A combination of more hash rate coming online from mining plants and a price protection approach is shielding Bitcoin mining firm Marathon Digital Holdings through the bear market, CEO Fred Thiel told Cointelegraph.
In an exclusive interview during the 2023 Bitcoin Conference in Miami, Thiel disclosed the strategy behind Marathon’s figures in the first quarter of 2023, when the firm reduced its net loss from $12.9 million ($0.12 per share) from Q1 2022 to $7.2 million ($0.05 per share) this year.
Marathon is offsetting lower Bitcoin (BTC) prices with production increases. It reported a quarterly record of 2,195 BTC mined over the first three months of the year, worth over $60 million at the time of writing. “We are now operating at somewhere of 14.0 [exhash/second (EH/s)] hash rate, which is two times more than where we were at the end of last year," said Thiel about the 74% increase in production, claiming Marathon should achieve 23.0 EH/s in hash rate in the coming months.
Last year’s crypto winter added more pressure on Bitcoin mining companies. In December, Core Scientific filed for Chapter 11 bankruptcy, while Greenridge received a $74 million debt restructuring lifeline from New York Digital Investment Group to survive amid Bitcoin’s value decline.
Although Bitcoin’s price also affected the company’s quarterly results, Marathon managed to reduce its debt in March amid the banks collapsing in the United States. The mining firm paid off a term loan with Silvergate Bank, freeing up the 3,132 Bitcoin held as collateral for the loan. At that time, Marathon said the move would eliminate $50 million worth of debt and reduce its annual borrowing cost by $5 million.
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Marathon’s strategy also included efforts to protect assets from market downturns. According to Thiel, Marathon deployed capital raised in past years by buying rigs at the peak of the market with price protection, tying its debt to Bitcoin's value.
“As the pricing came down in the market, our pricing was adjusted all the way down. What that meant is we had first looked essentially at the latest technology, which means that our fleet is going to be the most energy-efficient fleet in the industry. The average fleet across the industry is about 43, 44 joules per terahash. Our fleet is at 24 joules per terahash, so almost half the energy."
Marathon is also investing in foreign partnerships. Earlier in May, the company announced a joint venture with digital assets infrastructure company Zero Two to create a large-scale Bitcoin mining facility in Abu Dhabi, with two mining sites combining for a 250-megawatt capacity.
Abu Dhabi was picked due to its asymmetric energy market, in which the energy capacity needed to meet summer demand is left untapped during winter, said Thiel. “They don’t have to fund out the government’s coffers to subsidy electricity, because now Bitcoin is going to subsidize that."
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