Marathon Digital Holdings, Inc. (Nasdaq: MARA) Boosts Bitcoin Mining Capacity with $179 Million Acquisition

Date: December 19th, 2023 - Marathon Digital Holdings, Inc. (Nasdaq: MARA), a prominent player in the Bitcoin ecosystem, is surging ahead with an impressive 4.5% pre-market gain on December 19th, 2023. This notable surge is driven by the company's strategic move to acquire multiple Bitcoin mining sites in a definitive agreement, showcasing its commitment to expanding its presence and strengthening its position in the cryptocurrency mining space.


To see what Wall Street is saying about Marathon Digital Holdings, Inc. (Nasdaq: MARA) click here:

Expanding the Bitcoin Mining Portfolio

Marathon Digital Holdings has entered into a definitive purchase agreement to acquire two operational Bitcoin mining sites, boasting a combined capacity of 390 megawatts, from subsidiaries of Generate Capital, PBC. The acquisition comes with a hefty price tag of $178.6 million, equating to approximately $458,000 per megawatt, to be funded from Marathon's balance sheet. This move marks a significant milestone for Marathon as it transitions from being an asset-light organization to one that efficiently manages a diversified portfolio of Bitcoin mining operations.

At present, Marathon's Bitcoin mining portfolio encompasses 584 megawatts of capacity, with only 3% under direct ownership and operation by the company, while the remaining 97% is hosted by third parties. However, with this latest acquisition, Marathon's Bitcoin mining portfolio will see a remarkable expansion to approximately 910 megawatts of capacity. Notably, 45% of this expanded capacity will be managed by Marathon, enhancing the company's operational control and efficiency.

Unlocking Growth Opportunities

This acquisition not only bolsters Marathon's mining capabilities but also opens the door to significant growth opportunities. The newly acquired sites, offering 390 megawatts of operational capacity, present several avenues for expansion and optimization:

Approximately 82 megawatts (21%) of the capacity are currently available for immediate expansion.
Hosting clients occupy 244 megawatts (63%) of the capacity, offering Marathon the flexibility to increase its operational hash rate as these clients depart.
An additional 64 megawatts (16%) are already occupied by Marathon and present opportunities for optimizing operations, particularly through energy hedging.
In essence, this acquisition positions Marathon for substantial growth, potentially doubling its current operational hash rate to approximately 50 exahashes of total operating capacity over the next 18-24 months.

Efficiency and Cost Reductions

One key advantage of this transaction is the expected reduction in the cost per Bitcoin coin produced by Marathon's current operations at these sites. It is anticipated that operational costs will be reduced by approximately 30%, significantly enhancing profitability.

The Road Ahead

The acquisition is set to bolster Marathon's position in the Bitcoin mining sector, showcasing its commitment to driving innovation and efficiency in the industry. As the company evolves into a more sophisticated organization with a diversified portfolio of Bitcoin mining technologies and assets, the acquisition of these sites reflects its strategic vision for the future.

Marathon Digital Holdings is dedicated to securing and supporting the Bitcoin ecosystem, and this acquisition reinforces its commitment to the industry's growth. With plans to double its operational hash rate and capitalize on energy hedging opportunities, Marathon is poised for an exciting journey in the cryptocurrency mining space.

The transaction, subject to customary closing conditions, is expected to conclude in the first quarter of 2024. This move not only benefits Marathon but also allows Generate Capital to focus on sustainability initiatives within the digital and energy infrastructure landscape.

Management's Perspective

Marathon's Chairman and CEO, Fred Thiel, highlighted the significance of this acquisition, emphasizing the company's transition into a more diversified and resilient organization with substantial Bitcoin mining assets. The move aligns with Marathon's goal of increasing operational capacity and hash rate.

Marathon's Chief Financial Officer, Salman Khan, underlined the financial strength of the company, which facilitated this acquisition without the need to add debt or issue future equity. Khan emphasized the transaction's immediate accretive impact and its role in reducing operational costs, illustrating the effectiveness of Marathon's long-term strategy.

David Hirsch, Principal at Generate Capital, acknowledged Marathon's crucial role in the success of the data centers being acquired. He noted that this agreement plays to both organizations' strengths and long-term strategies, allowing Generate to continue its focus on sustainability initiatives while Marathon gains ownership of assets that reduce Bitcoin production costs and provide room for expansion.

Marathon Digital Holdings' strategic acquisition is a testament to the dynamism of the cryptocurrency mining industry and its commitment to growth, efficiency, and sustainability. The company's surge in pre-market trading reflects investor confidence in this strategic move as Marathon continues to assert its presence in the world of digital assets.

To see what Wall Street is saying about Marathon Digital Holdings, Inc. (Nasdaq: MARA) click here: