Bitcoin miner Marathon Digital Holdings has reported a substantial increase in revenue, marking a 670% rise year-on-year in the third quarter of 2023.
This remarkable growth is attributed to a significant uptick in Bitcoin (BTC) production, which increased from 6.7 mined BTC per day in Q3 2022 to an impressive 37.9 BTC per day in Q3 2023.
The company’s financial health has also seen a positive turn, with a reported net income of $64.1 million for the quarter, as per the latest results filed on Nov. 8. This profitability is a notable swing from previous figures, highlighting the company’s robust performance in the market.
A key factor in Marathon‘s enhanced output has been a 467% surge in Bitcoin production, coupled with a 403% increase in hashrate—a measure of the power of the miners in the network—over the same period last year.
The hashrate boost is partly due to Marathon’s strategic expansion, including the inauguration of a 27-megawatt hydro-powered mining facility in Paraguay, announced concurrently with the financial results.
Fred Thiel, Marathon’s CEO and chairman, expressed that the company’s “significant progress” has fortified its financial position, particularly in anticipation of the Bitcoin halving event slated for April 2024.
This BTC halving event is expected to impact miners’ rewards and has been a topic of discussion within the industry regarding its potential effects on profitability.
A note exchange finalized in September resulted in Marathon reducing its long-term debt to 56%, securing upwards of $100 million in cash savings for its shareholders, as highlighted by Thiel.
“For the first time in two years, our combined cash and bitcoin holdings exceeded our debt at the quarter’s end.”
Marathon Digital Holdings will continue to focus on enhancing its mining capacity in the near to medium term.
The company’s current operational hashrate is at 23.1 exahashes per second. Plans are in place to elevate this figure to 26 EH/s, with an ambitious target to achieve a 30% increase by 2024.
Valuation concerns amidst financial success
Despite these positive developments, Marathon Digital has been flagged by MinerMetrics as one of the most overvalued entities in the crypto mining sector.
This assessment is based on the enterprise value-to-sales (EV/S) ratio, with Marathon’s standing at 5.6. The high valuation is influenced by the company’s visibility and favor among institutional investors, which has granted it better access to capital and, consequently, a higher market valuation.
Analyst Jaran Mellerud from MinerMetrics suggests that investor focus might shift toward other crypto-mining entities with lower EV/S ratios, which could present more attractive investment opportunities.
Among the mining companies, Marathon still stands to be the largest holder of Bitcoin, with a reserve of 13,396 BTC valued at approximately $492.3 million.
The BTC miner’s stock (MARA) experienced a 6.9% decline to $8.55 on Nov. 8. However, it saw a rebound of 9.4% in after-hours trading following the earnings announcement, as per data from Google Finance.
