Marathon Digital to Acquire Mining Centers for $178.6M, Eyes Expansion Ahead of 2024 Reward Halving
Summary:
Marathon Digital plans to acquire two Bitcoin mining locations from Generate Capital for $178.6 million to expand its mining capacity ahead of the Bitcoin mining reward halving in 2024. The deal, set to conclude in 2024, will increase Marathon's total mining capacity to 910 megawatts. The company also intends to reduce its Bitcoin production costs and use the two sites' 82 megawatt vacant space for expansion. The acquisition is part of Marathon's strategy to diversify its Bitcoin mining assets and increase its operational capacity while reducing debt.
Marathon Digital plans to invest $178.6 million in purchasing two cryptocurrency mining data centers in anticipation of the Bitcoin mining incentive cut in 2024. The announcement made on December 19th states that the company will take over two ongoing Bitcoin mining locations from Generate Capital. These locations have a total power capacity of 390 megawatts. Currently, Marathon Digital manages a 584-megawatt crypto mining portfolio, out of which third-party data centers contribute to 97%.
With the deal expected to complete in early 2024, Marathon's mining capacity is projected to hit 910 megawatts. Interestingly, 45% of this will be directly handled by the company. However, Marathon continues to depend on external hosting agreements for 55% of its mining capacity. The forthcoming data centers will be based in Texas and Nebraska and offer more room for extending the company's Bitcoin mining activities. Over the next couple of years, the company aims to step up its operational hash rate to 50 exahashes.
The new additions will enable Marathon to take charge of roughly 390 megawatts of operational capacity, with 82 megawatts readily available for extension. Besides, other Bitcoin miners presently utilize 244 megawatts, while Marathon is already using 64 megawatts at these locations. Marathon estimates a cost cut by 30% in mining each Bitcoin once the deal is closed. Besides installing its mining equipment in the freed-up 82-megawatt-capacity, the company also plans to install more mining devices as current clients vacate the institutes. With seven exahashes of miners due for delivery, Marathon kick starts installation as early as January 2024.
Fred Thiel, Marathon's chairman and CEO, revealed that over the past year, the firm was keen on diversifying its Bitcoin mining assets. The acquisition of these locations from Generate lets Marathon drive down Bitcoin production expenses and seize energy hedging opportunities while escalating operational capacity. Marathon's CFO, Salman Khan, stated that the company was tactically enhancing its cash reserve and Bitcoin assets while lowering debts before the upcoming 2024 Bitcoin mining incentive cut. By cutting operational costs by 30% at these sites and providing immense extension possibilities, Khan believes the deal will bring immediate value-addition.
According to the reports dated November 8, Marathon Digital Holdings posted a dramatic hike in its revenue by 670% in the third quarter of 2023, upping Bitcoin production by a factor of five annually. The company's net profit for the quarter was $64.1 million, a massive recovery from its prior financial performance. The swing to profit was partially due to a 467% jump in Bitcoin production, from 6.7 BTC a day in the third quarter of 2022 to 37.9 BTC a day in the same period in 2023.
Published At
12/19/2023 4:56:12 PM
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