Bitcoin must fall 80% before Marathon loses money on mining

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(Bloomberg) – Bitcoin still has a long way to go before digital token mining becomes unprofitable for North America’s largest crypto mining company.

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After factoring in energy and hosting costs, the breakeven rate on Bitcoin for Marathon Digital Holdings Inc. is around $ 6,500, according to Fred Thiel, CEO of the Las Vegas-based company. Even with the drop this week from an all-time high of $ 68,991 to around $ 60,000, the world’s largest cryptocurrency is expected to plunge 80% before breaking even.

“It’s obviously a very profitable business,” Thiel said on Bloomberg’s “QuickTake Stock” streaming program. “We can tap into this market for quite a long time. Bitcoin would obviously have to drop 80% before it becomes a tough spot for us, so we’re pretty comfortable with where our costs are right now. “

The breakeven estimate is a reminder of how profitable Bitcoin mining can be for large companies and helps explain the nearly five-fold increase in the Marathon share price this year.

According to data compiled by crypto derivatives provider FRNT Financial Inc., Marathon has one of the lowest mining costs per coin, DA Davidson analyst Chris Brendler, who has a buy rating on, told Bloomberg. the actions. . Miners earn new Bitcoins by solving complex mathematical equations that secure the blockchain network while processing transactions.

Marathon shares fell about 33% this week after a quarterly filing showed the company had received a subpoena from the United States Securities and Exchange Commission over a partnership for a Montana data facility. Thiel declined to comment further on the investigation.

The company plans operations upgrades, with 130,000 machines previously purchased expected to be commissioned by mid-2022. By the end of the third quarter, Marathon increased its hash rate, or computing power, to 2.7 exahashs per second and generated 1,252 self-mined coins, a 91% jump from the production of the second trimester ; he held around 7,053 Bitcoins at the end of the quarter.

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Marathon took to the debt markets this week to sell convertible bonds – an offer that was raised to $ 650 million. The proceeds will be used to modernize mining equipment and possibly fund acquisitions, Thiel said.

“Having cash on the balance sheet allows us to take advantage of opportunities to buy more miners, or we could potentially acquire mining companies, we could invest in technologies that could significantly reduce or improve the energy efficiency of our mining operations,” Thiel said. “We want to be agile, we want to have optionality. “

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