Marathon gears up for Bitcoin halving, buys two mining sites for $179M

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Marathon Digital will pay $178.6 million for two mining data centers as it looks to increase its capacity ahead of the Bitcoin mining reward halving in 2024.

Marathon announced on Dec. 19 that it will acquire two operational Bitcoin (BTC) mining sites from Generate Capital, totaling 390 megawatts of capacity. Marathon’s Bitcoin mining portfolio currently consists of 584 megawatts, with 97% of its capacity provided by third-party data centers.

Upon completion of the transaction in early 2024, Marathon will have 910 megawatts of mining capacity, 45% of which will be owned and run by the company. Marathon will still outsource 55% of its mining capacity through third-party hosting agreements.

The new data centers are located in Texas and Nebraska in the United States and have additional space to allow Marathon to expand its Bitcoin mining operations. The company plans to double its operational hash rate to 50 exahashes over the next two years.

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The acquisition of the new sites allows Marathon to take ownership of approximately 390 megawatts of operational capacity, 82 of which are currently vacant and available for immediate expansion. Other Bitcoin mining tenants currently occupy 244 megawatts, while Marathon already occupies 64 megawatts of capacity at the sites.

Marathon said the deal will reduce its cost of mining a single Bitcoin by 30%. The firm also aims to deploy 82 megawatts of capacity at the sites with its own mining hardware. As hosting clients begin to depart from the two data centers, Marathon will continue to install additional mining equipment to increase its hash rate.

Marathon currently has seven exahashes of miners on order, the first tranche of which is set to be delivered and installed in January 2024.

A statement from Marathon chairman and CEO Fred Thiel notes that the company has been looking to diversify its portfolio of Bitcoin mining assets over the past year:

“By acquiring the sites in Granbury, Texas and Kearney, Nebraska from Generate, we have an opportunity to reduce our bitcoin production costs at these sites, to capitalize on energy hedging opportunities, and to expand our operational capacity.”

Marathon chief financial officer Salman Khan added that the company had deliberately been increasing its cash position and Bitcoin holdings on its balance sheet while reducing debt ahead of the Bitcoin mining reward halving in 2024.

“By reducing our current operating costs at these sites by 30% and providing us with ample expansion opportunities, this transaction is immediately accretive to our organization,” Khan said.

Related: Marathon, Riot among most overvalued Bitcoin mining stocks: Report

Marathon Digital Holdings saw its revenue surge 670% year-on-year in the third quarter of 2023, increasing its Bitcoin production fivefold year-on-year.

The results saw Marathon also swing to a quarterly profit, with $64.1 million of net income in the third quarter, according to the firm’s Nov. 8 results filing. The firm partly attributed the improved financial results to a 467% spike in BTC production, from 6.7 mined BTC per day in Q3 2022 to 37.9 BTC per day in Q3 2023. 

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