Marathon prepares to halve Bitcoin, buys two mining sites for $179M

Marathon Digital will pay $178.6 million for two mining data centers in hopes of increasing its capacity before Bitcoin mining rewards are halved in 2024.

Marathon announced on December 19th that it will purchase two 390 MW capacity Bitcoin (BTC) mining stations from Generate Capital. Marathon's Bitcoin mining portfolio currently consists of 584 megawatts, with 97 percent of capacity provided by third-party data centers.

When the transaction closes in early 2024, Marathon will have 910 MW of mining capacity, 45 percent of which will be owned and operated by the company. Marathon still extracts 55% of its mining capacity through third-party hosting agreements.

The new data centers are located in Texas and Nebraska in the United States and provide additional space for Marathon to expand its Bitcoin mining operations. The company plans to double its hashrate to 50 exhashes in the next two years.

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The acquisition of the new sites will allow Marathon to own approximately 390 MW of operating capacity, 82 of which are currently vacant and available for immediate expansion. Other Bitcoin mining tenants currently hold 244 megawatts, while Marathon has 64 megawatts of capacity at its sites.

Marathon says the deal will reduce the cost of mining a single bitcoin by 30 percent. The company plans to deploy 82 megawatts of its own mining hardware at the sites. As hosting clients begin to leave the two data centers, Marathon will continue to load additional mining resources to increase its hash rate.

Marathon currently has seven miners on order, with the first unit due to be delivered and installed in January 2024.

Marathon Chairman and CEO Fred Thiel announced last year that the company was looking to upgrade its Bitcoin mining portfolio.

“By acquiring the sites in Granbury, Texas and Kearny, Nebraska, we have the opportunity to reduce our bitcoin production costs at these sites, take advantage of energy conservation opportunities and expand our operational capacity.”

Marathon's chief financial officer, Salman Khan, revealed on its balance sheet that the company is deliberately increasing its cash position and Bitcoin holdings while reducing debt before halving Bitcoin mining rewards in 2024.

“By reducing our operational costs at these sites by 30% and providing extensive expansion opportunities, this transaction will immediately recognize our company,” he said.

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Marathon Digital Holdings reported a 670 percent year-over-year revenue increase in the third quarter of 2023, and fivefold increase in Bitcoin production year-over-year.

As a result, Marathon turned a quarterly profit, with net income of $64.1 million in the third quarter, the company reported on Nov. 8. The firm attributes its improved financial results in part to a 467% increase in BTC production, from 6.7 mined BTC per day in Q3 2022 to 37.9 BTC in Q3 2023.

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