The decision to terminate its loan with Silvergate Bank follows a change in its long-term financing strategy to create liquidity in Marathon.
Bitcoin mining company Marathon Digital has paid off its interim loan and ended its debt with Silvergate Bank, just as the cryptocurrency-friendly bank announced that it will wind down operations.
Marathon announced on March 8 that it had prepaid the balance of its loan before that date and was to terminate the intercompany revolving credit facility after giving Silvergate Bank 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 voluntarily liquidate the bank and cease operations “in light of recent industry and regulatory developments.”
Cointelegraph reached out to Marathon Digital to find out if the timing of the announcement had anything to do with the bank’s recent developments.
In an emailed response, Charlie Schumacher, Marathon’s vice president of corporate communications, said the decision to sever financial ties with Silvergate was “very much part of our financial strategy.”
In the announcement, Marathon said the move would release 3,132 Bitcoins
BTC
the tickers have fallen
$22,275
— worth more than $68 million at the time of writing — was held as collateral for the loan. This will eliminate $50 million in debt and reduce annual borrowing costs by $5 million, he said.
Marathon chief financial officer Hugh Gallagher noted that “the industry has changed dramatically” since the company opened a loan facility with Silvergate last summer, adding:
“We are actively building a stronger balance sheet that shows increased cash levels and unlimited Bitcoin holdings. Given our current financial position, we determined that it was in the best interest of the Company to prepay our term loans and eliminate both the term loans and RLOCs [revolving lines of credit].”
According to previous filings, Marathon obtained a $100 million revolving credit facility with Silvergate Bank in October 2021, with the intention of using it to purchase Bitcoin mining equipment and finance mining operations.
Related: The Silvergate debacle’s impact on crypto — Watch The Market Report live
Last month, Schumacher suggested that the company was going to build a “war chest” made up of liquidity, both cash and Bitcoin, and increase its cash position to continue paying down debt.
The comments were made on February 3, following reports that the company will sell Bitcoin for the first time since 2020.
Marathon, according to CoinGecko, is the second largest software analytics company MicroStrategy, which has only won.
