Marathon Digital Reports $199 Million Net Loss in Q2 as Bitcoin Production Declines

TLDR

Marathon Digital reported Q2 revenue of $145.1 million, missing analyst estimates of $157.9 million
The company posted a net loss of $199 million, or $0.72 per share, compared to a $9 million loss in Q2 2023
Marathon’s Bitcoin production decreased 30% year-over-year to 2,058 BTC in Q2
The company’s energized hash rate increased 78% to 31.5 EH/s in the second quarter
Marathon Digital held over 20,000 Bitcoin on its balance sheet after purchasing an additional $100 million worth

Marathon Digital Holdings, a leading Bitcoin mining company, released its second-quarter earnings report for 2024 on August 1, revealing significant challenges in the post-halving era of cryptocurrency mining.

The company reported revenue of $145.1 million for Q2, falling short of Wall Street expectations of $157.9 million. Despite missing estimates, this figure represents a 78% increase from the $81.7 million reported in Q2 2023. The revenue growth was primarily attributed to a higher average price of Bitcoin mined and revenues from newly acquired hosting services.

However, Marathon Digital faced a substantial net loss of $199 million, or $0.72 per diluted share, a stark contrast to the $9 million loss reported in the same quarter last year. This loss was largely driven by a $148 million fair market value drop in digital assets. Analysts had forecasted an earnings-per-share of -$0.19, but the actual figure missed by $0.53.

The company’s Bitcoin production saw a significant decline, with 2,058 BTC mined during the quarter, down 30% from the 2,926 BTC produced in Q2 2023. On average, Marathon mined 22.9 Bitcoin per day, which is 9.3 less than the previous period. The decrease in production was attributed to several factors, including unexpected equipment failures, increased global hash rates, and the impact of the Bitcoin halving event in April.

Fred Thiel, Marathon’s CEO, acknowledged these challenges in a statement, citing unexpected equipment failures and maintenance issues at their Ellendale site, as well as intensified competition in the mining sector.

“Our BTC production was impacted by unexpected equipment failures and transmission line maintenance at the Ellendale site operated by Applied Digital, increased global hash rate, and the April halving event,” Thiel explained.

Despite these setbacks, Marathon Digital reported some positive developments. The company’s energized hash rate increased 78% year-over-year to 31.5 EH/s in the second quarter, reaching an all-time high. Thiel stated that the company continues to target 50 exahash of energized hash rate by the end of 2024, with additional growth planned for 2025.

Marathon Digital’s financial position remained strong, with $1.4 billion in unrestricted cash, cash equivalents, and Bitcoin as of June 30. The company held 18,488 Bitcoin on its balance sheet at the quarter’s end and subsequently purchased an additional $100 million worth of Bitcoin, bringing total holdings to more than 20,000 Bitcoin.

The challenging quarter led Marathon to sell 51% of its mined Bitcoin to cover operating expenses. The company noted that the average price of BTC mined in Q2 2024 was 136% higher than in the prior year period, helping to offset some of the production declines.

Following the earnings report, Marathon Digital’s stock price fell 7.78%, ending the trading day at $18.14. This decline occurred amid a broader market slide driven by overheated tech stocks.

Marathon Digital’s Q2 results reflect the broader challenges facing the Bitcoin mining industry following the halving event. Other miners, such as Riot Platforms, have reported similar difficulties, with Riot posting an $84.4 million net loss for the same quarter.