August 9, 2022 (Investorideas.com Newswire) Investorideas.com (www.investorideas.com) Cryptocurrency Stock News Bites – LAS VEGAS – Marathon Digital Holdings, Inc. (NASDAQ:MARA) , a leader in supporting and securing the Bitcoin ecosystem, reported its financial and operational results for the quarter ended June 30, 2022.
“In the second quarter of 2022, we increased our bitcoin production 8% year-over-year, producing 707 bitcoin, and we continued to install miners in Texas in anticipation of energization as we worked through both operational obstacles and a challenging macro environment,” said Fred Thiel Marathon’s chairman and CEO. “Energization delays, maintenance and weather issues in Montana, and an approximately 56% decline in the price of bitcoin during the quarter, severely impacted our bitcoin production and financial results. These items reduced our revenues, caused us to record a $127.6 million impairment on our bitcoin holdings, and decreased the fair market value of our investment fund by $79.7 million. However, given the groundwork we laid during the quarter and the progress we have made since, we are optimistic that Marathon’s operational and financial positioning is improving.
“Subsequent to the quarter’s end, we began energizing miners in Texas after the power generator received the much-anticipated news that the tax-exempt status of the wind farm had been confirmed. Of the 68,000 miners that are being installed at this facility, approximately 40,000, representing 3.9 exahashes per second, are already installed and are now starting to be energized. With miners currently coming online in Texas, we have increased confidence that our bitcoin production may improve in the near term.
“During July, we also eliminated the uncertainty surrounding our hosting requirements by securing enough hosting capacity to achieve our prior target of 23.3 exahashes per second of compute power to support and secure the Bitcoin network. From a financial perspective, we further bolstered our liquidity position by expanding our credit facilities with Silvergate Bank. Additionally, we are in the process of upgrading our fleet so that, by the time we achieve 23.3 exahashes per second we expect approximately 66% of our hash rate be generated by S19 XPs, which are 30% more energy efficient than the prior generation. With these upgrades, we believe Marathon’s bitcoin mining fleet will not only be among the largest, but among the most efficient on a per terahash basis. Overall, this progress provides us with added confidence that we remain on track to grow our position as a leader in supporting and securing the Bitcoin ecosystem.”
Second Quarter 2022 Financial Results
The Company recorded a net loss of $191.6 million, or $1.75 per share, during the quarter compared with net loss of $108.9 million, or $1.09 per share, in the prior-year period. The deeper net loss was primarily related to the decline of bitcoin’s price in the second quarter of 2022 and the accelerated recognition of expenses related to the previously announced exit from the Hardin, MT facility, partially offset by a gain on sale of equipment.
The decrease in bitcoin’s price had a significant impact on the Company’s carrying value of digital currencies. On a combined basis, digital currencies subject to impairment and digital currencies held in the investment fund resulted in an expense of $207.3 million in the current-year quarter compared with a combined expense of $125.8 million in the prior-year period, an unfavorable $81.5 million period-over-period variance.
The Company recorded revenues of $24.9 million during the three months ended June 30, 2022 compared with $29.3 million during the three months ended June 30, 2021. This $4.4 million decrease in revenue was driven by lower revenue per bitcoin mined partially offset by an 8% increase in bitcoin production activity.
Cost of revenues were significantly impacted by the acceleration of certain costs associated with the early exit from the Hardin facility. Cost of revenues – energy, hosting, and other costs during the three months ended June 30, 2022, amounted to $16.7 million compared with $4.1 million in the prior-year period. This $12.6 million increase was driven by accelerated cost recognition associated with the early exit from Hardin and, to a lesser extent, higher costs per bitcoin mined. Cost of revenues – depreciation and amortization increased to $24.7 million from $2.9 million in the prior-year quarter, primarily due to the acceleration of depreciation related to the Company’s exit from the Hardin, MT facility and, to a lesser extent, increased depreciation costs associated with a higher number of mining servers in operation.
The Company also realized a gain of $58.2 million during the quarter related to a 2021 contract that called for the company to sell certain equipment in support of the development of commercial activities at the wind farm in McCamey, TX.
General and administrative expenses were $12.6 million for the three months ended June 30, 2022, an increase of $5.8 million from the prior-year period. The increase was primarily a result of higher stock-based (non-cash) compensation expense, which increased to $6.1 million from $0.9 million in the prior-year period.
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