MARA - Earnings call 4 2023 | Marathon Digital Holdings, Inc.

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Operator

Good day, ladies and gentlemen. Welcome to Marathon Digital Holdings Fourth Quarter and Fiscal Year 2023 Earnings Webcast and Conference Call. I'd now like to turn the call over to your host, Charlie Schumacher, Vice President of Corporate Communications. Please go ahead, Charlie.

Charlie Schumacher

Thank you, Kevin. to Earnings Holdings Call. welcome Fiscal Quarter and XXXX Year afternoon, Marathon Fourth Digital and Good Thank call today. for you joining us for our me Chief are Fred With call Chief today's Officer, Executive Chairman Thiel; Officer, Financial and our Salman Khan. and on

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

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

financial a and unrelated the not Finally, its Marathon Form including indicative please States, not to periodic to certain margin. are were with they non-GAAP certain in that Salman. prepared indicators note the After of remarks non-GAAP measures and the GAAP non-GAAP results. more principles are United that XX-Q out exclude that with popular to and to and questions we covering XX-K our will be from on with our kick of to measures from refer accordance most their And Fred be of turn that I'm today's in the on measures some company's because to may call prepared performance Please our reconciliation of analysts. today's accepted before reports call, important financial Fred? its these for off. to to GAAP a of way, operating begin we website things going performance and Fred will the live going Q&A items adjusted financial transferring our through refer believes measures. We'll comparable call full over these total comments, generally to investors financial EBITDA accounting with

Frederick Thiel

quarter primary Charlie. We last call for XXXX, year. objectives earnings on which Thank had our you, X first we outlined

our of energize to previously performance and mining purchased our to second to was more to reach efficient. first and target our the rigs effective The was become more XXx optimize as

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we XXXX As all alone, in QX. a result, more than of in XXXX Bitcoin and of X,XXX In we competitors QX did produced we a combined. Bitcoin produced Bitcoin record top more than our X

at how to record announced are of Bitcoin QX's see addition In that evolving. production, expansions several new we last indicative end Marathon year of we the

was our pilot landfill announcement by powered Energy from renewable Utah. project first The in offered a inaugural

more this preliminary reduce Bitcoin we is still team data finalizing that of Our project results turning miners the The model is that the into at data, suggests but emissions actually stranded economically pioneer the trash for help methane the operator Bitcoin by miners help of with flaring. and mining demonstrates and methane cash working is from landfill emissions. viable on reducing can effective landfills for

excellent the also pilot, joint the study the from can deployment landfill international into regional we as mining the Texas. replicate of to and Standards our portfolio and is data XX of into really centers second Bitcoin announced world significant Dhabi, $XXX bring Bitcoin announcement This Utah, and to is a X.X that demonstrates x value million In our Perhaps bring Bitcoin expand that sector. Abu partner working regions technology our in and of America. to in a for developed which Latin as the allows the on project in quarter in Nebraska mining our acquisition first us can unused fully that Bitcoin convert also our of Following to experts last just power. with value throughout quickly energy it was case experience effectively expansion the the It our serves with Kearney, venture world capacity. deployment model Marathon as hydropower excess essential first look to educate ability hash to internationally most mining mining our solution we megawatts gas Paraguay, we're Granbury, grow large-scale diversified owned to assets. we By footprint an

sites subject last a one XXX company of capacity, closed With transformed directly price purchase of with of and this month XXX megawatts Marathon strategic already from these which acquisition customary to of operated closing or accretive the of The operational the these of costs megawatts opportunities which importance and owning transaction reduce we acquisition, adjustments. have sites owned was at with the XX% we We've capacity, nature to X% the power own. directly about sites. of this our spoken of we to

So I'll refrain from today. into detail going

us operation We by will to accelerate April or be of optimization. savings allowing earlier, cost operational and full assuming XX control them

local the mining can transition While operations the economic that yet skilled world, create the contributions ensure best go we're we through change communities where engaging the on which currently the process. we and the local be with positively intently focused our team can operate, neighbors we the highly of our to operators, people communities believe We in possible as that starts those is communities. jobs and for Bitcoin not

ended plans, for results quarter to Before the to fiscal into fourth far going our financial going turn Salman? to the our call Salman I'm XXXX. discuss too over and future year

Salman Khan

million an quarter income or approximately attributable quarter. company income We has revenues, to year was for into a entered per well $X.XX balance XXXX an $X.XX and diluted a record dig in of me quarter that common successful you, us in prior produced share let $XXX $XXX Thank or common the upcoming Fred. reported Marathon. incredibly for cap excellent stockholders the We Well, beyond. million and positioned with EBITDA, net compared The approximately fourth loss adjusted having net the had the strong to to per share of we've year and net what sheet details. off

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stockholders early not share a company share loss quarter rules, to million adopted the would December per $X.XX a XXXX XX, of our ended million of the fourth been value per new attributable year income accounting have $XX XXXX. FASB for net or diluted of $X for or loss income and $X.XX common diluted As the net of net fair

record prior the revenues these XXX% I of XXX% detail million with and higher and a in $XXX by into $XX Fourth were impact dive average results. of million, mining higher let's Bitcoin quarter in driven were year significantly But increase will coupled than price production, more revenues first, changes a discuss a shortly. Bitcoin.

$XXX note to For year, Bitcoin of significant we also a XXXX and a impairment compared partially in million advances million the is equipment of an $XXX vendor X% within revenues recorded of mining held prior production million assets in disposals million of that $XXX loss we offset XXX% million driven and a million The a $XX net was in impairment due on improvement year. compared average bankruptcy, the to from investment improvement Bitcoin the price $XX $XX XXXX. It fund of and a digital in digital the in deposits, by impairment a investment important million, an sale year-over-year to of and accident equipment full XXXX, approximately to by benefited gain $XXX increase of loan vendors, to on of XXXX. assets

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were hosting million XXXX. energy costs $XXX the to year, in and million compared $XX For

which costs. was $XXX both Total to of in million related increase in the compared of depreciation primarily growth of and XXXX, includes to In XXX%. due amortization, revenues, was QX million and an XXXX $XX increase periods, QX mining in our cost of time fleet

and quarter was from amortization million, period For this XXX% increasing XXXX. the same prior the year. million, the for million fourth by was $XXX Depreciation million $XX $XXX the to year, full in $XX in compared

million both full and the growing rate In X amortization $XXX the predominantly was periods, our $XX exahash was compared the change For to from cash energized depreciation result to million XX.X of year, XXXX. in exahash.

new accounting guidance early XXXX. In disclosure the cumulative crypto value. XX% crypto measurement The of at which of actually hold quarter the million We of we on $XXX XXXX have gain XXXX, requires Bitcoin sheet, digital to million Bitcoin of recognized resulted assets, beginning holdings we of fourth assets we of full gain digital accounting the in our assets year adopted a XX,XXX. of assets FASB's Because $XXX a balance for our this Bitcoin a the for adjustment XX,XXX at significant and from new effect of the during guidance. amount a adoption accounting of on increased under also fair on

to the depreciation forward expect price companies, the The of as this million $X $XX Bitcoin and company's amortization of last among holders was continue line total value one Bitcoin non-GAAP quarter going same to in Bitcoin As accounting we to of margin, a impact compared largest excluding million new publicly fluctuates. bottom of the of quarter loss year. fair traded our the

year million the in depreciation change For non-GAAP of adjusted and improved prices, increased prior total $XXX higher period. was QX loss a XXXX. related $XX compared margin, EBITDA fiscal amortization, and XXXX, to our operational both the $XXX to the million XXXX, predominantly cases, was excluding million In production year $XXX to increased million versus efficiency. In in Bitcoin

million a expenses, impact million when a year. the General and improvement, the to compared For $XXX earnings loss compared in of of last in impairment of the and of adjusted prior year $XXX EBITDA in to depreciation EBITDA QX impairment in full in had $XX.X stock-based on gain total the of periods compensation, a million, $XXX to million period. XXXX. improvement excluding $XX $XXX improved The gains charges. Due which and administrative from million year, we absence adjusted the to had amortization, XXXX over include assets of charges were both XXXX, margin positive million digital excluding drivers to

fiscal to XXXX, payroll XX professional employees, the end $XX we scale due across the and primarily XX costs. and in had opportunistically the year At from $XX add increase organization. excluding G&A, was year the in benefits, was of approximately ago, XXXX, in fees including and increase other talent This of to the XXXX. compared continue stock-based a compensation, For up million business, expenses to million we

company's holdings was XXXX, at a last of December of cash equivalents December cash to combined approximately with $XXX The Bitcoin Bitcoin at Bitcoin cash of cash value we cash Turning $XXX equivalents totaled QX XX,XXX of XX, XXXX, approximately unrestricted and X,XXX billion year. proceeds during cash carrying balance up XX, our position. million. $X sheet. to $XX and million Unrestricted and Bitcoin million of held XX, compared million Also XXXX. sold on the and as December balance We realizing $XXX

year, proceeds including other we operating to cash utilized and revenues proceeds point bit X,XXX of energy of million. the During These operating fund cash realized cost were sold expenses, $XXX for and expenses. hosting

purposes. capital the During generated which for $XXX equity general other we year, from primarily million use and sales, at-the-market growth we corporate intend to

for strengthen by provides As and $X.XX reduced to million year, of we in took saved approximately having. stockholders. This share in reduced as $XXX in cash sheet, approach previously million advantage discussed, approximately during opportunity ample or balance the million sheet liquidity an with our market per along cash our notes combined to facility optionality and and at $XXX equity. exchanging convertible balance for XX% and and access of transaction opportunities strategically debt cash equivalents to we $XXX by our our debt us evaluate amount the on The Bitcoin

risk enter strength industry. of debt time management turbulent company's as sheet along prudent is we balance the believe it combined source the value for potentially reduced the and cash We Bitcoin, and increased of with of

As unrestricted with Bitcoin end our report, January held cash production mentioned January. approximately we approximately In a and $XXX million. billion our value $XXX XX,XXX in unrestricted of at balance million, was and total, XX fair January of had the at Bitcoin $X in cash we

treasury. Bitcoin portion Holdings. in treasury The the volatility our mitigate maintaining continue term our size value impacts actively near We to of extreme the manage the long-term and maximizing to is our hedging strategy a by while of optimize of and purpose of the

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Frederick Thiel

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As Ellendale City and of full back Garden is to is reenergized. this week, nearly strength

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ask you to are may get we So how going there.

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to was XXXX back more banner sustainable all that, a leverage to While Q&A. future, for for of about build a and accomplishments year Charlie look have we future. to on our with forward never And we turn assets more our building it I'll optimistic and inclusive to Marathon, Marathon's been

Charlie Schumacher

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

BTC more having? first after company who So from comes the profitable is question Rex, the asks,

Salman Khan

for I'll the take that asking question. Thank question. you,. Thank you

in miners, go run having prices Marathon drop depends the and drive The our Just gain here efficient are in $XXX the we simple $XX,XXX which that the the has on will the recently. our approximately through from us the to balance And been on current force those unique in market great [ stockholders. machines on as math out Bitcoin provide this we this that likely assumption for the inefficient every basis. will a years. that, with price profitable board to forces on and in how change those X will efficient you we have competition everybody, given And the industry marketplace. With answers. the the and us more depend in an down industry go could in expect of holding price do it the to the price will sheet. Hopefully, to activity certain a ] result become value from if impact more falls our will much And help here. operators some go Blocker discount interesting benefit environment, for significant of annualized the be terms, in EBITDA Bitcoin fact, it change having. Bitcoin the And well every opportunity expect that will Bitcoin the million And and -- remains. most all inefficient with in Obviously, there we as on competition create share where of one

Frederick Thiel

Bitcoin generate on fact great thing pile higher on that just I'll answers. focused IRRs One our traditional very mining. top Salman's parts of we than business growing that The are of

options, locked you orders for that the one at efficient think at if we inbound fleets and delivery point. look So are orders And industry. have this you and that the of the machines XX of between on the have in just about most exahash the we

maintaining Our or per down most to terahash jewels per the efficiency the XX around industry. XX efficient near somewhere from duels in XX fleet will terahash, again, drop

at to be smaller we're allow X We adjacent multiple is the electricity relatively at we'll scale, may the miners, Our some costs rate fact technology at the costs hash to heat target no will paid a in to operate able we global and that near Bitcoin generate cases. profitably. areas always of in reuse projects approach believe in sometime though, mining, lower quartile being across mine times minor energy of because investments what us matter installations of and large what that if Bitcoin is, can price to Bitcoin actually that

Charlie Schumacher

your how your love A, to critics the from in crypto concern?" you're are work Fred, worried and the won't right think so Our fluctuates, the next Tarek of "I fluctuation. that able on, address direction. question lot A market you if do be company says, handle comes heading that who

Frederick Thiel

building diversifying focused on paying storms, We're the technology, no positioning down ourselves for what debt, the investing across Well, in take and we've that. I'll business been happen. resiliency. worst of might matter

And sheets We survive well And gives it cycle. was the never balance importantly, our first of top future. come in our to comes have our is industry sector the maneuvered we in more this strength billion most whatever out down have cash one in us way. again. with the which the and last of Bitcoin, cycle. Marathon the not And confident we've strongest on built $X during been in

question. hope your I that answers So

Charlie Schumacher

Thanks, Fred.

that a necks X I'll We to have so questions little back are similar, ask back. them

the to of Samir A that then The first asked, be strategy, please And more having use end purchase its XXXX. cash XXXX balance CK to Bitcoin your on growth equity in any QX in for why i.e., after used is call Also, sheet. on what equity similarly, only from will XXX.X January in the target rate. at was purchase is who company hash explain [indiscernible] earnings November, the drive Marathon to stating treasury Bitcoin the asked did

a to would either take Marathon's bit strategy? that like treasury So if little you management to and speak

Salman Khan

Bitcoin for our costs. utilized The in that. investment want that for take been, primarily along. Look, in stated company strategy has and we the question. stated and we the operating our I'll purposes what that has in And growth follow we've exahash, to utilize that's past Sure. equity whereas

used of Bitcoin in drop at of certain take cases. how advantage in have to cash, looked price terms we we have the opportunistically, In cash

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our But core And and be focus business is remains our growth primary to Bitcoin mining. source of going investment. equity

expect arise, just we opportunistic we opportunities you price scale, of don't unique Given be will to was and regularly the kind in small if of these but Bitcoin nature of unusual this an like. opportunity, situation

great hotel from position a cycle. different fight for investors the also in opportunity here. to perspective. the We're price us cash It Bitcoin and us a write downturns goes having it from it as provides Our as Bitcoin upcycle, goes position through that appreciates great driving price any provides down the through cycles, to a mechanism it price

monetize may operating and in But our our for for purposes. investing now, to summarize, good of Just to company, growth for our use in discount costs. future, general we coin equity remains as corporate focus

Charlie Schumacher

question Michael, DTH The do to Ethereum hand Bitcoin percentage the percentage is company currently? mining your much as next take How and comes asks, mining overall and mining your Bitcoin today. what of Fred, Ethereum you on are or that want at from one? in who capacity

Frederick Thiel

mind don't Sure. period. We it,

Next question.

Charlie Schumacher

sweet. All Short, right.

but to plans of address any Mohar Next does from Bitcoin, on to who Marathon lot to less as efficiency power somewhat see is asked, what your compared competitors question hashing Are plans [indiscernible]. a hold with based are comes the compete that? metrics? there the

Frederick Thiel

optimizing most we and having more partially We're constantly X fleet ] efficiency year-over-year, that we have the the hostile continuing be hash of has the and have. that one mining in rate And [ and deploy that of rate of things our industry because machines to focused strategy. will business, our the increased energy-efficient on significantly work cash that part in energizing really

miners SG&A most you have mine. of efficient also basis. traded an the of the miner look most of We And are the to efficient or one on publicly at the total cost

You marginal just mine Bitcoin. at cost can't your look of

and the vast for operate, rate both is hash opportunity through We're of to more efficiencies going to of corporate you that and for we better, Marathon sites one parts metric today. considerably have the majority owned are their on roll we the our fleet, more. us, grow to to own believe to and we point is operating rate. more if hash very optimization. look continue more technology who we all we expect to which have put out of and Spark of efficient owned as to it our compare our What focused we even our we example, now the miners and operational whereas a of you own Clean where significant more number will add across which historically control as believe on at means take to already and not line. think our overall And sites, more allocations see players. we sites, to the is going And now of cost not reductions control mine increase if when us operate we and You of using XX% Riot which has the those But predominantly, cost that that par, their than expenses the that just Bitcoin costs.

Charlie Schumacher

Fred. Thanks, Great.

asks, think this But at having to more I the you revenue is think prepared goes take stays the ensure time. Fred, plan This comes a do do we'll one to same I little. question, of higher? Michael just addressed that post interest last we've want the the least one? from or questions of what in W, who

Frederick Thiel

same Well, providing rate occurs, produce Bitcoin many when having you rate, the the same. for hash hash of global as half stays amount

continue rate hash reasons we miners. the our of grow percentage targets One set of sure global rate we such to all hash to the and have for growth make aggressive is grow our

focus is rapid our growth. So

is operating complementary Our generate and mining to continuing them. existing as to from things our revenues well are products optimizing as technology focus metrics to that adjacent

Charlie Schumacher

Great.

this interest up and again, really and time, investors wrap appreciate the the consistent And dialogue. all we at we'll our questions the the So prepared questions. from

to I'm So open to the this questions line those our please call us back any turn time. to contact And going keep to and free our analysts. feel covering now submitting point, to from Kevin, at operator, the

So Kevin, you. back to

Operator

[Operator Now conducting question our covering Marathon's Instructions] Tyler question-and-answer coming from from Our first DiMatteo session BTIG. analysts. is with

Tyler DiMatteo

excellent Congrats lot as XXXX hash made just on roll Fred, I'm we've on curious technology expanding here, the as we out a different offerings. rate of strides well. the the

maybe you forth of think I and for the versus out rest the and look into you own in some offerings these expanding X. about going do tech the this prioritizing of just back other As of year XXXX, hash your between mean how

Frederick Thiel

Sure. Great question.

in Gulf we'll region, we're for together to we very and in XXX but business opportunities low-hanging operating do just Granbury, our traditional This continue So mining. call utility One that's megawatts about source of not have business, the UAE large-scale the large further, currently or that. We et is think is Mountain megawatts. cetera, and what doing helping grids. power predominant you X expand scale where internationally. sitting Kearney silos. we Latin believe in balance around The sites behind to also meter like We or the are opportunities can our we're America, sites what King Paraguay, Africa to fruit. see Today, that organized and sites, and UAE, is hundreds adjacent in

domestically, the in We are sites to similar also sites area kind transactions well did opportunities the believe Kearney. the we great greenfield and of both of Granbury there as as existing with

is paid recyclable way. generate that we're as industrial that, recycle which use forms do paid to The second leverage call find for energy what in we we other heat silo again energy of, even it to that take then an sources mine biofuels In were energy. some that back into to material process, we This and harvesting. and cases, such actually yet flare mining call them, heat, of let's a we producer is methane as and just Bitcoin of and predominantly gas where

technology relationships with. solutions that group build and at started we these to and developed partners Our developing small, large has We're the able medium with scale. together projects

today well the technology we see of sector silo, you'll think X over first software, Slipstream this The year of that's news tool as other I if variety X to like boards, now the later so of or projects gigawatt of as Anduro. next you that And those a and things the years. controller power of of over firmware consists would, business technologies expect And grow to the sector arise. some of

technology, While and and from revenues is have are have have not Slipstream we we generate that Anduro does helped owned won't incubate thought generate firmware. revenues. We customers us it. already by is that our using something

as significant to We revenues to And that we to more sales those technology begin immersion market next-generation expect to later as areas. generate comes well. this in year, see our expect

having coming X-year XX% sorry if And next for But XX% your of see from question. what is of revenue you'll of hope think And XX% our revenue revenue I the from domestically, traditional XX% you period, a is of mining, answers coming revenue XXXX, that elsewhere. internationally. the the long-winded utility-scale the is over in answer. by I look And the is

Tyler DiMatteo

actual about as the that No, great. rollout Slipstream generally I implementation there. And that helpful. I should to Very your on scaling you it. of mean, and really appreciate then, market. think we are management, the and how Okay. thinking and Fred, on comments how bringing about that

Frederick Thiel

system. submission technology. really So an Slipstream It's unique API. us It's is a

have So you do salesperson, a don't call anything. to don't you

it to the a something It's a to Think you whole The the block, for of that submitting simple. pictures is it's a idea like block, you goes very iCloud go and You queue off uploading or as meant into simple the a price system. It's be it pay to block website, as submit goes. that. hands-free hands-free.

are if So artist an do submit you block, can to you a and that. want

purchase financial and essentially you as doing need potentially advance If you're submit ensure institution have blocks that priority, blocks a them. you you're in want could and transactions to you will

So and here use This people enabler a frequency to tool. total to key temporal the we're Again, that so the miner so that you is it's with you technology blocks who of lots that's there use be large submit wind iterating, blocks operates I the is enough a of have of pool the makes that enough sense. nature for opportunities, simple a this. think, product can that are

Operator

Joe from Flynn coming from Research. is question Point next Compass Your

Joseph Flynn

power bit third up like creeped prices the like levels. into $X.XXX quarter, from a Looks backed

color XX% provide data could you and transition there model. if power curious about hosting to the all-in center owned more and think should you Just costs as guys how we

Frederick Thiel

operator look So curtailment. an that an you of at pre that get owner-operator, curtails a events we get impact don't there. when and QX the benefit were they being one to our site many times, is benefit in of an normal had in curtailment have the there model, of economic And winter way the some

You also have had because it's wintertime energy prices may well. fluctuated

per kilowatt I hour in and $X.XX all-in been has cost energy our think historically, around and the basis.

As kilowatt we operations take drop hour cost I our per more per the control somewhere kilowatt side possibly $X.XXX see the more it, of hour. you'll think sites, between of $X.XX to

that occasions advantage economic and of already. take and the economic of of And of other doing we can The owner-operator this have now year already take selling advantage by We is hedges. we seen that. advantage can can curtailment. a power have an handful we benefit power being now buying take that of on We now advantage

about between to but So operate and tell, $X.XX should where take will the to where somewhere we is to should power goal what that $X.XX model cost cost could operations time looks you $X.XX at the cost the a the is longer like. power be that kilowatt hour, think above I $X.X able model be the term

Salman Khan

Yes.

a of cost you a we transaction being how to that your that, helps certainly component that the helped cost the question. at associated QX, well answer out that. and perspective. it's had And much us can with from this Just scale, There's production, record fee that cost. Hopefully, of if the unit to add all record of a about cost that squeeze of production a the quarter, as high fixed that

Operator

is today Smith Reginald from question coming from JPMorgan. Next

Reginald Smith

fairly to what the private have large a there, get your of we then capital rate? most know final sense on private And a public public both competitively, cash do lot guess to have as to expect are on CapEx Fred, I the of across Obviously, is guess a I person out companies, and network industry public think basis? should you piece look larger, you landscape side well these fund growth. normalized best miners But the I follow-up just to will I topics the wanted been And look is covered. the to do curious, of opinion. announced you the like questions, or have that as offerings. much continue miners how to you're larger garner expect that I'm hard maybe but the I question, a companies line. all ATM a

Frederick Thiel

question. do Okay. I my your best to will answer

speaking, points, constraints. So that, X this think choke X generally industry to capital. It's access has I

and the capacity to constraint to constraint access machines miners have In access sites it's the there access cycles, cycle, mentioned, point. different miners. was plug to been points. to you As its different in prior In

$XX had machines. pricing You we're And per terahash on sub-XX%. still today,

And to today. constraint the seen the numbers all. announced our seem the obviously, orders we just based manufacturers a capacity not obviously supply that's on and So announced, you've peers us of to have machine plenty

So that's not a constraint.

capacity, quality, who if But raise couple a you is eligible SG&A. On you're large today definitely and difficult. looking through that's ATMs the over And capital scale. things. They're lot slight can grow advantage you One challenged for money to if of a by smaller miners side, The a the public certain a the that community more for there's would, that if scale a a able small-scale miners are is very are miners And can minor, to and a you cost if will. significant super-efficient. be as are and fixed looking a you ASR execute have able your the miner, over operate of investment else. moving everybody to towards

other putting buy the for miners. thing of site, small-scale miner having to and challenge doing the capital has deposits down a a The is getting PPAs

a challenge today big The capital this big game. is is boy

raise growing know, rate, behind. day. the is you're so money, hash mining get you cycles And Bitcoin not And you're your only going if accelerating. And per If backwards. game. Bitcoin available zero-sum can't of amounts -- to many left large are are a you as you're There they're falling innovation

late Bitmain jewels XXXX, per you that XXXX, being had in in And had terahash, started almost terahash. early started The machine XX% a that a per jewels delivered way, that energy being early this by the an was XX about delivered XXXX, of about energy decrease and think XP of efficiency use. it an S-XX XX efficiency so if JPro in

SXX for and pay of JPro essentially buying increased we overnight and of with case, add cycle the paying by the additional that more capacity. last you and without then than the megawatt out currently are any you XPs, our you The And JPro latest better, XX% them like so are having fleet and power came replaced vast X had Marathon's additional you hash rate or those any In are almost XPs. other of power efficient state-of-the-art if to we're machines. now today XPs deploying even machines or majority your

weeks. just is, this CapEx nothing have you starts just in have still The XPs And keep up be entering here the unfortunately, a few there you on being is of maintenance catch miners. there's to here So JPro will up come with to the normalized called to the profitable, we're CapEx cycle providing right because loss. bubble where profitable, power with. again, CapEx phase

to in who come. Pros, they SXX next S-XX, having. where will be yet machines have shut to generation profitable lot may time obviously, that a a for But operating And to the S-XX some off position to are the come they are and miners going of those be

Bitcoin extremely been behaving has well. Now

over may price at we XXs the was you Bitcoin's that having. in the a my spoken went past into and number X are, remember, we to we're today. expectation I the going of was of where here Some months, have be as times And $XX,XXX

right machines. have providing gas is it's some generations of to an if raise older for these breath, of now. would, extra miners opportunity giving them who an this So you And money

seeing is don't some equipment. did into you on nobody this the capital in you're prior so And private going have markets. What you that cycles have cycle is lending

call convince these and what, "Hey, and then to or you is lend bit so truck And guess do to want the I just site for to to you're and Bitmain way hardware me is somebody doing do it you're go only what their miners." that can't on the to for Nidec vendor say, a that. operating a and me getting You a money behalf really extra paid little you. do And like hosting Galaxy

Why? this is That where so to larger global as share is them a publicly nations business buying the cycle traded machines And consolidation getting Because declining. maintenance CapEx latest cycle start well miners. hash I you where miners rate of think the lot well-funded over this sovereign are of companies said, without into private as being capacity. large, rate hanging hash and see this very towards the moves market building

the add Butuan familiar of [ You're megawatts to working ] with Kingdom capacity. with Didier of XXX

just seeing like to will It they're mind, of critical that be is CleanSpark Chinese problem moving the miners, raise to and have now go Ethiopia, don't bought that going the is means my And in who They to exahash do money in business miners if doing hundreds mean less just lots have it. and mom-and-pop find out the miner people the by You're do if And mass any most out it. can't There megawatts end going of than miners Riot, by has cycle. doesn't power they're up get you ourselves to Ethiopia, of that. you available of to power. XX business. the They it, the money. of of the of can

else. continue is everywhere going so hash grow to to And meanwhile, global

Gazelle business and this drive this than get the starts happens as So run with and a this than eat grow. starting Bitcoin class, where record the now every already up the what grow, It's jungle, this here. morning into faster and faster grow, is just it has to ETFs. line that's in Gazelle which hold, in and survive. constant run And the ETFs, so to developing to very asset institutions it, every morning And that's can see chasing to close you're has like the line unfortunately, much, up gets to and

into keeps and As cycle is that the those in insane. was ETFs out as into which market. of won't going last total XX% it's areas, AUM ETF, back week, of total money gold coin And AUM big the

at Bitcoin on look exchanges for of you are in lowest exchanges when we cycle. if volume available where today, normalize so you the historically And their

is the adjacent with cost are scale, way, this cost capacity, to of that optimized the associated revenue at the and the because et waves So the streams Bitcoin or going decrease. keep going cetera, I of do cost structure that be Bitcoin's subsidize going think start that hard in to think to operational ], start in up it volatility of because of the the our as our one [ miners this is world, margin of can to mind largest grow bottom mine, quartile of normalize. going And to being at that the make the to revenue and point, be streams don't happen And very business. And of people and to cost to lead operator the heat us for is coming have out scale, through compression the you'll will it's this price have you goal in the the pack who to in business. industry is It's wise. in if mining, subsidize

will of be what no able we the obviously, within We'll rate. matter always operational. Bitcoin, be So price to recent always it mine

hopefully, answered that So your question.

Reginald Smith

like answer. great had a something. felt master appreciate as I It a on mining I was That just class tuition Bitcoin [indiscernible] it.

Operator

Dede next Our H.C. Wainwright. Kevin question from from coming is

Kevin Dede

more to Can insight you adding your some see you how come XX XX% to little XX% this out us Fred. A network? give granular and potentially. here, year exahash to on it

Frederick Thiel

Sure.

where reasons If it? one Well, you're to are going we of we... the thinking put

Kevin Dede

remarks. that prepared apologize, I'm I the in about timing. more Fred, your made clear you concerned

through how the Marathon's year. increase of rate see Just you a the have to so view course hash we

Frederick Thiel

energize okay, site novo That's chart a had of, this not month, a will we historically de our whole with you a been could et pipeline model. been cetera. I Sure. historical these if developer, on sites give

Our historical of quickly. an and we're in model vertically being owner-operator has more been, as now know, business grow the Agile integrating. you And of

excess buy the hosting X those absorb will And So sites age Kearney, things ability go customers you capacity to those like to bucket at contracts can ourselves. there's as the of out grow. capacity age think we as going an of where I'm sites across and is Granbury all There that buckets. out, with

So this it we're of looking way. -- think

is out and plug and the megawatts megawatts more for XXX a site contracts and XX have we'll we'll more X start we megawatts by the half used, megawatts then can potentially of XXX XX maybe because that And megawatts, over okay, and capacity. deploying And with You those develop site will next XX there. add oh, could of the add of miners. age years, that more miners XXX substation the way, that or

you. to you e-mail, to So to everybody not an can happy give playbook, it me our send send

look how But bucket. you that that's at

lot transformers money it's has but There's even site at they of don't because ground, can't is the a bucket, up allocation Reggie's centers if you they rest permitted, be And are some aren't market people they happen is but the people mining be, prefer more that because today's a Bitcoin believe look yet develop built substation the tension. may case. We option to to because AI to be to in there's There mining you we'll let believe to of Bitcoin somebody who who to centers question. form that have investors building the locked to They willing them may haven't people there money next place that's money raise that money. believe you data sites back If the made this give have have sites have power. the they gotten that of give for money a because to on data available. somebody

done of like world, in as it's think development the them raw side, it's land. So halfway not real estate

XX homebuilders "Hey, and it and lots want entitled, saying, to actually out the laid lines now build to home. you've and bought you're got I've you here, land, utility You've sewage the calling going the a got

to et type interconnects, And in to land, access not could acquire energized bucket. a So out are have power, to access to are folks opportunities be sites window. transmission These X- scouring U.S. are XX-month that access you global true the just where have today we that's XX the on to middle projects. Then that basis, in XX, and XX-month a sites to cetera, online greenfield those

global to believe you of that a And a capacity miner, midterm long-term build But if optionality. need as capacity, so would, world-class immediate you have give that projects stack, capacity. you we that Bitcoin and staggered all

power you Granbury, power. There's XXX the lots today. capacity give station an an to So I'll because opportunity megawatts of has has about expand of almost Texas example.

to that So optionality. it We invest add capacity want gives us to the if more it. we could to money

it to a want of want you partner, a for to to substations, you ]. have spend you use when do site, [ So money you power you what cover It's air it? that much et going a already are developing start have develop you Immersion to and site do have access already question how just cetera. And already to

in With and fund they back out the who can and the compute sit would tie lease speaking, relatively north the then is you XX when We substation, the do, longer-term optionality later, XX, is on basis that, long-term the The done is with essentially day. hour option And up compute Mountain an site power would there per to very build-out the and a then to to go way. which willing you the a to miner of it's this talk with plug you power King sites, was deal land. up used find and and be months access inexpensive go North they world days, the site a on Texas business megawatt that in tie in. in a engaged of would the company old the

came engaged then with sites. on the They and permits Energy, and they then operator in. being got this power, the that, acting case, of builder build we as In got to those and we're the NextEra site they they

you of X if tranches, those all along working we're so with partners and And ourselves. would, today directly

sites know the We that lot when have a to it cetera. And for at is available months do those have capacity, just to build readily permitted. out, term, longer there, it Ethiopia, megawatts investment. capacity. the essentially where mining And will There's an megawatts crank location storehouse already opportunity of XX today, et we're so available XXX longer-term XXX of longer-term there we megawatts, option capacity -- turned where may transmission, to megawatts willing Paraguay, operational, et want et a the goal all we the immediately full potential especially to of that bucket, already think be internationally, if as us. and cetera, then cetera. it XXX either And we available have need of We our XXX we midterm last is a

mention build example, is thing, the in the way, capacity and back. the goal it's take one huge not of the to business we the resilient to optionality by here I'll And event with a pipeline works site, is there So a the have in all way the the it. is really lock bad you potential build up We scale actually, sites PPA marketplace, for really like Granbury of can power. pricing it to

is So we have there, optionality the best thing. ultimate which

So you term. look of for long portfolio is capacity creating medium short, that a and

a long technology, and your is chips. and is term, access I have medium I'll a I'm to portfolio Canaan, ] on want look up You Bitmain, term short, touch chips. to to MicroBT, which me access to Short going right supply is now. Medium [ lock SXX. term that bucket to chip and Bitmain

model sit on to want from industry for different to miners. This you the is industry going player and tell build small technology is PC do then the You're me, and very going when and I'm you no to them this. I This model. the can the a

no X-phase term I the going write you And moat that where to what $XX I Why that a And longer our access can Because want see traditional getting so other you see products, be the or and to CleanSpark, we who's too, will the and part spec chips. immersion with it have actually miners. we've of technology that's in where with I you million, they I is these say, the company be get many have lock And chips." one are to technology a we're capacity, that way, is they have don't miners is people chips. of want Auradine, we $XXX to whether when last later to million important? up buying needs tell guys. check that, off-the-shelf specifically that believe able done about the you of You wafers miner, and turn one PCs own cases. benefit designing the to these then in the build building any your year, use "I suited build the custom worry of if releasing we'll to systems. Riot know high-performance how And busy be And can we differentiator biggest that it's when to this when

Kevin Dede

seeing to in forward looking action. much very product I'm Auradine's

to you the back you're So Fred, little XX think XX by Can thank mean color. that capacity June. XX at should just comes on based through it year? Or How Does afternoon, a online you're going mean how the of you that XX the end March? actually now. you're you're onion the if about does for the XX, we more end at that by of peel this that bit though, we numbers offered for exahash,

Frederick Thiel

XX. So at the We pretty much. were year end the already XX% of we're at at

deploy the going rate. think at plugged going we're they the play you to was in we to then to in yet?" lay So had not stuff up I it, these yet? game Are you. to going going it plugged where I are just because the they getting it look plugged way are to question, are cash is yet? they We about live machines. XXXX, going So when Are And "Hey, in we the goes talk forward. have for Kevin, in said here I'm we

So model a when we're I giving you you're and as going not when equipment come to idea it help because then combination a you see smoothly. of our can't is. come what it comes, lumps, in Unfortunately, very to an box. it's in at the rush of will interesting pipeline to But going

about I So more could it. I wish say

Operator

Securities. coming Riley Our Pipes Lucas from B. from next question is

Lucas Pipes

the you infrastructure? would XXXX. miners is it? and it And for budget down question my Fred, between around What break is capital able to be

Frederick Thiel

answer Let Salman question. that

Salman Khan

that purchases earlier somewhere million, so. it in $XXX capital minor between from total today, or well. talked somewhere Yes. time targeted This that a perspective, from Lucas, somewhere around about Fred includes is approximately as we're our I north And last million that what $XXX growth with $XXX $XXX million about think to range. of we're looking talked we a at million, the so and

reminder, quick and happened. of I'm already the accounting miners a about we those capital Just buying just here. have some some so these of have been paying may payments talking

small other portion capital, stuff, have In terms of top other that the about, talked And businesses will the that. that, be of of on of businesses a Fred and rest purchased Nebraska also Texas. that $XXX will approximately we technology then ancillary to we about allocated Granbury and was Kearney at added and generic which assets in but also to that in And some that the be is stage, million. this cost

Lucas Pipes

you And the other on mentioned. that, top of and of course, is separate numbers

Salman Khan

Yes.

Lucas Pipes

million miners. $XXX that I about for And heard million right. million XXXX for to it $XXX of is and It's $XX

Salman Khan

correct. is That

Operator

next Dobson from Brian from Chardan is coming Capital question Our Markets.

Brian Dobson

head global miners And that you decline entities? the we you some large for decline it's out we or magnitude private in states to pushed like hash? Do of view could could the business. on mentioned, be a potential very have of be of other potentially see players by offset the as So nation having, likely smaller mentioned you into the

Frederick Thiel

Great question.

coming at of category from and have done ability hash and work available, published So even at look been number can see of amount the one do what nonanalysis to machine to a rate the have you readily in that cases, that some pricing people the energy look is data you this analysis. essentially locations of if way where that's

how at the per XX So a industry efficiency jewels you in depending varies many on terahash. somewhere on machines around today time is XX when numbers. given are look the average XX,

XX% So off. the per at to you'll XX XX,XXX likely see hash jewels from rate terahash XX% of and come Bitcoin at having, post anywhere

not Now come all once. it may at off

Some the dropping of people know off benefit going hash I'm say, again. to going may not to they're have and a I'm I bank, and let to sucker the dollars because get other the few now what, the in willing shut off you profitable rate "I'm shut million

months if they post people a going or when you maybe." to dear take and life hang I'm going as I or That's then so can. long for the X say, having. the first a as are at who look window for to see hanging have willing to on And the X you're on to are X would loss So X month having or

price to to and I'm slowdown. of to going Other not bit I'm our is people are going wait corn down the rest of the and to you announcements say, see up going on What peers based "No, not. for not." days ourselves or the wait shut a world better are go

than very end global may world have year, hash you the so it And this where to rate well a is XX% today. higher by XX% is of

to is What work And the today. of very You exact that Bitcoin. ETFs. fact I may thing the it a the on have is -- tell you same I'll than that, go the world the about it's obviously, back will dependent price

to With sucking XXX the talk People they're ETFs supply go you having, a shocker realize nobody Bitcoin XXX and can day. Bitcoin print about up Bitcoin. from

to don't supply the see I it is mine it's It but up debating I supply XXX a anything the the doing it I'm So marketplace. creating don't ETFs to Bitcoin. based grow, do is What day And as can going what is it, may a problem to available ETFs That's swings start having when because down real going where there's no with price Bitcoin is huge What is institutional at certainly, is short price. the lows the exchanges. of is. volatility on in Bitcoin drawing in already market that aren't up. I'm record demand. investors, conversations continue causes the at drop on in not every abating. does buying vacuum see is somebody they to It that Bitcoin really the It's night

back already traders price then the are when and doing the up, in up, morning comes And comes there this. demand

go were days a of the ETFs XXx of the Bitcoin, the spot of couple ETFs that strategy. right let and up a markets price, it buy volume up to and where ETF seen Quatfunds the week or back couple outside drive back, have the short doing went this week come may exact it again. the and in a before, drop I'm going You sell it for last Bitcoin test as

shut you going And say, Oh god, And I'm is a when in price a going see bouncing to lot some to God, for my back of role. up, that to market going And happens, to a going be and having to going that prices down. Bitcoin up gyrations miners crazy on." see So make hash rate to I'm Bitcoin you're "Oh my turn were it. going dropped down. it's going will

a is subsidize they energy Miners to are it's they $X.XX, PPAs, not be of having right tear a especially be if miners. they're the in third-party of the type getting say JPros their energy hosted Nobody have the of real sporadic So afford $X.XX, other that benefit me going pay, And become XX contracts. I paying to some they to through to they're Bitcoin it take business minute let hosting think whether have to, because and because curtailment, won't economic contracted they dead. buy able or opposed just to cost the unless on miners miners mining have anymore pricing who's can't that SXX $X.XXX, all take means. business hosting can goes just do and megawatts

to purposes. And hosting from for and Do now miners see vanity do "Hey, the business, hosting it you want it's than who you get my want third-party so take the buy buy retail they plugged them people me. don't hosters host contract? and miners, saying, other have And because calls business. very want I really for in do I to frequently hosting I to people or the just locations over here that

business And so that dying. I foresee

rate will listen, -- I a balance it.'" where the be just not is availability portion saying, "You an you buying in that me do And by from off. hash have And in 'Hey, is you you're the the But third-party I'm there's you're calling saying, somebody if but may you. temporarily pay you, shelf come shelf, so you I will same going interested by this cash. every that buy know if from of to see think the like hosting guys you want be so token, of what, certain to And you. this going consolidation. sheet so I made hosting shelf and to where important for I'm is makes I'll empty interested

go for long a on on we this. And so anyway, time

Brian Dobson

a that. think as follow-up just I No, quick to Yes.

where in that having third-party see, is the share M&A appealing you So lion's it, that post hosting call of segment?

Frederick Thiel

price. Riot, cash We'll To some $X.XX who on was probably again, see Core to to extent, can but CleanSpark model it. I $X.XX be predicated at not. having. Core's afford a do business don't ourselves. is Yes,

do to way brother not plug lot with to can aren't capital. a of way. big share deal miners $XXX rev So I do to Core, sheets they a with have much. miners debt, a who's service think case can't able going of whose balance the are Bitmain a of in to that And able that debt. is But that's wonky, in raise be miners name million

large-scale Core So afford and small-scale the to in they buy and hosters Riot to are the disappearing can't their or self-lighting and hosters, others own converting miners.

to have to don't is So good to know power I don't going if they what And going do. they're nobody buy want them. prices,

Operator

or closing We turn floor further reached comments. the back Charlie like end the of for session. our I'd any to over to question-and-answer

Charlie Schumacher

time you all today. for Thank Kevin. your Thanks,

feel not answered team call, If Thank ir@mara.com. you today's free our Relations rest the have were Investor at please during contact of to day. that enjoy and the questions you,

Operator

does That conclude and webcast. today's you. Thank teleconference

You you this participation wonderful We a and thank for may disconnect lines today. time, day. at your your have

Marathon Digital (MARA) 28 Feb 242023 Q4 Earnings call transcript