Marathon Digital Holdings Reports Fourth Quarter and Fiscal Year 2023 Results
- Impressive financial and operational results for Marathon Digital Holdings, Inc. in 2023.
- Revenues surged by 229% to $388 million, net income reached $261.2 million, and adjusted EBITDA stood at $419.9 million.
- BTC production increased by 210% to a record 12,852 in 2023.
- Energized hash rate rose by 253% to 24.7 EH/s, and fleet efficiency improved by 21% to 24.5 J/TH.
- Marathon diversified its Bitcoin mining portfolio across 11 sites on three continents.
- Plans to grow hash rate to 35-37 exahash in 2024 and 50 exahash by the end of 2025.
- Strong balance sheet with $997 million in combined unrestricted cash, cash equivalents, and bitcoin as of December 31, 2023.
- None.
Insights
The remarkable turnaround in Marathon Digital Holdings' financial performance, highlighted by a 229% increase in revenue and a significant shift from a net loss to substantial net income, is indicative of the company's successful scaling and operational efficiency improvements. The reduction of debt by 56% at a discount, resulting in notable cash savings, demonstrates prudent financial management. This deleveraging, combined with the substantial growth in bitcoin production and energized hash rate, paints a picture of a company that has not only weathered the volatile crypto market but has emerged stronger with a robust balance sheet.
Investors should note the exponential increase in hash rate capacity and the company's ambitious growth targets. The strategic acquisition of data centers, expanding the mining portfolio, suggests a forward-thinking approach to infrastructure investment. However, the reliance on the volatile crypto market and prices, as well as the implementation of new FASB fair value accounting rules, introduces a layer of complexity to the financial analysis. The gains on digital assets may not be sustainable if crypto asset prices were to decline sharply, which is a risk factor that should be closely monitored.
Marathon's operational advancements, including a 21% improvement in fleet efficiency and a diversified bitcoin mining portfolio across multiple continents, showcase the company's commitment to technological innovation and risk mitigation. The increase in bitcoin production and the company's share of available miner rewards reflect a growing competitive edge in the mining sector. The adoption of new accounting standards for crypto assets aligns the company with evolving financial reporting practices, which could affect investor perceptions and the comparability of financial statements across the industry.
Looking at the broader market, Marathon's growth trajectory and strategic positioning could influence the competitive dynamics within the bitcoin mining industry. Their expansion plans and the potential to double their current capacity by 2025 could set a new benchmark for scale in the sector. This aggressive growth strategy could put pressure on smaller players and potentially lead to market consolidation.
The reported increase in Marathon's bitcoin holdings to over 15,000 BTC is a significant asset on the balance sheet, which could provide a hedge against operational costs and serve as a source of liquidity. The company's strategic decision to sell a portion of the bitcoin produced to cover expenses reflects a balanced approach to treasury management in a market known for its volatility. The focus on improving mining efficiency, measured in joules per terahash, is particularly crucial for maintaining profitability amidst rising energy costs and potential regulatory changes around energy consumption for cryptocurrency mining.
Marathon's performance must be contextualized within the broader crypto ecosystem, where network difficulty adjustments, bitcoin halving events and regulatory developments can have material impacts on mining profitability. The company's ability to navigate these factors, while maintaining operational efficiency and cost management, will be critical to sustaining their growth and profitability in the long term.
- Revenues Increase
- Net Income Improves to
- Adjusted EBITDA Improves to
- BTC Production Increases
Fort Lauderdale, FL, Feb. 28, 2024 (GLOBE NEWSWIRE) -- Marathon Digital Holdings, Inc. (NASDAQ:MARA) ("Marathon" or "Company"), a leader in supporting and securing the Bitcoin ecosystem, reported its financial and operational results for the fourth quarter and fiscal year ended December 31, 2023.
Fiscal Year 2023 Financial and Operational Highlights
- Energized hash rate increased
253% to 24.7 EH/s in 2023 from 7.0 EH/s in 2022 - Bitcoin production increased
210% to a record 12,852 BTC in 2023 from 4,144 BTC in 2022 - Revenues increased
229% to a record$387.5 million in 2023 from$117.8 million in 2022 - Net income improved to a record
$261.2 million , or$1.06 per diluted share, from a net loss of$694 million , or$(6.12) per diluted share, in 2022 - Adjusted EBITDA improved to a record
$419.9 million in 2023 from a loss of$543.4 million in 2022 - Combined unrestricted cash and cash equivalents and bitcoin increased to
$997.0 million as of December 31, 2023 - Debt reduced by
56% to$331 million from$748 million , at a21% discount to par, resulting in$101 million , or$0.55 per share, in cash savings - Fleet efficiency improved
21% to 24.5 J/TH (joules per terahash) from 30.9 J/TH - Entered into an agreement to acquire two data centers, increasing mining portfolio to more than 900-megawatts of capacity,
45% of which resides on sites now directly owned by the Company - Bitcoin mining portfolio diversified across 11 sites on three continents as of December 31, 2023
Management Commentary
“2023 was a record-breaking year for Marathon, during which we achieved our primary objectives of energizing our fleet of previously purchased mining rigs and optimizing our performance,” said Fred Thiel, Marathon’s chairman and CEO. “In 2023, we grew our hash rate
“We produced a record 12,852 bitcoin in 2023 and drove a
“In 2024, we plan to grow our hash rate to approximately 35 to 37 exahash. By the end of 2025, we plan to be at 50 exahash, which is approximately double our current capacity. With orders for 22 exahash of miners already placed and options to add an additional 23 exahash to these orders, we believe there may be opportunities to accelerate our growth targets.
“Today, Marathon is one of the largest Bitcoin miners in North America, and whether it be financially, operationally, or technologically, we believe we are setting the pace for this industry. Given our momentum, our strong balance sheet, and the differentiators we are building with our technology stack, we are optimistic that the most exciting times for our organization are still to come.”
Fourth Quarter 2023 Production Highlights
| Year-over-year Comparison | Quarter-over-quarter comparison | |||||||||||||||||||||||
| Metric | Q4 2023 | Q4 2022 | % Δ | Q4 2023 | Q3 2023 | % Δ | ||||||||||||||||||
| BTC Produced | 4,242 | 1,562 | 172 | % | 4,242 | 3,490 | 22 | % | ||||||||||||||||
| Average Bitcoin Produced per Day | 46.1 | 17.0 | 172 | % | 46.1 | 37.9 | 22 | % | ||||||||||||||||
| Share of available miner rewards1 | 4.4 | % | 1.8 | % | 141 | % | 4.4 | % | 4.0 | % | 11 | % | ||||||||||||
| Energized Hash Rate (EH/s)2 | 24.7 | 7.0 | 319 | % | 24.7 | 19.1 | 29 | % | ||||||||||||||||
| Average Operational Hash Rate3 (EH/s) | 19.4 | N/A | 19.4 | 14.2 | 37 | % | ||||||||||||||||||
| Installed Hash Rate (EH/s)4 | 25.2 | 7.0 | 260 | % | 25.2 | 23.1 | 9 | % | ||||||||||||||||
| 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. |
Fourth Quarter 2023 Financial Results
Net income improved to
Revenues increased
The Company sold
There were no impairments in the fourth quarter of 2023, compared to total impairments of
Gains on digital assets were
Adjusted EBITDA improved to
Fiscal Year 2023 Production Highlights
| Year-over-year Comparison | ||||||||||||
| Metric | 2023 | 2022 | % Δ | |||||||||
| BTC Produced | 12,852 | 4,144 | 210 | % | ||||||||
| Average Bitcoin Produced per Day | 35.2 | 11.4 | 209 | % | ||||||||
| Share of available miner rewards1 | 3.6 | % | 1.2 | % | 192 | % | ||||||
| Energized Hash Rate (EH/s)2 | 24.7 | 7.0 | 319 | % | ||||||||
| Average Operational Hash Rate (EH/s)3 | 19.4 | N/A | ||||||||||
| Installed Hash Rate (EH/s)4 | 25.2 | 7.0 | 260 | % | ||||||||
Fiscal Year 2023 Financial Results
Net income improved to
Revenues increased
The Company sold
There were no impairments in 2023, compared to total impairments of
Gains on digital assets were
Adjusted EBITDA improved to
At December 31, 2023, Marathon held
Fourth Quarter and Fiscal Year 2023 Earnings Webcast and Conference Call
Marathon Digital Holdings will hold a webcast and conference call today, February 28, at 5:00 p.m. Eastern time to discuss its financial results for the quarter ended December 31, 2023.
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.
Earnings Webcast and Conference Call Details
Date: Today, February 28, 2024
Time: 5:00 p.m. Eastern time (2:00 p.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 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, 2023, filed with the SEC on February 28, 2024. 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. See "Forward-Looking Statements" below.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements in this press release relate to the expected timing and achievement of our growth targets, specifically relating to our anticipated hash rate and exahash growth. You can identify forward-looking statements by the use of words such as “may,” “will,” “could,” “anticipate,” “expect,” “intend,” “believe,” “continue,” or the negative of such terms, or other comparable terminology. Forward-looking statements include the assumptions underlying or relating to such statements. The Company has based these forward-looking statements largely on its current expectations and projections about future events and trends that we believe may affect its business, results of operations and financial condition. The outcomes of the events described in these forward-looking statements are subject to risks, uncertainties and other factors described under the heading “Risk Factors” in the reports the Company files with the Securities and Exchange Commission. The Company cannot assure you that the events and circumstances reflected in the forward-looking statements will be achieved or occur, and actual results could differ materially from those expressed or implied in the forward-looking statements. The forward-looking statements made in this press release relate only to events as of the date of this press release. The Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made.
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 Holdings Company Contact:
Telephone: 800-804-1690
Email: ir@mara.com
Marathon Digital Holdings Media Contact:
Email: marathon@wachsman.com
MARATHON DIGITAL HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
| Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||
| (in thousands, except share and per share data) | 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Total revenues | $ | 156,768 | $ | 28,417 | $ | 387,508 | $ | 117,753 | ||||||||
| Costs and expenses | ||||||||||||||||
| Cost of revenues | ||||||||||||||||
| Cost of revenues - energy, hosting and other | (75,111 | ) | (29,734 | ) | (223,338 | ) | (72,715 | ) | ||||||||
| Cost of revenues - depreciation and amortization | (70,957 | ) | (13,827 | ) | (179,513 | ) | (78,709 | ) | ||||||||
| Total cost of revenues | (146,068 | ) | (43,561 | ) | (402,851 | ) | (151,424 | ) | ||||||||
| Operating expenses | ||||||||||||||||
| General and administrative expenses | (39,253 | ) | (18,612 | ) | (95,230 | ) | (56,739 | ) | ||||||||
| Gains (losses) on digital assets and digital assets loan receivable | 213,616 | — | 331,484 | (14,460 | ) | |||||||||||
| Legal reserves | — | (1,171 | ) | — | (26,131 | ) | ||||||||||
| Impairment of deposits due to vendor bankruptcy filing | — | (16,674 | ) | — | (24,661 | ) | ||||||||||
| Impairment of digital assets | — | (26,391 | ) | — | (182,891 | ) | ||||||||||
| Impairment of patents | — | — | — | (919 | ) | |||||||||||
| Impairment of mining equipment and advances to vendors | — | (332,933 | ) | — | (332,933 | ) | ||||||||||
| Gain on sale of equipment, net of disposals | — | — | — | 83,879 | ||||||||||||
| Losses on digital assets held within investment fund | — | — | — | (85,017 | ) | |||||||||||
| Total operating expenses | 174,363 | (395,781 | ) | 236,254 | (639,872 | ) | ||||||||||
| Operating income (loss) | 185,063 | (410,925 | ) | 220,911 | (673,543 | ) | ||||||||||
| Net gain from extinguishment of debt | — | — | 82,267 | — | ||||||||||||
| Loss on hedged instruments | (17,421 | ) | — | (17,421 | ) | — | ||||||||||
| Equity in net earnings of unconsolidated affiliate | 30 | — | (617 | ) | — | |||||||||||
| Impairment of loan and investment due to vendor bankruptcy filing | — | — | — | (31,013 | ) | |||||||||||
| Interest expense | (1,214 | ) | (4,667 | ) | (10,350 | ) | (14,981 | ) | ||||||||
| Other non-operating income | 1,443 | 663 | 2,809 | 1,283 | ||||||||||||
| Income (loss) before income taxes | 167,901 | (414,929 | ) | 277,599 | (718,254 | ) | ||||||||||
| Income tax benefit (expense) | (16,075 | ) | 23,331 | (16,426 | ) | 24,232 | ||||||||||
| Net income (loss) | $ | 151,826 | $ | (391,598 | ) | $ | 261,173 | $ | (694,022 | ) | ||||||
| Series A Preferred Stock accretion to redemption value | — | — | (2,121 | ) | — | |||||||||||
| Net income (loss) attributable to common stockholders | $ | 151,826 | $ | (391,598 | ) | $ | 259,052 | $ | (694,022 | ) | ||||||
| Net income (loss) attributable to common stockholders per common stock - basic | $ | 0.67 | $ | (3.13 | ) | $ | 1.41 | $ | (6.12 | ) | ||||||
| Weighted average common stock outstanding - basic | 227,444,786 | 125,263,133 | 183,855,570 | 113,467,837 | ||||||||||||
| Net income (loss) attributable to common stockholders per common stock - diluted | $ | 0.66 | $ | (3.13 | ) | $ | 1.06 | $ | (6.12 | ) | ||||||
| Weighted average common stock outstanding - diluted | 233,358,831 | 125,263,133 | 192,293,276 | 113,467,837 | ||||||||||||
| Supplemental information: | ||||||||||||||||
| bitcoin (“BTC”) production during the period, in whole BTC | 4,242 | 1,562 | 12,852 | 4,144 | ||||||||||||
| Average bitcoin per day, in whole BTC | 46.1 | 17.0 | 35.2 | 11.4 | ||||||||||||
| Total margin (revenues less total cost of revenues) | $ | 10,700 | $ | (15,144 | ) | $ | (15,343 | ) | $ | (33,671 | ) | |||||
| Total margin excluding the impact of depreciation and amortization | 81,657 | (1,317 | ) | 164,170 | 45,038 | |||||||||||
| General and administrative expenses excluding stock-based compensation | (20,516 | ) | (12,892 | ) | (62,586 | ) | (32,144 | ) | ||||||||
| Total impairments due to vendor bankruptcy filing | — | (16,674 | ) | — | (55,674 | ) | ||||||||||
| Installed Hash Rate (Exahashes per second) - at end of period (1) | 25.2 | 7.0 | 25.2 | 7.0 | ||||||||||||
| Energized Hash Rate (Exahashes per second) - at end of period (1) | 24.7 | 7.0 | 24.7 | 5.9 | ||||||||||||
| Average operational Hash Rate (Exahashes per second) (1) | 19.4 | N/A | 19.4 | N/A | ||||||||||||
| Share of available miner rewards | 4.4 | % | 1.8 | % | 3.6 | % | 1.2 | % | ||||||||
| Number of blocks won | 562 | 236 | 1,725 | 621 | ||||||||||||
| Transaction fees as a percentage of total | 13.4 | % | 1.9 | % | 7.7 | % | 1.3 | % | ||||||||
| Reconciliation to Adjusted EBITDA: | ||||||||||||||||
| Net income (loss) | $ | 151,826 | $ | (391,598 | ) | $ | 261,173 | $ | (694,022 | ) | ||||||
| Exclude: Interest expense | 1,214 | 4,667 | 10,350 | 14,981 | ||||||||||||
| Exclude: Income tax expense (benefit) | 16,075 | (23,331 | ) | 16,426 | (24,232 | ) | ||||||||||
| EBIT | 169,115 | (410,262 | ) | 287,949 | (703,273 | ) | ||||||||||
| Exclude: Depreciation and amortization | 72,550 | 13,827 | 181,590 | 78,709 | ||||||||||||
| EBITDA | 241,665 | (396,435 | ) | 469,539 | (624,564 | ) | ||||||||||
| Exclude: Stock compensation expense | 18,737 | 5,720 | 32,644 | 24,595 | ||||||||||||
| Exclude: Net gain from extinguishment of debt | — | — | (82,267 | ) | — | |||||||||||
| Exclude: Total impairments due to vendor bankruptcy filing | — | 16,674 | — | 55,674 | ||||||||||||
| Exclude: Impairment of patents | — | — | — | 919 | ||||||||||||
| Adjusted EBITDA (5) | $ | 260,402 | $ | (374,041 | ) | $ | 419,916 | $ | (543,376 | ) | ||||||
(5) Non-GAAP Financial Measures In addition to our results determined in accordance with GAAP, the Company also provides adjusted EBITDA and total margin excluding depreciation and amortization, which are non-GAAP measures. The Company provides investors with reconciliations from net loss to adjusted EBITDA and total margin to total margin excluding depreciation and amortization as components of Management’s Discussion and Analysis. The Company defines adjusted EBITDA as (a) GAAP net income (loss) plus (b) adjustments to add back the impacts of (1) depreciation and amortization, (2) interest expense, (3) income tax expense (benefit) and (4) adjustments for non-cash and non-recurring items which currently include (i) stock compensation expense, (ii) impairments of patents and (iii) losses on extinguishment of debt. The Company defines total margin excluding depreciation and amortization as (a) GAAP total margin less (b) depreciation and amortization.
Adjusted EBITDA and total margin excluding depreciation and amortization are not financial measures of performance under GAAP and, as a result, these measures may not be comparable to similarly titled measures of other companies. Non-GAAP financial measures are subject to material limitations as they are not in accordance with, or a substitute for, measurements prepared in accordance with GAAP. These non-GAAP measures are not meant to be considered in isolation and should be read only in conjunction with our Interim Reports on Form 10-Q and our Annual Reports on Form 10-K as filed with the Securities and Exchange Commission. Management uses adjusted EBITDA, total margin excluding depreciation and amortization, and the supplemental information provided herein as a means of understanding, managing, and evaluating business performance and to help inform operating decision making. The Company relies primarily on our condensed consolidated financial statements to understand, manage, and evaluate our financial performance and use the non-GAAP financial measures only supplementally.
FAQ
What was Marathon Digital Holdings' (MARA) revenue in 2023?
How much did Marathon's net income improve in 2023?
What was Marathon's adjusted EBITDA in 2023?
By how much did BTC production increase for Marathon in 2023?
How much did Marathon's hash rate increase in 2023?
How many sites and continents is Marathon's mining portfolio diversified across?
What are Marathon's plans for hash rate growth in 2024 and 2025?
What was Marathon's combined balance of unrestricted cash, cash equivalents, and bitcoin as of December 31, 2023?
What was Marathon's net income in the fourth quarter of 2023?
How much did Marathon's revenues increase in Q4 2023 compared to Q4 2022?
What was Marathon's adjusted EBITDA in Q4 2023?
What percentage of bitcoin did Marathon sell in 2023 to fund operating costs?
Was there any impairment recorded in Marathon's financial results for 2023?
What were the gains on digital assets for Marathon in 2023?
How much did Marathon's adjusted EBITDA improve in 2023 compared to 2022?
