Bitcoin miner Marathon Digital targets its hash rate to double in 2024

Bitcoin BTC +0.44% miner Marathon Digital has raised its 2024 hash rate growth target in response to Bitcoin’s fourth halving event, which reduced miners’ block subsidy rewards from 6.25 BTC to 3.125 BTC.

Starting 2024 with a total hash rate of around 24.7 exahash per second (EH/s) across its mining facilities, Marathon initially planned to increase its hash rate by around 46% during the year, targeting 35-37 EH/s.

Due to an increase in machine orders and capacity following recent acquisitions, the firm now expects its operations to scale up and reach a fully funded hash rate of around 50 EH/s by the end of 2024.

“Given the amount of capacity we have available following our recent acquisitions and the amount of hash rate we have access to through current machine orders and options, we now believe it is possible for us to double the scale of Marathon’s mining operations in 2024 and achieve 50 exahash by the end of the year,” Marathon Chairman and CEO Fred Thiel said in a statement late Thursday.

“With our current liquidity position, this growth target is also fully funded and there is no need for us to raise additional capital to achieve our objective. By deploying state of the art equipment and our own proprietary technology, we also believe that we can improve our fleet efficiency and approach 21 joules per terahash as we grow to 50 exahash.”

Impact on Bitcoin mining post-halving

Marathon Digital's VP of Corporate Communications Charlie Schumacher told The Block last week that the mining industry essentially navigated a halving already last year.

“One thing I feel like the market forgets is that we essentially went through a halving event last year,” Schumacher said. “In 2023, Bitcoin's difficulty rate doubled. The industry still performed quite well. The large miners, like Marathon, have been preparing for the halving event for years. If anything, I think you'll see hash rate continue to climb as miners swap out old machines for newer more efficient equipment.”

CEOs at leading Bitcoin mining firms remain "upbeat" for this halving cycle despite generally failing to outperform bitcoin year-to-date, according to analysts at research and brokerage firm Bernstein. The analysts suggested earlier this month that the recent underperformance was due to strong U.S. spot Bitcoin exchange-traded fund flows “sucking away” retail liquidity from miner stocks and concern regarding the halving’s impact on miners’ revenue.

Thiel told Bernstein that the market has seen mining stocks as mere bitcoin proxies so far and that after the ETFs launched, a popular trade has been long spot Bitcoin ETFs and short the miners, explaining the underperformance.

Despite the negative headlines on miner revenue impact, some miners are still at all-time highs in terms of U.S. dollar revenue, providing solid balance sheets post-halving alongside relatively low debt, the analysts also pointed out.

Marathon traded for $19.01 at market close on Thursday, down 0.4% for the day but up around 25% in the trading days following the halving, according to TradingView.

MARA/USD price chart. Image: TradingView.

While consolidation of mining operations toward large public companies presents centralization concerns in terms of hash rate, public miners considerably built up their operations in the prior halving cycle with the analysts expecting the industry to further consolidate toward four leading public miners, including Marathon, as well as CleanSpark, Riot Platforms and Cipher Mining.

This time is different

Bitcoin mining difficulty rose 2% on Wednesday to hit a new all-time high, marking the first time the metric has increased in the initial adjustment following a halving event.

In previous halvings, transaction fee rewards were insufficient to stave off a reduction in Bitcoin’s hash rate, which measures the total computational power dedicated to the network by miners, immediately following the events.

However, this time around hash rate has remained near all-time highs, according to The Block’s data dashboard. Hash rate has risen from a seven-day moving average of 630 EH/s in the final difficulty adjustment pre-halving to 640 EH/s in the first one that followed, as miners’ transaction fee rewards surged post-halving.

After halving block 840,000 generated $2.4 million in fees — far exceeding the approximate $200,000 worth of block subsidy reward — bitcoin went on a record 104-block run of transaction fee rewards higher than the subsidy, according to the Bitcoin explorer Mempool.

Much of the transaction fee activity can be attributed to the hype surrounding Runes — a new fungible token standard for Bitcoin launched at the halving. “This is driven by speculative activity to mint new tokens (mostly meme tokens) by retail traders,” the Bernstein analysts said earlier this week.