8-K: MARA Holdings Reports Q3 2024 Results, Expands Mining Capacity and Focuses on Zero-Cost Energy

MARA Holdings announced its Q3 2024 financial results, highlighting a 35% revenue increase, significant hash rate growth, and strategic moves towards zero-cost energy.

Summary

• MARA Holdings has shifted from issuing standard quarterly earnings press releases to shareholder letters to better communicate its business and strategy.
• In Q3 2024, MARA added 372 MW of mining capacity in Ohio, including a 222 MW acquisition and a 150 MW greenfield development.
• The company's energized hash rate grew to 40.2 EH/s in October, a 9% increase from September, and held 26,747 BTC at quarter end.
• During the quarter, MARA mined 2,070 BTC and purchased 6,210 BTC, with 4,144 acquired using proceeds from a $300 million convertible senior notes offering.
• MARA's BTC per share yield improved by 29% in Q3 2024, and the company did not sell any BTC.
• The company launched a 25 MW micro data center operation using flared gas in Texas and North Dakota.
• MARA secured its first external orders for its two-phase immersion cooling (2PIC) tanks.
• The company was recognized by the World Energy Council as a finalist for Energy Technology of the Year.
• MARA is focused on expanding its portfolio of owned and operated sites, aiming for near-zero-cost energy through sustainable sources and strategic partnerships.
• The company aims to have 50% of its business outside the United States by 2028.
• Revenues increased 35% to $131.6 million in Q3 2024 compared to $97.8 million in Q3 2023.
• The net loss increased to $124.8 million, or $0.42 loss per diluted share, in Q3 2024 from a net loss of $0.4 million in Q3 2023.
• Adjusted EBITDA increased to $21.8 million in Q3 2024 from a loss of $21.3 million in Q3 2023.
• Combined unrestricted cash and cash equivalents and BTC increased to $1.9 billion as of September 30, 2024.
• The company's cost of revenue per petahash per day improved by 10% this quarter and 18% year-to-date.
• MARA's total nameplate capacity has increased to just under 1.5 GW, with approximately 65% owned and operated.
• The company has secured 962 MW of capacity during the year, with over 800 MW through acquisitions.
• MARA is targeting 50 EH/s by midto late December 2024.

Sentiment

Score: 6

Explanation: The document presents a mixed picture. While there are positive developments in revenue growth, hash rate expansion, and strategic initiatives, the significant increase in net loss and operating expenses tempers the overall sentiment. The company's focus on zero-cost energy and technology development is promising, but the financial results raise concerns.

Positives

• MARA achieved a 35% increase in revenue year-over-year, reaching $131.6 million in Q3 2024.
• The company significantly increased its energized hash rate by 93% year-over-year to 36.9 EH/s.
• MARA improved its BTC per share yield by 29% in Q3 2024.
• Adjusted EBITDA turned positive, reaching $21.8 million in Q3 2024, compared to a loss of $21.3 million in Q3 2023.
• The company's cost of revenue per petahash per day improved by 10% this quarter and 18% year-to-date, indicating increased efficiency.
• MARA is expanding its owned and operated sites, aiming for near-zero-cost energy through sustainable sources.
• The company is diversifying geographically with international operations, aiming for 50% of its business outside the US by 2028.
• MARA is actively developing and deploying its proprietary 2PIC technology, securing its first commercial orders.
• The company is actively involved in political and regulatory discussions to advocate for the role of BTC mining.
• MARA has secured a $200 million line of credit collateralized by a portion of its BTC holdings.

Negatives

• MARA reported a net loss of $124.8 million in Q3 2024, a significant increase from a net loss of $0.4 million in Q3 2023.
• The company's net loss per diluted share was $0.42 in Q3 2024, compared to a loss of $0.34 in Q3 2023.
• The company's BTC production decreased due to the April 2024 halving event and increased global hash rate.
• General and administrative expenses increased to $40 million, excluding stock-based compensation, compared to $14 million in the prior year period.
• Depreciation and amortization expenses increased to $101 million in Q3 2024, up from $53.5 million in the same quarter last year.

Risks

• The company's financial results are subject to the volatility of BTC prices, which can significantly impact earnings.
• The company's operations are subject to the risks associated with the Bitcoin network, including increased global hash rate and network difficulty.
• The company's expansion plans and technology development are subject to execution risks and potential delays.
• The company's reliance on at-the-market (ATM) equity sales for capital raises may lead to shareholder dilution.
• The company's international operations are subject to geopolitical and regulatory risks.
• The company's investments in new technologies and infrastructure may not yield the expected returns.
• The company's ability to achieve near-zero-cost energy is subject to the availability of sustainable energy sources and the success of its partnerships.

Future Outlook

MARA anticipates continued expansion across U.S. and international markets, with ambitious goals to expand its portfolio of owned and operated sites. The company is selectively pursuing M&A opportunities and believes its strategy to utilize zero-cost energy will enable scalable and sustainable growth. MARA is targeting 50 EH/s by midto late December 2024.

Management Comments

• MARA has chosen to move away from issuing a standard quarterly earnings press release and will now be issuing a shareholder letter as a better way to communicate our business and strategy.
• We are focused on sourcing sustainable energy such as solar, wind, and other renewables with the goal of ensuring our mining operations remain economically efficient and environmentally responsible.
• By converting flared gas into electricity, we generate all the energy we need at near-zero-cost and do not need additional power.
• Our goal is to convert the vast majority of our portfolio to owned and operated sites, resulting in significant cost savings as we transition the remaining third-party hosted sites.
• We aim to have 50% of our business come from outside the United States by 2028.
• We believe MARA's ability to pair onsite demand to onsite power (fueled by low-cost natural gas) will unlock hundreds of MW if not more than a GW of low-cost and long-duration gas-to-power opportunities.
• Our innovation cycle is grounded in practical experience, enabling us to build, test, and learn from our own solutions.
• We believe we are on a strong growth trajectory, with no plans to slow down.

Industry Context

MARA's focus on zero-cost energy and sustainable practices aligns with the growing industry trend towards environmentally responsible mining. The company's expansion into international markets and its development of proprietary cooling technology position it as a leader in the digital asset mining space. The company's move to own and operate its own sites is a move away from the more common hosting model.

Comparison to Industry Standards

• MARA's acquisition cost of approximately $400,000 per megawatt for data center infrastructure was 28% cheaper than the average of its nearest three competitors in 2024, based on publicly available information.
• MARA's HODL per share is three times more than its closest competition.
• MARA's return on capital employed on the last 12-month basis remains top tier amongst its competitors.
• The company is one of the most globally diversified public miners in the industry with 15 data centers located on four continents.
• MARA is the first publicly traded digital asset mining company to submit a climate-related disclosure report to the Climate Disclosure Project (CDP).

Management Changes

Stakeholder Impact

• Shareholders have seen a 29% increase in BTC per share yield in Q3 2024.
• Employees have increased in number from 48 to 130, indicating growth in the company.
• The company's focus on sustainable energy and methane mitigation may positively impact communities where it operates.
• The company's partnerships with energy providers and data center developers may create new opportunities for those stakeholders.
• The company's HODL strategy and opportunistic BTC purchases have benefited shareholders.

Next Steps

• MARA will continue to expand its owned and operated sites.
• The company will pursue M&A opportunities to enhance capacity.
• MARA will continue to develop and deploy its 2PIC technology.
• The company will continue to engage in political and regulatory discussions.
• MARA is targeting 50 EH/s by midto late December 2024.

Key Dates

Keywords

Bitcoin Mining, Cryptocurrency, Hash Rate, Data Centers, Energy Transformation, Zero-Cost Energy, Immersion Cooling, Digital Assets, Renewable Energy, AI, HPC