Silvergate Bank

Fed, central banks enhance ‘swap lines’ to combat banking crisis

Currency swap lines have been used during times of crisis in the past, such as the 2008 global financial crisis and the 2020 coronavirus pandemic.

The United States Federal Reserve has announced a coordinated effort with five other central banks aimed at keeping the U.S. dollar flowing amid a series of banking blowups in the U.S. and in Europe.

The March 19 announcement from the Fed comes only a few hours after Swiss-based bank Credit Suisse was bought out by UBS for $3.25 billion as part of an emergency plan led by Swiss authorities to preserve the country’s financial stability.

According to the Federal Reserve Board, a plan to shore up liquidity conditions will be carried out through “swap lines” — an agreement between two central banks to exchange currencies.

Swap lines previously served as an emergency-like action for the Federal Reserve in the 2007-2008 global financial crisis and the 2020 response to the COVID-19 pandemic. Federal Reserve-initiated swap lines are designed to improve liquidity in dollar funding markets during tough economic conditions.

“To improve the swap lines’ effectiveness in providing U.S. dollar funding, the central banks currently offering U.S. dollar operations have agreed to increase the frequency of seven-day maturity operations from weekly to daily,” the Fed said in a statement.

The swap line network will include the Bank of Canada, Bank of England, Bank of Japan, European Central Bank and the Swiss National Bank. It will start on March 20 and continue at least until April 30.

The move also comes amid a negative outlook for the U.S. banking system, with Silvergate Bank and Silicon Valley Bank collapsing and the New York District of Financial Services taking over Signature Bank.

The Federal Reserve, however, made no direct reference to the recent banking crisis in its statement. Instead, it explained that they implemented the swap line agreement to strengthen the supply of credit to households and businesses:

“The network of swap lines among these central banks is a set of available standing facilities and serve as an important liquidity backstop to ease strains in global funding markets, thereby helping to mitigate the effects of such strains on the supply of credit to households and businesses.”

The latest announcement from the Fed has sparked a debate about whether the arrangement constitutes quantitative easing.

U.S. economist Danielle DiMartino Booth argued that the arrangements are unrelated to quantitative easing or inflation and that it does not “loosen” financial conditions:

The Federal Reserve has been working to prevent an escalation of the banking crisis.

Related: Banking crisis: What does it mean for crypto?

Last week, the Federal Reserve set up a $25 billion funding program to ensure banks have sufficient liquidity to cover customer needs amid tough market conditions.

A recent analysis by several economists on the SVB collapse found that up to 186 U.S. banks are at risk of insolvency:

“Even if only half of uninsured depositors decide to withdraw, almost 190 banks are at a potential risk of impairment to insured depositors, with potentially $300 billion of insured deposits at risk.”

Cointelegraph reached out to the Federal Reserve for comment but did not receive an immediate response.

Did regulators intentionally cause a run on banks?

Silicon Valley Bank and Silvergate Bank were crucial to many in the cryptocurrency industry, and it’s fueling theories that regulators encouraged their downfall.

Global economic conditions are tightening; interest rates are in flux; and inflation has yet to be curbed. Considering the economic headwinds, the fact that Silvergate Bank, Silicon Valley Bank and other banks are breaking is not surprising. 

But why now? Quickly rising interest rates are extremely disruptive to banking models, but the collapse of these particular banks has raised eyebrows. It just so happens that these banks are important to the crypto industry.

Selective enforcement in service of an agenda

Government agencies often use the selective enforcement of convoluted or unclear rules and regulations to pursue agendas. They can then defend the action by saying that the public’s interest was at stake.

Here’s the analogy: An apartment building needs to be removed for an upcoming freeway expansion project. The choices are to either execute eminent domain, a scenario where the government has the ability to overrule all leases and ownership and take control of the property. This would not be a popular decision with the community. There is another option. The local government could simply not enforce pre-existing regulations around maintenance and upkeep, thus letting the property slip into disrepair.

A government inspector shows up. The property needs major updates or it will have to be condemned. The property owner cannot afford to get the property up to code. And the inhabitants must move and be relocated for their own safety.

This is the way the government works.

The government sets up broad rules and regulations — selectively enforces them — and creates a situation where the outcome they need is achieved. They skirt direct accountability and public ire but achieve the action needed.

Market conditions are the set-up

As market conditions begin to tighten, businesses that are discretionary and speculative suffer first — e.g., businesses such as startups, restaurants and hedge funds. Thus, banks in the tech and crypto sectors become weakened first. Most banks focus on serving specific industries. If a bank’s customers are failing, the bank is in a precarious position.

If a bank is publicly listed, once public investors understand the predicament, the results are catastrophic. SVB tried to raise additional capital via public markets to bail themselves out, but markets caught wind and went short. Depositors fled to “safer” banks. A classic bank run ensued. The market, in effect, prepped the bank for regulatory intervention.

Regulators take full advantage

The failure of Silvergate and SVB and the takeover of Signature have arguably signaled the start of a regulatory effort to actively cull crypto banks. If crypto can be surgically separated from traditional banking, this solves many perceived problems for regulators. Once crypto on-ramps are eliminated, the category can be aggressively regulated without the perception from the public that an investment opportunity is being taken away.

However, this is not a conspiratorial plan. Rather, the regulators are taking advantage of balance sheet weakness and poor banking practices to set up scenarios where it then seems logical that they should intervene. There was no bank run at Signature. Regulators took the advantage of a chaotic situation to pursue an agenda.

Startups, especially crypto startups, are by their very nature speculative. Blockchain at scale is an “unknown quantity” of speculation due to a lack of regulation. Recall the analogy above. The lack of oversight and regulatory direction has led financial institutions that serve tech and crypto companies to push the boundaries.

Because of macro market conditions, that type of experimentation has created a situation that puts these banks on the edge of solvency. As regulators step in to “save the day,” they get a two-for-one deal. They are perceived to have the public’s interest in mind as they eliminate critical functionality for the crypto industry.

Contagion is a meme

No bank can survive a bank run. Fractional banking has led to a system where banks simply do not have the assets to entirely cover customer deposits. If investors begin to question the stability of a bank and start to withdraw deposits, that bank will either fail or need to be bailed out. Contagion is a meme that, like other memes, is built on a deep, potentially uncomfortable truth. Banks are not as stable as the public is led to believe.

Related: Why isn’t the Federal Reserve requiring banks to hold depositors’ cash?

Nic Carter calls this recent regulatory focus on crypto banks “Operation Chokepoint.” However, bank failures accelerated by regulatory targeting destabilize the perceived stability of the entire financial system. We see this as runs on institutions like First Republic — a traditional medium-sized bank — play out. More runs are coming.

Market forces opened the door for regulators to aggressively cull crypto banks through controlled demolition. But the demolition has focused investors on existing deep systemic risks. The controlled demolition might serve the immediate agenda, but contagion is on the brink.

Joseph Bradley is the head of business development at Heirloom, a software-as-a-service startup. He started in the cryptocurrency industry in 2014 as an independent researcher before going to work at Gem (which was later acquired by Blockdaemon) and subsequently moving to the hedge fund industry. He received his master’s degree from the University of Southern California with a focus on portfolio construction and alternative asset management.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Collapse of Silvergate and Silicon Valley Bank represent a challenge for crypto

The fire lit by Silvergate Bank and Silicon Valley Bank will make it harder for crypto to find financial partners.

The collapse of Silicon Valley Bank (SVB) and Silvergate Capital, some of the most crypto-friendly banks in the industry, has forced many crypto firms to hold their breath. The loss of a significant banking partner for many companies means it will be even harder for them to comply with regulations and offer their services in a way that is consistent with the expectations of the United States Securities and Exchange Commission.

In the aftermath of the banks’ collapse, the second-most liquid U.S.-dollar pegged stablecoin, USD Coin (USDC), temporarily lost its peg and fell below $0.87, as its issuer, Circle, admitted that it held $3.3 billion at SVB. Within the crypto industry, Circle is one of the better-known, “mature” players, so the news understandably shook investors, forcing many to lose their confidence in cryptocurrencies once again.

It is obvious that the collapse of SVB and Silvergate has and will continue to challenge the crypto industry as a whole. In addition to that, it has also created uncertainty as banking partnerships are crucial for the infrastructure that enables crypto companies to operate.

This is especially evident with stablecoins like USDC that rely on banking partnerships to ensure their value is pegged to the U.S. dollar. But what does the collapse of a banking partner mean for the future of stablecoins and the overall crypto industry?

Related: Blame traditional finance for the collapse of Silicon Valley Bank

In general, a collapse such as this can cause instability in the value of a stablecoin because of how dependent they are on real-life assets. However, in the long run, a situation like this could also put pressure on other major crypto players like Bitcoin (BTC) and Ether (ETH), which were down almost 10% in the aftermath, with concerns growing over a potential liquidity shortage for the industry.

To top it all off, the collapse of SVB and Silvergate has also brought other banks to a halt, making them less likely to endorse new relationships with the crypto industry. This could make it more challenging for crypto companies to find stable banking partners in the future.

In essence, this whole situation creates a falling domino effect: When a major player in the center of a spiral that holds the group together starts to wobble (in this case, it was SVB and Silvergate), the rest of the construction will follow suit once that central piece has fallen to the ground.

The uncertainty and uneasiness that followed the collapse of both SVB and Silvergate are likely to have a knock-on effect on investor confidence, adoption and growth, which are essential aspects in the further mass adoption of cryptocurrencies. In addition, without a stable banking partner, crypto companies may struggle to comply with regulations, which has already been a key hurdle for many crypto firms. In the end, crypto companies will not be able to offer their services in a consistent manner, leading to their total downfall.

Related: Why isn’t the Federal Reserve requiring banks to hold depositors’ cash?

What has also not been helpful in this situation is the fact that the SEC has been out to get crypto firms for a long time. SVB and Silvergate’s collapse means crypto firms will now be more vulnerable to increased scrutiny from regulators regarding their reliance on stablecoins and banking partnerships. In addition, this will also bring up wider implications for the traditional banking industry’s relationship with the crypto industry.

Why?

Because as the crypto industry continues to grow, traditional banks may be forced to reassess their relationships with crypto companies and the risks associated with those relationships.

In the U.S., it seems the government is actively trying to cease any crypto operations by going against crypto companies and banks and trying everything in its power to shut them down. While this was not proven by anyone yet, speculations within the wider crypto community continue to arise, with a number of crypto firms looking for bank partnerships outside American shores.

While the crypto community has managed to regain most of its losses since the bank collapses, the aftermath lingers as a reminder of the challenges the industry faces in the weeks and maybe even months to come.

Daniele Servadei is the co-founder and CEO of Sellix, an e-commerce platform based in Italy.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Crypto bank Anchorage Digital cuts 20% of staff, citing regulatory uncertainty

It’s unclear whether Anchorage Digital’s layoffs relate to the current turmoil in the United States banking sector.

Crypto bank Anchorage Digital has announced it would be letting go of 75 employees, or approximately 20% of its workforce, citing regulatory uncertainty in the United States as a factor in its decision.

In a March 14 statement, Anchorage labeled the layoffs “a strategic realignment to better focus our resources,” pointing to “broad macroeconomic challenges and crypto market volatility” as other factors contributing to its shift in strategy.

It said the market conditions had boosted demand for its product and client assets under custody “are at an all-time high,” but added:

“These same macroeconomic, market, and regulatory dynamics are creating headwinds for our business and the crypto industry.”

Anchorage — which became the first U.S.-based crypto firm to be granted a national trust bank charter from the Office of the Comptroller of the Currency in January 2021 — expressed continued confidence in the digital asset landscape and its ability to build “regulated solutions for digital asset holders.”

The layoffs come at a time when the banking system in the U.S. is in a state of disarray after three regional banks went under in just one week.

Related: Banks collapsing; stablecoins depegging — What is happening? Watch The Market Report live

Silicon Valley Bank, Silvergate Bank and Signature Bank have all gone under since March 8, prompting the Federal Deposit Insurance Corporation to take the extraordinary step of guaranteeing all customer deposits for SVB and Signature. Its standard threshold for guarantees is $250,000.

It’s unclear if the recent developments regarding SVB, Signature, and Silvergate contributed to Anchorage’s decision to cut staff.

Anchorage did not immediately respond to Cointelegraph’s request for comment.

Layoffs within the crypto industry have considerably slowed since the beginning of the year, after the nearly 3,000 positions cut by crypto firms such as crypto exchanges Coinbase and Crypto.com in January were followed by a more muted 570 layoffs for February.

Bitcoin market cap flips tech giant Meta, widens gap on Visa

BTC’s market cap has climbed to the 11th spot among top assets by market cap, sitting behind electric vehicle maker Tesla.

Despite a turbulent week for crypto following the downfall of Silicon Valley Bank (SVB) and Signature Bank, Bitcoin’s (BTC) market cap has managed to flip that of tech giant Meta.

At the time of writing, data from Companies Market Cap shows Bitcoin’s market cap has reached $471.86 billion, surpassing Meta’s $469 billion.

Companies Market Cap provides real-time monitoring and ranking of market caps for cryptocurrencies, public companies, precious metals and exchange-traded funds.

Bitcoin’s market cap standing compared to other assets. Source: Companies Market Cap

Only 24 hours earlier, BTC’s market cap was nearly $37 billion below Meta’s, sitting at $433.49 billion.

However, Bitcoin’s market cap rose 9.7% in the past 24 hours, pushing the cryptocurrency to sit in the 11th spot among top assets by market cap, just below electric vehicle maker Tesla.

On Feb. 20, Cointelegraph reported that BTC had flipped the market cap of payment processing giant Visa for the third time in history, putting it just ahead of the payments company.

Related: Bitcoin on-chain data highlights key similarities between the 2019 and 2023 BTC price rally

The gap between the two market caps is now more than $20 billion, though it still is quite a distance from gold, which sits in first position with a $12.59 trillion market cap, followed by Apple in second place with a $2.380 trillion market cap.

BTC’s price has risen 8.72% in the past 24 hours, sitting at $24,441.

‘Nobody left to bank crypto companies’ — Crypto Twitter reacts

Prominent members of the crypto community have expressed uncertainty after the loss of crypto friendly banks.

Crypto companies could find it harder to access traditional banking partners with the loss of two major crypto-friendly banks in less than a week, according to some in the crypto community. 

On March 12, the Federal Reserve announced the closure of Signature Bank as part of “decisive actions” to protect the U.S. economy, citing “systemic risk.” It came only days after the closure of Silicon Valley Bank, which was ordered to shut down on March 10.

A week prior, Silvergate Bank, another crypto-friendly bank, announced it would close its doors and voluntarily liquidate on March 8.

At least two of these banks were seen as important banking pillars for the crypto industry. According to insurance documents, Signature Bank had $88.6 billion in deposits as of Dec. 31.

Crypto investor Scott Melker, also known as The Wolf Of All Streets, believes — like many others who took to Twitter following the news — that the collapse of the three banks will leave crypto companies “basically” without banking options.

“Silvergate, Silicon Valley and Signature all shuttered. Depositors will be made whole, but there’s basically nobody left to bank crypto companies in the US,” he said.

Meltem Demirors, chief strategy officer of digital asset manager Coinshares, shared similar concerns on Twitter, highlighting that in just one week, “crypto in america has been unbanked.” She noted that SEN and SigNet “are the most challenging to replace.”

The Silvergate Exchange Network (SEN) and Signature Bank’s “Signet” were real-time payment platforms that allowed commercial crypto clients to make real-time payments in dollars at any time.

Their loss could mean that  “crypto liquidity could be somewhat impaired,” according to comments from Nic Carter of Castle Island Ventures in a March 12 CNBC report. He said that both Signet and SEN were key for firms to get fiat in, but hoped that other banks would step up to fill the void.

Others believe the closure of the three firms will create room for another bank to step up and fill the vacuum. 

 Jake Chervinsky, head of policy at crypto policy promoter the Blockchain Association, said the closure of the banks would create a “huge gap” in the market for crypto-friendy banking. 

“There are many banks that can seize this opportunity without taking on the same risks as these three. The question is if banking regulators will try to stand in the way,” he added.

Meanwhile, others have suggested there are already viable alternatives out there.

Mike Bucella, General Partner at BlockTower Capital, told CNBC many in the industry are already changing to Mercury Bank and Axos Bank.

“Near-term, crypto banking in North America is a tough place,” he said.

“However there is a long tail of challenger banks that may take up that slack.”

Ryan Selkis, CEO of blockchain research firm Messari, noted the incidents have seen “Crypto’s banking rails” shuttered in less than a week, with a warning of the future for USDC.

“Next up, USDC. The message from DC is clear: crypto is not welcome here,” he said.

“The entire industry should be fighting like hell to protect and promote USDC from here on out. It’s the last stand for crypto in the US,” Selkis added.

Circle, the issuer of the stablecoin USDC, confirmed on March 10 that wires initiated to move its balances at Silicon Valley Bank had not yet been processed, leaving $3.3 billion of its $40 billion USDC reserves at SV.

Related: Silicon Valley Bank collapse: Everything that’s happened until now

The news prompted USDC to waver against its peg, dropping below 90 cents at times on major exchanges.

However, as of March 13, USDC was climbing back to its $1 peg following confirmation from CEO Jeremy Allaire that its reserves are safe and the firm has new banking partners lined up.

US Fed to create new crypto team amid concerns about unregulated stablecoins

The Fed’s vice chair for supervision said that the central bank does not want to curb innovation but ensure that regulations protect households and the financial system.

The United States Federal Reserve is set to create a “specialized team of experts” to keep up with developments in the cryptocurrency industry, according to a Fed official, amid concerns from the central bank about “unregulated” stablecoins.

Speaking at the Peterson Institute for International Economics in Washington on March 9, Vice Chair for Supervision Michael Barr admitted that crypto could have a “transformative effect” on the financial system but added that “the benefits of innovation can only be realized if appropriate guardrails are in place.”

According to Barr, the new crypto team will help the Federal Reserve “learn from new developments and make sure we’re up to date on innovation in this sector.” He added:

“Innovation always comes quickly, but it takes time for consumers to become aware that they could both gain and lose money on new financial products.”

Meanwhile, Barr noted that regulation needs to be a “deliberative process” to ensure a balance is reached between over-regulation that “will stifle innovation” and under-regulation that “will allow for substantial harm to households and the financial system”

Related: Fed signals a sharp rate hike in March due to inflation — Here’s how Bitcoin traders can prepare

One subsect of crypto that Barr highlighted as a point of concern was stablecoins.

He said that the assets backing many stablecoins in circulation are illiquid, meaning that it can be difficult to liquidate them for cash when needed, arguing:

“This mismatch in value and liquidity is the recipe for a classic bank run.”

He believes that unless regulated by the Fed, any widespread adoption of stablecoins could put households, businesses and the broader economy at risk.

Caitlin Long, the CEO of Custodia Bank — which has consistently been rejected from joining the Federal Reserve System — pointed out the irony in the comments from Barr given her belief that Silvergate Bank collapsed due to liquidity issues arising from a bank run.

Long also pointed to the current issues facing Silicon Valley Bank, whose shares plummeted after a March 8 financial update disclosed that it sold $21 billion worth of its holdings at a $1.8 billion loss, prompting fears that it was forced to sell to free up capital.


Breaking: Bitcoin slips under $20K amid Biden budget, Silvergate collapse

The price of BTC briefly slipped under $20,000 on March 10, although at time of writing was hovering just above that level.

Bitcoin (BTC) briefly slipped below $20,000 for the first time in nearly two months, following the latest budget from United States President Joe Biden and the collapse of “crypto-bank” Silvergate.

The price of BTC dipped to $19,945 on March 10 before recovering to hover just above $20,000, according to data from CoinMarketCap. 

Bitcoin had a stellar start to 2023 but fell as much as 5% in an hour on March 3 amid uncertainty at Silvergate. The price doesn’t appear to have been able to lift since.

Price chart of Bitcoin over the last seven days. Source: Cointelegraph Markets Pro

The announcement that Silvergate Bank, one of the key banks in the United States that services crypto firms, had entered into voluntary liquidation on March 8 has emerged as a possible strong headwind for the crypto industry.

Related: Bitcoin price drops to $20.8K as regulatory and macroeconomic pressure mounts

Meanwhile, a supplementary budget explainer paper on March 9 revealed that United States crypto miners could eventually be subject to a 30% tax on electricity costs under a Biden budget proposal that aims to “reduce mining activity.”

Silvergate downfall sparks debate over whose fault it actually was

The demise of the crypto-friendly bank has prompted discussion about who tipped the first domino, and where crypto firms can turn for their banking needs.

The voluntary liquidation of Silvergate Bank has sparked many to share their thoughts about the source of its troubles and the broader impact of the crypto-friendly bank’s collapse on crypto. 

From lawmakers to crypto analysts, crypto firm executives to commentators — nearly everyone’s had something to say regarding the recent announcement from Silvergate.

Some United States lawmakers have used the moment to make a comment about the state of the crypto industry, labeling it a “risky, volatile sector,” which “spreads risk across the financial system.”

Senator Elizabeth Warren called Silvergate’s failure “disappointing, but predictable,” calling for regulators to “step up against crypto risk.”

Senator Sherrod Brown also chimed in, sharing his concern that banks that get involved with crypto are putting the financial system at risk and reaffirming his desire to “establish strong safeguards for our financial system from the risks of crypto.”

The senators’ remarks have sparked criticism from the community, some of whom argue it was not a crypto problem and that fractional-reserve banking was to blame — as Silvergate held far more in-demand deposits compared to cash on hand.

Several companies have instead used the recent announcement from Silvergate to reiterate their lack of or now-severed ties with the firm.

Binance CEO Changpeng Zhao assured customers on Twitter that the crypto exchange does not have assets stored with Silvergate, while peer exchange Coinbase has also assured its followers that no customer funds were held by the bank.

Meanwhile, Nic Carter, co-founder of venture firm Castle Island and crypto intelligence firm Coin Metrics, suggested that it was the government that “hastened the collapse” of Silvergate by launching investigations and legal attacks on it.

“They’re the arsonist and the firefighter in one,” he wrote.

The CEO of financial services firm Lumida — Ram Ahluwalia — had a similar take, arguing in a tweet that Silvergate faced a bank run after a senator’s letter had undermined public trust in the firm. He saidthat “Silvergate was denied due process.”

Related: Marathon Digital terminates credit facilities with Silvergate Bank

In an earlier blog post, Carter referred to “Operation Choke Point 2.0” as being underway, claiming that the U.S. government is using the banking sector to organize “a sophisticated, widespread crackdown against the crypto industry.”

Others believe the collapse of Silvergate won’t necessarily hurt the crypto industry, but along with proposed changes to tax laws, would exacerbate the exodus of crypto firms from the U.S.

With Silvergate winding down, some have also asked where crypto firms will turn to now.

Coinbase, which previously accepted payments via Silvergate, announced on March 3 that it would facilitate institutional client cash transactions for its prime customers with its other banking partner, Signature Bank.

Signature Bank, however, announced in December that it intended to reduce its exposure to the crypto sector by reducing deposits from clients holding digital assets.

To further reduce its crypto exposure, on Jan. 21 Signature imposed a minimum transaction limit of $100,000 on transactions it would process through the SWIFT payment system on behalf of crypto exchange Binance.

Marathon Digital terminates credit facilities with Silvergate Bank

The decision to end its loan facilities with Silvergate Bank follows a shift in Marathon’s long-term financial strategy to build liquidity.

Bitcoin mining firm Marathon Digital has paid off its term loan and terminated its credit facilities with Silvergate Bank, just as the crypto-friendly bankannounced it would be winding down operations.

Marathon announced on March 8 that it had prepaid its outstanding loan balance earlier that day and would be terminating the revolving line of credit facility between the firms after providing Silvergate Bank with the required 30-day notice in early February.

The announcement from Marathon came less than an hour after Silvergate Bank’s holding company — Silvergate Capital Corporation — announced it would be voluntarily liquidating the bank and winding down operations “in light of recent industry and regulatory developments.”

Cointelegraph reached out to Marathon Digital to understand whether the timing of the announcement had anything to do with the bank’s most recent development.

In an emailed response, Marathon vice president of corporate communications Charlie Schumacher said the decision to cut financial ties with Silvergate was “predominantly part of our financial strategy.”

In the announcement, Marathon said the move will free up the 3,132 Bitcoin (BTC) — worth over $68 million at the time of writing — held as collateral for the loan. This would eliminate $50 million worth of debt and reduce its annual borrowing costs by $5 million, it said. 

Marathon chief financial officer Hugh Gallagher noted that the crypto “industry has significantly changed” since the firm had opened the lending facilities with Silvergate last summer, adding:

“We have been actively building a more robust balance sheet that features increased levels of cash and unrestricted Bitcoin holdings. Given our current cash position, we determined that it was in the Company’s best interest to prepay our term loan and eliminate both the term loan and RLOC [revolving line of credit] facilities.”

According to a prior filing, Marathon secured the $100 million revolving credit facility with Silvergate Bank in October 2021 and intended to use it to purchase Bitcoin mining equipment and fund its mining operations.

Related: Impact of the Silvergate collapse on crypto — Watch The Market Report live

Last month, Schumacher suggested the firm is looking to build a “war chest” of liquidity, composed of both cash and Bitcoin, and was looking to continue paying down debt while increasing its cash positions.

The comments came on Feb. 3, following reports that the firm had sold Bitcoin for the first time since 2020.

Marathon is the second-biggest publicly listed holder of Bitcoin, according to CoinGecko, beaten only by software analytics company MicroStrategy.