Marathon Digital Holdings, Inc. (NASDAQ:MARA) added two Bitcoin mining sites and 390 megawatts of mining capacity in preparation for next year’s Bitcoin halving.
The company signed a definitive purchase agreement on Tuesday to acquire the two sites from subsidiaries of Generate Capital, PBC. Marathon will also pay the $178.6 million price tag from cash from its balance sheet.
These transactions consequently mark Marathon’s fully first-owned sites and the official transition from an asset-light organization to one that actively manages a diversified portfolio of Bitcoin mining operations.
Marathon’s mining portfolio consists of 584 megawatts (MW) of capacity, with 3 per cent owned Marathon’s Bitcoin mining portfolio consists of 584 megawatts of capacity, with 3 per cent owned and operated by the company, and 97 per cent hosted by third parties.
In comparison, after this transaction closes, Marathon’s operation will grow to approximately 910 megawatts of capacity, with 45 per cent directly owned by the company and 55 per cent hosted by third parties. These sites will also increase Marathon’s Bitcoin mining pipeline and allow the company to double its operational hash rate to approximately 50 exahashes of total operating capacity over the next 18-24 months.
“For the past year, Marathon has been vertically integrating as we transition into a more sophisticated and mature organization with a diversified portfolio of Bitcoin mining technologies and assets, and the acquisition of these sites is the next step in that evolution,” Fred Thiel, Marathon’s chairman and CEO, said.
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Marathon strengthens balance sheet to prepare for halving
The Bitcoin blockchain will cut block rewards in half on April 17, 2024.
The Bitcoin halving is a programmed event that occurs approximately every four years. It cuts the reward miners receive for verifying transactions in half. This reduction in rewards is also designed to control the rate at which new Bitcoins are created. Consequently, this limits the total supply of Bitcoin to 21 million coins.
As a result, Marathon has spent the past year increasing its cash position, bitcoin holdings and reducing its debt in preparation for the halving.
According to Marathon’s chief financial officer, Salman Khan, this deal is part of the company’s long-term strategy. It wouldn’t be possible without these improvements. This transaction immediately benefits the organization by reducing site operating costs by 30 per cent and offering opportunities for expansion.
Generate will transfer ownership of the data centers in Granbury, Texas, and Kearney, Nebraska, to Marathon.
The transaction is expected to close in the first quarter of 2024, pending the fulfillment of customary closing conditions.
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