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The combination of greater hash rate flowing into the network from mining plants and a price protection approach is protecting bitcoin (BTC) mining company Marathon Digital Holdings (Nasdaq: MARA) from a bear market, its CEO Fred Thiel told Cointelegraph.
In an exclusive interview during the 2023 Bitcoin Conference in Miami, Thiel revealed the strategy behind Marathon’s Q1 2023 performance as the firm cut its net loss from $12.9 million ($0.12 per share) in Q1 2022 to $7.2 million ($0.05). per share) this year.
The marathon makes up for lower bitcoin prices with increased production. He reported a quarterly record of 2,195 BTC mined in the first three months of the year, worth over $60 million at the time of writing. “Now we are working with a hash rate somewhere around 14.0 [Exhash/sec (EH/s)]which is double what it was at the end of last year,” Thiel said of a 74 percent increase in production, saying Marathon should reach a hash rate of 23.0 EH/s in the coming months.
The cryptocurrency winter of last year increased the pressure on Bitcoin mining companies. In December, Core Scientific filed for Chapter 11 bankruptcy, and Greenridge received a $74 million debt restructuring lifeline from New York Digital Investment Group to survive the fall in Bitcoin’s value.
Although the price of bitcoin also affected its quarterly results, Marathon managed to reduce its debt in March amid the collapse of the US banks. the mining company repaid a term loan at Silvergate Bank, releasing 3,132 bitcoins held as collateral for the loan. At the time, Marathon said the move would eliminate $50 million in debt and reduce the annual cost of borrowing by $5 million.
Related: Contagion Sweeps Bitcoin Miners as Bear Market Continues
Marathon’s strategy also included measures to protect assets from market downturns. According to Thiel, Marathon has diverted capital raised in recent years to buy rigs at the peak of the market with price protection, pegging its debt to the value of Bitcoin.
“Since market prices have declined, our prices have been adjusted to the minimum. This meant that we first looked essentially at the latest technology, which means that our park will be the most energy efficient park in the world. The industry average energy consumption is about 43.44 joules per terahash. Our fleet consumes 24 joules per terahesh, which is almost half the energy.”
Marathon also invests in overseas partnerships. Earlier in May, the company announced a joint venture with Digital Asset Infrastructure Zero Two to set up a large-scale Bitcoin mining facility in Abu Dhabi with two mining sites combining 250MW capacity.
Thiel said Abu Dhabi was chosen because of its asymmetric energy market, in which the energy needed to meet summer demand remains untapped in winter. “They don’t have to fund the public treasury to subsidize electricity because now Bitcoin will subsidize that.”