Marathon Digital Expands with 200-MW Mining Center

The TDR Three Takeaways Marathon

1. Marathon Digital’s acquisition increases its mining capacity to 1.1 gigawatts, highlighting a focus on renewable energy.
2. The deal for a Texas mining center at $87.3 million underscores Marathon Digital’s strategic investment in Bitcoin mining.
3. With this acquisition, Marathon Digital aims to reduce mining costs by approximately 20%, enhancing economic value.

Marathon Digital Holdings (NASDAQ: MARA) has strengthened its position in the cryptocurrency mining sector with a significant acquisition that underscores its commitment to sustainability and operational control. The company has entered a definitive purchase agreement to acquire a 200-megawatt Bitcoin mining data center in Garden City, Texas, from Applied Digital Corporation for $87.3 million, paid in cash from its balance sheet. This strategic move not only augments Marathon Digital’s mining capacity to 1.1 gigawatts but also amplifies its focus on renewable energy sources by situating the center adjacent to a wind farm.

This acquisition marks Marathon Digital’s second major expansion in the Bitcoin mining industry within the last four months, signifying a strong growth trajectory. Prior to these acquisitions, the company’s portfolio consisted of 584 megawatts, with a mere 3% under direct ownership and operation. The recent purchase escalates the percentage of self-owned and operated megawatts to 54%, a significant leap towards autonomy and operational efficiency.

The Garden City data center, operational since 2023 and employing around 25 individuals, currently utilizes approximately 100 megawatts to mine Bitcoin, thereby converting energy into economic value. The acquisition not only grants Marathon Digital direct ownership of these operations but also provides an additional 100 megawatts of expandable capacity, pending regulatory approvals. This aligns with the company’s strategy to bolster its presence and reduce the cost per coin by approximately 20% at the site, emphasizing efficiency and profitability.

Fred Thiel, Marathon Digital’s chairman and CEO, articulated the acquisition’s strategic benefits, noting the expected reduction in cost per coin and the opportunity for expansion. The move is seen as a continuation of Marathon Digital’s momentum in enhancing control over operations and reducing operational costs, thereby augmenting its competitive edge in the Bitcoin mining industry. Wes Cummins, CEO of Applied Digital, echoed the sentiment, recognizing Marathon Digital as a valuable partner and expressing optimism for the transaction’s contribution to both companies’ long-term strategies.

The transaction, anticipated to close in the second quarter of 2024, is subject to customary closing conditions. It represents an important moment for Marathon Digital as it moves to directly own and operate a more significant portion of its mining operations. The expansion into renewable energy-powered sites further demonstrates the company’s commitment to sustainability within the digital asset industry. Want to keep up to date with all of TDR’s research and news, subscribe to our daily Baked In newsletter.