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 September 2022.
Management Commentary“During
the third quarter, we sequentially improved our bitcoin production
as we successfully transitioned out of our facility in Montana and
continued scaling operations at new locations, including the King
Mountain wind farm in Texas,” said Fred Thiel, Marathon’s chairman
and CEO. “This progress has continued into the first week of
October with approximately 19,000 additional miners, representing
approximately 2.0 exahashes per second, coming online since the
quarter’s end. As of today, Marathon’s active fleet currently
consists of approximately 57,000 active miners, representing
approximately 5.7 exahashes per second. We expect to continue
building our hash rate in the fourth quarter as approximately
19,000 additional miners, representing approximately 2.0 exahashes
per second, are expected to come online in the next 30 days.
“Our operations at the King Mountain wind farm,
among others, are hosted by Compute North, who recently initiated
Chapter 11 bankruptcy proceedings. Compute North has been a
supportive partner, and we respect this voluntary step to stabilize
their business. Based on the information available today, we do not
anticipate these proceedings impacting our current operations or
our ability to achieve our primary target of 23 exahashes per
second in 2023. We are in active discussions with Compute North’s
management and intend to closely monitor the progress of their
proceedings. While we expect operations to continue as originally
anticipated, our asset light model provides us with the optionality
to relocate our miners to other locations, should the need arise.
We believe this agility is a particularly valuable strategic
advantage we maintain given current market conditions.”
Recent Highlights
- Produced 616 BTC in Q3 2022. As the
Company successfully transitioned out of its facility in Hardin, MT
and began scaling operations at new facilities, bitcoin production
during the quarter improved sequentially as follows:
- July 2022: 72 BTC
- August 2022: 184 BTC
- September 2022: 360 BTC
- As of September 30, operating
mining fleet consisted of approximately 37,000 active miners,
producing approximately 3.8 EH/s, after approximately 3,000 miners
(c. 0.3 EH/s) were successfully energized during September
2022
- As of October 5, operating mining
fleet consisted of approximately 57,000 active miners, producing
approximately 5.7 EH/s, after approximately 19,000 additional
miners (c. 2.0 EH/s) were energized subsequent to the quarter’s
end
- Year-to-date through September 30,
2022, produced 2,582 BTC, a 23% increase over the same time period
in the prior year
- Benefitted from a downward market
price adjustment for the S19 XPs set to ship in October; benefits
from price adjustments expected to continue as additional XPs are
shipped in November and December
- Total bitcoin holdings increased to
10,670 BTC with a fair market value of approximately $207.3 million
as of September 30, 2022
- Unrestricted bitcoin holdings were
approximately 6,841 BTC with a fair market value of approximately
$132.9 million
- Unrestricted cash on hand was
approximately $55.3 million at September 30, 2022
- Successfully
completed the exit from Hardin, MT facility on schedule with all
Hardin miners resold or redeployed. Proceeds from the sales of
Hardin miners totaled approximately $47.5 million
Compute North Bankruptcy
UpdatesOn September 22, 2022, Compute North LLC (“Compute
North”), one of Marathon’s hosting providers, filed for
restructuring under Chapter 11 of the U.S. Bankruptcy Code. The
bulk of the Company’s current operations are hosted by a Compute
North / NextEra Joint Venture in McCamey, TX (“King Mountain”). The
Company also has operations hosted by Compute North in Granbury, TX
(“Wolf Hollow”), and minor operations hosted by Computer North
facilities in Nebraska and South Dakota.
The Compute North entities associated with both
the King Mountain and Wolf Hollow sites are not directly subject to
the Chapter 11 process. As a result, Marathon has not experienced
any significant negative impacts on its operations at King
Mountain, where miners continue to be energized according to
schedule. The Company has experienced some delays at Wolf Hollow,
which Compute North has attributed to a regulatory matter.
Marathon is currently in the process of
relocating approximately 3,000 of its miners from Compute North’s
facilities in Nebraska and South Dakota to new sites. This
relocation is unrelated to Compute North’s bankruptcy and was
previously scheduled to occur upon the October 3, 2022 expiry of
the Company’s contracts at these facilities.
Marathon’s financial exposure to Compute North
from investments includes $10 million in convertible preferred
stock of Compute North Holdings, Inc. and $21.3 million related to
an unsecured senior promissory note with Compute North LLC. The
Company has also paid approximately $50 million in operating
deposits to Compute North entities. These deposits were primarily
related to King Mountain and Wolf Hollow security deposits and
prepayments associated with the ongoing operation of those
sites.
Miner Energization and Installations
UpdatesIn September, approximately 3,000 of Marathon’s
previously installed miners, representing approximately 0.3 EH/s,
were successfully energized and brought online. As a result, the
Company’s hash rate increased to approximately 3.8 EH/s (c. 37,000
active miners) as of September 30, 2022.
Since that date, an additional 19,000 of
Marathon’s miners have been energized, increasing the Company’s
hash rate to approximately 5.7 EH/s as of October 5, 2022. Based on
current construction and installation schedules provided to
Marathon by its hosting providers, the Company currently expects
that approximately 19,000 additional miners (c. 2.0 EH/s) will be
energized over the next 30 days. Based on these reports, the
Company continues to expect to have enough miners installed to
generate approximately 23 EH/s near the middle of fiscal year
2023.
Once all of Marathon’s previously purchased
miners are installed, approximately 66% of the Company’s hash rate
is expected to be generated by S19 XPs, which are approximately 30%
more energy efficient than the prior generation. As a result, once
fully operational, Marathon’s Bitcoin mining operations are
currently expected to be among the largest and most energy
efficient on a per terahash basis.
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, 2021, filed with the
SEC on March 10, 2022. 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 September
2022. 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, while remaining asset light.
Marathon Digital
Holdings Company Contact: Telephone:
800-804-1690Email: ir@mara.com
Marathon Digital (NASDAQ:MARA)
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