Silvergate Bank’s credit facilities with Marathon Digital are canceled.
In response to a change in Marathon’s long-term financial plan to increase liquidity, the company has decided to terminate its credit arrangements with Silvergate Bank.
Coincident with Silvergate Bank’s announcement that it will be closing its doors, Bitcoin mining company Marathon Digital paid off its term loan and ended its credit agreements with the bank.
Marathon reported on March 8 that it had paid the remaining loan sum in full earlier that day and that, following the mandatory 30-day notice to Silvergate Bank in early February, it would be ending the revolving line of credit between the two companies.
Marathon’s declaration came less than an hour after Silvergate Capital Corporation, the holding company of Silvergate Bank, declared it would be winding down operations and voluntary dissolving the bank “in light of recent industry and regulatory events.”
In order to find out if the announcement’s timing was related to the bank’s most recent development, Cointelegraph contacted Marathon Digital.
Vice President of Corporate Communications at Marathon, Charlie Schumacher, responded by email, stating that the choice to sever financial ties with Silvergate was “primarily part of our financial plan.”
Marathon stated in the announcement that the action will release the 3,132 Bitcoin BTC tickers down $21,742 that were being held as loan collateral and are currently valued over $68 million. It claimed that doing this would pay off $50 million worth of debt and $5 million in annual borrowing expenses.
Hugh Gallagher, the chief financial officer of Marathon, stated that since the company started the loan facilities with Silvergate Bank last summer, the cryptocurrency “sector has drastically evolved,” adding:
“We have been working hard to develop a stronger balance sheet with higher cash levels and unfettered bitcoin holdings. We felt that it was in the best interest of the Company to prepay our term loan and remove both the term loan and RLOC facilities given our present cash position.
Marathon obtained the $100 million revolving credit line from Silvergate Bank in October 2021 with the intention of using it to buy Bitcoin mining hardware and finance its mining activities, according to a previous filing.
Schumacher said last month that the company is aiming to create a “war chest” of liquidity, made up of both cash and Bitcoin, and is hoping to keep paying down debt while boosting its cash balances.
On February 3, remarks were made in response to news that the company had sold Bitcoin for the first time since 2020.
According to CoinGecko, MicroStrategy, a provider of software analytics, holds more Bitcoin than Marathon, the second-largest publicly listed holder, which is Marathon.