Marathon Digital Holdings chief exec Fred Thiel recently said selling the Bitcoin mining titan may be the right energy for shareholders — provided somebody makes an offer it can’t refuse.
As reported by Bloomberg, companies like Marathon are increasingly targets of takeovers. This is due to energy providers looking to move into mining crypto for themselves rather than simply producing the power.
And Las Vegas-based Marathon would be a plum buy. The company boasts a market cap of nearly $3 billion, analysts say it’s “highly profitable,” and it has plans to provide 10% of all hashrate to the Bitcoin network by 2023.
“I am always willing to talk but it’s got to be the right price,” Thiel told Bloomberg in late March.
“If somebody offers us a huge premium over our market cap, I have to take it under consideration and that may be the right thing to do for the investors.”
Thiel ultimately predicted that energy companies could become the dominant force in Bitcoin mining.
Bitcoin-hungry energy firms could be more profitable than Marathon
As Bloomberg noted, energy companies are among the fastest-growing Bitcoin miners, with some enjoying reported profit margins of up to 90%.
These margins are due to the fact that energy companies have access to much cheaper energy than regular miners. This becomes particularly significant when Bitcoin’s price drops for extended periods of time.
Miners like Marathon also have to fork out for third-party construction and hosting. Established energy companies, on the other hand, often already maintain access to these services and might even own them.
“A generating company can sell their electricity to themselves at a lower cost, so they would be the most profitable Bitcoin miner over time,” Thiel said (via Bloomberg).
“How do they scale? They go find a big miner that they are going to acquire and they get scaled overnight.”
Energy companies that pivot to Bitcoin mining also hold another advantage over more established rivals. Namely, the willingness to sell the Bitcoin they mine.
It’s common for the current crop of Bitcoin mining stocks to raise debt by selling bonds rather than offload Bitcoin to cover overheads.
Matthew Schultz, Executive Chairman of Nevada-based energy technology company CleanSpark, told Bloomberg last month (our emphasis):
“Instead of selling part of the company, what we sell is a small portion of the Bitcoin that we mine. It costs us about $4,500 at our company’s own facilities to mine a Bitcoin at today’s price; that is a 90% margin.”
“I can sell Bitcoin and use that to pay for my facilities, operations, personnel and growth, and not dilute my shareholders.”
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