Marathon CEO: Building is more attractive than buying now

Marathon CEO: Building is more attractive than buying now

Although the consolidation of crypto miners is probably imminent, the CEO of Marathon Digital said, mergers and take over between the smaller actors of the segment.

"The stock markets do not become more relaxed, the debt markets are not cheaper, and they see that some of the deals that miners complete for financing are quite expensive." Marathon- Managing Director Fred Thiel said Blockworks.

But for the largest Bitcoin mining companies with plenty of liquidity reserves and modern new machines, Thiel added, be it in many cases smarter to build than to buy.

Many mining companies collected money during the bull run at the end of last year to complete electricity contracts and order containers. In the expectation of raising more money for machines, the miners saw that the capital markets began to close and they remained with unused hosting capacities.

other companies expanded hosting capacities from third-party providers and expected higher growth, which ultimately remained far behind their forecasts.

"We get many calls," said Thiel. "Companies that have previously only thought about self-mining have to actively check whether they offer hosting capacities for third-party providers. We see more and more attractive offers."

Thiel and other managers in the industry have pointed out the price for new machines - which has dropped sharply in recent months - as a reason to continue building M and not to buy. Hütte 8 MINING CEO Jaime Leverton said last month during a panel at the Digital Asset Summit from Blockworks in New York that asset-based M&A deals can therefore be "difficult" with other companies.

"If you have paid $ 70 or 80 per terahash for your equipment - and you have a certain leverage - I will not take over your debt for overpriced machines if I can simply buy machines directly for $ 20 or $ 25," said Leverton.

Frank Holmes, CEO of Hive Blockchain Technologies, said Blockworks in the past month that his company will check the purchase of equipment and possibly mining companies in the next six months.

The energy prices - a main concern of all miners - meet certain companies in the industry particularly hard, said Thiel.

"If we survive this winter, the consolidation and the type of cleanup that will take place, it becomes very clear which companies are professionally managed and well financed and which is not," he said.

growth of the hash rate, international expansion

marathon recorded a net loss of $ 192 million in the second quarter and will announce its profits for the third quarter next month.

The company said on October 6 that its fleet of 57,000 is a capacity of around 5.7 exahashes per second (EH/S). Another 19,000 miner - in the amount of 2 EH/S - will probably go online for the next 30 days.

Thiel told Blockworks that the company was aiming to reach about 13 EH/s by the end of 2022 and 23 EH/S by mid -2023.

"The hosting was completed; the machines were all ordered and pretty much all paid for and are planned for the entrance," said the marathon CEO. "It can happen ... but at this point there are no gating elements that are known to us."

Thiel said that the bankruptcy applications by Compute North, one of the hosting providers of Marathon, will probably not have any effects on Marathon's growth goals last month. The companies associated with the mining locations King Mountain and Wolf Hollow in Texas are not directly the subject of insolvency proceedings, he added.

"The court has already given [Compute North] permission to continue the company, while it is preparing to auction assets in the coming weeks and months to pay its debts," wrote Chase White and Joe Flynn, analysts of Compass Point Research & Trading, in a Research Note from October 4. "Even afterwards, we expect [Marathon] to continue working in the data centers in view of the value of the operations is almost exclusively determined by the miners who actually dismantle."

marathon invested $ 10 million in Compute North. It also lent the company $ 21.3 million and paid the hosting provider around $ 50 million in operating deposits.

"We are currently not seeing any problems with the deposits," said Thiel. "The loan we have you will see how the bankruptcy shakes everything and what we have in the end."

Since Marathon continues to add miner to its US locations, Thiel said that the company is also aiming for building relationships and new mining locations at the international level and named Latin America and the Middle East as potential goals.

"In parts of the world, in which energy is very cheap and the risk of regime is relatively low, there is a lot of stranded energy, and we definitely examine that," he said. "We believe that Texas reaches a point where there is a lot of mining in Texas and people have to start looking around for other places."

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