Marathon Digital Holdings, one of the largest Bitcoin mining companies in the United States, has reported significant financial losses for the second quarter of 2024.
Despite a substantial increase in revenue compared to last year, the company faced numerous challenges that led to a notable drop in its stock price and overall financial performance.
Marathon Digital reported a Q2 revenue of $145.1 million, which represents a 78% increase from the $81.7 million reported in Q2 2023.
This impressive year-over-year growth was primarily driven by a higher average price of bitcoin mined and revenues from newly acquired hosting services.
However, the revenue figure fell short of Wall Street’s expectations of $157.9 million, resulting in a 9% miss. Marathon stated in their announcement on Thursday:
“The Company sold 51% of the BTC it produced during the quarter to fund operating costs.”
The company’s net loss for the quarter was substantial, amounting to $199.7 million, or $0.72 per diluted share. This is a stark contrast to the $9 million loss, or $0.07 per diluted share, reported in the same quarter last year.
The significant loss was largely driven by a $148 million fair market value drop in digital assets. Analysts had forecasted an earnings-per-share (EPS) of -$0.19, but the actual figure missed by $0.53.
Fred Thiel, Marathon’s CEO, acknowledged the difficulties faced by the company, stating:
“During the second quarter of 2024, our BTC production was impacted by unexpected equipment failures and transmission line maintenance at the Ellendale site operated by Applied Digital, increased global hash rate, and the April halving event.”
Marathon Digital’s bitcoin production saw a significant decline in Q2 2024, with 2,058 BTC mined during the quarter. This is a 30% decrease from the 2,926 BTC produced in Q2 2023.
On average, Marathon mined 22.9 bitcoin per day, which is 9.3 fewer than the previous period. The decrease in production was attributed to several factors, including the impact of the Bitcoin halving event in April.
The halving event, which occurs approximately every four years, effectively slashes the reward miners receive for processing transactions by half. This year’s halving, coupled with increased global hash rates and equipment failures, greatly affected Marathon Digital’s output.
Following the earnings report, Marathon Digital’s stock price fell by 7.82%, ending the trading day at $17.91.
The decline occurred amid a broader market slide driven by overheated tech stocks. The company’s share price has dropped 20.89% so far this year, reflecting the broader challenges facing the Bitcoin mining industry.
Despite the setbacks, Marathon Digital reported some positive developments.
The company’s energized hash rate increased 78% year-over-year to 31.5 exahashes per second (EH/s) in the second quarter, reaching an all-time high. Thiel stated that the company continues to target 50 EH/s of energized hash rate by the end of 2024, with additional growth planned for 2025.
Related: Marathon Announces Plans to Double Its Hashrate by Year-End
Marathon Digital’s financial position remained strong, with $1.4 billion in unrestricted cash, cash equivalents, and bitcoin as of June 30.
The company held 18,488 BTC on its balance sheet at the quarter’s end and subsequently purchased an additional $100 million worth of bitcoin, bringing total holdings to more than 20,000 BTC.
This purchase aligns with the company’s shift to a full HODL strategy, reflecting their confidence in the long-term value of bitcoin.
Thiel emphasized the company’s strategic reorganization to better align with growth opportunities, saying, “We are beginning to lay the foundation for MARA to become a globally diversified company that leverages digital asset compute to build a more sustainable and inclusive future.”
He added: “During the quarter, we organized the internal structure of the business to better align with our growth opportunities, sharpen our strategic focus, bolster accountability, and accelerate our speed and agility as we scale.”
Marathon Digital is not alone in facing challenges. Other Bitcoin miners, such as Riot Platforms, have reported similar difficulties.
Riot Platforms posted a net loss of $84.4 million for the same quarter, driven by a 52% year-over-year decline in the number of bitcoin mined.
Riot’s Q2 revenues were $70 million, an 8.8% year-on-year decline, which was in line with market expectations. Riot’s stock also fell by
8.54%, closing at $9.32.
The recent financial difficulties of Marathon Digital underscore the volatility and challenges in the Bitcoin mining sector. The company’s ability to navigate these operational challenges and capitalize on growth opportunities will be crucial for future performance.
The significant increase in revenue highlights Marathon Digital’s ability to scale its operations, but the substantial net loss and decrease in BTC production underscore the challenges the company faces in maintaining operational efficiency and managing digital asset volatility.
