Marathon Digital ($MARA) 2023 Q1 Earnings Call: How Far Have We Run?
Marathon Digital ($MARA) 2023 Q1 Earnings Call: How Far Have We Run?
After increasing Bitcoin production to almost 2x (or 24.4 BTC) per day, MARA has been running it's own marathon in the markets. Let's go over the earnings call to see more...
Earnings Call Highlights:
The Company reported a net loss of $7.2 million or $0.05 per share in Q1 2023, which is an improvement from a net loss of $12.9 million or $0.12 per share in the same period the previous year (Q1 2022).
Revenues for the quarter were $51.1 million, slightly down from the previous year's $51.7 million. Despite an increase in bitcoin production by 74%, this was more than offset by lower bitcoin prices.
Gains on the sale of bitcoin were recorded at $17.6 million, which was part of the Company's strategy to fund operating costs through bitcoin sales.
The Company saw a decrease in impairments on the carrying value of its digital assets, amounting to $11.5 million, due to a general rise in bitcoin prices.
There was no repeat of the $5.3 million unrealized loss on digital assets from an investment fund, which was experienced in the prior year.
These positives were partially offset by a lower total margin of $25.3 million, mainly due to lower bitcoin prices, and an increased tax expense of $4.3 million, resulting from the establishment of a valuation allowance at the end of 2022.
Adjusted EBITDA for the period was $18.6 million, up from $9.8 million in the prior-year period. The increase in Adjusted EBITDA was due to the aforementioned gain on bitcoin sales and lower impairment charges, despite a lower margin (excluding depreciation and amortization) of $21.5 million.
Marathon's Chairman and CEO, Fred Thiel, noted a strong start to the year after a challenging 2022. The company has seen growth in its hash rate, reduced its cost to mine, and improved its balance sheet during the first quarter.
In Q1 2023, Marathon grew its energized hash rate by 64%, from 7.0 exahashes to 11.5 exahashes. This increase, coupled with improved uptime, led to an increase in bitcoin production. The company produced a record 2,195 bitcoin in the first three months of the year, a 74% increase from the prior year.
The company also strengthened its financial position during the quarter. Its cash position increased by $12 million, debt was reduced by $50 million, and unrestricted bitcoin holdings increased by 3,132 bitcoin. This was achieved after prepaying their term loan and terminating credit facilities with Silvergate Bank. By the end of the quarter, the company had about $124.9 million in unrestricted cash and cash equivalents, as well as 11,466 bitcoin, the market value of which was approximately $326.5 million as of March 31.
Thiel expressed optimism for the future, noting that more hash rate is expected to come online in the coming months. The company is on track to reach its goal of 23 exahashes near the middle of the year. Marathon aims to establish itself as one of the largest, most energy efficient, and most technologically advanced Bitcoin mining operations globally.
Price Levels to Watch:
Local Resistance: $12.90
Giga Resistance: $19.25
Local Support: $7.60
Giga Support: $5.10