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 firm Marathon Digital has paid off its term loan and terminated its credit facilities with Silvergate Bank, just as the crypto-friendly bankannounced it would be winding down operations.
Marathon announced on March 8 that it had prepaid its outstanding loan balance earlier that day and would be terminating the revolving line of credit facility between the firms after providing Silvergate Bank with the required 30-day notice in early February.
The announcement from Marathon came less than an hour after Silvergate Bank’s holding company — Silvergate Capital Corporation — announced it would be voluntarily liquidating the bank and winding down operations “in light of recent industry and regulatory developments.”
Cointelegraph reached out to Marathon Digital to understand whether the timing of the announcement had anything to do with the bank’s most recent development.
In an emailed response, Marathon vice president of corporate communications Charlie Schumacher said the decision to cut financial ties with Silvergate was “predominantly part of our financial strategy.”
In the announcement, Marathon said the move will free up the 3,132 Bitcoin BTC $21,652 — worth over $68 million at the time of writing — held as collateral for the loan. This would eliminate $50 million worth of debt and reduce its annual borrowing costs by $5 million, it said.
Marathon chief financial officer Hugh Gallagher noted that the crypto “industry has significantly changed” since the firm had opened the lending facilities with Silvergate last summer, adding:
“We have been actively building a more robust balance sheet that features increased levels of cash and unrestricted Bitcoin holdings. Given our current cash position, we determined that it was in the Company’s best interest to prepay our term loan and eliminate both the term loan and RLOC [revolving line of credit] facilities.”
According to a prior filing, Marathon secured the $100 million revolving credit facility with Silvergate Bank in October 2021 and intended to use it to purchase Bitcoin mining equipment and fund its mining operations.
Last month, Schumacher suggested the firm is looking to build a “war chest” of liquidity, composed of both cash and Bitcoin, and was looking to continue paying down debt while increasing its cash positions.
The comments came on Feb. 3, following reports that the firm had sold Bitcoin for the first time since 2020.
Marathon is the second-biggest publicly listed holder of Bitcoin, according to CoinGecko, beaten only by software analytics company MicroStrategy.