Marathon Digital Holdings, Inc. (NASDAQ:MARA) (“Marathon” or
“Company”), a leader in supporting and securing the Bitcoin
ecosystem, has entered into a definitive purchase agreement to
acquire two currently operational Bitcoin mining sites, totaling
390 megawatts of capacity, from subsidiaries of Generate Capital,
PBC (“Generate”) for a total of $178.6 million, or $458,000 per
megawatt, to be paid in cash from Marathon’s balance sheet.
This transaction represents Marathon’s first
fully owned sites and marks the Company’s official transition from
an asset-light organization to one that manages a diversified and
resilient portfolio of Bitcoin mining operations. Currently,
Marathon’s Bitcoin mining portfolio consists of 584 megawatts of
capacity, 3% of which resides in sites that are owned and/or
operated by the Company, and 97% of which is hosted by third
parties. Following the close of this transaction, Marathon’s
Bitcoin mining portfolio will consist of approximately 910
megawatts of capacity, 45% of which will reside on sites directly
owned by the Company, and 55% of which will be hosted by third
parties. In addition, the expansion opportunities at these sites
substantially increase Marathon’s Bitcoin mining pipeline and
provide the Company with the potential to double its current
operational hash rate to approximately 50 exahashes of total
operating capacity over the next 18-24 months.
With the acquisition of these sites, Marathon
will take ownership of approximately 390 megawatts of operational
capacity, 82 megawatts (21%) of which are currently vacant and
available for immediate expansion, 244 megawatts (63%) of which are
currently occupied by other Bitcoin mining tenants, and 64
megawatts (16%) of which are already occupied by Marathon and ripe
for operational optimizations through energy hedging and other
means. The transaction is expected to reduce the cost per coin of
Marathon’s current operations at these sites by approximately 30%.
In the near term, the Company intends to fill 82 megawatts of
capacity currently available at the sites with its own miners.
Hosting clients currently occupy 244 megawatts of capacity and, as
these existing hosting clients depart the sites, the Company
intends to use available capacity for its own miners to further
increase its hash rate and maximize operational efficiencies.
Marathon currently has 7 exahashes of miners on order, the first
tranche of which is set to be delivered and installed in January
2024.
Under the terms of the agreement, Generate will
transfer ownership of the data centers in Granbury, Texas and
Kearney, Nebraska, both of which have third-party operators, to
Marathon in exchange for $178.6 million, or $458,000 per megawatt
(subject to certain adjustments), which will be paid in cash from
Marathon’s balance sheet. The transaction is subject to customary
closing conditions and is expected to close in the first quarter of
2024.
Management Commentary“For the
past year, Marathon has been vertically integrating as we
transition into a more sophisticated and mature organization with a
diversified portfolio of Bitcoin mining technologies and assets,
and the acquisition of these sites is the next step in that
evolution,” said Fred Thiel, Marathon’s chairman and CEO. “By
acquiring the sites in Granbury, Texas and Kearney, Nebraska from
Generate, we have an opportunity to reduce our bitcoin production
costs at these sites, to capitalize on energy hedging
opportunities, and to expand our operational capacity.
“This transaction increases the size of our
Bitcoin mining portfolio by 56% from 584 megawatts to 910 megawatts
of capacity, and it also provides us with a roadmap to double our
current operational hash rate to approximately 50 exahashes over
the next 18-24 months. We look forward to applying the operational
expertise and the innovative technologies we have successfully
developed and deployed at sites across the globe to our first fully
owned and operated sites in the U.S.”
Salman Khan, Marathon’s chief financial officer,
added, “We have spent the past year strengthening our balance sheet
by increasing our cash position, adding to our bitcoin holdings,
and reducing our debt to prepare for the halving and to ensure we
can capitalize on accretive opportunities as they present
themselves. This transaction is part of that long-term strategy and
is made possible by the strategic efforts we have made to improve
our balance sheet. By reducing our current operating costs at these
sites by 30% and providing us with ample expansion opportunities,
this transaction is immediately accretive to our organization. With
our strong balance sheet, we were able to quickly advance the
mutually beneficial purchase agreement of these assets without
having to add debt or issue future equity. By transitioning
ownership of the sites to Marathon, Generate will be able to
continue their focus on greening data centers, and Marathon will
own physical assets that reduce our bitcoin production costs and
provide us with ample room to grow.”
David Hirsch, Principal at Generate Capital,
commented, “Marathon has been an excellent partner and an essential
part of the success of the data centers in Granbury, Texas and
Kearney, Nebraska. With this transaction, Marathon strengthens its
position as a leader in the Bitcoin ecosystem, and Generate can
redeploy resources to continue its sustainability leadership with
other initiatives at the nexus of digital and energy
infrastructure. This agreement plays to both organizations’
strengths and long-term strategies.”
Webcast and Conference
CallMarathon Digital Holdings will hold a webcast and
conference call today, December 19, at 9:00 a.m. Eastern time to
discuss the transaction.
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 the Company’s website.
Webcast and Conference Call DetailsDate: Today,
December 19, 2023Time: 9:00 a.m. Eastern time (6:00 a.m. Pacific
time)Registration link: LINK
If you have any difficulty connecting with the
conference call, please contact Marathon’s investor relations team
at ir@mara.com.
Investor PresentationIn
conjunction with this press release, Marathon has published a
presentation that includes additional information about the
transaction. The presentation, titled Building the Bitcoin Mining
Portfolio – The Acquisition of Marathon’s First Fully Owned Sites,
is available in investor relations section of the Company’s website
under Presentations.
AdvisorsPaul, Weiss, Rifkind,
Wharton & Garrison LLP is serving as legal advisor to Marathon
in connection with the transaction and Kirkland & Ellis LLP is
serving as legal advisor to Generate.
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 December 2023. 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: @MarathonDHLinkedIn:
www.linkedin.com/company/marathon-digital-holdings Facebook:
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@marathondigitalholdings
Marathon Digital
Holdings Company Contact:
Telephone: 800-804-1690Email: ir@mara.com
Marathon Digital Holdings Media
Contact:Email: marathon@wachsman.com
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