Marathon Installs 2.2 EH/s in February - Total Hashrate now 9.5 EH/s 📈

Hi all,

In this newsletter, we summarize some of the big events from this week and we will continue doing this on a weekly basis. Subscribe to get it straight in your inbox.

Block Green will publish a report next week on the North American miner landscape and how energy management strategies will continue to become increasingly important

Here's what happened in the world of mining this week:

• Hive increased production YoY by 13% 📈 

• TeraWulf raise 27 MUSD equity capital 🐺 

• Soluna exits 20MW facility in Kentucky 🚚 

• The Blockware Podcast had Matthew Schultz ⚡️ 

• Short insight about Nuclear and Bitcoin mining 💚 

What Shaun Connell explained in WBD was repeated in ERCOT’s board meeting. Hopefully, politicians take notice..

Marathon Installed 18,000 Miners in February 🤑 

• Increased hashrate by 30% by energizing 18,800 Bitcoin miners (ca. 2.2 EH/s) in February 2023

• Produced:

  • 683 BTC in February

  • 1,370 BTC Quarter-To-Date

• Increased cash position to 219.7 MUSD

• bitcoin holdings to 8,260

• Of the 18.800 Bitcoin miners energized in Feb over 8,000 were S19 XPs.

• Sold 650 bitcoin in Feb to offset operating expenses and for general corporate purposes.

• Even with these sales, they increased their bitcoin holding by 170

• They remain confident in scaling Marathon by installing approximately 23 EH before near the middle of 2023.

• In February ca. 18,800 miners (c. 2.2 EH/s) were energized across multiple sites, including:

  • 3,900 S19 XPs (c. 0.5 EH/s) in Granbury, TX (Wolf Hollow).

  • 3,800 S19 XPs (c. 0.5 EH/s) in Jamestown, ND.

• Marathon’s operating fleet increased to approximately 90,000 Bitcoin miners, theoretically capable of producing approximately 9.5 EH/s.

• During February, the installation of Marathon’s miners at Applied Digital’s facility in Garden City, TX, was fully completed. In addition, approximately 4,100 of Marathon’s S19 XPs were installed at Applied Digital’s facility in Ellendale, ND, during the month.

• Once all of Marathon’s previously purchased miners are installed, approximately 66% of the Company’s hash rate is expected to be generated by S19 XPs, which are approximately 30% more energy efficient than the prior generation of mining rigs.

Hive Mined 787 BTC in February 🏒 

Hive announced Q4 Revenue of 14.3 MUSD down from 29.6 MUSD in Q3.

• Increased mining production ca +12% YOY. 

• Net loss of 90.4 MUSD with an adjusted EBITDA of 1.5 MUSD.

• 787 Bitcoin, with a 25% Gross Mining Margin representing 3.62 MUSD of income from mining operations

• Q3 2022 was the first quarter that the company did not mine any ETH following the Merge upgrade in September.

• It also upgraded the existing fleet of ASICs to improve overall efficiency.

• On a relative basis, HIVE has been able to mine with healthy profit margins during periods of market volatility because of being globally diversified and enjoying attractive power costs in Sweden, Iceland, and Quebec

• Furthermore, HIVE’s average cost of production per Bitcoin was 13,599 USD (including cost of goods sold, not including SG&A) for the quarter ending December 31, 2022, a 37% increase in cost from the previous quarter ending September 30, 2022.

• This also represents a 37% increase in production costs of Bitcoin from the previous quarter of 9,894 USD for the three months ended September 30, 2022 (average price of Bitcoin was 21,252 USD during this period).

• Working capital decreased by 21.6 MUSD during the three-month period ending December 31, 2022.

• Digital currency assets of 39.0MUSD, as at December 31, 2022.

• Impairment on miner equipment of 38.8 MUSD and of 22.7 MUSD on equipment deposits during the three-month period ended December 31, 2022

• 150MW build-out and ready for hashing

TeraWulf Raises 27.7 MUSD in a Public Offering 💰️ 

• TeraWulf which owns and operates vertically integrated, domestic bitcoin mining facilities powered by more than 91% zero-carbon energy,

• Today announced that it has completed its previously announced underwritten public offering of 40,764,706 shares of its common stock, including 4,000,000 shares sold pursuant to the partial exercise of the underwriter’s option to purchase additional shares.

• The shares were issued at a public offering price of 0.68 USD per share for total gross proceeds to the Company of 27,7 MUSD, before deducting underwriter discounts and commissions, and offering expenses.

• TeraWulf intends to use the capital for general corporate purposes, which may include working capital and/or capital expenditures.

Soluna Exits Marie to Focus on Sophie and Dorothy 👩‍👩‍👧 

• Soluna announced today that it has exited its Project Marie facility in Kentucky.

• Project Marie 20MW first-generation project, “where designs and economics were tested and refined, ultimately leading to the engineering and economics deployed at the other sites.

• Project Sophie in Kentucky and Project Dorothy in Texas will continue operations.

• The exit from Project Marie will allow Soluna to focus on the development and energization of Project Dorothy in Texas, where grid connection and energization are imminent.

CleanSpark’s February - Mined 20.6 BTC/Day 📯  

• Bitcoin mined in February: 576

• CY2023 bitcoin mined: 1,273

• Total BTC holdings as of Feb 28: 100

• Total BTC converted for operations and growth in February: 778

• Currently deployed hashrate of 6.6 EH/s

• The sale of 778 bitcoins in February 2023 at an average of approximately 23 KUSD per BTC.

• February daily BTC mined averaged about 20.6 and reached a high of 21.5.

David Pan, Bloomberg, Wrote an Update on the Public Miners 🟠 

The Bloomberg importance of a Bitcoin rally for cryptocurrency miners after Q1 of 2023.

• It explains that the mining process is becoming increasingly expensive and difficult, making it more challenging for miners to generate profits.

• A Bitcoin rally, which would increase the price of Bitcoin, would help to alleviate some of these difficulties and provide greater profitability for miners.

• The article also discusses the impact of various factors, such as regulatory developments and the increasing popularity of alternative cryptocurrencies, on the mining industry.

• Miners such as Marathon Digital Holdings Inc. and Riot Platforms Inc. have been among the best-performing US stocks this year, gaining more than 75% each after tumbling in value in 2022.

• Marathon canceled the release of fourth-quarter results Tuesday after saying there had been “accounting errors” in several quarters of its financial statements. The US Securities and Exchange Commission raised questions about how the miner recognized the impairment of digital assets and revenue.

• In the most recent quarter, Greenidge Generation Holdings Inc. was able to push back a deadline to repay an 11 MUSD debt with investment bank B. Riley, which was allowed to purchase shares at a discount in late January.

• Terawulf was able to defer amortization after raising 32 MUSD from equity proceeds in February.

• Even Core Scientific (Chapter 11) received court approval to refinance its loan so that it can keep operating.

Energy Know-How is a Competitive Advantage ⚡️ 

• Matthew Schultz, CEO, CleanSpark joined Joe Burnett on the Blockware Intelligence podcast.

• Treasury management - we have three levers, bitcoin we mined, the ability to use equity as a public company, and debt.

  • Double-digit interest rate.

  • 60% LTV on mining equipment.

  • 24-month maturity.

• CleanSpark is the largest energy customer in Georgia.

• By working with the cities, CleanSpark was an influencer in decommissioning coal plants.

• Congestion is a bigger problem than generation, transmission is the issue.

• “WE LOVE NUCLEAR” - non-carbon emitting, stable, scalable, renewable by most definitions. Not enough funding.

• Battery degradation is an environmental issue. Energy storage is a bottleneck.

• Three levels: mined bitcoin, equity, debt.

  • All OPEX is paid for by Bitcoin which they sell.

  • They are more selective when it comes to CAPEX.

• Matt said they will use equity when the appreciation (accretive) opportunities to their shareholders. (Return of Investment must have a better ROR than the percentage amount of diluted shareholders).

  • Traditional Bitcoin mining rigs are not compatible with asset-backed lending.

• This will be the true test of the mining industry. Consistently balanced approach will separate winners and losers.

• Regulation is a good thing in the eyes of Cleanspark…

Bitcoin Mining with Nuclear Energy 💚 

Investment in nuclear is increasing. Nuclear Energy increases our capacity for electrons overall and a new end-user has emerged - Bitcoin miners.

While Bitcoin’s environmental impacts are carbon-reducing in many cases, Nuclear Powered miners are proving to be reliable, clean, and carbon-free businesses. Griid, Tera Wulf, Talen Energy, and Cumulus Coin are four companies leading the way in nuclear-powered bitcoin mining. Nuclear Energy is a safe, cost-effective, and sustainable source of power. Miners can now produce bitcoin carbon-free. Industry stakeholders can add nuclear to emission-reducing mining strategies along with associated gas and intermittent resources.

There are a number of nuclear plants in North America with excess capacity and the potential to mine bitcoin carbon-free. Earlier this year, Talen Energy and Tera Wulf partnered with nuclear generator Energy Harbor Corp to provide power to their data centers. Their facilities are connected to the Susquehanna Steam Electric Station. Cumulus Coin will host the data facilities and recently announced the intention to build an additional 300MW with an indicative price of 20-30 USD per MW.

Another example of business development within the Nuclear Bitcoin Mining sphere is Oklo partnering with Compass mining. Oklo is a company, founded by Everett Redmond, which is building smaller reactors/data centers that are better fit for more nimble miners and the retail customers of Compass. As a pleb miner myself, this sounds like an attractive opportunity, and I am anxiously awaiting a lower hosting bill… ; )

Conclusion

In the coming years, we can expect Nuclear Energy to play a large role in the bitcoin mining industry. My hopeful expectation is that electrical applications will not stop there. I am a nuclear bull and believe we may have found a new form of baseload power. The United States is a resource-rich country as it stands today - we have barely scratched the surface of our nuclear potential. Reliable and abundant electricity is the backbone of an innovative future.

/Patrick Guerriero, GM US, Block Green

Data 🌍️