Marathon Digital (MARA) experienced a significant drop in its shares in after-hours trading following a second-quarter revenue report that failed to meet Wall Street’s expectations. The company reported revenue of $145.1 million, falling short of the forecasted $157.9 million by approximately 9%. The revenue miss was attributed to operational challenges such as unexpected equipment failures, transmission line maintenance at the Ellendale site, an increased global hash rate, and the impact of the recent halving event on the mining sector.
CEO Fred Thiel acknowledged that these issues had a negative impact on the company’s BTC production. Despite the setbacks, Marathon achieved a record mining power of 31.5 exahash per second (EH/s) in the quarter. The company aims to further increase its hashrate to 50 EH/s by the end of the year and plans for additional expansion in 2025.
Marathon’s adjusted EBITDA dropped to a loss of $85.1 million from a $35.8 million gain in the previous year, primarily due to unfavorable fair value adjustments of digital assets and reduced BTC production. To cover operating costs, the company sold 51% of the BTC it mined. However, Marathon also purchased $100 million worth of bitcoin, choosing to retain all of it on its balance sheet, which now exceeds 20,000 BTC.
The average price of BTC mined in Q2 2024 was 136% higher than the previous year, despite the decrease in daily BTC mining from 22.9 BTC per day to 9.3 BTC per day. Thiel mentioned that the company has undergone internal restructuring to align better with growth opportunities and enhance operational efficiency.
Marathon Digital faced legal trouble when fined $138 million for breaching a non-disclosure agreement. Meanwhile, rival crypto miner Riot Platforms reported a revenue of $70 million for Q2 2024, marking an 8.8% decrease year-over-year, which was closer to Wall Street’s estimates compared to MARA. The stock of MARA fell by 7.78%, closing at $18.14 at the end of the trading day.
Marathon Digital faces various challenges, including revenue misses, operational difficulties, financial pressures, and legal issues. Despite these setbacks, the company is focused on increasing its mining power, pursuing expansion opportunities, and improving operational efficiency to overcome the current challenges and achieve long-term success in the cryptocurrency mining industry.