Marathon says it has repaid Silvergate loan, terminated credit facility

Marathon Digital said that it has repaid a term loan and terminated its credit facilities with Silvergate Bank, according to a press release published on March 8.

Marathon reduces debt, strengthens balance sheet

Marathon said that this decision will reduce its debt by $50 million and increase its unrestricted Bitcoin holdings by an additional 3,132 BTC.

The crypto mining firm said that the credit facility was a revolving line of credit (RLOC) that did not have any outstanding borrowings on the date of termination.

Marathon CFO Hugh Gallagher noted that the crypto industry has “significantly changed” since Marathon put those facilities in place last summer. Gallagher said that, in response to those changes, the company has changed its financial strategy by strengthening its balance sheet with greater amounts of cash and unrestricted Bitcoin holdings.

Marathon published its February operations report on March 2. At that time, it said that it had $410 million of unrestricted assets including cash and Bitcoin. The company’s decision today will, as noted, increase those amounts significantly.

End of deal was planned before Silvergate shutdown

Though Silvergate Bank announced today that it will halt its operations, Marathon’s decision only appears to be partially related to that announcement.

Marathon said that it completed the term loan prepayment and termination today, March 8. However, it also said it provided Silvergate with a 30-day notice of its intent to repay the relevant loan and terminate its credit facilities in February. As such, Marathon seemingly planned to end those agreements long in advance of Silvergate’s failure today.

Issues that emerged around Silvergate last week — such as inquiries into the company’s involvement with FTX — were known in previous months. It is possible that those and other developments influenced Marathon in the time leading up to the current crisis.

The news coincides with changes in stock value. Marathon (MARA) is up 1.48% today and down 2.10% after hours. Silvergate (SI) is down 5.76% today and down 41.75% after hours.