Earnings call transcript Q2 2023

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Operator

Good day, ladies and gentlemen. Welcome to Marathon Digital Holdings Second Quarter Earnings Webcast and Conference Call.

I would now like to turn the call over to your host, Chris Brendler, Vice President of Investor Relations. Please go ahead.

Chris Brendler

Thank you, Daryl. to Holdings welcome earnings quarter and call. afternoon, Marathon second Digital XXXX Good joining call for you us Thank for our today. Khan. Chief With me Officer, Officer, our Executive and Chairman Salman Financial on today's Fred call Thiel; are Chief and

and our materially. our subject anticipate, Before to we get When uncertainties, and recitation subject full and may question-and-answer I'd expect, will, the Please uncertainties are used forward-looking statements earnings like and are similar our in These to that forward-looking this which statements risks of make session. to prepared a additional during Digital project may Marathon could, everyone believe, statements, forward-looking release call, words such results to for contain should, relate intend, enable, to statement. differ remarks remind as started, risks estimate, a that they statements. Holdings are and we forward-looking actual may expressions as forward-looking potential, refer the

all risks from are Marathon time. those this forward-looking materially Investors at statements anticipated differ which that and may actual to involve cautioned by results cause uncertainties,

are risks Commission, viewed more which www.sec.gov be described public filings in other with and the can addition, In at ir.mara.com. and Exchange Marathon's U.S. Securities fully

our non-GAAP in reports on measures. call, Form today's will comparable please that for GAAP to periodic the performance most company's GAAP refer full website note to measures our a these from Finally, non-GAAP financial on financial XX-K which certain its XX-Q, refer financial to items we reconciliation excludes certain to measures Marathon results. and of Please and

popular from our Q&A comments, we'll a to Fred from prepared investors of their before begin with be the After today's transferring some will We with analysts. Salman. remarks call going covering questions through more live and

Fred of out off. kick things to to the to that over with way, the Fred? going call turn I'm And

Fred Thiel

Chris. you, Thank

while towards to make at XXXX After our XX year, include continued our target, fleet our start exahahash reach time, operational increasing progress a to our the energizing to we efficiency. which the same primary solid goals,

goal and second. our we're As results consistent the demonstrate, recent making we're completing our progress first on near to

During XX.X production XX% our XX. week exahashes rate hash now we QX, who July noticed will approximately the published XX.X exahashes. is X, June to April have Those last operational hash we increased exahashes of saw our report on you operational on from rate XX that

our operational XXXX In to and by our positioned at energize hash year team publicly more partners as new rate grown We've with this self-miner doubled hash hash the us alone, hosting has on an than rate the various Marathon facilities. traded installed largest basis. working successfully rate

facility our During at was energized the mining quarter, the and Ellendale, site. Bitcoin operational became North Dakota largest officially

our that Marathon has been While growing sustainable we important primary manner. rate a hash for it do been has us in so goal, at

mostly effort on plant sustainable powered is a we less successful have one to have that In for by company evolved concerted became of relied two a to and energy. to that years, Since pleased I'm made sources been Marathon than energy in we've endeavor. from we more renewable a to I power, CEO, transition its report coal that that

XX% this sources. sustainable During first renewable by of year, six months generated our and approximately of was consumed energy the miners the

or remain fluctuate in mix offset depending committed wind While and conditions, instruments. by with on factors, other balance XXX% to renewable similar this the curtailment we expect we XXXX, neutrality credits carbon to energy

Operationally, this week. milestone we hit another

therefore, reaching pleased imminent. site barring energizing delays, capacity miners, officially Garden final to exahashes installed have operational imminent. unforeseen energization of appears to City XX tie-in tranche to to of any substation be and the of is should be XX we I'm today, final XX and the this the report operating capacity of in exahahash As reach exahashes of complete;

improving from simultaneously faster quarter, than rate network second X,XXX our and we've have the to Bitcoin during growing production. continued hash Because record produced we our Bitcoin We rest the a our been QX uptime, improvements third the increase of record continued And we indicates XX% year. Marathon record quarter. a that is of last for which the this have XXX increase and into which blocks, our month, won is a a

In minutes, the expanding results our strategy, I'm on Salman quarter. I'll growth call capabilities second to but and a evolving few update to first provide discuss an going to the turn financial our over for

team. he public He As quickly consulting. a CFO June, member of and and renewable gas, in us energy, that valuable wealth oil several including as to joined valuable directly are a experience industries of Four Big accounting has technology, from and brings and reminder, Salman a pertinent Marathon, become our

With his that, to with earnings call Salman? please join Salman me first in Marathon. welcoming

Salman Khan

forward Thank the look to analysts and warm months. investors meeting for you, thanks over our with Fred, the I engaging coming welcome. and and

now, the the focus results For let's quarter. for on

represents Total quarter. of quarter favorable loss for net a year-over-year. attributable Improving prices, in sales operating revenues a on The per in $X.XX or to million, a variance the $XXX.X of a our common representing stockholders XXX% of drivers the and results quarter. increase were per million, of $XX.X or in Bitcoin million, the main prior-year million increased compared accounting loss company This recorded gains production common above $XXX.X net Bitcoin share share the $X.XX with our quarter, were $XX.X well million prior-year revenues $XX.X second loss year-over-year. net for

at lower per quarter. year's partially production was XXX% was price XX to day Bitcoin which Bitcoin average company's last higher, a The by compared offset Bitcoin XX%

partially Montana facility lower million one-time for exit three and million our $XX.X year. offset to $XX.X costs last Hardin, June months due ended hosting were for cost energy costs XXXX The by and Bitcoin increase production coin was year. Our XX, last compared per to the increased production,

million XXX%. amortization this last includes increasing last $XX.X million depreciation, million quarter Total by million, $XX.X amortization year $XX.X revenues, million cost to compared was to was quarter of by the and which compared year. or $XX.X increasing $XX.X same Depreciation

year. We of Hardin, our $X.X also had one-time accelerated for million facility depreciation Montana last

a rate in exahashes quarter X.X the in the XXXX. of energized exahashes mining our grown as we mentioned, significantly result, our And year. rigs second to have since XX.X of from hash quarter last Fred increased same XXXX As

And million we $XX as by year's $XX.X had Impairment loan from of $XXX.X million the assets in receivable. improved Gains prices year-over-year quarter. fell digital of million of quarter. year, digital year in current was assets in digital prior losses loss a Bitcoin on prior on assets the the significantly sale

which last gain Lastly, you a exist both and with a not of year quarter. Bitcoin million did equipment, on remember $XX.X we investment loss fund a had of this million $XX.X sale

same this This our is want efficiency. or to to margin, improve increased systematically rate excluding company's and representing last representative an total depreciation $XX.X our amortization, that I XXX% quarter million, hash note year. the of was to when compared million the quarter, $XX.X non-GAAP and strategy increase

The prior-year of amortization, by the previously $XX Adjusted EBITDA million million improved depreciation partially versus include general the $XXX.X the expense our year-over-year a drivers to margin million and business. loss EBITDA accounting adjusted of to $XX.X increase administrative offset excluding impacts in and and mentioned in period. growth improvement total support

expenses, to taxes, benefits, we're General in compared charitable the $XX in period insurance contributions stock-based due and costs. in compensation million professional This was cash as current the with primarily prior-year fees, and increase expenses higher compensation, property administrative excluding period. and $X.X million

organization. teams now year across our as just we communications, report opportunistically XX over built the out have ago, up we and human have a strategy, added to legal pleased XX talent finance, resources I'm employees, from and

value of cash totaled an XX,XXX $XXX.X our million to XX, June million Cash of Bitcoin increase Holdings million position. to Also, and quarter carrying compared $XXX million last of Turning equivalents $XXX our we with end. at a year. value sheet, and XX, with Bitcoin approximately fair at June approximately cash the balance XXXX, $XX.X XXXX, the on holdings at held

of of X,XXX was the of realizing $XXX.X Bitcoin cash fund cash expenses operating cash during the We of million. expenses. to sold energy proceeds and and million. The and were company's combined fair revenues balance for quarter, operating other cost including sheet value during hosting proceeds $XX.X approximately cash unrestricted utilized These Bitcoin equivalents, quarter,

- equity, During $XX.X growth at at-the-market combined strategy. the our of to for provides from and access we to liquidity ample market use the amount Bitcoin generated cash intend and our The execute equivalents to capital. we cash us of which optionality and facility quarter, sale million

we for Bitcoin cash Holdings. strong all, as So all our in sheet balance a while our the increasing good position quarter maintain

our our million, held in value July of million. $XXX balance XX we was XX,XXX cash production mentioned and $XXX.X at unrestricted a fair As July with report, approximately Bitcoin

will We intend expect We fund general Holdings purposes. fluctuate increase, Bitcoin of will future add to to Holdings a we means generating continue Bitcoin, conditions. primarily, generally to sell our Bitcoin costs, also depending corporate will production for and but operating And cash monthly and market activities. our upon through our as to operating

that completes update. And my

bit a more our little So to Fred? Fred ongoing I'll who - who turn about little over back will and more plan. operations talk bit will a take it about our

Fred Thiel

Salman. Thanks,

markets to geographically and concentration in first for mix Bitcoin for farms differently. domestically, the fight done energy, diversifying reduce improve capital pace our Bitcoin. sustainable of risk. navigating the wind blockchain operations has scale improve Marathon the We've to set to for rate We've for miners Bitcoin of the growing business, all hash operating meter industry. efficiently our While to always production number achieved internationally and behind for win as a things our to

stack, our reduce continuing vertically technology operations. this in by potentially trend we're can latency our Now integrating which

money closer more will XX%. efficiently, Efficiency win in important is can by reduced potentially sorry, reduce dynamic, If you Because rate operate move difficulty having be I'm then particularly blocks. mining block the make towards Bitcoins always next make from year's subsidy can you as latency theory, Bitcoin. you and more therefore will mining someone

the that you're believe is when those the And to are efficiency cannot. more improving and what can of you of operating others keep in operating efficient even low end average matters, toughest times. than curve if cost the that technology of But the miner. one is we And keys you the on

the runs and down that directly each only miners influences stack. or miner pool, mining of orchestration top the all controls way Marathon the of the is tech is the blockchain, to Starts between the the mining Bitcoin and which at it ASIC. the the layer, aspect

which Over of have the blocks won, contributed the and upgrades past in number an to few earned. to several months, we've MaraPool, therefore, to made improvement Bitcoin seem

a that However, superior And even to might our are several experience our build proprietary for expertise, miners we firmware we an our developing given able own our sell be is impact. solution. larger companies firmware. making technological thought in There

And we're feedback have. indicates so third we alternatives. leading that against We benchmarked our the recently some far of the proprietary

and in And security. so several advantages performance, protections

improved our allows curtailment overclocking, times and a So demonstrated the with publicly to it mining tool valuable protection as better that seems security is And for traded firmware far audit, which are us a temperature and very pool. voltage for have communications company. encrypted

also reduce our We've stack it per hardware. heavily efficient industry. operates one to rate, in on Moving focused mining at XPs makes energy the hash which of been joules to per our down not SXX the this to grow XX.X now tech of upgrading most the fleet expenditure but just our fleets hash fleet terahash

demonstrating the to infrastructure facility mining competency February, Abu in level designing a farms. immersion clearly At our and we we're in jointly XXX Dhabi. megawatt cooled build signed an agreement In building

the climate is For that reference, Bitcoin Dhabi miners. is towards extremely hostile in Abu one

The were in very temperature Bitcoin team sites is designed where air its are shut-off trained The high built XX meaning a over by Abu Marathon in operated above it's humidity by and joint miners for today is and venture Dhabi often partner the very typical temperature Marathon. demanding environment. and C and degree

site matter ability without intervention, sophisticated shows really of a in And can for the how that has over operated building Marathon our XXX exemplifies pilot days be. human as sites. these fact, which operations our it And

So, hosted. and leader owned, third-party the space become demonstrates a as operated as this our to truly now, we that believe in clearly ability well

during Abu whole the two Bitcoin which be we already have is balancer the hash the in day reports the sites shown to change. XX the received load online Bitcoin XXX site's when hashing but that's produced July, our and to and up demands to grid in as ownership proven Even and dynamically energy the before already project. this of ramp the be currently region XX% Dhabi of a expected due the rate end So in down megawatts ability X.X online first began preliminary for to year, of has helpful to

successfully inaccessible case excellent utilities. This Bitcoin year ago, an can parts mine their can the mining Bitcoin we also in that now for were proves, benefit that a world type of of has how flexible climates. given even demand response It study

beyond plans XX not we've significant growth While announced any exahashes.

Our and leading to intention in space. grow position continue is this to our maintain

expansion are scale, of technological business efficient drive innovations Our expertise, our approach the all operational given flexible of portfolio deployment, a model implementing ever increasing right to to operations. key rapid and for

survive, With this And is today every dominant in the our the do, focused going to optimism not having coming up how may many not miner. they're next to spaces. are on for industry be given dynamic year Bitcoin easy emotion how which

have that staying shape therefore the our in consistently But most Bitcoin lie remaining improving focused Even focus thriving. this rate, and a going. past conscientiously to willing Marathon, we it's believe ahead. on at exciting Marathon challenging keep years industry is full times. we the and those in and it setting in We is alive, intention industry our We've most leader every hash not pace growing this and industry. Chris? of the technology the are for just and potential remain years, three for This who for but been still for trend to young, our

A -Chris Brendler

by the through popular Submitted to some of by platform. today's Q&A start our Q&A At I'll this section commence the of Fred. going most call. investors time, answering Thanks, we're questions.

question MARA; having MARA of as first regarding how own? asks, Auradine stake one, Auradine in continue providing provide AI And capabilities Our should a will the the what within from number hash Two, stack? three, to does is you Auradine about Auradine tech CK who MARA comes pricing/benefit scaling we that rate? MARA to and think percent

Great was on you Fred, add point. that sure I'm disclosed this question, much color not at little can Auradine? a of CK. how

Fred Thiel

Sure, great question.

the percentage, we're So Auradine, of of today much venture founders owns minority large XX% and capital Marathon that Auradine then own are There balance. own shareholder. a the about larger firms so a

advantages should about you think rather why the things about reasons that. the we price investment than made talking and think like I

in challenging was operations, immersion, to phase environments able more in of able down miner importantly, be really be able up single to What but ramp immersion, to underclock, phase, to needed operate for all to have have to built and ability be dual operate we looking overclock, were efficient we the and find be ramp could able the be a that really very intelligent.

the is team achieve one of ownership able been a things significantly expectations Marathon has industry. miners the even a initially And of key is to clearly that of cost miner most the lower had the total create with that with Auradine Auradine in beyond the that to than

critical a And it these from the means And for that to large variety capacity, managed would, that in - important set energy platform can a target scaling is of parameters, their dynamic pricing a up hash pricing move can energy again dynamic you and or will with target capacity. down energy adjust miners industry, It if essentially you And so a so Bitcoin of their in unique. the into other automatically which the that fleets those miners scaling game-changer is the operate miners an within cloud for very makes we price environment operate price, as a these parameters. operate also is price of halving. and because Bitcoin, if can would way you very

very those what to to about to fleet. start as our systems able we're excited we're be that's Auradine, and regards incorporating excited most into So

Chris Brendler

Great.

who Our there projections things future next question focusing asks, from is what's bring Are to any for besides more revenue your on also you're Tariq mining to mining company? Bitcoin your production?

You want well, as to take that one Fred?

Fred Thiel

Sure.

we're mining, to going So of that, kind doing to just haven't say we to outside what of Bitcoin stay tuned operations. disclosed would grow I pure and our while we're continue

we to years. prepared leader, remain my I coming conscientious capacity we'll continue As over to continue the and said a rate a remarks, at in intend grow to

to and supporting duty around blockchain leaders We industry the the and this the the and securing in infrastructure believe that supporting it. it's Bitcoin one be and of our industry

to industry the technologies the for towards help expect will build future, developing term. So really as you this thrive see long that to Marathon infrastructure look

Chris Brendler

That's great.

to color optimism, point. a we from Next can are who What how going ourselves. a price? the the think rapid differentiating on price upon you we rapidly this doing bull have some asks, in on I and how plans predictions don't approaching we're is separate Fred, this companies? I having So to question it, we are from halving you Bitcoin comment Andreas are with appreciate your yourself run. Bitcoin mining maybe rise provide are and more approaching What but at other Andreas, your looming

Fred Thiel

recurring the is in this miners next on XXXX. be there'll sure in making the having that to having, a - at and are obviously the profitably, So operate all focused and until cycle event industry beyond but very able not next having through just

to that allow going operations where very obviously down sort here any optimizing not mentioned, on comment and we the we will of be. going of where we're kind storm on But towards greatly. halving fluctuate as Chris think to as is cost our our may we're focused So, mine weather the to to up of price Bitcoin us price Bitcoin Bitcoin, get

increase there more miners into some will be rate to Bitcoin as the price halving, obviously on predicted, decrease may up, then post-halving. doesn't As of grow expect, If moves in because an rate. the want Bitcoin the will have putting be price hash actually hash you more to hash analysts even rate

we'll look optimized cost being time. focused both So perspective. at it. optimize, all we're that just has some as And this to from see is, on very have and mantra just we're And our and very year, ways while on very most been to focused the focused on a so have the still we it's but go, we're miner and energize same how doing

Chris Brendler

investing other from as do buying compared comes as Allowing Riot should as What F. the see Bert asks, Bert. who why MARA Great benefits MARA question, opposed question well. in to to options? of or to next Fred you itself? invest The Bitcoin right. That's an individual

Fred Thiel

a operation. So great I Riot runs think

self-miner. the challenge also pure-play they makes they're susceptible very they parties, are ERCOT changes that business in concentrated either hosting a operate which are the where highly to regulatory area rent Riot out a them a not then also third in in with They a cetera. climate, is Texas, et third-party in Texas, Texas, particular to to capacity changes think Bitcoin sense they and I

greater owned So operate I and operate diversified in think of North very third-party operated to we'll continue sites. sites. diversify miner's Dakota. you our internationally today. to we We operating Texas. move now a UAE. in than have some and operate sites at continue to of And We're in operated have hosted operate to We We a owned some operating portfolio. We We expand portfolio look each operate and balance model. and

kind offer in we So regard. of of that diversified play more a

We are we And in generally our stock of increases that also hold not a Bitcoin Bitcoin, pure-play you tends show to a itself that Bitcoin. lot the price only to we react Bitcoin. how of in in mine see but

So two and companies different under models. different Riot, I Marathon, think operating very

you I for movements look a think Marathon spot would I you at compare and likely and example, that, yes, there opportunities year, were basis to back think has year-to-date buying recommend movements Marathon I where outperformed Marathon even and see and Bitcoin. Bitcoin that just stock if Bitcoin, you'll on this price find

a be to reason may invest that So in the stock.

Chris Brendler

and ones both. some asks, shares then are then and do time actually of a we wish and and our shares continue not platform one from two your can combine shareholders? And perhaps our James trying to one equity and up. the Xavier Okay. reverse popular asks, Fred, into this question T. to in hit you Salman, it the color instead company. try try why to And of the Why about advance you you provide thinking for dilute create to we'll afternoon, to similar more planning or a finish you always of R. split? or on growing can them last - can question or start the something take value have shareholder for and, So as one do last do we a most our dilute strategy value? split, maybe you loan from

Salman Khan

focused as Thanks, for that when that. our which it's the value that low Xavier in shareholder always on capital we stack convertible a debt And the have and balance eyes James, creation first. do and shareholder interest to is we think decision to - our Happy sheet, will The is creation, about evidence see value debt we question. make, And that whether so stockholders. any are an asking Sure. the we equity our standpoint from the shares, creates it value comes capital certainly, is that stack on already or for there balance have we rate. way sheet

and growing when capital creating We're raising with grow we're and the at stockholders. the of growing value here, the not look just of we of growth growing sake the intention terms the for growing. to strategy In for the exahash,

to our perspective. As stockholders, long raise we will as existing to grow from continue capital that it's accretive to

So hopefully, that answers your question.

of a our in question. size, In certain don't at We stock not our answers and your reverse price a we this this Hopefully, intention the terms the that have I value given a given don't stage, at question. I'm stock split split, if see company stage. stock understood reverse

Fred?

Fred Thiel

Yes, split, you I very share is it did so I down share would they seven and just a looked a they down very, historically, their comment share they dropped to something a was if their to $XXX affordable. like between stock stock price it about look dropped it a is stock Apple more makes your mean, it did is And high. add when - when price $XXX the because splitting do $XX. you that

doesn't to if shareholder any do Trading stock price that below where trade, create the split. doing your And range sense ever $XX in a $X. a we really you reverse to only And do make $XX value. split, gets it doesn't

any don't that. in value I doing see So

balance amount certain percentage on hold add you value. certain continues value. amount the Bitcoin as at that continue it a adds to produces shareholder of our But we growth, just Bitcoin, of sheet. that exahash every shareholder And that add, we'll and of Because that a look to

cover selling We our have this to Bitcoin operating been expenses year.

operating expenses shareholders So in maintain that we're diluting not our to degree.

drive be things that our shareholder very So plans accretion. growth are I consistent value with going doing to think

Chris Brendler

Okay.

questions of interest, up have all time, the interest the appreciate wrap and submitting for of those to Again, we section On thanks Q&A. the questions. and this really we'll

back to to operator questions I'm from covering turn you. call Daryl, to to our line back analysts. now the for going the open the

Operator

Thank the now Our Please Riley. Instructions] line Lucas open call Marathon's come to you. of analysts. with the proceed first [Operator questions Pipes questions. from B. your to covering We're going questions from with

Lucas Pipes

everyone. much, very first Good operator. you questions. halving afternoon, Thank for one my on you Thank taking My also side. the is

rapidly flexibility it to a have. I'm with the So approaching, trying get for sense you

for basis, curtail Just commitments argument's kind a is of on not you. you there you variable take miners economical do step still center data appreciate your you a a take-or-pay if that amount there sake, that to temporarily Would given color or have if have Thank really to power? were were the on flexibility to least, at that for would of given dynamic. pay

Fred Thiel

the be and one of other by just low pass-through are go we're in by hosting. to and fixed not one. power. varies which site, doing uses or power power sites is It I'm site case PPA some each cost very to depends on happens the there that site control that Lucas. have that if But pricing, going and Thanks, it the the into sites sites have at fixed And other we

broad a between the it's mix three. So

Lucas Pipes

roughly And installed and of Fred. fall exahash on a you, Thank assuming more under flexible? today, which percentage would just be rate, to exahash commitments and as that, helpful. would percentage fixed up follow That's of kind what ones rate

Fred Thiel

I'm but the cost similar, going is today probably is low very guess, third a about probably installed, the fixed. is of balance it's most - most fixed to And find XX% balance flexible. and would the not then you think I

Lucas Pipes

turn Garden clear, it that. you hash Really that terms appreciate the to appreciate are utilization of not expect very expectations somewhat in I so in-house, you going you if but Thank because imminently calculated that, metric Then, first pretty would that not imminently thank you much would would you the kind when up on on maybe the much approach but follow-up start Two your rate. rate online, City, your yes, site mentioned of could for how quick update your you directly expect is share really on for color. question. you related, We operating to questions, and but it. related, directly appreciate but forward? What

Fred Thiel

Yes, they tie-in soon energy hosting And passed start our documents signed, so site final the energizing. the provider complete. as lines. And and and are physical being the red that provider the at between document as back forth is with last is the

other last site that's are any up no that There issues So holding or going other approvals regulatory the from step. on.

our hosting it happen XX-megawatt they the believe We ramp in company. expect based So their of power providers same And publicly with said the period discussions time. a kind the steps status will that imminently. of current on to over short of

Lucas Pipes

it, this course the so up of over so? or would of ramp Got kind weeks XX

Fred Thiel

between to Most probably six weeks XX weeks. somewhere

Lucas Pipes

terms rates in of And then Great. broadly? more utilization

Fred Thiel

You me mean uptime? So mean help understand what you by utilization.

Lucas Pipes

Yes.

of is base, a in Garden what City that's run, kind the operating Sorry, kind terms uptime understood. with benchmark. that, like good of miners I mean, Obviously But that don't yes, uptime. of

Fred Thiel

you're in aware. lot seasonal, of So curtailment it's as well summer. the has a Texas

Dakota, to And by the is be in operating uptime North we've so XX%, even summer. been well over lower Texas, going in operating Texas. in In XX% contrast,

has site uptime. that very been so with high And operating

think to the look being have I at Texas West kind you So very of sites seasonal. as

the in mid the be be the the you to hotter to times 'XXs depending in XX% months issues, may going the the in You're year. and of curtailment cooler some during in of on XX% temperature And summer.

Lucas Pipes

appreciate Fred and Super. it I really and of best Hi, luck. team,

Fred Thiel

Yes.

Operator

Thank you.

your questions with Our questions. proceed Compass White the Chase Please Point. from line next with of come

Chase White

evening, Thanks. guys. Good

a across power site aggregate I think we Garden how that City the then and And energize follow-up. you as should starts about portfolio entire So online? costs have to come

Fred Thiel

Yes.

the hosting. this for that a power price complicates is and pay fixed So sites, APLD we what essentially

power So hosting. power isn't and broken out net cost, it's

find harder would costs. So generally you and sites, that But bit the - all per of the makes $X.XX to you hosting speaking, sites include you power across range going give and I a the think us it you could look, in across if just little power kilowatt. kind be you're to

Chase White

about details you gears economics I Abu And Dhabi switching mean, the provide JV? little to bit. a are you. additional any able Got for the us

Fred Thiel

month's you. a sub-$X.XX venture. don't an costs first is can you even fixed - started XX-XX tell have yet, operating couldn't joint It's price tell price just I the so so we production, financials what I fixed We've split we But XX-XX. then and it's energy,

Chase White

- Perfect. sub-$X.XX. the all updates Got And that the the time. any And bankruptcy? from you, recoveries that's Compute so on and fixed just then North is

Fred Thiel

mention, to None no.

Chase White

Got it, thanks.

Operator

you. Thank

next questions the proceed your Jefferies. with come Jon line Our Petersen questions. of with from Please

Jon Petersen

XPs exahash today's like at right very payback do curious machines the economics. on for the period that you thank economics? What you today's much. putting place Great, on here the now - or you I'm those paid is just you're at what into estimate

Fred Thiel

be to find had probably. to those were them, for when below can we XX seen the pay off it amount right? going by discounted ended and most So for finally do paying significantly we've the that as them, CapEx by significantly time a Well, it's think price. at you're was time those, machines it was to up between And them, high ordered months, XX we by so limited I of paid the we months somewhere

Jon Petersen

do in now of estimate to a right Okay. what that's you I answer, then of And off helpful. hard that's curious All halving right, any the was know but online come the exahash of is next percent terms year, question I this post-halving? would have

Fred Thiel

touch what tell you to going me Well, of be, yourself. and then Bitcoin it is you the can price

Jon Petersen

I Bitcoin it's just stuff levers know it's a there's this Let's today's price to out. exahash. lot today's today, if and figure of of pretend

Fred Thiel

be essentially price at marginal about you're of we're our cost Bitcoin, the of produce. right that I which halving, mean if talking $XX,XXX, for the about equivalent $XX,XXX mean, talking to a would around would

know off necessarily. shut don't So would we

Jon Petersen

any I sorry, didn't much have - sense like the yours. of mean might how of network the mean market rate I any overall, of any didn't do meant you come I total offline. hash

Fred Thiel

it look this Well, at way.

Our fleet somewhere XX operates the terahash. in average at The per the roughly for industry joules mid 'XXs. is

estimating would off. Your are colleagues XX% XX% come to

Jon Petersen

that's all Yes, okay. - All right,

Fred Thiel

an So perspective, third to if the in miners, efficiency going do fine. of you're the I lower you're from think

to I challenged. going - you're average above, be think if above you're it's, if you're or

Jon Petersen

for fair. that's Thank that's Yes, right, All all you. me.

Operator

H.C. with line questions next Wainwright. with Please the proceed Thank of come Dede you. from your [Operator Our questions. Kevin Instructions]

Kevin Dede

was much Hi, How gains Thanks made implemented, to of have your integration. can what Fred. on that software at taking you you for sort that, you all? much, have progress seen, you curious efficiency it. have about talk how I

Fred Thiel

bit I a little it. can talk to

just We've software, third of that to want is driving one let's it's but efficiency generation developed driving been and the how I that Marathon a our transitioned pool running. say kind we're is efficiency just So gains. of of gains. been say fully much, lot to which that's

is which firmware running is the efficiencies, gives we across miners us continue vast a fleet subset our That to think I here fleet to will far year. have the expand balance of over and additional beneficial. to firmware transition Our expectation of majority be and of in more our the very that the this

to we're and direction where the tiny done and in party also with in that we're technology even on-site. we're require engineers immersion, by the purposes expanding was efficiency you with Marathon we've you other have do that immersion to but not you testing in third by operate beings more for get we're some the immersion The the if that's able to places can to is UAE better fewer because get efforts, a have focused bit just an being running environments have running human in it for also touches doing operating touch efficiencies it immersion a very development of and and efficiencies some in developed extreme fewer don't U.S. on in the

lot on very a system. been instrumentation the putting we've so of And focused into

kind So a manage on fleet and machines the that prior capabilities be managed have we'll really profitability a comments points. the standpoint that remotely. question, manage of you can my where ability miners profit to layer time and with a those to if you bring orchestration the regarding from cost targets over Auradine based if recall they themselves And really the

ability focused So in to ASIC so on. of the have important all the design the that's way Auradine what we it make level. felt that's kind of the to we why to miner down And influence so the was we're could the very investment

can the solution marketplace the get felt specifically was we needs. right we for So what to our

Kevin Dede

to take the Fred load from the software, do to need pull RAC it So you firmware shop. the the miner Auradine to and

Fred Thiel

about on will clear miner. It software Auradine Bitmain that. so on won't be the Auradine let's the run so Well, run the

Kevin Dede

Okay.

Fred Thiel

Below the software software we the do air over upgrades.

Kevin Dede

be Okay. in development And changes and you fleet. the is how to software your flexible will think do

Fred Thiel

Yes, it's way. far got this So think very been flexible. it about

XPs of and J consists today SXX SXX fleet machines Our PROs two types of predominantly.

As we add of as other versions machines will firmware add different it makes sense.

and no points, like happens the if change for to the machine particularly and comes as us the the underclock firmware it firmware the come has when as there that machine. reason that's firmware with so ours It Bitmain's So to it's with a minimal. just, overclock ability XX set same machine it's things comes is good just that, to good capabilities, very don't

one firmwares that other third-party be the everything. at might things at good good not two are or And

And that the decision was develop. we to so why made

Kevin Dede

Okay. appreciate questions. Thanks the you I Fred. for Thanks, detail. taking my

Operator

you. Thank

of proceed come questions. with Our B. next Pipes from Please Lucas your questions with the line Riley.

Lucas Pipes

Thank my taking you, questions. for you operator. Thank follow-up

at of us City. First, about fleet Fred can remind Garden -- you most the Are those

Fred Thiel

XPs. All

Lucas Pipes

All XPs? it. Got

as the of up efficiency kind City online. Garden expect So to tick turns should we

Fred Thiel

Yes.

So at think fully once we XX be that today. terahash joules at I said our and XX per or would we've about XX deployed, we're previously

So for feel of that that. kind you gives

Lucas Pipes

just it. do Got it there here, thoughts be players could said Fred, imagine you you times. thank of that. on it had I have before. for the challenging make remember through of could the liquidity. came on looking then what And are to And obviously sense sure kind for M&A, Very wanted some might I I I know make you right. industry most helpful,

your And I play, a have to so you appreciate on that. thoughts would a as leader, might role

Fred Thiel

Sure.

I've the these cost be on dollars to as M&A the digit running, buying times I acquisition machines fleet because said hardware SXX you depending single aware tends today, everyone's think new somewhere. weigh the and to are challenging terahash the - you're a what per bottom miners the mid-'XXs this a am most rock versus because pay cost same machines number about that you age life of of the PRO miner going for have a in the in to and J industry level always class whatever cost about I of replacement short as is the XPs think when fairly for new paying is is has and miners

better today why machines. a brand where it's low There's energy acquire costs a almost to to somebody absolute in you're machines to and can old somebody, put got has if got it's reason pull is to for facility you new an amazing to, essentially out be typically super-efficient the be that going So company PPA access very right. sale and or

miners right people be I trouble to trouble in with themselves the sell certainly now. there's So either in the having the the And are solve in activity will marketplace that lot trying to of a issue. therefore now or trying with they and who think

Because are an to even these miners trouble come more going that are be in having. today trouble

power great they're to miners. I they've I next going so miner, were yet a very more for of and low the would year. somebody way if But in opportunities cost And be with think even infrastructure What to in to any come want advertise access buy to where to minute. put Marathon great it's

it. can And we build can and equip the so we site

Lucas Pipes

positive fairly question. a bit appreciate I back new Thank your It's you, would that Maybe came thoughts. higher perspectives. over Fred of question, years follow-up when last one a a every mining little Bitcoin relentless for of level history look of the mining the I kind but upwards out, march of Fred couple efficiency. system. advancement you you're is technological today the front a negative demand accelerating what it possibly seeing the efficient seeing on increases and stable, with the pace computing new I very as because developments with of the AI a the for some ships wondered that decelerating, or are overall of in

Thank I question appreciate. two-pronged - at double of here. would you. kind So

Fred Thiel

apart in increase mining joules space as advent what of with - the the space went basically XP we mining the terahash XX joules an us down Yes, AI so was in XX a around about Bitcoin pretty efficiency average Bitcoin a taking terahash. in per the of through per from from significant space industry to

So significant efficiency that's percent. XX-ish increase - pretty a in

coming mining sharing or are the in machine the that get we're it's you whether there can underclock a them now What from can per cetera, down high-teens. was you maybe of to a Auradine XX-ish at terahash. seeing new - miner, were BT, disrupt is that company which if joules underclock et micro you you overclock machines whether But if them down into it all raft

it a to hash software, rate be going miner where either the miner returns cost I big there them tune like Bitmain especially rate from just people to before it's to pretty are target on energy meaning - not surprise something start we come to think step. the me is smaller generation the and the of if heard wouldn't year. efficiency the expect of of this the in from or real is efficiency most end miner on next next level hash But operation efficiency totally the mining becoming going to Getting fully in require I so Bitcoin hash working technologies to new et to going global the of a price from a the the ability going gains or perspective are in cetera.

overclock? So itself underclock? I to a the of that miner for I What tune Bitcoin do amount fleets and miner. into start you of the do maximize lot literally then I I so getting can Do Mining cloud AI-driven operate. can of Do orchestration

like two by hardware very So than ourselves efficiency benefits terahash. the reap large that large so more increasing the or joules operators per could from of one level

that's So level. higher

Lucas Pipes

Yes, ahead. sorry, go

Fred Thiel

that on who I actively there are I of was Applied I won't compute to which at rate be capital moving global it have route of less to look that say, just will AI hash focused at on means to means Hut that running AI business mining Bitcoin, those what focused hash this companies versus that as miners see is et growing. number go rate very going it X, that growing the are from Bitcoin Bitcoin in relative as are and does miners a look you to cetera side invest players meaning Mining

the see from to Bitcoin think mine to of going you're think in to reserve the trend as sovereigns sovereigns global I rate as to to a continue going to want Bitcoin I use growth we're way continue a and who see hash potentially mining Bitcoin asset. is

much a be important industry to going more forward. going to it's this think I trend

Lucas Pipes

Thank of there. Fred. you. interesting you, Thank A things couple

where the your you best at a would regarding machine next today? put comment joules in - the XX the would On joules, smaller guess what efficiency, be generation advance XX

Fred Thiel

will jump change. big next the a be So geometry

XX, because maybe again to cost of X example a you X-nanometer, which all jump to for of to they may joules going very XX XX XP should that's may X-nanometer So to the miner were way the if down be they see down be is if but see come a today. you wafers terahash, it expensive X, come expensive, Bitmain's of it jump to to

software, the real So opposed we'll I take as thinking to the and to to in technologies to advancements then in have next come benefits a see typically keep that's flow over through. years, going are in while to why and hardware two three compute

sold of you think miner millions the year. about fairly volume small at And technology of they're end the industry it, Bitcoin day, companies. When not is mining hundreds a a of for

kind one side it's it. hardware for the after then of it's dominate justify small so effort. the typically two hard where of players just the type And of you it's players got to they things And market little student a marginal can. to or I development think And

Lucas Pipes

there. Very of helpful. I Lots food perspective. your Fred, appreciate for thought really

Fred Thiel

Yes. Thanks.

Operator

for questions. further call I'm no are to remarks. over Chris there to point closing this the At back you. Brendler turn going Thank

Chris Brendler

actually efficiency production a Thank that our you, question XX.X the clarification expecting press deployed. per when Daryl. in on we're week when fully fully around release we fleet And quick last deployed, July put just terahash our on joules

Do Investor So were at Relations And and for all during thanks to with rest ir.mara.com. any that with day. feel that, of your contact team today. time enjoy call, today's that your not free answered have you the our thank you questions please

Operator

Thank your you. participation. appreciate does conclude We This teleconference. today's

You rest time. your may at Enjoy disconnect your day. lines the this of

Marathon Digital (MARA) 8 Aug 232023 Q2 Earnings call transcript