, subject to the facility documents.

The floor and ceiling are reset alongside the interest rate at each rollover. This allows the financing to adjust to current Bitcoin market conditions rather than relying on a static structure designed for a different price environment.

The collar also changes how liquidation risk is managed. During each rolling period, the structure relies on the agreed floor and ceiling rather than a conventional mark-to-market margin-call process. Risk has not disappeared; it has been explicitly allocated and priced into the transaction.

For PowerCompute, the economic cost therefore includes both the stated interest rate and any Bitcoin appreciation surrendered above the ceiling. For Arch, the return includes the cash interest and the economics of the hedge. Evaluating a structured facility like this requires looking at both, not simply comparing headline APRs.

Why this transaction matters

Bitcoin-backed credit is often discussed as a way for individuals to access liquidity without selling. PowerCompute’s refinancing demonstrates that the same underlying principle can be applied to corporate balance sheets at a larger scale and with more tailored risk management.

For companies holding Bitcoin, structured credit can potentially help address several competing priorities:

Accessing working capital or refinancing debt without immediately selling treasury assets
Avoiding equity issuance and the resulting shareholder dilution
Matching financing terms to a company’s Bitcoin risk tolerance
Replacing rigid lending structures with terms designed for volatile collateral
Retaining Bitcoin exposure while defining downside and upside in advance

These outcomes do not come from treating Bitcoin like conventional collateral. They require financing documents, custody arrangements and hedging terms designed specifically for the asset.

PowerCompute’s facility is not a standardized consumer loan. It is a negotiated institutional transaction reflecting the company’s collateral, balance sheet and objectives. But it illustrates a broader point: Bitcoin can support sophisticated corporate financing when the structure accounts honestly for its volatility.

A new option for Bitcoin treasury companies

As more businesses hold Bitcoin, treasury teams will need alternatives to the binary choice between selling their holdings and leaving capital inaccessible.

Custom Bitcoin-backed facilities can offer another path. The right structure may allow a company to refinance existing obligations, fund operations or pursue growth while keeping Bitcoin central to its long-term strategy.

Arch works with businesses, funds and large Bitcoin holders to design financing around their specific liquidity needs and risk parameters.

Learn more about institutional Bitcoin-backed lending

Discuss a corporate Bitcoin-backed facility with Arch

Sources

Disclaimer: This article is for informational purposes only and does not constitute investment, legal, or tax advice. Crypto assets are volatile and involve risk. Facility terms vary by borrower and market conditions; consult qualified professionals regarding your situation.