According to a Bloomberg report, Marathon Digital plans to acquire additional electrical infrastructure and expand its mining capacity to keep costs low and profitable.
The Bitcoin (BTC) market has been on a wild ride recently, hitting a new all-time high (ATH) before experiencing notable volatility that resulted in an 8% drop to the $65,500 level on Friday.
Meanwhile, Marathon Digital, one of the largest US-based Bitcoin mining companies, is preparing to acquire more energy infrastructure and streamline operations to meet the challenges posed by reduced revenue due to the upcoming reduction event. in the middle of April.
Bitcoin Miners Prepare for Post-Halving Shakeout
By streamlining operations and expanding its scale, Marathon aims to mitigate the impact of the impending revenue decline and ensure broader margins in the post-halving landscape.
Marathon Digital recently announced an agreement to purchase a 200-megawatt data center in Garden City, Texas, for more than $87 million. This acquisition marks the company’s second major investment in electrical infrastructure after it acquired several sites for $179 million earlier this year.
Fred Thiel, President and CEO of Marathon, commented:
“This transaction increases our influence over our current operations, reduces our cost per coin by approximately 20% at the site and provides us with an additional 100 megawatts of capacity to expand …Following the closing of this transaction and the planned site expansion this year, our bitcoin mining portfolio will consist of approximately 1.1 gigawatts of capacity, 54% of which will reside at sites we directly own and operate, and all of which are diversified across eleven sites on three continents”
As recently reported by an outlet media, Marathon Digital had its best year of revenue in 2023, generating $387.5 million, an increase of 229% from the previous year and 452% for the fourth quarter.
By increasing its ownership of mining capacity infrastructure to 53%, up from just 3% the previous year, Marathon is positioning itself for greater operational efficiency and profitability, Bloomberg notes.
However, after the halving, the Bitcoin mining industry is expected to undergo significant changes, with some miners facing profitability challenges and possible exits.
A Profitability Crisis Looms
Marathon Digital CEO Fred Thiel highlights the impact of reduced revenue, estimating that the industry’s average breakeven point will rise from around $23,000 per Bitcoin to approximately $43,000. Thiel stated the following:
“After the halving, there will be some miners who will lose profitability, maybe challenged or maybe looking for a way out, as their income will fall due to the rewarded Bitcoin decreasing. The simple math is that if the average industry break-even point was around $23,000 per Bitcoin, it will now increase to around $43,000.”
This does not necessarily mean that the price of Bitcoin will fall to $43,000 from its current trading price of $69,300. The breakeven price refers to the price at which miners like Marathon Digital can cover their operating costs and achieve profitability. It is not directly related to the market price of Bitcoin.
Next up for mining companies like Marathon Digital will be navigating the impending Halving. This event could have a disproportionate effect on large-scale mining organizations, as rewards for mining a block will be reduced by 50%, from 6.25 BTC to 3,125 BTC per block.
BTC is trading at $69,300 and is about to reclaim the important milestone of $70,000. The cryptocurrency saw a notable spike in volatility during the early hours of the trading session on Friday, but has since recovered, mitigating its losses from 8% to 2.5%.
By Leonardo Perez
