Bitcoin mining firm Marathon Digital has paid off its term loan and terminated its credit facility with Silvergate Bank, just as the crypto-friendly bank announced it was winding down operations.
Marathon announced on March 8 that it had prepaid the outstanding loan balance earlier in the day and would terminate the revolving line of credit between the companies after providing Silvergate Bank with the required 30-day notice in early February. Marathon's announcement comes less than an hour after Silvergate Bank's holding company, Silvergate Capital Corporation, announced it would voluntarily liquidate the bank and wind up operations "in light of recent industry and regulatory developments".
Cointelegraph reached out to Marathon Digital to find out if the timing of the announcement has anything to do with the bank’s latest development. In an emailed response, Marathon vice president of corporate communications Charlie Schumacher said the decision to sever the financial relationship with Silvergate was "primarily part of our financial strategy."
In an announcement, Marathon said the move will free up 3,132 bitcoins - worth over $68 million at the time of writing - held as collateral for the loan. It said this would eliminate $50 million worth of debt and reduce its annual borrowing costs by $5 million.
Hugh Gallagher, Marathon’s chief financial officer, noted that since the company opened a lending facility with Silvergate last summer, there has been “significant change in the industry” for cryptocurrencies, adding: “We have been actively building a stronger balance sheet characterized by increased cash levels and unrestricted Bitcoin holdings. Given our current cash position, we have determined to prepay our term loan and cancel the term loan and the RLOC [revolving line of credit] facility is in the best interest of the company.”
According to a previous filing, Marathon received a $100 million revolving line of credit from Silvergate Bank in October 2021 and intends to use it to purchase bitcoin mining equipment and fund its mining operations. Last month, Schumacher said the company was looking to build a liquid "war chest" of cash and bitcoin and hoped to continue paying down debt while growing its cash position.
The comments were made on Feb. 3 following reports that the firm had sold bitcoin for the first time since 2020. According to data from CoinGecko, Marathon is the second-largest publicly listed bitcoin holder, behind software analytics firm MicroStrategy.
