The decision to end its loan facilities with Silvergate Bank follows a shift in Marathon’s long-term financial strategy to build liquidity.
Bitcoin mining company Marathon Digital has repaid a loan term and terminated its credit facility with Silvergate Bank, as the crypto-friendly bank announced it will cease operations.
Marathon announced on March 8 that it paid its outstanding loan repayments early and suspended the intercompany line of credit after Silvergate Bank granted a 30-day demand in early February. The marathon announcement came less than an hour after Silvergate Bank’s holding company – Silvergate Capital Corporation – announced that it would voluntarily liquidate the bank and cease operations “due to recent developments in the company and principles”.
Cointelegraph reached out to Marathon Digital to find out if the timing of the announcement has anything to do with the latest banking developments.
In an emailed response, Marathon corporate communications vice president Charlie Schumacher said the decision to sever financial ties with Silvergate was “part of our financial strategy.”
In the announcement, Marathon said the move would release a total of 3,132 Bitcoins BTC ($21,654) – worth more than $ 68 million at the time of writing – held as collateral for the loan. It will eliminate $50 million in debt and reduce its annual mortgage payments by $5 million, he said.
Marathon CFO Hugh Gallagher said that “the crypto industry has changed a lot” since the company opened a lending facility at Silvergate last summer, adding:
“We have worked hard to build a strong balance sheet that reflects the increase in liquidity and unlimited Bitcoin holdings. Given our current financial situation, we have decided that it is in the best interest of the company to pay off our term loan and eliminate both the term loan and the RLOC [revolving line of credit] facility.
According to the original filing, Marathon received a $100 million revolving credit facility from Silvergate Bank in October 2021 and intends to use it to purchase Bitcoin mining equipment and support its mining operations.
Last month, Schumacher suggested that the company is looking to create a “war chest” of liquid assets, which includes both cash and Bitcoin, and wants to continue paying debt while increasing its financial position. . These announcements came on February 3, following the news that the company had sold Bitcoin for the first time since 2020. Marathon is the second-largest publicly traded bitcoin holder, according to CoinGecko, beaten only by software analytics firm MicroStrategy.
Get $200 Free Bitcoins every hour! No Deposit No Credit Card required. Sign Up