Marathon Digital Holdings Expand Its Credit Facilities With Silvergate Bank
- Marathon refinanced its $100 million credit line and added another $100 million term loan on July 28.
America’s leading enterprise bitcoin miner, Marathon digital holdings, has announced an expansion of its credit facilities with Silvergate bank. Notably, Silvergate bank is one of the top financial institutions that provide innovative financial solutions for crypto industry players. Marathon also announced that it would refinance its current $100 million revolving credit line and add another $100 million term loan.
This term loan has a delayed draw feature, allowing Marathon to draw $250 million at the time of closing. Then, it can remove another $50 million 270 days after closing. The interest rate on the term loan is variable. Currently, the interest rate for the first draw is 7.25 percent.
The company also revealed that it had refinanced its $100 million revolving credit line, which was due to expire by October 2022. As of this writing, the revolving credit facility has no outstanding amount. Marathon is using bitcoin to secure both credit facilities, and both are due to expire by July 2024.
Marathon chief financial officer (CFO), Hugh Gallagher, revealed the company’s delight in closing on these debt facilities. He added that the combined term loan and revolving credit line would give Marathon more freedom to fund essential projects and extend its services.
Gallagher further said the facilities would enable Marathon to expand the growth of its operations capacity without being restricted by finances. He thanked the Silvergate team for their assistance and collaboration in making these credit facilities happen. The company’s ability to refinance is applaudable given the shaky finances of many bitcoin mining firms and the current crypto market conditions.
Also, many crypto lenders have cooled down their support for crypto firms as the US Fed increases rates. Through this Silvergate credit, the market volatility won’t hugely impact Marathon’s business.
Marathon Market Outlook
In its June operational update, Marathon disclosed that it has 29,640 bitcoin mining rigs awaiting energization in West Texas. The reason is that its energy provider (Compute North) is waiting for the approval of its tax-exempt status from federal regulators. Currently, compute north hosts about 20,000 of Marathon’s mining machines and will host 60,000 by the end of Q3 2022.
Marathon announced on April 17 that 4,200 of its rigs are awaiting activation. Last month, the company announced that it had secured new hosting agreements to access 254 megawatts (MW) of energy which could rise to 324 MW.
One of the agreements was the deal with applied blockchain for 200 MW of energy which would power 60,000 of its machines for the company’s sites in North Dakota and Texas. With these multiple hosting deals, Marathon believes it can achieve its goal of about 23.3 exahashes per second (EH/s) in bitcoin mining computing power by next year.
Besides the Texas energization delay, a storm affected Marathon’s energy supplier in Hardin, Montana, two months ago. Thus, the company couldn’t power 75 percent of its active fleet. However, Marathon stated that 30,000 miners weren’t affected by the storm.