Hi all,

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

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

• NYT hit piece in the making 🗞️ 

• Marathon weathered the storm and came out more resilient 🏃‍♂️ 

• Cipher increases production quickly 🧡 

• Zach Bradford, CleanSpark, talking about fleet efficiency 🦾 

• Zack Voell found some unexpected mining operations ⛏️ 

First Chapter of Energy Strategy and Planning for North American Bitcoin Miners

For those who thought the last report was a bit too wordy, we split it up into chapters. Starting with the site distribution of the North American mining industry:

Good Week for Miners 📈 

Courtney Dentlinger, Nebraska Public Power District 💚 

Hit Piece Coming from NYT 🤔 

A continuation of NYT’s campaign against Bitcoin and proof of work.

According to our sources:

• The article has been six months in the making, criticizing the impact of Bitcoin mining on the environment.

• The accounting is based on how much the site draw, and what grid it is connected to, they discount energy source completely.

• Reported by a hydro miner - “they classify it all as dirty and calculated x tons of carbon”

• The assumption - power would have gone to the grid if the miner wasn’t there.

• The absence of the miner would have displaced gas generation.

• The claim is that demand response is not actually helpful. 

• They have analyzed a majority of the larger miners in the US and spoken to ERCOT.

Marathon Digital Holdings had more than 100 MUSD with Signature Bank 💵 

• 686.7 MUSD net loss in 2022 to a combination of a more than 60% plunge in the price of BTC and surging energy costs.

• Compared to a 37.1 MUSD net loss in 2021. 

• Revenue of 28.42 MUSD, missing the 34.62 MUSD consensus, also slid from 68.36 MUSD a year ago.

• Adjusted EBITDA loss came in at -374.04 MUSD.

• Doubled hashrate to 7.0 EH of capacity year-over-year.

• MARA produced a record 1,562 bitcoin in Q4, and increased bitcoin production 30% YoY from 3,197 BTC in 2021 to 4,144 BTC in 2022.

Financial performance is negatively impacted by several factors

• Accelerated costs related to our exit from Hardin and Compute North bankruptcy.

• The bitcoin price reduced margins and resulted in impairment charges for bitcoin holdings.

• Fred Thiel said - “In the face of these challenges, and given the macroeconomic uncertainty headed into 2023, we took proactive measures starting in the latter half of 2022 to strengthen our balance sheet.”

• In December 2022, fully paid down outstanding balances under the revolving line of credit.

• In February 2023, they terminated our credit facilities with Silvergate Bank, which resulted in the release of 3,132 bitcoin that were previously held as collateral.

• They are also pursuing alternative banking relationships in light of the recent developments with Signature Bank.

• Marathon has two primary goals for 2023:

  • The first is to energize their previously purchased mining rigs to reach our target of 23 EH by the middle of this year.

  • The second is to optimize their performance – to become more effective and more efficient.

Marathon and Signature Bank

• Bitcoin mining firm Marathon Digital Holdings (MARA) said it still has access to 142 MUSD in cash deposits at Signature Bank.

• It also holds more than 11,000 bitcoin, giving it "financial optionality that extends beyond the traditional banking system." - Fred Thiel

• The MARA share price has risen by more than 40% since this announcement, riding the bitcoin surge.

Cipher Mining Reports Mining 66% of FY 2022's BTC in January 🏃‍♂️ 

• 3.0 MUSD in revenues for 2022 with a net loss of 39.0 MUSD

• Cipher produced:

  • 398 bitcoin in February

  • ~343 bitcoin in January, 52% increase in production relative to the previous month.

• 515 bitcoin in the fiscal year 2022, ~377 bitcoin were mined Q4 2022

• Below 7 KUSD breakeven prices across all sites.

• The weighted average power price at the company’s current sites is ~2.7 c/kWh.

• Cipher reported over 3.3 EH/s of self-mining operations at Odessa.

• ~4.3 EH/s of self-mining operations across all the sites.

• 5.2 EH/s Total Hash Rate expected to grow to over 8 EH/s.

The Cipher fleet is getting updated

• 31.4 J/TH weighted average mining rig efficiency.

• In January 2023, Cipher energized 13,300 new Bitmain and MicroBT miners, representing an increase in hashrate of ~1.4 EH/s and a ~48% increase relative to the previous month.

• They plan to purchase rigs with the revenues we are generating from operations to fully utilize our 207 MW at Odessa.

Zach Bradford Discuss Hardware Risk Management ✍️ 

• Zach discussed the importance of fleet efficiency and their approach to hardware risk management.

• Incremental improvements in mining machines can result in significant energy savings.

• Buying incrementally better machines has allowed us from December to be at 31.6 W/TH and all the way down to 30.6 W/TH

• The average efficiency worldwide is around 45J/TH, most public miners are on the right side of that.

• Payback periods for mining machines are an important factor to consider, especially after halving.

• Ideology often trumps strategy in the Bitcoin space, leading some companies to make inefficient purchasing decisions.

• The market is flooded with older, less efficient XP machines, making it challenging to shift to newer models.

• Scale matters in mining operations and efficient machines can significantly affect profitability.

Some Unexpected Miners 🚢 

Zack Voell wrote an interesting article about unexpected companies mining bitcoin:

• Florida-based Graystone Company, a self-described wellness, longevity and anti-aging company with over 2,000 TH/s of hashrate

• BlockFi and Celsius, are less unexpected.

• Sino-Global Shipping has purchased a few thousand mining machines, entered a joint venture to manufacture new mining hardware.

• Horizon Kinetics, New York-based investment management firm started its first bitcoin mining unit in 2017, launching a second mining initiative in 2018.

• Less unexpectedly, E.ON, a utility company, has partnered with another Hungary-based company, Enerhash, to install a small mining operation at one of their plants.

• Jasmine Technology, Thailand-based telecom company publicly disclosed it operated 325 mining machines.

Data 🌎️