Marathon Digital bitcoin production falls for third straight month

artiemedvedev

Marathon Digital (NASDAQ:MARA) shares are drifting down 3.7% in Thursday after-hours trading, as its bitcoin (BTC-USD) production dips for a third consecutive month. Still, MARA stock jumped 24.1% on the day as bitcoin (BTC-USD) +5.7% climbs firmly above $20K over the past 24 hours.

The bitcoin (BTC-USD) miner has produced 140.1 tokens in June, down from 267.6 in May and 265.6 in June 2021, according to its monthly update.

The slump in mining growth comes as "we continued to work through several operational obstacles as we progressed with installing miners in Texas in preparation of energization,” said Marathon Digital CEO and Chairman Fred Thiel. Also, its mining facility in Hardin, Montana had lost power in June after a storm passed through the region.

As a result of the storm, Marathon Digital's (MARA) current operating fleet was reduced to ~6.3K active miners producing 0.7 exahash per second ("EH/s").

It's holding a total of 10,055 bitcoins (BTC-USD) on its balance sheet with a fair market value of $198.9M.

The company had approximately $88.7M cash on hand and liquidity, defined as unrestricted cash and available credit facilities, was ~$153.7M.

“Despite the current operational challenges, we are working to capitalize on hosting opportunities and are actively engaged with various hosting providers," Thiel said.

Previously, (June 11) Marathon Digital bitcoin mining growth softened in May.

Comments

[User 49215273]

If you are currently invested in Texas miners such as MARA you may want to reconsider your short term position. All Texas miners had to shut down production due to the Texas energy crises. Basically for miners using grid energy they cannot run until the crises improves.

As a swing trader I took my mining portfolio up north to HUT 8 and Bitfarm. Both will see improved mining results this month as miners in Texas and elsewhere are shutting down due to energy. Either the crises or the price of energy versus the BTC price makes it unprofitable for them to run. This leaves both Canadian firms with less competition until the next mining difficulty adjustment.

Besides the temporary bump soon investors will realize that they are controlling costs so much better than the largest miners. HUT turned a profit last quarter versus MARA loss. Just thinking that you may want to give them a look. Yes I own these stocks but check ‘em out first so you can make your own decision.

[mutsavj]

@Big fish 73 Didn't MARA just POP for like +40% in 2 days. Point is, you just NEVER KNOW.

[User 49215273]

@mutsavj You’re right, the market does as it does and short squeezes like we just experienced usually come to an end after their moves. That makes me even more nervous that MARA will be exposed for their upcoming quarterly report. It could get real nasty on the downside with the heavy shorting or we could see a squeeze up on unexpected positive news.

Unless BTC pops, MARA will be facing tough times after recent production numbers of 268 in May, 140 in June, and ?? in July.
Look for good numbers for our Canadian miners next quarter as they will benefit from the Texas miners shutdowns. So for me it is a matter of managing risks, I think holding off on MARA for now is a safer bet.

[John Miller]

@Big fish 73 ...Bitfarms is my favorite by far, but MARA is sitting on a ton of hash rate. They have a pretty set plan for moving the rigs out of Hardin. And the Texas issue for them looks to be more red tape than a curtailment issue (if you have a good link that explains your point will you post?) I know Riot curtailed in June but it only cost them about 10%.

Only trouble with Bitfarms longer term is that their new site in Argentina is natural gas powered and not hydro like they have in Canada, Washington, and Paraguay. And most of the growth in the second half for them will come in Argentina. There is also some regulatory risk for them there.

I recapped Bitfarms' recent investor day and also tried to compute Bitfarms' cash costs last month. Here is a link if you are interested.
seekingalpha.com/...

[Funnychef7868]

The less they mine the more the price goes up.

[Smaugz]

I have been tempted to sell and put those funds into better miners, but MARA's stock price is somehow beating others even on crap production like this. I guess I should just hold?

[John Miller]

@Smaugz ….there is a fair chance that production booms, and soon. MARA has one of the largest, most economical, fastest fleets of installed miners in the world. They are just sitting idle with no power.

[mutsavj]

There's a 28+% short interest in MARA ...getting a small squeeze over the last 2 days. Amazing. My shares via covered calls will be gone in a week ...sigh.

[pat45]

HOW MUCH electric and other costs to mine one BTC??

[John Miller]

@pat45 ....8-12k USD for electric depending on rig type. Ops expense and admin expense can be another 5k per coin but highly variable depending on the size of production.

[AODEIS]

MARA up 25% this morning...

[Maschuette]

@AODEIS MARA's production of coins per month: 436 in March, 299 in April, 268 in May, and now 140 in June.

This company is amazing at marketing though. It will probably become the next meme stock. Meanwhile their production will go to zero. Oh well, i'm about to buy some. Why fight it?

[Maschuette]

Not surpised. Their production has been dropping like a rock for a few months. Another person on Seeking Alpha showed that they were not mining at all for the last several weeks. At this rate their production should be zero for July. They are also the most hyped miner. They are priced 10x higher than any other miner. But that helped them yesterday.

[John Miller]

@Maschuette ...you have a couple of facts wrong.

They are now and have been mining with all energized rigs outside of Hardin. There production will not be zero for July. The other person you mention was only looking at the MARA pool. The main problem in Hardin recently was actually a storm.

As importantly, they have a large installed capacity that needs regulatory approval to switch the switch at a wind farm in Texas. That is not hype, just a fact.

[Maschuette]

@John Miller if not hype then why the jump?

Their production is down regularly. They have not been given the greenlight in Texas. I don't even know if they are back to producing yet after the storm. I fully expect their production to go down for July also.

[John Miller]

@Maschuette ...small chance some know the outcome in Texas?

[coach24]

Staff compensation could be greater than mining revenue for the quarter. Could have saved more money laying off staff for the last 6 months than mining less.

[John Miller]

@coach24 the cash compensation not that bad really. And more so, the share count has only been diluted 7% over the past 52 weeks and some of that was for capital and not compensation.

[coach24]

@John Miller Not sure about the future but I know it was a major complaint by shareholders after earnings were released in the last year. So was a major complaint previously but I don't know specific numbers so defer to your knowledge.

[TheeSoluution]

Thinking Bitcoin is heading back to 30k+ imo

[WillyDogg]

Having an article about the stock “sliding” 3% after hours without mentioning that it rose 24% today regular hours is completely asinine.

[AODEIS]

@WillyDogg So after the smoke cleared it dropped nine cents after hours... pffftt.

[Cloughre]

@WillyDogg so true. Stupid headline. Makes me think they are trying to know I down miner stocks.

[qwerty11]

But if the price was higher they would have produced a lot more!

[John Miller]

@qwerty11 ...not at all, they did not produce becasue they cant get any power in Hardin and the government has not approved the energy at Texas facility that has multiple EH ready to go.

[User 49215273]

Advice for those still holding MARA…sell. I am a previous MARA swing trader and have been out of MARA ever since they announced operational issues last month.

Their significant down time is a real problem with BTC at its current price and energy prices rising. Financing for equipment is rising as well. Not giving financial advice but I’m in two other miners currently that are outperforming MARA with less risk.

Today was a great day, take profits and invest in another miner, it’s going to take a while for MARA to come back.

[Long Horizon]

@Big fish 73 but doesn't their operational structure of outsourcing hosting and other capex intensive things keep their costs down and enable them to weather down markets better than other miners, since they can just turn off machines and run with low costs? For this reason they also seem to be one of the few miners so far that have not had to sell any of their btc holdings

[FirstFIREWealth_P01135809]

@Big fish 73 I've lost (unrealized) $978 on MARA. Sell now?

[User 49215273]

@Long Horizon Indeed in this scenario it helps that MARA is outsourcing operations however I believe their fixed costs are going to bite them still. Their variable costs will go down, however we do not know by how much. I am sure that their host will expect a return for lost business (they could of hosted other miners) and they will most certainly demand that MARA meets a minimum payment to cover their fixed costs. That detail was probably negotiated and under contract.

The big problem is that MARA has hodled their BTC up until recently. They have used share dilution and leveraged financing to grow their hash rate by acquiring new equipment. Last qtr they had $2.8 M in interest expense alone.

Looking at last qtr they produced 1259 BTC for $51.7M in rev. Last qtr cost of revenue was $26.4 M, operating & admin costs were $34.45M , other expenses $5.3M,Interest $2.8M, income tax benefit was $4.3M for a total quarter loss of $12.96M. They lost $.13 per share.

This quarter their losses will mount as they only mined 707 BTC so far Q2 2022. July may not be much better than Junes 140 BTC. Needless to say they will be around 850 BTC maybe. Then you look at last qtr BTC price and this quarters, it gets kind of uglier for MARA.

Now look at HUT at $1.60 per share,last qtr they had only $53.3 M (Canadian)in revenue but they kept costs under control and turned a profit of $.31 per share. In June their production was up 6% for 328 BTC and should easily out produce MARA this quarter. They have less debt and they are hodling their BTC. I could go on but the important point is that this quarter they will outshine MARA. MARA’S high debt, production and facility issues is creating a high risk. Most certainly MARA will lose more money this qtr than last.

[KING80]

Try again LOL