Marathon Digital Reports a Net Loss of $686M in 2022
- Bitcoin mining company Marathon Digital Holdings has recorded a net loss of $686.7 million in 2022, compared to a net loss of $37.1M in 2021.
- The full year revenue declined by 26% to $117.8M while the fourth quarter revenue fell 58% to $28.4M when compared to the same period in 2021.
- It produced a record 1,562 bitcoin in Q4, and increased BTC production by 30% year-over year, from 3,197 BTC in 2021 to 4,144 BTC in 2022.
- The goal for 2023 is to energize the previously purchased mining rigs to reach the target of 23 exahashes by the middle of this year.
Popular crypto companies have posted losses in the past few quarters as the demand for their products has declined significantly due to the prevailing crypto winter. Interestingly, crypto mining companies have also faced losses thanks to the significant decline in the prices of crypto coins since the beginning of 2022. The largest Bitcoin (BTC) mining company in North America, Marathon Digital, announced recently that it had suffered a net loss of $686.7 million in 2022.
According to a press release made live on March 16, in which Marathon Digital has reported its financial and operational results for the fourth quarter and fiscal year 2022 ending December 31, 2022, the company recorded a loss of $6.05 per share compared to a net loss of $37.1 million, or $0.37 per share, in the same period a year earlier.
Marathon described several unfavorable variances during the year, including impairment charges related to the carrying value of mining rigs and advances to vendors of $332.9 million. The company also suffered losses worth $317.6 million on its crypto holdings, along with $55.7 million tied to the bankruptcy of another mining firm, Compute North. An increased interest expense of $13.4 million was also reported.
Additionally, in order to offset these costs, the company reduced its general and administrative expenses, saving around $117.6 million. Furthermore, Marathon gained $83.9 million from the sale of mining rigs and $44.4 million via a favorable income tax variance.
“While navigating the macro environment, pivoting our energy strategy, and negotiating new hosting contracts, we doubled our hash rate to 7.0 exahashes of capacity year-over-year, and we finished the year with one of our most productive quarters to date. We produced a record 1,562 bitcoin in Q4, and we increased our bitcoin production 30% year-over-year from 3,197 BTC in 2021 to 4,144 BTC in 2022,” noted Fred Thiel, Marathon’s chairman and CEO.
Thiel stated that his company was affected by the accelerated costs related to its exit from Hardin, the Compute North bankruptcy, and most significantly, by the 64% decline in the price of Bitcoin. The reduction in the price of the leading cryptocurrency reduced Marathon’s margin and resulted in impairment charges for the company’s holdings.
It is crucial to note here that Marathon Digital had exposure to the troubled crypto bank Silvergate Bank, which was shut down by its parent company Silvergate Capital Corporation earlier this month. The mining company announced in August 2022 that it would refinance its $100 million revolving credit line at that time and add another $100 million term loan.
According to Thiel’s statement, Marathon terminated its credit facilities with Silvergate Bank, which resulted in the release of 3,132 Bitcoin that were previously held as collateral. Interestingly, the firm also had relations with Signature Bank, a New York-based crypto-friendly bank that was recently closed by the NY Department of Financial Services (DFS). As a result, the mining company is pursuing alternative banking relationships.
Furthermore, last year, Marathon also announced that it would temporarily suspend its mining operations in Montana due to a heavy recorded storm.
“We have two primary goals for 2023: the first is to energize our previously purchased mining rigs to reach our target of 23 exahashes by the middle of this year, and the second is to optimize our performance – to become more effective and more efficient,” said Thiel.
A crypto journalist with over 3 years of experience in DeFi, NFT, metaverse, etc. Parth has worked with major media outlets in the crypto and finance world and has gained experience and expertise in crypto culture after surviving bear and bull markets over the years.
