[TL; DR]
Marathon now holds more than 25,000 Bitcoin in reserve.
While it will buy more bitcoin when the market conditions are suitable Marathon’s focus is on expanding its mining operations.
MicroStrategy, Block, Coinbase and Tesla are other firms that have bitcoin as part of their reserves.
Introduction
Looking at the current cryptocurrency trends several institutions are focusing on acquiring and holding bitcoin due to its scarcity and the prospect of much appreciation in the future. The approval of spot bitcoin ETFs in several countries including the United States seem to have made bitcoin more acceptable to many people than before. Today we discuss Marathon Digital’s bitcoin acquisition and holding strategy.
Marathon Digital Bitcoin Reserves Surpasses 25,000 as it Promises to Acquire More
Marathon Digital, the world’s largest bitcoin miner, aims to purchase bitcoin strategically to increase its reserves. However, it is not going to willy-nilly buy bitcoin. It will always assess the best thing to do within a given period, to buy or mine it. The cost of mining versus bitcoin purchase at any time will determine Marathon’s best strategy. Although Marathon’s focus is to invest more in mining operations it will capitalize at any strategic acquisition of bitcoin opportunity.
Explaining in its blog, Marathon spokesperson said, “Our strategy is to strike a balance between mining bitcoin and buying bitcoin, factoring in market conditions. During periods of significant price appreciation, we may focus solely on mining. However, with bitcoin trending sideways and costs increasing, which has been the case recently, we expect to opportunistically “buy the dips.”
The blog added, “Looking ahead, we don’t anticipate major supply shocks in the near term. Market participants continue to absorb any available bitcoin supply, maintaining upward momentum during high-volume trading hours, indicating strong demand.”
In terms of expanding its mining operations Marathon pointed out that last year it acquired three blockchain mining sites in Texas and Nebraska. It also acquired an additional source of power, about 690 operational megawatts (MWs). It explained the logic of its strategy: “These acquisitions, at the time, increased MARA’s directly owned and operated Bitcoin mining portfolio from 3% to 45%, and reduced our cost of revenue at these sites by approximately 20%.”
Recent news about Marathon Digital Expands Mining Horizon with $16M Kaspa
Marathon Acquires 4,144 Bitcoin amid its Price Slump
On 14 August Marathon Digital announced that it had purchased 4,144 Bitcoin at an average price of $59,500. It used $240 million from the $300 million it raised through a senior note offering. After that strategic acquisition the bitcoin miner now holds over 25,000 BTC. Its convertible senior notes, with a 2.125% annual interest rate, will be due in September 2031. Marathon’s recent acquisition came a few days after its boss Fred Thiel announced in July that the company has adopted a hodl strategy for bitcoin. Previously, Marathon purchased 2,282 BTC worth around $124 million in July this year. The bitcoin miner started buying and holding bitcoin in 2021. At that time, it bought bitcoin worth $150 million which it still holds to date. Right now, Marathon is the second largest publicly traded company with bitcoin on its balance sheet.
How Marathon’s Recent Bitcoin Acquisition has affected its Financial Health
After making its latest cryptocurrency investment Marathon’s share value dropped by 2.26% on the day to close at $15.14. On the other hand, it has fallen by 34% year-to-date. Earlier in August the shares posted revenues of $145.1 million which was 9% less than the expected level. However, its revenue increased by 78% from that of quarter 2, 2023. Worse still, mining profitability has hit a low point after the April halving event.
Despite the short term negative effects in one way or the other Marathon’s strategy may have a positive effect on its future financial position. Several other firms are adopting similar crypto investment strategies. For example, miners are using the hodling strategy for the bitcoin that they are mining. During the first half of the year long term hodlers have increased their holdings by 404,000 bitcoin which is equivalent to $23 billion. Nevertheless, 40, 000 have been accumulated through BTC ETFs.
The evolving legal and economic environments may be favourable for firms that are focusing on cryptocurrency investment. According to Chainanalysis there has been a proposal to introduce a bill to establish a strategic bitcoin reserve in the country. Such a development may lead to the appreciation of the crypto asset which will become advantageous to those who choose to keep large bitcoin reserves. Also, there is much supportive crypto regulatory environment in many countries.
It will also become strategic and advantageous for Marathon Digital to own a substantial percentage of the global bitcoin hash rate. For example, that will become fast enough to make some important transactions. Pertaining to this, Marathon said, “We strive to maintain or increase our share of block space as global hash rate continues to increase by continuing to invest in our mining operations. Equally important is our commitment to owning bitcoin to ensure that MARA remains a key player in the ecosystem for years to come.”
Although Marathon still has far less bitcoin than MicroStrategy it has also amassed more than the other leading bitcoin holders such as Block, Coinbase and Tesla. At the moment its target could be to own 26, 2 thousand bitcoin as per Michael Saylor, MicroStrategy founder's encouragement to Marathon.
Read also: Companies and whales: Who holds the most Bitcoin?
Conclusion
Despite Marathon having amassed over than 25,000 it aims to acquire more in the near future. It has adopted the hodl strategy to the bitcoin it mines and buys in the future. This year alone it has added more than 6, 426 BTC to its reserve. MicroStrategy, Block, Coinbase and Tesla are some firms that hold large amounts of bitcoin.