MARA Reports Second Quarter 2024 Results
Rhea-AI Summary
MARA reported Q2 2024 results with revenues increasing 78% to $145.1 million, despite a 30% decrease in BTC production to 2,058. The company faced a net loss of $199.7 million, or $0.72 per diluted share, largely due to a $148.0 million fair market value loss on digital assets. Adjusted EBITDA decreased to a loss of $85.1 million.
Key highlights include:
- Energized hash rate increased 78% YoY to 31.5 EH/s
- Combined cash and BTC holdings reached $1.4 billion
- Reorganized into three strategic business teams
- Acquired Garden City data center in Texas
- Partnered with Kenya government for energy asset development
Positive
- Revenues increased 78% YoY to $145.1 million
- Energized hash rate increased 78% YoY to 31.5 EH/s
- Combined cash and BTC holdings reached $1.4 billion
- Acquired Garden City data center in Texas
- Partnered with Kenya government for energy asset development
- Targeting 50 EH/s of energized hash rate by end of 2024
- Adopted full HODL approach for BTC, holdings now exceed 20,000 BTC
Negative
- Net loss increased to $199.7 million, or $0.72 loss per diluted share
- Adjusted EBITDA decreased to a loss of $85.1 million
- BTC production decreased 30% YoY to 2,058
- $148.0 million loss on fair value of digital assets
- Average daily BTC production decreased to 22.9 from 32.2 YoY
- Sold 51% of BTC produced during the quarter to fund operating costs
Insights
MARA's Q2 2024 results present a mixed picture with some concerning trends. While revenues increased
The adoption of new accounting standards (ASU No. 2023-08) requiring ongoing fair value measurement of crypto assets has significantly impacted MARA's financial statements. This change introduces more volatility to the company's reported earnings, as evidenced by the large fair value loss this quarter.
On the operational front, MARA's energized hash rate increased
The company's liquidity position remains strong, with combined unrestricted cash and BTC holdings of
MARA's reorganization into three strategic business teams and its expansion efforts, including the Garden City data center acquisition and partnership with the Kenyan government, demonstrate a focus on diversification and growth. However, the company needs to address operational challenges and mitigate the impact of Bitcoin price volatility on its financial performance.
MARA's Q2 2024 results reflect the broader challenges facing the Bitcoin mining industry. The Bitcoin halving event in April 2024 has had a significant impact on the company's operations, as evidenced by the
The company's increased hash rate capacity, reaching 31.5 EH/s, is impressive but hasn't translated into proportional BTC production growth due to the rising global hash rate. This highlights the intensifying competition in the mining sector and the need for continuous efficiency improvements.
MARA's decision to adopt a full HODL approach for its BTC holdings is a bold move. With over 20,000 BTC on its balance sheet, the company is heavily exposed to Bitcoin price fluctuations. This strategy could pay off if BTC prices rise significantly but also increases the company's financial risk.
The company's diversification efforts, including the launch of Kaspa mining operations and the focus on energy harvesting, are prudent steps to reduce reliance on Bitcoin mining alone. However, these initiatives are still in early stages and their impact on MARA's bottom line remains to be seen.
The fair value accounting for crypto assets has introduced significant volatility to MARA's financial statements. Investors will need to look beyond these non-cash adjustments to assess the company's operational performance and long-term prospects in the evolving cryptocurrency mining landscape.
MARA's Q2 2024 results highlight the company's growing focus on energy-related initiatives in the cryptocurrency mining sector. The reorganization into three strategic business teams, including an Energy Harvesting division, signals a commitment to addressing the energy-intensive nature of Bitcoin mining.
The partnership with the Kenyan government to develop underutilized energy assets is a noteworthy move. This initiative could potentially provide MARA with access to low-cost, sustainable energy sources, which is important for maintaining competitiveness in the mining industry. However, the success of such international ventures depends on navigating complex regulatory and operational challenges.
The acquisition of the Garden City data center in Texas also aligns with MARA's energy strategy. Texas has become a hub for cryptocurrency mining due to its relatively low energy costs and supportive regulatory environment. This acquisition could help MARA optimize its energy consumption and potentially tap into the state's growing renewable energy sector.
Despite these positive developments, MARA faced operational challenges related to equipment failures and transmission line maintenance at third-party operated sites. These issues underscore the importance of robust infrastructure and highlight potential risks associated with relying on external facilities.
As MARA aims to reach 50 exahash of energized hash rate by the end of 2024, managing energy costs and reliability will be critical. The company's focus on leveraging digital asset compute to support the energy transformation is promising, but it will need to demonstrate tangible results in terms of improved energy efficiency and reduced operational costs to offset the challenges posed by Bitcoin halving events and increasing competition.
- Revenues Increase
- Fair Market Value Loss of
- Adjusted EBITDA Decreases to a Loss of
Fort Lauderdale, FL, Aug. 01, 2024 (GLOBE NEWSWIRE) -- MARA (NASDAQ:MARA) (“MARA” or the “Company”), a global leader in leveraging digital asset compute to support the energy transformation, reported its financial and operational results for the quarter ended June 30, 2024.
Second Quarter 2024 Financial and Operational Highlights
| - | Energized hash rate increased |
| - | Produced 2,058 bitcoin (“BTC”) during Q2 2024, a |
| - | Revenues increased |
| - | Net loss increased to |
| - | Adjusted EBITDA decreased to a loss of |
| - | Combined unrestricted cash and cash equivalents and BTC increased to |
| - | Organized the company into three strategic business teams – Utility Scale Mining, Energy Harvesting, and Technology – to better align MARA’s internal structure with its pursuit of growth opportunities |
| - | Successfully acquired and closed the Garden City data center in Texas |
| - | Signed a partnership with the government of Kenya aimed at developing underutilized energy assets |
| - | Diversified the Company’s portfolio of digital asset compute through the successful launch of Kaspa mining operations |
Management Commentary
“During the second quarter of 2024, our BTC production was impacted by unexpected equipment failures and transmission line maintenance at the Ellendale site operated by Applied Digital, increased global hash rate, and the April halving event,” said Fred Thiel, MARA’s chairman and chief executive officer. “However, I’m pleased to report that transformer issues at the Ellendale site were mitigated and remediated post quarter end, and our hash rate recovery effort is complete. We reached an all-time high installed hash rate of 31.5 exahash in the second quarter and continue to target 50 exahash of energized hash rate by the end of 2024 with additional growth in 2025.
“We are beginning to lay the foundation for MARA to become a globally diversified company that leverages digital asset compute to build a more sustainable and inclusive future. During the quarter, we organized the internal structure of the business to better align with our growth opportunities, sharpen our strategic focus, bolster accountability, and accelerate our speed and agility as we scale. MARA is now a streamlined organization consisting of three specialized business teams: Utility Scale Mining, Energy Harvesting, and Technology.
“Revenues increased
Second Quarter 2024 Production Highlights
| Year-Over-Year Comparison | Prior Quarter Comparison | |||||||||||||||||||||||
| Metric(1) | Q2 2024 | Q2 2023 | % Δ | Q2 2024 | Q1 2024 | % Δ | ||||||||||||||||||
| BTC Produced | 2,058 | 2,926 | (30 | )% | 2,058 | 2,811 | (27 | )% | ||||||||||||||||
| Average BTC Produced per Day | 22.9 | 32.2 | (29 | )% | 22.9 | 30.9 | (26 | )% | ||||||||||||||||
| Share of available miner rewards (1) | 3.7 | % | 3.3 | % | NA | 3.7 | % | 3.1 | % | NA | ||||||||||||||
| Energized Hash Rate (EH/s) (2) | 31.5 | 17.7 | 78 | % | 31.5 | 27.8 | 13 | % | ||||||||||||||||
| Average Operational Hash Rate (EH/s) (3) | 24.0 | 12.1 | 98 | % | 24.0 | 18.2 | 32 | % | ||||||||||||||||
| Installed Hash Rate (EH/s) (4) | 31.5 | 21.8 | 44 | % | 31.5 | 27.8 | 13 | % | ||||||||||||||||
NA - Not applicable
1. Defined as the total amount of block rewards including transaction fees that MARA earned during the period divided by the total amount of block rewards and transaction fees awarded by the Bitcoin network during the period.
2. Defined as the amount of hash rate that could theoretically be generated if all miners that have been energized are currently in operation including miners that may be temporarily offline. Hash rates are estimates based on the manufacturers’ specifications. All figures are rounded.
3. Defined as the average hash rate that was actually generated during the period from all operational miners. All figures are estimates and are rounded.
4. Defined as the sum of energized hash rate (see above) and hash rate that has been installed but not yet energized. Hash rates are estimates based on the manufacturers’ specifications. All figures are rounded.
Second Quarter 2024 Financial Results
Net loss increased to
Adjusted EBITDA decreased to a loss of
Revenues increased
The Company sold
Change in fair value of digital assets was a
Second Quarter 2024 Earnings Webcast and Conference Call
MARA will hold a webcast and conference call today, August 1, 2024, at 5:00 p.m. Eastern time to discuss its financial results for the quarter ended June 30, 2024.
To register to participate in the conference call or to listen to the live audio webcast, please use this link. The webcast will also be broadcast live and available for replay via the investor relations section of our website.
Earnings Webcast and Conference Call Details
Date: Thursday, August 1, 2024
Time: 5:00 p.m. Eastern time (2:00 p.m. Pacific time)
Registration link: LINK
If you have any difficulty connecting with the conference call, please contact MARA’s investor relations team at ir@mara.com.
Investor Notice
Investing in our securities involves a high degree of risk. Before making an investment decision, you should carefully consider the risks, uncertainties and forward-looking statements described under the heading “Risk Factors” in our most recent annual report on Form 10-K and any other periodic reports that we may file with the U.S. Securities and Exchange Commission (the “SEC”). If any of these risks were to occur, our business, financial condition or results of operations would likely suffer. In that event, the value of our securities could decline, and you could lose part or all of your investment. The risks and uncertainties we describe are not the only ones facing us. Additional risks not presently known to us or that we currently deem immaterial may also impair our business operations. In addition, our past financial performance may not be a reliable indicator of future performance, and historical trends should not be used to anticipate results in the future. See “Forward-Looking Statements” below.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the federal securities laws. All statements, other than statements of historical fact, included in this press release are forward-looking statements. The words “may,” “will,” “could,” “anticipate,” “expect,” “intend,” “believe,” “continue,” “target” and similar expressions or variations or negatives of these words are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Such forward-looking statements include, among other things, statements related to our strategy, future operations, growth targets, BTC treasury policy and the long-term value of BTC. Such forward-looking statements are based on management’s current expectations about future events as of the date hereof and involve many risks and uncertainties that could cause our actual results to differ materially from those expressed or implied in our forward-looking statements. Subsequent events and developments, including actual results or changes in our assumptions, may cause our views to change. We do not undertake to update our forward-looking statements except to the extent required by applicable law. Readers are cautioned not to place undue reliance on such forward-looking statements. All forward-looking statements included herein are expressly qualified in their entirety by these cautionary statements. Our actual results and outcomes could differ materially from those included in these forward-looking statements as a result of various factors, including, but not limited to, the factors set forth under the heading “Risk Factors” in our most recent annual report on Form 10-K and any other periodic reports that we may file with the SEC.
About MARA
MARA (NASDAQ:MARA) is a global leader in digital asset compute that develops and deploys innovative technologies to build a more sustainable and inclusive future. MARA secures the world’s preeminent blockchain ledger and supports the energy transformation by converting clean, stranded, or otherwise underutilized energy into economic value.
For more information, visit www.mara.com, or follow us on:
Twitter: @MarathonDH
LinkedIn: www.linkedin.com/company/marathon-digital-holdings
Facebook: www.facebook.com/MarathonDigitalHoldings
Instagram: @marathondigitalholdings
MARA Company Contact:
Telephone: 800-804-1690
Email: ir@mara.com
MARA Media Contact:
Email: marathon@wachsman.com
MARATHON DIGITAL HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| (in thousands, except share and per share data) | 2024 | 2023 | 2024 | 2023 | ||||||||||||
| Total revenues | $ | 145,139 | $ | 81,759 | $ | 310,337 | $ | 132,891 | ||||||||
| Costs and expenses | ||||||||||||||||
| Cost of revenues | ||||||||||||||||
| Mining and hosting services | (93,887 | ) | (55,222 | ) | (184,098 | ) | (88,599 | ) | ||||||||
| Depreciation and amortization | (87,808 | ) | (37,275 | ) | (165,803 | ) | (55,008 | ) | ||||||||
| Total cost of revenues | (181,695 | ) | (92,497 | ) | (349,901 | ) | (143,607 | ) | ||||||||
| Operating expenses | ||||||||||||||||
| General and administrative expenses | (57,118 | ) | (19,840 | ) | (130,429 | ) | (34,976 | ) | ||||||||
| Change in fair value of digital assets | (147,999 | ) | 25,162 | 340,808 | 162,560 | |||||||||||
| Change in fair value of derivative | 38,251 | — | 22,999 | — | ||||||||||||
| Research and development | (3,845 | ) | (651 | ) | (6,311 | ) | (860 | ) | ||||||||
| Early termination expenses | (5,660 | ) | — | (27,757 | ) | — | ||||||||||
| Amortization of intangible assets | (19,470 | ) | — | (22,439 | ) | — | ||||||||||
| Total operating expenses | (195,841 | ) | 4,671 | 176,871 | 126,724 | |||||||||||
| Operating income (loss) | (232,397 | ) | (6,067 | ) | 137,307 | 116,008 | ||||||||||
| Gain on investments | — | — | 5,236 | — | ||||||||||||
| Loss on hedge instruments | — | — | (2,292 | ) | — | |||||||||||
| Equity in net earnings of unconsolidated affiliate | 49 | — | 1,308 | — | ||||||||||||
| Net loss from extinguishment of debt | — | — | — | (333 | ) | |||||||||||
| Interest income | 2,188 | 118 | 4,761 | 910 | ||||||||||||
| Interest expense | (1,369 | ) | (2,840 | ) | (2,625 | ) | (6,600 | ) | ||||||||
| Other non-operating income | 213 | 30 | 213 | 30 | ||||||||||||
| Income (loss) before income taxes | (231,316 | ) | (8,759 | ) | 143,908 | 110,015 | ||||||||||
| Income tax benefit (expense) | 31,657 | (203 | ) | (6,394 | ) | (278 | ) | |||||||||
| Net income (loss) | $ | (199,659 | ) | $ | (8,962 | ) | $ | 137,514 | $ | 109,737 | ||||||
| Series A preferred stock accretion to redemption value | — | (2,121 | ) | — | (2,121 | ) | ||||||||||
| Net income (loss) attributable to common stockholders | $ | (199,659 | ) | $ | (11,083 | ) | $ | 137,514 | $ | 107,616 | ||||||
| Net income (loss) per share of common stock - basic | $ | (0.72 | ) | $ | (0.07 | ) | $ | 0.51 | $ | 0.66 | ||||||
| Weighted average shares of common stock - basic | 278,674,506 | 168,474,882 | 268,899,932 | 163,856,352 | ||||||||||||
| Net income (loss) per share of common stock - diluted | $ | (0.72 | ) | $ | (0.07 | ) | $ | 0.50 | $ | 0.66 | ||||||
| Weighted average shares of common stock - diluted | 278,674,506 | 168,474,882 | 277,959,660 | 173,740,064 | ||||||||||||
| Supplemental information: | ||||||||||||||||
| BTC production during the period, in whole BTC | 2,058 | 2,926 | 4,869 | 5,121 | ||||||||||||
| Average BTC per day, in whole BTC | 22.9 | 32.2 | 26.8 | 28.3 | ||||||||||||
| Total margin (total revenues less total cost of revenues) | $ | (36,556 | ) | $ | (10,738 | ) | $ | (39,564 | ) | $ | (10,716 | ) | ||||
| Total margin excluding the impact of depreciation and amortization (2): | ||||||||||||||||
| Mining (1) | 50,640 | 26,537 | $ | 123,823 | $ | 44,292 | ||||||||||
| Hosting services (1) | 612 | — | $ | 2,416 | $ | — | ||||||||||
| General and administrative expenses excluding stock-based compensation | (28,786 | ) | (15,389 | ) | $ | (50,184 | ) | $ | (26,580 | ) | ||||||
| Installed Hash Rate (Exahashes per second) - at end of period (1) | 31.5 | 21.8 | 31.5 | 21.8 | ||||||||||||
| Energized Hash Rate (Exahashes per second) - at end of period (1) | 31.5 | 17.7 | 31.5 | 17.7 | ||||||||||||
| Average Operational Hash Rate (Exahashes per second) (1) | 24.0 | 12.1 | 21.2 | 12.1 | ||||||||||||
| Cost per Petahash per day (1) | $ | 41.0 | $ | 50.4 | $ | 42.8 | $ | 51.7 | ||||||||
| Share of available miner rewards | 3.7 | % | 3.3 | % | 3.2 | % | 2.9 | % | ||||||||
| Number of blocks won | 457 | 414 | 825 | 635 | ||||||||||||
| Transaction fees as a percentage of total | 10.5 | % | 8.2 | % | 8.8 | % | 6.2 | % | ||||||||
| Reconciliation to Adjusted EBITDA: | ||||||||||||||||
| Net income (loss) | $ | (199,659 | ) | $ | (8,962 | ) | $ | 137,514 | $ | 109,737 | ||||||
| Exclude: Interest expense | 1,369 | 2,840 | 2,625 | 6,600 | ||||||||||||
| Exclude: Income tax expense (benefit) | (31,657 | ) | 203 | 6,394 | 278 | |||||||||||
| EBIT | (229,947 | ) | (5,919 | ) | 146,533 | 116,615 | ||||||||||
| Exclude: Depreciation and amortization | 110,815 | 37,275 | 194,363 | 55,008 | ||||||||||||
| EBITDA | (119,132 | ) | 31,356 | 340,896 | 171,623 | |||||||||||
| Exclude: Stock compensation expense | 28,332 | 4,451 | 80,245 | 8,396 | ||||||||||||
| Exclude: Early termination expenses | 5,660 | — | 27,757 | — | ||||||||||||
| Exclude: Gain on investments | — | — | (5,236 | ) | — | |||||||||||
| Exclude: Net loss from extinguishment of debt | — | — | — | 333 | ||||||||||||
| Adjusted EBITDA (2) | $ | (85,140 | ) | $ | 35,807 | $ | 443,662 | $ | 180,352 | |||||||
(1) Mining and hosting services margin excluding the impact of depreciation and amortization is calculated using revenues less cost of revenues, excluding depreciation and amortization, for mining and hosting services, respectively. The Company defines Energized Hash Rate as the total hash rate that could theoretically be generated if all mining rigs that have been operational / energized are currently in operation and running at
The Company believes that these metrics are useful as an indicator of potential BTC production. However, these metrics cannot be tied directly to any production level expected to be actually achieved as (a) there may be delays in the energization of Installed Hash Rate (b) the Company cannot predict when installed and energized rigs may be offline for any reason, including curtailment or machine failure and (c) the Company cannot predict Global Hash Rate (and therefore the Company’s share of the Global Hash Rate), which has significant impact on the Company’s ability to generate BTC in any given period.
(2) Non-GAAP Financial Measures In order to provide a more comprehensive understanding of the information used by our management team in financial and operational decision-making, we supplement our Condensed Consolidated Financial Statements that have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) with the non-GAAP financial measures of adjusted EBITDA and total margin excluding depreciation and amortization.
The Company defines adjusted EBITDA as (a) GAAP net income (loss) plus (b) adjustments to add back the impacts of (1) depreciation and amortization, (2) interest expense, (3) income tax expense (benefit) and (4) adjustments for non-cash and non-recurring items which currently include (i) stock compensation expense, (ii) early termination expenses, (iii) gain on investments and (iv) losses from extinguishment of debt. The Company defines total margin excluding depreciation and amortization as (a) GAAP total margin less (b) depreciation and amortization.
Management uses adjusted EBITDA and total margin excluding depreciation and amortization, along with the supplemental information provided herein, as a means of understanding, managing, and evaluating business performance and to help inform operating decision-making. The Company relies primarily on its Condensed Consolidated Financial Statements to understand, manage, and evaluate its financial performance and uses non-GAAP financial measures only supplementally.
We believe that adjusted EBITDA and total margin excluding depreciation and amortization are useful measures to us and to our investors because they exclude certain financial, capital structure, and non-cash items that we do not believe directly reflect our core operations and may not be indicative of our recurring operations, in part because they may vary widely across time and within our industry independent of the performance of our core operations. We believe that excluding these items enables us to more effectively evaluate our performance period-over-period and relative to our competitors. Adjusted EBITDA and total margin excluding depreciation and amortization may not be comparable to similarly titled measures provided by other companies due to potential differences in methods of calculations.
FAQ
What was MARA's revenue for Q2 2024?
How many bitcoin did MARA produce in Q2 2024?
What was MARA's net loss for Q2 2024?
What was MARA's energized hash rate at the end of Q2 2024?
What is MARA's target for energized hash rate by the end of 2024?
