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Marathon Digital Holdings Announces Bitcoin Production and Mining Operation Updates for January 2024

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Marathon Digital Holdings, Inc. (NASDAQ:MARA) published unaudited bitcoin production and miner installation updates for January 2024. The company increased its energized hash rate by 7% to 26.4 exahash and had BTC holdings of 15,741 with a total cash and BTC of $1.0B as of January 31, 2024. The financial highlights show a significant increase in total cash, cash equivalents, and restricted cash, as well as a 38% increase in total BTC holdings compared to the previous year.
Positive
  • Increased energized hash rate by 7% to 26.4 exahash in January 2024
  • BTC holdings of 15,741 and total cash & BTC of $1.0B as of January 31, 2024
  • Significant increase in total cash, cash equivalents, and restricted cash
  • 38% increase in total BTC holdings compared to the previous year
Negative
  • Production of 1,084 BTC in January, 42% less than produced in December
  • Total network rewards decreased 14% month-over-month
  • Transaction fees declined to 11% of overall production in January from 22% in December

The acquisition of data centers by Marathon Digital Holdings represents a strategic move to bolster their operational control and reduce costs associated with bitcoin production. The termination of Hut8 as the operator and the direct assumption of control by Marathon could potentially lead to improved operational efficiency and a decrease in operating fees. This is significant as it directly impacts Marathon's cost structure and could enhance profitability, particularly important in the volatile cryptocurrency market.

Furthermore, the company's decision not to sell any bitcoin in January and instead increase its holdings suggests a confident outlook on the future value of bitcoin, which is a strategic treasury management decision that investors may view as a positive signal of the company's belief in the long-term value of their assets. However, the substantial investment in bitcoin also exposes the company to market risk, as the value of its holdings is directly tied to the fluctuating price of bitcoin.

The financial update indicating a 124% year-over-year increase in cash and cash equivalents, coupled with a 38% increase in BTC holdings, reflects a strong liquidity position. This may provide Marathon with the flexibility to navigate the upcoming Bitcoin network halving and capitalize on strategic opportunities such as industry consolidation, which could be a long-term growth driver.

Marathon's operational update, including the 7% month-over-month increase in energized hash rate and the 42% decline in BTC production compared to December, highlights the volatility inherent in mining operations. Weather-related curtailment and equipment failures are industry risks that can significantly impact production levels. The ability to address these disruptions and return to full operational strength will be critical in maintaining investor confidence and market competitiveness.

The international expansion into Abu Dhabi and Paraguay with technologically advanced mining operations could be a diversification strategy that mitigates geographical risks and taps into global energy markets. This international footprint may offer Marathon a competitive edge, particularly with the Abu Dhabi joint venture's high uptime, which is crucial for maintaining consistent production levels.

The operational metrics provided, such as the share of available miner rewards and the number of blocks won, offer transparency into Marathon's performance within the broader Bitcoin network. These metrics can be useful for investors to gauge the company's efficiency and market share relative to competitors.

The acquisition of new mining facilities and the subsequent increase in hash rate capacity are pivotal factors in the cryptocurrency mining industry. Marathon's expansion to 50 EH/s by the end of 2025 indicates an aggressive growth strategy that could position the company as a dominant player in the Bitcoin mining sector. Hash rate is a critical measure of a miner's performance, as it indicates the amount of computational power being contributed to the network, which in turn affects the likelihood of earning block rewards.

Marathon's proactive approach to managing disruptions and scaling operations, such as the immersion deployment in Abu Dhabi, reflects an understanding of the importance of technological advancements in maintaining a competitive edge. The immersion cooling technology used in such deployments is a cutting-edge method that can significantly improve miner efficiency and longevity, which is essential for reducing operational costs and maximizing production.

It's important to note that while Marathon's strategic moves appear to strengthen its market position, the cryptocurrency sector remains highly speculative and subject to regulatory and market risks. Investors should consider the potential impact of these factors on Marathon's operations and the broader implications for the industry.

  • Closed Generate Capital Acquisition, Paving Path to 50 EH/s
  • Signed Agreement with Hut8 To Assume Full Control of New Sites by April 30
  • Increased Energized Hash Rate 7% M/M to 26.4 EH/s
  • BTC Holdings 15,741 and Total Cash & BTC of $1.0B as of January 31, 2024

Fort Lauderdale, FL, Feb. 05, 2024 (GLOBE NEWSWIRE) -- Marathon Digital Holdings, Inc. (NASDAQ:MARA) ("Marathon" or "Company"), a leader in supporting and securing the Bitcoin ecosystem, today published unaudited bitcoin (“BTC”) production and miner installation updates for January 2024.

Management Commentary

“In January, we increased our energized hash rate 7% to 26.4 exahash as our team worked to address several temporary disruptions that negatively impacted our production,” said Fred Thiel, Marathon’s chairman and CEO. “These disruptions included weather-related curtailment and equipment failures that led to site outages and reduced our average operational hash rate 14% to 19.3 exahash in January. Additionally, total network rewards decreased 14% month-over-month as transaction fees, which spiked in the prior month and represented 22% of our overall production in December, declined to 11% of our overall production in January. As a result, we produced 1,084 BTC in January, 42% less than we produced in December. Our team is addressing the short-term disruptions and working to bring our sites back to full strength. We expect hash rate to improve over the next few weeks.

“While our team began addressing these domestic challenges, we also made notable progress internationally. In collaboration with our regional partner, we completed the construction and energization all 250 megawatts of our joint venture in Abu Dhabi, which is among the most technologically advanced immersion deployments globally and operates at nearly 100% uptime. At the same time, we continued executing our joint venture in Paraguay. This deployment now has 2,100 miners, or 0.3 exahash, operational, and we continue to expect the full 1.1 exahash to be online in Q2 2024.

“After closing the acquisition of the data centers in Granbury, Texas and Kearney, Nebraska in January, we announced last week that we would be terminating Hut8 as the operator of these sites and we intend to assume full operational control ourselves by April 30. By directly owning and operating these sites, we believe we can reduce our operating fees, thereby improving our cost to produce bitcoin, more effectively participate in energy hedging and other energy management services and streamline the implementation of our proprietary technology to improve operational efficiency.

“We have already added another 0.9 exahash of capacity at our newly owned facility in Granbury, Texas, and we expect progress to accelerate as we gain more operational influence. As we closed the acquisition, our team immediately began engaging with the local community in Granbury, and we look forward to a long and mutually beneficial relationship. With the acquisition closed and seven exahash of miners on order and almost entirely paid, we have a clear path to grow our hash rate another 30% this year and reach 50 EH/s by the end of 2025.”

Operational Highlights and Updates

Figure 1: Operational Highlights

Metric 1/31/2024  1/31/2023  % Δ  1/31/2024  12/31/2023  % Δ 
Bitcoin Produced  1,084   687   58%  1,084   1,853   -42%
Average Bitcoin Produced per Day  35.0   22.2   58%  35.0   59.8   -42%
Share of Available Miner Rewards1  3.5%  2.3%  52%  3.5%  5.1%  -31%
Number of Blocks Won5  140   68   106%  140   222   -37%
Transaction Fees as % of Total5  11.4%  2.3%  396%  11.4%  21.8%  -48%
Energized Hash Rate (EH/s)2  26.4   7.3   262%  26.4   24.7   7%
Average Operational Hash Rate (EH/s)3  19.3   5.7   239%  19.3   22.4   -14%
Installed Hash Rate (EH/s)4  26.7   11.0   143%  26.7   25.2   6%


1. Defined as the total amount of block rewards including transaction fees that Marathon 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 month 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.

5. These metrics are MaraPool only, do not include the joint ventures

Approximately 13,700 of Marathon’s Bitcoin miners (c. 1.6 EH/s) were energized in January. This energization helped increase the Company’s operating fleet by 7% to approximately 212,900 Bitcoin miners, capable of producing approximately 26.7 EH/s, according to the manufacturer’s specifications as of January 31, 2024.

Figure 2: Operational Details by Site

Hash Rates in EH/s   Installed Hash Rate  Energized Hash Rate  Avg Operating Hash Rate  Avg % of Energized 
Site State Host Jan 2024  Dec 2023  Jan 2024  Dec 2023  Jan 2024  Dec 2023  Jan 2024  Dec 2023 
McCamey TX US Bitcoin  7.7   7.7   7.7   7.7   6.4   7.1   82%  92%
Ellendale ND Applied  7.8   7.8   7.8   7.8   4.0   7.4   51%  95%
Garden City TX Applied  4.5   4.5   4.5   4.5   3.8   3.6   83%  80%
Granbury TX US Bitcoin  2.8   1.9   2.8   1.9   2.2   1.9   78%  99%
Jamestown ND Applied  1.4   1.4   1.4   1.4   1.3   1.2   90%  86%
All Other   Various  2.7   1.3   2.2   1.3   1.8   1.1   82%  83%
Total      26.9   24.6   26.4   24.6   19.3   22.3   73%  90%


As of January 31, the Company holds a total of 15,741 unrestricted BTC. With a substantial cash position at year-end 2023, Marathon opted not to sell any bitcoin in January and instead purchased an additional 183.5 bitcoin at an average price of $39,738. The Company intends to continue to sell a portion of its bitcoin holdings in future periods to support monthly operations, manage its treasury, and for general corporate purposes.

Financial Highlights and Updates

Figure 3: Financial Highlights

  Year-Over-Year Comparison  Prior Month Comparison 
Metric 1/31/2024  1/31/2023  % Δ  1/31/2024  12/31/2023  % Δ 
Total Cash, Cash Equivalents, & Restricted Cash ($, in millions)  318.9   142.6   124%  318.9   356.8   -11%
Unrestricted Cash  318.9   133.8   138%  318.9   356.8   -11%
Restricted Cash  0.0   8.8   -100%  0.0   0.0   NA 
Total BTC Holdings (in whole numbers)  15,741   11,419   38%  15,741   15,174   4%
Unrestricted BTC Holdings  15,741   8,091   95%  15,741   15,174   4%
Restricted BTC Holdings  0   3,328   -100%  0   0   NA 
Pledged BTC Holdings  700   0   NA   700   0   NA 


Marathon held $318.9 million in cash and cash equivalents on its balance sheet at month end, all of which was unrestricted. On January 31, 2024, the combined balance of unrestricted cash and cash equivalents and bitcoin was $988.7 million. The transaction to acquire two operating sites from Generate Capital closed on January 12, 2024 for approximately $178.6 million in cash, excluding customary working capital related purchase price adjustments. In anticipation of the next Bitcoin network halving, the Company continues to build liquidity on the balance sheet to capitalize on strategic opportunities, including industry consolidation.

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 "Risk Factors" in Item 1A of our most recent Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on March 16, 2023. 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. Future changes in the network-wide mining difficulty rate or Bitcoin hash rate may also materially affect the future performance of Marathon's production of bitcoin. Additionally, all discussions of financial metrics assume mining difficulty rates as of February 2024. See "Forward-Looking Statements" below.

Forward-Looking Statements

Statements made in this press release include forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements can be identified by the use of words such as “may,” “will,” “plan,” “should,” “expect,” “anticipate,” “estimate,” “continue,” or comparable terminology. Such forward-looking statements are inherently subject to certain risks, trends and uncertainties, many of which the Company cannot predict with accuracy and some of which the Company might not even anticipate and involve factors that may cause actual results to differ materially from those projected or suggested. Readers are cautioned not to place undue reliance on these forward-looking statements and are advised to consider the factors listed above together with the additional factors under the heading “Risk Factors” in the Company's Annual Reports on Form 10-K, as may be supplemented or amended by the Company's Quarterly Reports on Form 10-Q. The Company assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events, new information or otherwise.

About Marathon Digital Holdings

Marathon is a digital asset technology company that focuses on supporting and securing the Bitcoin ecosystem. The Company is currently in the process of becoming one of the largest and most sustainably powered Bitcoin mining operations in North America.

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

Marathon Digital HoldingsCompanyContact:
Telephone: 800-804-1690
Email: ir@mara.com

Marathon Digital Holdings Media Contact:
Email: marathon@wachsman.com


FAQ

What is the ticker symbol for Marathon Digital Holdings, Inc.?

The ticker symbol for Marathon Digital Holdings, Inc. is MARA.

What was the BTC production for Marathon Digital Holdings, Inc. in January 2024?

Marathon Digital Holdings, Inc. produced 1,084 BTC in January 2024.

What was the percentage change in BTC production for Marathon Digital Holdings, Inc. compared to December 2023?

BTC production decreased by 42% in January 2024 compared to December 2023.

What was the energized hash rate for Marathon Digital Holdings, Inc. in January 2024?

The energized hash rate was 26.4 exahash in January 2024.

What was the total cash and BTC holdings for Marathon Digital Holdings, Inc. as of January 31, 2024?

The total cash and BTC holdings were $1.0 billion as of January 31, 2024.

What was the percentage change in total BTC holdings for Marathon Digital Holdings, Inc. compared to January 2023?

There was a 38% increase in total BTC holdings for Marathon Digital Holdings, Inc. compared to January 2023.

Marathon Digital Holdings, Inc.

NASDAQ:MARA

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About MARA

Marathon Digital Holdings is focused on securing and supporting the development of the Bitcoin ecosystem by building one of the largest, most agile, and most sustainable bitcoin mining operations in the world. We’re here to help make Bitcoin more secure and more widely adopted by bringing a professional and innovative approach to securing the blockchain.