Marathon Digital Holdings To Assume Full Operational Control of Its Recently Acquired Bitcoin Mining Sites

Rhea-AI Summary

Marathon Digital Holdings, Inc. (MARA) has entered into an agreement to remove Hut8 as the operator of two Bitcoin mining sites recently acquired by Marathon in Granbury, Texas and Kearney, Nebraska. Marathon intends to replace Hut8 as the operator of these sites by April 30, 2024. By removing Hut8 as the third-party operator and assuming direct operational control of both sites, Marathon expects to reduce its operating fees, improve its cost to produce bitcoin, participate in energy hedging and other energy management services, and streamline the implementation of its proprietary technology to improve operational efficiency.

Insights

Market Research Analyst

Marathon Digital Holdings' strategic decision to assume direct operational control of the two Bitcoin mining sites in Granbury, Texas and Kearney, Nebraska, is a significant move that could potentially enhance the company's competitive edge within the cryptocurrency mining sector. By eliminating third-party operator fees and improving the cost efficiency of Bitcoin production, Marathon is likely to see an increase in its profit margins. Furthermore, the ability to partake in energy hedging and management services could provide a buffer against the volatility of energy prices, which are a substantial cost factor in the mining process.

Streamlining operations with proprietary technology could lead to further cost reductions and efficiency improvements. This operational shift may also be perceived positively by investors who are looking for companies with a hands-on approach to asset management and cost control. However, the success of this transition will largely depend on Marathon's ability to manage the complexities of mining operations without the expertise of Hut8, which could introduce operational risks during the transition period.

Financial Analyst

The termination of Hut8 as the operator and the transition of operational responsibilities to Marathon could have a meaningful impact on Marathon's financials. Reduced operating fees directly correlate with improved profitability, particularly in an industry where margins can be thin and subject to Bitcoin's market price fluctuations. Investors should monitor Marathon's quarterly reports post-transition for evidence of these cost savings and operational improvements, which could be a catalyst for stock price movement.

Additionally, Marathon's proactive approach to energy management could lead to more predictable and potentially lower energy costs, which is critical given that electricity is a major expense in Bitcoin mining. Any reduction in production costs will improve Marathon's ability to remain profitable during periods of lower Bitcoin prices. The market will also be looking to see if these changes align with industry norms for self-operating mining sites and whether Marathon can match or exceed the operational efficiency that Hut8 provided.

Energy Sector Analyst

The focus on energy management services and hedging is particularly relevant given the energy-intensive nature of Bitcoin mining. Marathon's move to internalize these aspects of the business might allow for more agile and strategic responses to the fluctuations in energy markets. The ability to implement proprietary technology could lead to innovative approaches to energy utilization, which is a critical factor in sustainable and environmentally responsible Bitcoin mining practices.

It's important to consider the broader implications for the energy sector, as large-scale operations like Marathon's can influence local energy demand and pricing. The company's efforts to improve operational efficiency could also set a precedent for other players in the industry, potentially leading to a shift in how Bitcoin mining companies approach energy consumption and management.

Fort Lauderdale, FL , Feb. 01, 2024 (GLOBE NEWSWIRE) -- Marathon Digital Holdings, Inc. (NASDAQ:MARA) ("Marathon" or "Company"), a leader in supporting and securing the Bitcoin ecosystem, has entered into an agreement with affiliates of Hut8 Mining Corp. (such affiliates, “Hut8”) to remove Hut8 as the operator of two Bitcoin mining sites recently acquired by Marathon in Granbury, Texas and Kearney, Nebraska. Marathon intends to replace Hut8 as the operator of these sites by April 30, 2024.

On January 16, 2024, Marathon closed its previously announced acquisition of two Bitcoin mining sites, totaling 390 megawatts of operational capacity. While Marathon assumed ownership of both sites, Hut8 continued to function as the operator. On January 30, 2024, subsidiaries of Marathon and Hut8 entered into an agreement to terminate Hut8 as the operator of these sites and transition the operational responsibilities to Marathon.

By removing Hut8 as the third-party operator and assuming direct operational control of both sites, Marathon expects to reduce its operating fees, thereby improving its cost to produce bitcoin, to more effectively participate in energy hedging and other energy management services, and to streamline the implementation of its proprietary technology to improve operational efficiency. The transition is expected to be completed by April 30, 2024, at which point, Marathon will be both the owner and operator of 390 megawatts of capacity in Texas and Nebraska.

“By operating the sites in Granbury and Kearney ourselves, we will be able to fully recognize the operational and economic benefits of owning these assets,” said Fred Thiel, Marathon’s chairman and CEO. “The consistent performance of our site in Abu Dhabi along with the immense improvements our team made to King Mountain’s uptime last year, clearly demonstrate that Marathon has some of the best operators in the industry. We look forward to gaining more influence over our new sites in Texas and Nebraska and leveraging our operational expertise to realize the full benefits of our recent acquisition.”

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 February 2024. 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: @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

FAQ

What is the agreement between Marathon and Hut8 about?

The agreement is to remove Hut8 as the operator of two Bitcoin mining sites recently acquired by Marathon in Granbury, Texas and Kearney, Nebraska.

When does Marathon intend to replace Hut8 as the operator of the sites?

Marathon intends to replace Hut8 as the operator of these sites by April 30, 2024.

What benefits does Marathon expect by removing Hut8 as the third-party operator?

Marathon expects to reduce its operating fees, improve its cost to produce bitcoin, participate in energy hedging and other energy management services, and streamline the implementation of its proprietary technology to improve operational efficiency.

What is the total operational capacity of the two Bitcoin mining sites acquired by Marathon?

The total operational capacity of the two Bitcoin mining sites acquired by Marathon is 390 megawatts.

Who is the chairman and CEO of Marathon?

Fred Thiel is the chairman and CEO of Marathon.