Marathon Digital, one of the largest Bitcoin mining companies in the world, reported mixed results for the first quarter of 2024. While the company’s earnings per share beat analyst expectations, its revenue fell short due to operational challenges faced during the quarter.
TLDR
- Marathon Digital, a major Bitcoin mining company, missed Wall Street’s revenue expectations for Q1 2024 due to operational challenges.
- The company mined 2,811 Bitcoins in Q1, a 34% decrease from the previous quarter, citing unexpected equipment failures, transmission line maintenance, and weather-related curtailments.
- Despite missing revenue estimates, Marathon Digital reported earnings per share of $1.26, beating analyst expectations, thanks to the adoption of new FASB fair value accounting rules that allowed them to recognize unrealized gains on their Bitcoin holdings.
- The company’s stock fell around 1.5% in after-hours trading on May 9, and its share price is down 26% year-to-date.
- Marathon Digital is sticking to its 2024 guidance of ramping up to 50 exahash per second (EH/s) and expects additional growth in 2025.
According to the company’s earnings report, Marathon Digital mined 2,811 Bitcoins in Q1 2024, a significant 34% decrease compared to the previous quarter.
The company attributed this decline to a series of unexpected issues, including equipment failures, transmission line maintenance, and weather-related curtailments at its mining facilities, particularly in Garden City, Texas, and other sites.
“Bitcoin production, and therefore revenues, generated during the quarter was negatively impacted by unexpected equipment failures, transmission line maintenance, and higher than anticipated weather-related curtailments at Garden City and other sites during the quarter,” the company stated.
Despite the lower-than-expected Bitcoin production and revenue, Marathon Digital reported earnings per share of $1.26 for the first quarter, easily surpassing Wall Street’s estimate of $0.02.
However, this positive outcome was largely due to the company’s adoption of the newly-approved Financial Accounting Standards Board (FASB) fair value accounting rules, which allowed Marathon Digital to record a favorable mark-to-market adjustment on its Bitcoin holdings.
The company’s stock price reacted negatively to the mixed results, with shares falling approximately 1.5% in after-hours trading on May 9.
Marathon’s Q1 2024 Earnings Release is here:
– Revenues Increase 223% to a Record $165.2 Million
– Net Income Increases 184% to a Record $337.2 Million, or $1.26 per Diluted Share
– Adjusted EBITDA Increases 266% to a Record $528.8 Million pic.twitter.com/MCzh0U46SK— MARA (@MarathonDH) May 9, 2024
Year-to-date, Marathon Digital’s stock has declined by 26%, underperforming its peer Riot Platforms (RIOT), whose stock has fallen by 40% over the same period.
Nonetheless, Marathon Digital remains optimistic about its future prospects. The company is sticking to its 2024 guidance of ramping up its computing power to 50 exahash per second (EH/s), a significant increase from its current level of 27 EH/s.
The company expects additional growth in 2025, though specific targets have not been disclosed.
During the earnings call, Marathon Digital CEO Fred Thiel acknowledged the challenges faced in Q1 but assured investors that the company had taken steps to mitigate the issues and was operating at record-high computing power levels.
“We mitigated a number of these issues,” Thiel said, referring to the equipment failures and weather-related curtailments. “We’re operating at a record high of 27 exahashes per second.”
Thiel also reaffirmed the company’s bullish outlook on Bitcoin, stating that Marathon Digital remains committed to its long-term strategy of expanding its mining operations and capitalizing on the growing demand for the world’s largest cryptocurrency.
