Marathon Digital Holdings, Inc. (NASDAQ: MARA), a prominent figure in the Bitcoin ecosystem, has announced a definitive agreement to acquire two operational Bitcoin mining sites from subsidiaries of Generate Capital, PBC, for a total of $178.6 million. The strategic acquisition, paid in cash from the company’s balance sheet, marks a significant shift in the company’s operational strategy and portfolio diversification.
The acquisition represents the company’s first venture into fully owning its mining sites, signaling a departure from its previous asset-light approach. The company is set to acquire a total of 390 megawatts of capacity at $458,000 per megawatt. Currently, the company’s portfolio includes 584 megawatts of capacity, with only a small fraction of sites owned or operated by the company. Post-acquisition, Marathon’s portfolio will expand to approximately 910 megawatts, with 45% of the capacity residing in company-owned sites.
Enhancing operational capacity and reducing costs
The acquisition is not just an expansion in terms of capacity but also a strategic move to enhance operational efficiency and reduce costs. The new sites, located in Granbury, Texas, and Kearney, Nebraska, offer significant opportunities for expansion and operational optimization. Marathon plans to utilize the vacant 82 megawatts (21% of the acquired capacity) for immediate expansion. Additionally, the company aims to replace the existing hosting clients, who currently occupy 244 megawatts, with its miners to further increase hash rate and operational efficiencies.
The transaction is expected to reduce the company’s cost per coin at these sites by approximately 30%. With 7 exahashes of miners already on order, the first tranche set to be installed in January 2024, Marathon is well-positioned to double its current operational hash rate to about 50 exahashes within the next 18-24 months. The company’s strong balance sheet, bolstered by increased cash positions and reduced debt, has facilitated the acquisition, aligning with its long-term strategy to capitalize on accretive opportunities.
Marathon’s management’s perspective on the acquisition
Fred Thiel, Marathon’s chairman and CEO, expressed that the acquisition is a critical step in Marathon’s evolution into a more sophisticated and mature organization. He emphasized the opportunity to reduce bitcoin production costs, capitalize on energy hedging opportunities, and expand operational capacity. Salman Khan, Marathon’s CFO, highlighted the strategic efforts made to improve the balance sheet, making the transaction immediately accretive to the organization.
David Hirsch, Principal at Generate Capital, commended Marathon’s role in the success of the data centers in Granbury and Kearney. He noted that the transaction allows Generate to continue focusing on greening data centers while Marathon strengthens its position in the Bitcoin ecosystem.
Marathon Digital Holdings will host a webcast and conference call on December 19 to discuss the transaction in detail. Interested parties can register to participate in the call or listen to the live audio webcast through the provided link, also available on the Company’s website.
Conclusion
Marathon Digital Holdings’ acquisition of these cryptocurrency mining sites marks a significant milestone in its growth trajectory. By transitioning to owning physical assets, the company is set to reduce production costs and expand its operational capacity, reinforcing its position as a leader in the Bitcoin mining industry. The strategic move, backed by a strong balance sheet and forward-thinking management, positions Marathon for sustained growth and success in the dynamic world of cryptocurrency mining.
