Marathon Digital Refinances $100m Credit Facility from Silvergate Bank

Marathon Digital Holdings, Inc., a major US enterprise Bitcoin mining firm, announced on Monday that it has secured another $100 million line of credit from Silvergate Bank backed by Bitcoin (BTC). 

In July last year, the Bitcoin miner financed a $100 million revolving credit line with the crypto bank.

Hugh Gallagher, Marathon’s CFO, talked about the latest development: “We are pleased to be closing on these debt facilities and believe that the combination of a term loan and revolver provides Marathon with exceptional flexibility regarding our funding options. With these facilities in place, we have achieved our goals of adding capacity and optionality to finance our future operations growth. We thank the team at Silvergate for their engagement as we collaborated to put these facilities in place.”

The term loan comes with a variable interest rate, which is currently priced at 7.25%.

The miner announced refinancing the $100 million revolving line of credit that was set to expire in October 2022. At this point, the firm has no amounts outstanding under the revolving credit facility. The company secured both loan facilities backed by Bitcoin. The loans are set to mature in July 2024.

Marathon said it acquired the loan to give it the flexibility to navigate the market volatility. Part of the company’s strategy is to “risk” the business by becoming more resilient to a potential fall in Bitcoin prices. The firm is working to be agile with the turbulence of Bitcoin prices by leveraging its scale to negotiate favourable contract terms.

Marathon is building one of the largest Bitcoin mining operations in North America. Its mining operations are based in South Dakota/Nebraska (hosted by Compute North), Montana (hosted by Beowulf), and Texas (hosted by Compute North).

Like Marathon, most Bitcoin mining firms use their Bitcoins as collateral for fiat loans, which they can use to pay electricity costs, purchase ASICs or other mining hardware, finance other operational costs, or fund other growth projects.

Instead of traditional loans, Bitcoin-backed borrowing allows such mining firms to keep their Bitcoin while sourcing additional funds to expand their operations with fiat currency.