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Crypto

Marathon Digital's Q1 Miss: $165.2M Revenue, Bitcoin Mining Down 34%

Marathon Digital's Q1 revenue up 223% to $165.2M, misses estimates amid operational challenges, aims for 50 EH/s by 2024.

By Alex P. Chase

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5/9, 17:41 EDT
Bitcoin / U.S. dollar
Marathon Digital Holdings, Inc.
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Key Takeaway

  • Marathon Digital (MARA) missed Q1 revenue expectations due to operational issues, mining 34% fewer bitcoins.
  • Despite challenges, MARA reported EPS of $1.26, benefiting from new FASB fair value accounting rules and a rise in bitcoin prices.
  • Shares fell 1.5% post-report; the company maintains its 2024 goal of reaching 50 EH/s, with further growth expected in 2025.

Marathon Digital's Q1 Performance

Marathon Digital Holdings Inc. (MARA), a leading name in the bitcoin mining sector, reported its first-quarter financial results, revealing a mix of triumphs and challenges. Despite a significant year-over-year revenue increase of 223% to $165.2 million, the company fell short of the consensus estimate of $180.69 million. This shortfall was attributed to a series of operational hurdles, including unexpected equipment failures and weather-related disruptions at its mining facilities. The company managed to mine 2,811 bitcoins during the quarter, marking a 28% increase from the previous year but a 34% decrease from the last quarter. These operational issues were highlighted as the primary reasons for the lower-than-expected bitcoin production and subsequent revenue impact.

Adjusted Earnings and Market Reaction

Marathon Digital announced an adjusted earnings per share (EPS) of $1.26, surpassing analyst expectations of 22 cents per share. This notable beat was largely due to the adoption of newly-approved FASB fair value accounting rules, which allowed the company to benefit from the recent surge in bitcoin prices through mark-to-market adjustments. However, the company's stock experienced a 1.5% decline in post-market trading on Thursday, extending its year-to-date loss to 26%. This market reaction reflects investor sentiment towards the operational challenges faced by Marathon, despite the strong earnings performance.

Strategic Outlook and Hash Rate Goals

Looking ahead, Marathon Digital remains committed to its strategic growth plans, aiming to achieve a hash rate of 50 exahash per second (EH/s) by the end of 2024, with further growth anticipated in 2025. This ambitious target represents a significant increase from the company's current energized hash rate of 27.8 EH/s. Marathon's CEO, Fred Thiel, expressed confidence in overcoming the quarter's operational setbacks, citing the company's agility in redistributing equipment and leveraging its "HODL" strategy to capitalize on Bitcoin's positive momentum. With $1.6 billion in unrestricted cash, cash equivalents, and bitcoin, Marathon is well-positioned to expand its mining capacity and achieve its hash rate goals.

Management Quotes

  • Marathon Digital statement:

    "Bitcoin production, and therefore revenues, generated during the quarter was negatively impacted by unexpected equipment failures, transmission line maintenance, and higher than anticipated weather-related curtailments at Garden City and other sites during the quarter."