Bitcoin Miner Marathon Digital Pays Off Silvergate Revolving Credit
Marathon Digital (MARA) fully paid off $30 million in revolver loans during December, freeing up 3,615 bitcoin (BTC) that had been pledged as collateral, according to its monthly update.
The lender on the revolver was Silvergate Bank (SI), which this morning announced deposit withdrawals during Q4 of $8.1 billion as it continues to reel from the FTX collapse fallout. Silvergate shares are lower by 46% today.
The Marathon move is the latest in a series of similar actions from bitcoin miners to reduce their debt obligations through payments or restructurings as the bear market continues to take a toll on the industry.
Marathon's unrestricted bitcoin holdings are now 7,815 (about $130 million), and total bitcoin holdings – after production of 475 bitcoin in December – are up to 12,232. Unrestricted bitcoin holdings on Nov. 9 (prior to the FTX collapse) had been just 1,950. Marathon has repeatedly hinted at its intentions to sell some of its mined bitcoin, but hasn't yet done so.
Marathon stock was down 4.1% for the session at press time.
The company as of Jan. 1 had an operating mining fleet of 69,000 rigs with hashrate, or computing power, of 7 exahash/second (EH/s). Marathon continues to expect to have installed computing power of 23 EH/s sometime around the middle of 2023.
Turning back to Silvergate, the crypto lender had ties to crypto exchange FTX, which filed for Chapter 11 bankruptcy on Nov. 11. To counter the deposit outflows in Q4, the bank this morning announced it sold off $5.2 billion of debt securities, resulting in a $718 million loss.
Silvergate had previously lent funds to Marathon through two different debt instruments. One is the revolving credit facility, which Marathon reduced from $30 million Nov. 30 to zero by year-end, that was initially signed in October 2021. The other is a term loan agreed to in August 2022. Marathon did not respond to CoinDesk's request for comment as to how much of the term loan was outstanding at the end of 2022.
Marathon's Vice President of Corporate Communications, Charlie Schumacher told CoinDesk in November the company had drawn about $100 million roughly equally from both debt instruments, meaning $50 million could still be outstanding with Silvergate.
Marathon's plan initially, said Schumacher, had been to draw on the term loan to pay down the credit line, but the FTX collapse and resulting market uncertainty forced a rethink, with the company instead deciding it a better idea to deleverage its balance sheet.