Mining firm Marathon Digital has reportedly paid off its term loan with Silvergate Bank in full and closed out its credit facilities with the financial institution. The move comes just as the formerly crypto-friendly bank revealed that it would begin closing down its operations.
On March 8th, Marathon announced that it had paid off its remaining loan balance earlier in the day and would be closing its revolving credit line after giving Silvergate Bank a 30-day notice last month. The announcement came just after Silvergate Capital Corporation, which is Silvergate Bank’s holding company, stated that it intended to voluntarily liquidate the bank and would begin closing down operations “in light of recent industry and regulatory developments.”
When questioned by crypto news outlet Cointelegraph, Charlie Schumacher, Marathon Digital’s VP of corporate communications, said the move to sever its business relationship with the bank was “predominantly part of our financial strategy.” Marathon further stated that the decision will free up the over three thousand Bitcoin that Silvergate had been holding as collateral. It would also eliminate a $50 million dollar debt and decrease its yearly borrowing costs by roughly $5 million.
Marathon CFO Hugh Gallagher stated that the cryptocurrency “industry has significantly changed” since the time that the firm first opened its credit account with Silvergate, 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.”
As indicated in an earlier filing, Marathon opened the $100 million revolving line of credit with the bank in October 2021 and planned to use the funds to purchase mining equipment and finance its Bitcoin mining operations. Schumacher has suggested that the company is wanting to build up a “war chest” of liquidity, consisting of cash and crypto, and was aiming to continue reducing its debts while simultaneously increasing its cash balance.
Last month, Marathon sold some of its Bitcoin stash for the first time in over two years. Marathon Digital is the second largest publicly listed Bitcoin holder, topped only by computer software analytics firm MicroStrategy.