• Marathon Digital has paid off its term loan and terminated its credit facilities with Silvergate Bank.
• The move will free up the 3,132 Bitcoin held as collateral for the loan, eliminating $50 million worth of debt.
• The decision to end its loan facilities follows a shift in Marathon’s long-term financial strategy to build liquidity.
Marathon Digital Terminates Credit Facilities with Silvergate Bank
Marathon Digital Holdings 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 decision follows a shift in Marathon’s long-term financial strategy to build liquidity.
Impact on Marathon
The move will free up the 3,132 Bitcoin (BTC) — worth over $68 million at the time of writing — held as collateral for the loan, which will eliminate $50 million worth of debt and reduce its annual borrowing costs by $5 million.
Timing of Announcement
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.”
Long Term Financial Strategy
Marathon chief financial officer Hugh Gallagher noted thatthe crypto”industry has significantly changed” since they had opened their lendingfacilitieswithSilver gate last summerand thatthey have been actively building a more robust balance sheet which features increased levels of cash and unrestricted Bitcoin holdings. Given their current cash position, they determined that it was in their best interest to prepay their term loan and terminate their creditfacilitieswithSilver gateBank.
By paying off its termloanandterminatingitscredit facilities withSilver gate Bank,MarathonDigitalwas abletofree upthe3,132Bitcoinheldascollateralforloan,eliminating$50millionworthofdebtandreducingtheirannualborrowingcostsby$5million.ThiswillallowthemtobuildamorerobustbalancesheetwhichfeaturesincreasedlevelsofcashandunrestrictedBitcoinholdingsforlongtermmovementinthecryptocurrencymarketplace