Bitcoin miner Marathon Digital CEO Fred Thiel suggested that the firm could raise capital through convertible bonds to purchase more of the flagship digital asset in the future.

This follows the firm’s recent purchase of $100 million worth of Bitcoin, raising its total holdings to over 20,000 BTC.

Future purchases

In a Telegram message to CryptoSlate, Thiel said the publicly traded Bitcoin miner could buy more of the top asset from the open market when conditions are favorable for its shareholders.

He stated:

“We will do it when we think conditions suggest it’s the right thing to do from a shareholder perspective.”

This statement aligns with the firm’s promise to make periodic strategic acquisitions of the top crypto and adopt a full HODL strategy. Following the miner’s recent purchase, Thiel described the digital asset as “the world’s best treasury reserve asset” and urged “governments and corporations to all hold bitcoin as a reserve asset.”

Meanwhile, Marathon’s thirst for Bitcoin is unsurprising, considering the firm is the largest mining company in the world. Additionally, this is not the first time the miner has purchased Bitcoin outside of its mining production, as it procured $150 million worth of Bitcoin in January 2021.

Convertible notes

When questioned about how future purchases would be funded, Thiel suggested that the firm adopt the convertible notes strategy, pointing out that the firm was familiar with these processes.

He stated:

“It all will come down to a cost of capital decision. We have done converts in the past (fall 2021) so we are familiar with using converts as a financing tool.”

Convertible debt allows investors to convert their debt into equity later, usually at a discount to the share price at conversion. This type of financing lets companies raise capital without immediately diluting shareholder value.

MicroStrategy has popularized this strategy with frequent Bitcoin purchases over the past year. The firm holds over 200,000 BTC, making it the largest corporate Bitcoin holder.

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Bitcoin miner Marathon Digital acquired $100 million worth of the flagship digital asset, boosting its total holdings to over 20,000 BTC, according to a July 25 statement.

Bitcoin Treasuries data ranks Marathon as the second-largest Bitcoin-holding firm, while MicroStrategy remains the top public holder with over 220,000 BTC or 1.07% of the total supply.

Meanwhile, the miner said it had readopted its “hold” strategy and intends to retain all the BTC it mines and acquires via purchases.

Marathon Chairman and CEO Fried Thiel said the strategy reflects the company’s confidence in Bitcoin’s long-term value. He said:

“We believe bitcoin is the world’s best treasury reserve asset and support the idea of sovereign wealth funds holding it. We encourage governments and corporations to all hold bitcoin as a reserve asset.”

In a post on social media platform X, Thiel compared Marathon’s new HODL policy to Michael Saylor‘s MicroStrategy.

Notably, Saylor praised the move, saying:

“Every company should have a Bitcoin Strategic Reserve.”

Meanwhile, Marathon CFO Salman Khan explained that the new policy returns the firm to its previous approach.

Khan attributed the policy shift to favorable market trends and growing institutional support for the asset. The improving macroeconomic environment also allows the firm to double down on its current approach.

Khan added:

“Bitcoin’s recent price decline, coupled with the strength of our balance sheet, afforded us an opportunity to add to our holdings. We look forward to continuing to leverage our technological expertise to support Bitcoin and distributed digital asset ecosystems.”

Other miners selling

Marathon’s Bitcoin buying actions contrast sharply with the recent trend of other miners selling.

On July 22, Mathew Sigel, VanEck’s head of digital research, citing Glassnode data, pointed out that BTC miners had unloaded 170% of their 30-day mined supply. He wrote:

“BTC miners are now selling heavily into the recent rally, unloading 170% of the 30-day mined supply. Such avid dumping has occurred at both bear market lows and bull market highs, leaving little signal.”

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Bitcoin miner Marathon Digital is diversifying its revenue by mining Kaspa, a proof-of-work (PoW) layer 1 blockchain network.

The miner said it became interested in Kaspa in May 2023 when its internal analysis revealed diversifying opportunities beyond Bitcoin mining. The company deployed its first Kaspa mining machine in September 2023.

Since then, Marathon Digital has mined 93 million KAS tokens, worth about $15 million as of June 25.

Following this announcement, KAS, the native asset of the Kaspa network, surged by 9% to a multi-week high of $0.18.

Why Kaspa?

Marathon Digital said it selected Kaspa due to its fair launch, advanced technology, growing ecosystem, and high profitability (enhanced $/kWh). Additionally, it noted that Kaspa integrates well with its existing data center sites, requiring minimal reconfiguration.

The company further highlighted that the Kaspa network processes one block per second. This rapid transaction speed potentially allows miners to earn more block rewards within a given timeframe.

This increased profitability opportunity enhances its operational flexibility and allows it to establish digital asset data centers in locations where Bitcoin mining may not be viable.

Adam Swick, Marathon’s chief growth officer, added:

“By mining Kaspa, we are able to create a stream of revenue that is diversified from Bitcoin, and that is directly tied to our core competencies in digital asset compute.”

Marathon eyes 16% of Kaspa’s global hash rate

Marathon Digital aims to dominate Kaspa’s mining industry. The miner revealed the purchase of 60 petahashes of KS3, KS5, and KS5 Pro ASICs from Bitmain, which will boost its Kaspa generation.

The company highlighted that Kaspa ASICs are among the most profitable on the market. A KS5 Pro can generate approximately $79 daily profit, compared to $11 from a BTC-mining S21.

These Kaspa ASICs will be deployed in Marathon’s Texas facilities. While the project is not yet fully operational, it is expected to be fully energized by Q3 2024.

Once deployed, the machines will account for about 16% of Kaspa’s global hash rate. Although this is significant within Kaspa’s ecosystem, it represents only 1% of Marathon’s 1,100 MW data center portfolio.

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NiceHash, a leading Bitcoin hashing power marketplace, has partnered with Marathon Digital Holdings to introduce new custom firmware for ASIC miners on its platform.

The new product, NiceHash Firmware, will leverage Marathon’s technology to enhance the efficiency and revenue of Bitcoin miners using ASIC devices. Miners who adopt this firmware will benefit from a low fee of 2%, which drops to 1.4% if they use NiceHash as their primary mining pool.

NiceHash Firmware aims to maximize miners’ profits by offering rewards for selling excess hashing power on its marketplace and boosting their ASIC machine’s efficiency.

The firmware’s features include an auto-tuning capability and a customized environment profile, which increase its market accessibility. The auto-tune feature allows adjustments based on the miners’ required power target, hashrate target, or percentage adjustment. The environment profile ensures compatibility with ASICs using air, hydro, and single—or two-phase immersion cooling systems.

Additionally, the firmware provides thermal protection to prevent overheating and includes a custom dashboard for detailed ASIC performance monitoring. The partnership with Marathon will ensure compatibility with NiceHash ASIC Manager, Foreman, and Awesome Miner.

Vladimir Hozjan, CEO of NiceHash, highlighted the significance of this addition to their product lineup. He said:

“Our joint efforts will ensure we stay ahead of this rapidly evolving industry. We believe that teaming up and combining our knowledge will strengthen our position in the market, drive innovation, set new standards in the mining space, and empower miners worldwide to achieve unprecedented efficiency and profitability.”

Echoing this sentiment, Marathon CTO Ashu Swami stated:

“This collaboration enables us to bring advanced safety and optimization features to Bitcoin miners of all sizes, enhancing their performance and profitability.”

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Marathon Digital reported a significant year-on-year surge in its Bitcoin production last month, defying expectations surrounding the halving event.

Bitcoin production increase

In its April operational report, Marathon revealed that it produced 850 BTC, marking a notable 21% increase on the year-on-year metrics. This uptick is primarily attributed to the 15% boost in its operational hashrate, now standing at 21.1 exahash.

The launch of the Runes Protocol and the Bitcoin halving event, which reduced miners’ rewards to 3.125 BTC per block, will have had a marginal impact on the data, with less than one month since the events.

Nonetheless, Marathon’s improved hash rate enabled it to capitalize on the increased transaction fees inspired by the Runes Protocol. Transaction fees contributed approximately 16% to the Bitcoin earnings in April.

Fred Thiel, Marathon’s chairman and CEO, said:

“In April, we achieved an all time operating hash rate high of 25.9 exahash. Transaction fees also reached all time highs around the Halving, which we were able to capitalize on with our Slipstream service and our proprietary mining pool. Just before the Halving, we earned an additional 4.25 BTC from Slipstream alone, and MARA Pool outperformed, capturing one block with 10 BTC and another with 16 BTC in transaction fees.”

Meanwhile, Marathon said it sold 600 BTC in April to support monthly operations, manage its treasury, and for general corporate purposes. The miner held 17,631 unrestricted Bitcoin as of April 30.

Consultant to Kenya government

In a parallel development, Kenya’s president, Williams Ruto, spoke at the AMCHAM summit and revealed ongoing discussions between the African country and the crypto miners about crypto regulations and mining.

Ruto said:

“Marathon Digital has been ushered to consult with the National Treasury Kenya on our cryptocurrency regime and to the Ministry of Energy to discuss its energy needs in connection with cryptocurrency mining here in Kenya.”

The firm also confirmed this development, adding that its team is discussing how its digital asset data centers “can spur energy development in the region and foster US-East Africa trade relations.”

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Bitcoin miner Marathon Digital has reviewed its hash rate target for this fiscal year to 50 EH/s, according to an April 25 statement.

Initially, the miner aimed to boost its mining capacity by about 46% by year-end to as high as 37 EH/s from 24.7 EH/s. However, buoyed by its recent acquisition of a 200-megawatt Bitcoin mining center from Digital Applied, Marathon now anticipates a 100% increase in its mining power, reaching 50 EH/s by year-end.

Marathon’s Chairman and CEO, Fred Thiel, expressed confidence in achieving the new target, attributing it to the recent acquisition that has provided access to additional hash rate.

Thiel noted:

“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.”

Marathon is the largest publicly traded Bitcoin mining firm in the world. According to data from the Bitcoin Treasuries, the company holds more than 17,000 BTC.

Marathon’s ambitions to boost its hash rate haven’t been deterred by the significant uptick in Bitcoin’s mining difficulty.

On April 24, the network’s mining difficulty increased by 2%, marking the first adjustment since the fourth Bitcoin halving.

Halvings reduce block subsidies, often leading to a steep decline in mining profitability. This prompts some miners to halt operations, causing the hash rate to drop.

However, CryptoSlate analysis attributed the recent hash rate spike to miners joining the network to capitalize on the 6.25 BTC block rewards before the April 20 halving. Moreover, transaction fees, particularly from Runes, have remained elevated, offering further incentives for miners to maintain their operations.

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