Marathon Digital secures $750M crypto loan via Coinbase, Two Prime
In brief
- Marathon Digital pledged 18,750 BTC (~$1.2B) to secure $750M term loans maturing August 2028
- Coinbase Credit supplied $450M; Two Prime Lending added $300M at 7.65% fixed rate
- Proceeds fund Long Ridge power plant acquisition and general corporate use
- 53% of Marathon's Bitcoin holdings now collateralized, creating liquidation risk
The deal structure
Marathon Digital pledged 18,750 BTC for two term loans that mature in August 2028. At the time of the transaction, those coins carried a market value of approximately $1.2 billion, representing about 53% of the company's total holdings of 35,577 BTC as of June 30. The Coinbase facility includes an option for a one-year extension.
Two Prime Lending charged a fixed 7.65% interest rate on its $300 million tranche. The total facilities amount to $750 million, including refinancing a $150 million existing credit line alongside $300 million in fresh capital.
Capital deployment and risk
Marathon Digital earmarked the capital for general corporate purposes, but the primary use is its planned acquisition of Long Ridge Energy & Power, projected at roughly $1.5 billion in enterprise value. Long Ridge operates a 505 MW gas-fired power plant and could support high-performance computing workloads.
The borrowing structure reflects tight leverage. Marathon Digital borrowed $600 million against $1.2 billion in Bitcoin, a roughly 50% loan-to-value ratio. That cushion looks reasonable in normal markets, but it compresses quickly if Bitcoin enters a downturn.
"Coinbase stepping up as a primary lender in a deal this size signals that institutional crypto lending has entered a new phase."
With 53% of Marathon's Bitcoin holdings already pledged, the margin for error is thinner than it might appear. If Bitcoin enters a prolonged downturn, Marathon Digital could face pressure to pledge additional collateral or have its Bitcoin liquidated by lenders. The deal illustrates both the maturation of institutional crypto credit and the tail risks that come with it.
Frequently asked questions
Why did Marathon Digital pledge Bitcoin for a loan?
Marathon Digital used the $750 million loan proceeds primarily to fund its acquisition of Long Ridge Energy & Power (valued at ~$1.5B enterprise value) and for general corporate purposes. Crypto-collateralized lending allows miners to access capital without selling their Bitcoin holdings.
What happens if Bitcoin's price drops significantly?
Marathon Digital pledged 53% of its Bitcoin holdings as collateral at a 50% loan-to-value ratio. If Bitcoin enters a prolonged downturn, the company could face pressure to pledge additional collateral or risk having its Bitcoin liquidated by lenders.
