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Bitcoin mining giants Marathon Digital (Nasdaq: MARA) and Riot Platforms (Nasdaq: RIOT) have reported disappointing results in their latest earnings reports, underscoring the challenging operating environment for the industry.
Both companies grappled with declining revenues and widening losses as they navigate the complexities of the post-halving landscape.
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Marathon Digital Struggles
Marathon saw its stock price tumble after reporting weaker-than-expected revenue for the second quarter. The company blamed operational challenges, including equipment failures and transmission line maintenance, as well as the Bitcoin halving event in April, for impacting its BTC production – Marathon said the average cost per BTC mined in the second quarter of 2024 was 136% higher than in the prior year period.
Its reported revenue of $145.1 million for the quarter missed analyst estimates by 9%. In the previous quarter, it missed revenue estimates by 14.8%.
Net loss increased to $199.7 million, or $0.72 loss per diluted share, for the quarter, from a net loss of $9 million, or $0.07 loss per diluted share, in the same period last year. The company attributed the decrease in earnings to the "unfavorable fair value of digital assets" from the newly adopted fair value accounting rules issued by the Financial Accounting Standards Board, which requires ongoing measurement of crypto assets to fair value.
Despite these setbacks, Marathon managed to achieve an all-time high mining power of 31.5 EH/s during the quarter. The company is optimistic about reaching a hashrate of 50 EH/s by the end of the year and plans to further expand its capacity next year, it said.
A significant shift in strategy was also announced. After selling 51% of its mined Bitcoin to fund operations, Marathon has reversed course, purchasing $100 million worth of Bitcoin and committing to holding all future BTC on its balance sheet. The company now boasts a Bitcoin holding of over 20,000 BTC.
Marathon stock is trading at $18.12 in after-hours trading, or 22.78% down since the start of the year.
Riot Platforms' Losses Tripled
Riot Platforms (RIOT) experienced an even more challenging quarter, with its net loss tripling compared to the previous year. Soaring general and administrative expenses, primarily driven by stock compensation, contributed to the widening loss, the company said.
Net loss for the quarter was $84.4 million, or $0.32 per share, compared to net loss of $27.4 million, or $0.16 per share, for the same period in 2023.
The Bitcoin halving also impacted Riot's production, leading to a 52% decline in BTC mined compared to the same period last year. The increased difficulty of mining, reflected in the higher hashrate, further exacerbated the company's costs, though it expects to hit a total self-mining hash rate capacity of 36 EH/s by the end of 2024, up from its current capacity of 22 EH/s.
The company has been purchasing shares of mining company Bitfarms, which rejected a takeover bid of $1 billion from Riot in May – it now owns 15.9% of the company, or 71.56 million Bitfarms shares, valued at $159.1 million.
Riot stocks are currently at $9.63 in after-hours trading, down 39.75% since the start of the year.
Industry Challenges Persist
Both Marathon Digital and Riot Platforms highlight the ongoing challenges facing the Bitcoin mining industry. The Bitcoin halving, coupled with increased competition and rising energy costs, has created a demanding operating environment.
While these companies remain committed to expanding their mining operations and accumulating Bitcoin, the road ahead is likely to be fraught with obstacles.
CleanSpark is scheduled to announce its fiscal third-quarter results next week.
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