Marathon Digital is set to strengthen its Bitcoin mining operations by acquiring two data centers for $178.6 million, aiming to boost capacity before the 2024 Bitcoin halving event. Announced on December 19, the deal involves the purchase of two operational mining facilities from Generate Capital, together totaling a 390-megawatt capacity. This acquisition will expand Marathon's existing Bitcoin mining portfolio, which currently stands at 584 megawatts, 97% of which is managed by third-party data centers.
Upon completion of this deal in early 2024, Marathon's total mining capacity will reach 910 megawatts, with the company owning and operating 45% of it. The remaining 55% of its mining power will continue to be outsourced under a hosting agreement. The new facilities, located in Texas and Nebraska, offer additional space for Marathon to further grow its Bitcoin mining operations.
Marathon's plan includes doubling its operational hash rate to 50 exahash within the next two years. The acquisition provides around 390 MW of operational capacity, with 82 MW readily available for immediate expansion. Currently, other Bitcoin mining tenants use 244 MW of the capacity, while Marathon occupies 64 MW.
The company anticipates that the acquisition will reduce its cost of mining a single Bitcoin by 30%. Marathon intends to deploy 82 MW of this new capacity for its own mining hardware and will install additional equipment as hosting clients vacate the facilities, thereby increasing its computing power. Marathon has already ordered seven new mining rigs, with the first batch expected to be delivered and operational by January 2024.
Fred Thiel, Marathon's Chairman and CEO, emphasized the strategic importance of diversifying their Bitcoin mining assets, highlighting the potential to reduce production costs and expand operations. CFO Salman Khan added that this move is expected to bolster Marathon’s financial position by enhancing cash and Bitcoin reserves and reducing debt in preparation for the 2024 Bitcoin mining reward halving. This strategy aligns with Marathon's recent performance, as evidenced by a 670% increase in third-quarter 2023 revenue and a fivefold rise in Bitcoin production year-over-year, leading to a profitable quarter with net income of $64.1 million.
