A price protection strategy and increased hash rate are helping Bitcoin (BTC) mining firm Marathon Digital Holdings (Nasdaq: MARA) navigate the current bear market, according to its CEO Fred Thiel. In an exclusive interview at the 2023 Bitcoin Conference in Miami, Thiel discussed Marathon’s performance in Q1 2023, when it managed to reduce its net loss to $7.2 million ($0.05 per share) from $12.9 million ($0.12 per share) in Q1 2022. The company achieved a quarterly record of 2,195 BTC mined in the first three months of the year, valued at over $60 million. The company’s 74% increase in production is attributed to a hash rate of 14.0 Exhash/second (EH/s), twice the level at the end of last year, with plans to reach 23.0 EH/s in the coming months.
Despite the challenges posed by last year’s crypto winter, Marathon managed to reduce its debt in March amid US banks collapsing. The firm paid off a term loan with Silvergate Bank, freeing up 3,132 Bitcoins held as collateral, eliminating $50 million worth of debt, and reducing its annual borrowing cost by $5 million.
Marathon’s strategy involves protecting its assets from market downturns. Thiel explained that the capital raised in past years was used to purchase rigs at the peak of the market with price protection tied to Bitcoin’s value. As a result, the company has secured the latest technology, meaning its fleet has become the most energy-efficient in the industry. The average industry fleet consumes around 43 to 44 joules per terahash, while Marathon’s fleet uses only 24 joules per terahash, almost half the energy.
The mining firm is also exploring foreign partnerships for further expansion. In May, Marathon announced a joint venture with digital asset infrastructure company Zero Two to establish a large-scale Bitcoin mining facility in Abu Dhabi. The venture includes two mining sites with a combined capacity of 250 megawatts. Abu Dhabi was chosen due to its asymmetric energy market, where the energy needed for summer demand is left untapped during the winter months. Thiel stated that this could potentially allow the government to avoid electric subsidies, as “Bitcoin is going to subsidize” the difference.
While Marathon’s performance in Q1 2023 shows promise, it’s important to consider the volatile nature of the crypto market and the potential challenges that may arise for mining firms. It remains to be seen whether Marathon’s strategy and ongoing expansion efforts will prove successful in the long term and enable it to weather future market downturns.
Source: Cointelegraph
