Marathon Digital, a bitcoin mining company, paid off its term loan and closed its financial assistance with Silvergate Bank.
On March 8, Marathon said that it had already given Silvergate Bank the mandatory 30-day notice in early February and now it would be dissolving the ongoing credit line between the two companies. The mining company had paid the remaining loan debt in full earlier that day.
Marathon’s statement came just under an hour after Silvergate Capital Corporation, the holding company of Silvergate Bank, declared it would be winding down operations and voluntarily dissolving the bank “in light of recent industry and regulatory developments.”
Marathon stated in the announcement that the action will release the 3,132 Bitcoin, which were being used as security for the loan and are currently valued at over $68 million. It claimed that doing this would pay off $50 million worth of debt and $5 million in annual borrowing expenses.
Marathon’s Credit Line with Silvergate
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.
Hugh Gallagher, chief financial officer of Marathon, stated that since the company started the lending facilities with Silvergate last summer, the cryptocurrency “industry has significantly changed” 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,” the company further added.
Also, Silvergate had asked for an extra two weeks to complete its 10-K report for the SEC. The proposal resulted in a drop in its stock price. Silvergate also recently experienced rejections in the digital asset market. The bank has already lost the business of organizations like Microstrategy, Tether, Crypto.com, and Gemini.