In focus – Bitfarms, Riot Platforms, Hive Blockchain, Marathon Digital, Stronghold Digital, CleanSpark, Hut 8 and Cipher Mining.
Bitcoin miners deliver April and first-quarter financial and operation updates
Estimate figures compiled by Glassnode earlier this month indicated that Bitcoin miners have earned more than $50 billion in fees and block reward subsidies since the digital asset began openly trading in 2010. Researchers from the blockchain analytics firm highlighted in a May 2 report on Bitcoin production cost that despite tight margins starting in 2015 and onwards, mining entities were still 37% in profit within the period. The reported figures matched expectations given that Bitcoin’s hashrate and network difficulty reign near record levels.
Mining difficulty chart
Last week, most mining firms shared their quarterly earnings reports for the just concluded period. Here is a recap of the financials, updates on the progress of existing initiatives, and propositions on future plans.
Marathon Digital grew hashrate, cut mining costs and improved its balance sheet in Q1
Bitcoin miner Marathon Digital posted its first-quarter results last Wednesday, revealing a net loss of $7.2 million compared to $23 million in Q1, 2022. The figure translated to a quarter’s loss per share of $0.05 against a forecast of $0.08 per FactSet. Revenue across the three-month period rose to $51.1 million, beating analyst estimates of $48.8 million and up from $28.4 million in Q4 last year.
The May 10 filing indicated an appreciable swell in production – expectedly so, with the firm having recovered from several operational setbacks, including the bankruptcy of data center services provider Compute North. The now-defunct mining and infrastructure firm was one of its hosting partners. Marathon’s operational hashrate saw a 64% quarter-on-quarter growth, reaching 11.5 exahash/second (EH/s). Production increased by 74% year-over-year to a record high of 2,195 BTC. In the coming months, the North American miner plans to bring more machines online to realize a hash rate goal of 23 EH/s.
SEC subpoena
Marathon’s filing for Q1 was delivered on schedule as opposed to its previous quarter’s, whose release was postponed in February. The US Securities and Exchange Commission (SEC) had flagged some inaccuracies resulting from accounting errors in the calculations of impairment of digital assets and revenue from contracts with customers.
The Nevada-based firm also revealed that it was served another subpoena by the SEC, which is investigating a violation of federal securities laws. The latest order, received on April 10, follows an earlier one handed to the company at the end of September 2021 regarding the issuance of shares of common stock related to its Hardin facility. Marathon Digital said it is working together with the commission on the probe tied to its Montana-based data center.
Partnership with Zero Two for a digital asset mining operation in Abu Dhabi
In a separate statement last Tuesday, Marathon said it is currently setting up the Middle East’s first-ever large-scale liquid-cooled Bitcoin mining operation in collaboration with digital asset infra firm Zero Two. Dubbed the Abu Dhabi Global Markets JV Entity, the initiative will initially focus on completing mining sites powered by excess energy in Abu Dhabi. The sites will be developed across two facilities in Abu Dhabi, potentially delivering 250 megawatts (MW) when pooled together. A smaller 50MW site will be located in the port zone of Mina Zayed, and the other in the capital’s sustainability hub, Masdar City. Ownership of the project is split 80/20 between Zero Two and Marathon, with the initial $406 million in capital contribution shared out in the same measure.
The Middle Eastern region typically experiences high temperatures, an annual average of 82 Fahrenheit (28° C), which are unideal for mining operations. The air-cooling technology popularly used to cool mining their rigs wouldn’t suffice in these high temperature and high humidity conditions. Marathon proposed immersion solution relies on liquid cooling technology, whose initial results have been promising – a notable decline in the maintenance needs of ASIC miners while maintaining optimal hash rate production. Construction is in progress, and Marathon claimed that upon completion, the facilities are poised to be the most technologically advanced, with unrivaled energy efficiency in the global digital asset mining landscape. The projected timelines are for both sites to be operational by the end of the year, realizing a combined hash rate of 7 EH/s.
Cipher Mining expects a 20% hashrate growth by Q4
Texas-based Bitcoin miner Cipher Mining also posted an update on its business operations in the first quarter last Tuesday. CEO Tyler Page said the company concluded the first phase of growth of its Odessa facility and achieved a self-mining capacity of over 6.0 EH/s across Q1. The miner’s realized total computing power outperformed projections of 5.7 EH/s captured in the full-year business update released in March. As of April 30, Cipher Mining operated a total of 69,500 miners. The units, powered by approximately 230 MW of electricity, deliver an aggregate hashrate capacity of around 7.0 EH/s. Of this fleet, Cipher owned 59,500 miners, roughly 6.0 EH/s hashrate.
Financials and 7.2 EH/s target by the end of Q3
Cipher reported a GAAP diluted net loss of $0.03 per share (down from $0.07 in Q1 2022) and realized a non-GAAP diluted net income of $0.03 per share, which means that when certain adjustments or exclusions are made, Cipher booked a profit. Regarding cost optimization, the firm continues running on sustainable agreements for its power supply. Notably, a significant portion of Cipher’s portfolio, around 96%, enjoys fixed-price power contracts, ensuring stability and predictability in their operational costs. The Nasdaq-listed miner also revealed it acquired an additional 11,000 miners from Canaan.
The newly purchased A1346 rigs will be delivered and energized in the third quarter and used to finalize the buildout at the Odessa facility, significantly bolstering the company’s self-mining capacity. The capacity is projected to reach over 7.2 EH/s, representing an increase of about 20%, by the end of Q3. To cover the payment obligations for this purchase, the company anticipates using funds generated from its ongoing operations, including the sale of Bitcoin mined at its facilities. Canaan’s A1346 model, introduced as part of the Avalon Made A13 series in October last year, comes with a robust hash rate of 110 TH/s and an impressive power efficiency of 30J/TH, pitting it as a suitable alternative to widely used ASICs like Whatsminer and Antminer.
Riot Platforms misses hashrate target as its subsidiary disputes with Rhodium
In its Q1 earnings released last Thursday, Colorado-based Riot Platforms reported quarterly sales of $48.02 million and a revenue of $73.24 million for the three-month period. The latter figure represents a slight decrease in revenues from $79.79 million a year ago. The miner’s Q1 non-GAAP EPS stood at $0.04 against the consensus estimate of $0.17 and earnings of $0.30 per share reported in the same period last year. Bitcoin production increased year over year from 1,405 BTC in Q1 2022 to 2,115 BTC this year, attributable to the deployment of additional miners. With approx. 17,000 of its mining rigs going offline for a while in February, Riot failed to meet is target hashrate of 12.5 EH/s.
Reports surfacing on Friday indicated that Riot Platform’s Whinstone unit wants to break off some hosting agreements with its counterparty, Rhodium, due to unpaid fees totaling $26 million. Though Whinstone made the complaint public this week alongside the quarterly earnings, records show the civil case entailing breach of contract was filed on May 2 with the district court of Milam, Texas. The dispute, which named four Rhodium subsidiaries defendants, arises from participation in demand response programs in Texas. Whinstone alleges that Rhodium intentionally misreported the hosting fees it owes for hosting services provided between 2021 and Q1 2023. Riot’s subsidiary alleged it is owed 26 million in hosting fees and separately asked to be relieved of refunding any credits since Rhodium’s units amassed power credits they didn’t have rights to during the period.
Hut 8 Q1 quarterly production and revenue figures take a hit
Canadian mining firm Hut 8 reported revenue of $14.16 million in Q1 – a notable decline from $42 million in Q1 2022. The company attributed the decline to “electrical issues, equipment failures, fluctuating energy prices and increased network difficulty”. The operating and financial results also indicated that it mined 475 BTC, roughly half the production figure for Q1 2022.
“Leading up to the halving, we will continue to focus on strategically increasing our stack of Bitcoin and growing our HPC business, including exploring opportunities in the growing Artificial Intelligence market,” CEO Jaime Leverton remarked on the miner’s preparation ahead of the event. “We expect that our proposed business combination with USBTC […] will positively distinguishing us from pureplay digital asset miners, who post-halving, are likely to have more exposure to diminishing returns driven by an increasing global hashrate and additional competition from sovereign nations and well-funded new entrants.”
Leverton confirmed that remediation of the Drumheller site, which currently operates at approximately 15% of the installed hashrate, has been ongoing since March with expectations to bring the facility online in 10 to 12 weeks. Its Medicine Hat facility set a record operational high of 1.72 EH/s, while the total installed hashrate (excluding operations from the North Bay facility) remained almost unchanged at 2.6 EH/s compared to the previous quarter. Hut 8 separately reported its production and operational performance for April last Tuesday, revealing that it mined 132 BTC.
Hut 8 still HODLs onto its stash of self-mined Bitcoin, which reached 9,265 BTC as of April 30, the biggest reserve of any publicly traded miner. Notwithstanding its challenges, Hut 8 remains focused on closing a deal with US Bitcoin, which will expand its overall production to 7.02 EH/s and provide access to new energy markets. Hut 8 is also exploring options to operationalize some 7,000 miners that were previously removed from their North Bay, Ontario, site. Notably, 1,000 rigs from this batch were deployed at the Medicine Hat site in March.
Others: Stronghold, Hive and CleanSpark
Stronghold Digital missed expectations per its Q1 financial and operational results, reporting a net loss of $28.5 million and a revenue of $17.3 million, translating to a 25% slump from Q4 in 2022. Through the three months, the company mined BTC – a 38% increase in production compared to Q4 of 2022, when it reported mining 447 BTC. Stronghold’s total hashrate stood at 2.8 EH/s, contributed to by a fleet of more than 31,000 mining units as of May 8. The company plans to grow this figure to over 3.8 EH/s and has set a target of 4 EH/s to be realized by the end of the third quarter.
Canadian miner Hive blockchain separately detailed in a Friday press release plans to increase its computing power by roughly double to 6 EH/s but didn’t provide a timeline. The mining firm first aims to realize a hashrate capacity of 4 EH/s by the end of the second quarter, having already acquired 1.26 EH/s of new-generation machines. The overall growth will be funded by an at-the-market (ATM) sale through which it intends to sell up to $100 million in common shares. Hive’s projections calculated the cost of realizing one exahash BTC mining computing power to $30 million. The shares sale offering is thus expected to add at least 3 EH/s.
CleanSpark, on the other hand, took a net loss of $0.23 per share from continuing operations, per its Q1 earnings which represent the company’s second fiscal quarter of 2023. The reported net loss per share figure is roughly half the previous quarter’s figure and better than estimates of $0.32 from FactSet. The Nevada-based miner has acquired all the machines necessary to meet its year-end goal of 16 EH/s in computing capacity, mostly Bitmain Antminer XPs. CEO Zach Bradford remarked on the purchase, explaining that it positions the company in good stead to take advantage of the upcoming Bitcoin halving.
Bitcoin mining stock performance
Marathon Digital (MARA) stock closed at $8.92 on Friday and was pictured at $9.32 in Monday’s premarket hours. MARA stock price is down 22% in the last one month, slightly underperforming compared to Bitcoin but in a similar range to fellow peers like Cipher Mining (CIFR). Riot Platform (RIOT), HIVE Blockchain (HIVE), and Hut 8 (HUT) have retraced between 17% and 29% during this period.
Year-to-date (YTD), CIFR has tracked a 228% growth, based on market close price on May 12, followed by RIOT shares up 214%. The stock price of Marathon, one of the few major miners to run its pool, has registered 162%, while HUT and HIVE stocks have seen decent returns of 109% and 88%, respectively. CleanSpark (CLSK) stock has moved up 25% this month and is up 113% thus far this year. Overall, only Riot (RIOT) and Cipher Mining (CIFR) in the bunch of peers range are in the green on the extended 12-month timeframe.
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