Bitcoin Miner Marathon Digital Pays Off Revolver Credit To Crypto Bank Silvergate 

Bitcoin Miner Marathon Digital Pays Off Revolver Credit To Crypto Bank Silvergate 

Marathon Digital has paid off the $30 million revolving credit that it owed to crypto banking giant Silvergate Capital. The loan was issued to the company after it faced liquidity constraints during the crypto bear market. 

Bitcoin miner Marathon Digital has fully paid the $30 million revolver credit that it owed to crypto banking giant, Silvergate Capital. The payment completed in December now frees up 3,615 BTC worth over $60 million that was promised as collateral by the miner when borrowing the funds. 

Revolving credit is an agreement between a bank and its account holder, allowing them to repeatedly borrow money up to a predetermined limit while repaying a portion of the due amount at regular intervals. Each time a payment is made, it replenishes the credit amount available to the borrower.

Marathon’s unrestricted Bitcoin holdings now stand at 7,815 BTC, approximately $130 million, and total holdings after adding the 45 BTC (worth $753,000) it produced in December are up to 12,232, which is currently valued at over $200 million. In November, the miner held just 1,950 ($32.6 million) unrestricted Bitcoins.

Bitcoin Miner Marathon Digital Pays Off Revolver Credit To Crypto Bank Silvergate 

As of last week, Marathon is operating a fleet of 69,000 rigs that are mining at a computing power rate of 7 exahashes per second (EH/s). The company which is one of the largest Bitcoin miners in the world plans to increase its total output to 23 EH/s by the end of the year. 

Marathon’s decision to take out loans is in relation to the Bear market that continues to take its toll on the global crypto industry. Other bitcoin miners have also taken similar action to raise capital in order to continue operations during a time of turbulence. Marathon previously borrowed capital from Silvergate through two debt instruments; one was the revolving credit facility which was first issued in October 2021 and reduced from $30 million to zero last month, and the other is a $200 million term loan agreed to in August 2022. 

The term loan has a delayed draw facility that allows the miner to draw $50 million at the time of closing and another $50 million 270 days after closing the initial payment. Marathon’s spokesperson Charlie Schumacher said that the company has drawn about $100 million from both debt instruments, meaning it could still have $50 million in outstanding dues to Silvergate. 

As for Silvergate Capital, the crypto bank continues to reel from the collapse of crypto exchange FTX and Celsius Network. On January 5, the investment bank reported that customers withdrew $8.1 billion worth of deposits in the last quarter of 2022. This resulted in the company facing huge liquidity issues, leading to it laying off 200 employees, or 40% of its workforce. In its quarterly financial statement declaration made to the U.S. Securities and Exchange Commission (SEC), the company reported writing off $196 million related to its acquisition of Diem Association from Meta – the parent company of Facebook, Instagram, and Whatsapp.

Meta had agreed to sell its unsuccessful stablecoin project Diem, formerly called Libra, to the crypto bank in February 2022 after facing trouble from U.S authorities. Silvergate originally planned to purchase Diem’s assets and technology to release its own stablecoin asset that was backed by the dollar. However, the financial institution has decided to halt the project citing extreme market conditions. 

In a desperate effort to cover the outflows, Silvergate sold $5.2 billion worth of its debt securities, incurring a loss of $718 million in the process. The SEC filing also showed that customer deposits in the banking platform declined from $11.9 billion in the third quarter to a mere $3.8 billion in the fourth quarter of 2022. Meanwhile, the average daily trading volume on the Silvergate Exchange Network rose from $1.2 billion in the third quarter to $1.3 billion in the fourth. 

“The digital asset industry has undergone a transformational shift, with significant over-leverage in the industry-leading to several high-profile bankruptcies. These dynamics have sparked a crisis of confidence across the ecosystem and led many industry participants to shift to a “risk off” position across digital asset trading platforms,” said Silvergate CEO Alan Lane in a press statement. 

Also Read: Shopify Merchants Can Now Sell NFTs Minted On Avalanche 

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