The Bitcoin 2024 conference started on July 25, with the first day’s agenda focusing on Bitcoin mining. As a leading Bitcoin mining company, Marathon Digital has garnered significant investor attention. Recently, the company has been frequently in the news with a series of notable actions. This article provides a quick look at Marathon Digital’s recent strategies in key areas like increasing Bitcoin holdings and developing Layer 2 solutions.

1. About Marathon Digital

Marathon Digital started as a patent acquisition company (Marathon Patent Group Inc.). Since rebranding in 2013 and shifting its focus to digital asset mining, the company has successfully transitioned from traditional business operations to Bitcoin mining. This shift not only marks a major change in its business direction but also showcases its ambitions in the growing cryptocurrency industry. Today, Marathon Digital (MARA) is one of the largest Bitcoin mining companies and the biggest Bitcoin holder among publicly traded companies in North America.

Marathon’s business involves self-operating Bitcoin mining by purchasing mining machines and deploying mining farms to hold cryptocurrency. The company’s profit model is straightforward, depending solely on increasing BTC mining efficiency and its value appreciation, but it carries a high debt ratio. Its revenue is closely tied to Bitcoin prices, making it vulnerable to insolvency during bear markets. As a mining stock, it has a higher BTC leverage effect, reflecting Bitcoin’s bull and bear cycles. The Hash Ribbons indicator partly reflects the relationship between Bitcoin miner computing power, mining activity, and Bitcoin prices. Data from Glassnode indicates that the Bitcoin hash ribbons are recovering from a prolonged “surrender period.” This suggests that miners are gradually ending their surrender, and price momentum is slowly turning positive. Additionally, profitability forecasts for mining companies around Bitcoin’s halving periods also provide insights into market trends. Therefore, closely monitoring mining companies can help in accurately understanding Bitcoin’s long-term cycles.

Source：https://studio.glassnode.com/metrics

2. Recent Developments

Increasing Bitcoin Holdings: Building Core Assets

A crucial strategy for Marathon Digital in the Bitcoin mining sector is its commitment to holding Bitcoin long-term. On July 25, it was reported that MARA purchased $100 million worth of Bitcoin, bringing its total Bitcoin holdings to over 20,000 BTC, valued at approximately $1.3 billion, which is close to 0.1% of the total supply. MARA’s CFO Salman Khan did not specify the purchase timing or average price. However, Bitcoin financial data shows that MARA held 18,536 BTC at the end of June, indicating this purchase was around 1,500 BTC, priced between $54,000 and $68,000.

Marathon’s Chairman and CEO, Fred Thiel, said: “Our comprehensive HODL strategy shows our confidence in Bitcoin’s long-term value. We believe Bitcoin is the best reserve asset globally and support the idea of sovereign wealth funds holding Bitcoin. We encourage governments and businesses to hold Bitcoin as a reserve asset.”

Marathon Digital’s strategy of increasing Bitcoin holdings highlights its long-term investment approach. By continually purchasing Bitcoin, MARA not only strengthens its balance sheet but also provides a buffer against future market volatility. This approach demonstrates its strong belief in the long-term value growth of Bitcoin and offers a stable income source during market downturns.

Kaspa Mining: Enhancing Asset Diversity

Kaspa is a PoW public blockchain built on the GhostDAG protocol, which allows for high-speed transactions and true decentralization. Compared to Bitcoin, Kaspa’s mining process is more energy-efficient.

In May 2023, MARA began considering Kaspa as a potential means to diversify its asset portfolio. After deploying the first Kaspa ASICs in September 2023, MARA expanded its operations. Marathon has acquired approximately 60 petahash worth of KS3, KS5, and KS5 Pro ASICs. Estimates from ASIC Miner Value suggest that, given the current network difficulty and KAS price, each ASIC can achieve a profit margin of up to 95% in some cases. By June 25, 2024, Marathon had mined 93 million KAS, valued at around $15 million.

Adam Swick, Marathon’s Chief Growth Officer, commented: “Mining Kaspa allows us to create a diversified revenue stream distinct from Bitcoin and enhances our core competitiveness in digital asset computation. With our existing infrastructure, unique relationships with hardware manufacturers, strong balance sheet, and team expertise, Marathon has a distinct advantage in mining Kaspa, enabling us to achieve higher profits.”

Anduro Incubation: Expanding the Ecosystem

Anduro is a Bitcoin sidechain platform incubated by Marathon Digital but operates independently from MARA. The Anduro sidechain utilizes Bitcoin’s proof-of-work for its consensus through a process called merged mining. By integrating a simple API and running a full Anduro node, any Bitcoin miner can earn Bitcoin-denominated transaction fees from the Anduro sidechain permanently, without additional power consumption. Marathon Digital sees the importance of maintaining miner incentives, attracting innovators, and increasing transaction volume through Bitcoin’s application layer. Anduro aims to address the current market gap by creating a suitable Bitcoin application layer that resolves miner incentive issues while enhancing the Bitcoin network’s functionality and appeal. It comprises three key components: Collective, sidechain, and native sidechain assets.

Fred Thiel, Marathon’s Chairman and CEO, mentioned: “Anduro could introduce new fee revenue streams, adding to Marathon’s expanding technology stack. Additionally, by enhancing Bitcoin’s functionality, Anduro could increase Bitcoin adoption, driving the growth of the entire Bitcoin ecosystem.”

Marathon’s Chairman and CEO, Fred Thiel, commented: “Anduro could generate new fee revenue streams, thereby enhancing Marathon’s expanding technology stack. Moreover, by increasing Bitcoin’s capabilities, Anduro could drive greater Bitcoin adoption, advancing the entire Bitcoin ecosystem.”

Julian Duran, Marathon’s sidechain product leader, spoke at the Bitcoin 2024 conference on July 26, stating, “Cross-border payments are the primary use case for blockchain, particularly Bitcoin. In emerging markets, the average cost of overseas remittances ranges from 8% to 10% of the transaction value, and settlement usually takes 3-4 days. In contrast, Bitcoin transfers typically complete within 10 minutes, and Layer 2 solutions can be even faster.” Duran also highlighted that the success of any payment solution must adhere to regulatory requirements, despite potential cost increases. In emerging markets, regulatory approval is often faster and cheaper because local authorities and regulators are keen on better cross-border payment solutions.

Anduro has integrated Portal to Bitcoin, enabling users to convert assets like ETH to BTC through atomic swaps, allowing for peer-to-peer transactions. Cointelegraph reported that “cross-border BTC payments are Anduro’s top priority,” and Marathon Digital is working with blockchain developers to create Bitcoin Layer 2 cross-border payment solutions. Beyond payments, Marathon is also interested in tokenizing real-world assets, such as whiskey barrels in the US and partnering with a platform to protect French castles.

MOEP Collaboration: Advancing Sustainable Development

In late May, Bitcoin mining company Marathon Digital announced a partnership with Kenya to work on renewable energy projects. Following this announcement, MARA’s stock price saw a 5% increase in a single day. According to a joint statement, they will form a committee to oversee the development and implementation of all energy-related projects.

Source：https://ir.mara.com/investors/news-events/press-releases/detail/1358/

Conclusion

MARA’s recent initiatives, including asset accumulation, technological innovation, ecosystem development, and energy efficiency management, highlight its strength and foresight as a leading mining company. According to the latest Factset survey, MARA’s EPS estimate has been increased to $0.65, with an estimated target price of $22.50. As the Bitcoin mining industry matures and global hash power is redistributed, MARA is well-positioned to maintain its leadership.

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