Marathon Digital reports $199 million net loss in Q2 as bitcoin production falls

In short

• Marathon Digital reports Q2 revenue of $145.1 million, missing analyst estimates of $157.9 million
• The company reported a net loss of $199 million, or $0.72 per share, compared with a loss of $9 million in the second quarter of 2023.
• Marathon Bitcoin production falls 30% year-over-year to 2,058 BTC in Q2
• In Q2, the company’s hash rate increased by 78% to 31.5 EH/s
• Marathon Digital had over 20,000 Bitcoins on its balance sheet after buying an additional $100 million

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

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

However, Marathon Digital reported a significant 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. The loss was largely due to a $148 million decline in the market value of digital assets. Analysts had forecast earnings per share of -$0.19, but the actual figure was $0.53 lower.

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

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

“Our BTC production was impacted by unexpected equipment failures and transmission line maintenance at our Ellendale facility operated by Applied Digital, an increase in global processing power, and the April halving,” 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 Q2, reaching an all-time high. Thiel stated that the company remains on target to achieve 50 exahash 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 end of the quarter and subsequently purchased an additional $100 million worth of Bitcoin, bringing its total holdings to over 20,000 Bitcoin.

The difficult quarter led to Marathon selling 51% of its mined Bitcoin to cover operating costs. The company noted that the average price of mined BTC in Q2 2024 was 136% higher than the same period the previous year, which helped offset some of the declines in production.

Following the earnings report, Marathon Digital’s share price fell 7.78% to end the trading day at $18.14. The decline came amid a broader market decline driven by overheating in technology stocks.

Marathon Digital’s second-quarter results reflect the broader challenges facing the Bitcoin mining industry following the halving. Other miners like Riot Platforms have reported similar difficulties, with Riot reporting a net loss of $84.4 million in the same quarter.