Bitcoin mining company Marathon Digital has announced that it will close lines of credit to Silvergate Bank. This statement comes just after the crypto-bank announced that it would end its activities. Is this decision related to the liquidation of Silvergate? An official from Marathon Digital provides a clarification.
Marathon Digital Debt Reduction
On March 8, Marathon Digital announced that it had prepaid an outstanding loan balance. Then, the mining company added that it would end lending operations with Silvergate Bank. This decision eliminates $50 million of its debts and reduces annual borrowing costs by $5 million. The debt repayment also increased the company’s holdings of unencumbered bitcoins. Indeed, this operation returned 3,132 BTC, worth more than $68 million. The BTCs being held as collateral by a third-party custodian.
Marathon Digital Holdings has taken steps to shore up its balance sheet by paying down its debts and releasing its BTC tokens. There Company had fully repaid $30 million in loans from Silvergate in December. This freed up 3,615 Bitcoins that had been pledged. In February, she sold 650 Bitcoin after selling 1,500 in January. She made these sales to cover operating expenses and general business needs.
Voluntary liquidation of the crypto-bank
Marathon Digital announced the move just after Silvergate Bank said it would wind down operations. Silvergate Bank’s holding company, Silvergate Capital Corporation has announced that it is voluntarily liquidating the bank. She adds that she would end her operations ” in light of recent industry and regulatory developments “.
However, Charlie Schumacher, an official at Marathon, claimed that the two decisions are unrelated. The decision to cut financial ties with Silvergate makes “ mainly part of our financial strategy ” did he declare. Hugues Gallagher, Marathon’s chief financial officer, noted that it is in the company’s interest to prepay its loan.
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