Hi from New York,

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

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

• Ordinals change the dynamic of mining economics 💥 

• Marathon beat estimates and plans to open 200 MW in Abu Dhabi 🏃 

• Hut8 had a tough quarter 🚆 

• CleanSpark grew revenue by 53% 📈 

• Cipher hits ATH with over 6 EH/s 🔝 

• Iris Energy April revenues up >100% MoM 👁️ 

Block Green x BTC 2023 🌴 

Block Green is coming to Miami for BTC2023 and Sebastien will be speaking on the Hashrate Marketplace panel.

📍 BTC2023 Miami, Mining stage
⏰ 1.45 pm, Thursday 18th of May
🧑‍⚖️ Moderated by Wolfie Zhao from BlocksBridge
👨‍👨‍👧‍👦 With Matthew Williams (Luxor), Marko Tarman (NiceHash), Thomas Pacchia (HODL Capital)

Please reach out or come meet us after our panel.

Texas Passes Flaring Bill 🤠 

High Transaction Fees Shake Up Bitcoin Mining: Will the New Dynamic Persist? 💨 

• Bitcoin miners are experiencing record revenue as transaction fees on the network have reached their highest levels in two years.

• Transaction fees on Bitcoin now represent 75% of the current block reward, compared to the usual 2-5%.

• The surge in fees is partially attributed to the Ordinals protocol, allowing the creation of non-fungible tokens, and BRC20s.

• The increased revenue is a welcome relief for miners who suffered during the crypto winter of 2022. However, the high fees may be short-lived as users are seeking alternative transaction methods due to the high cost.

• The mining pools' revenue composition has drastically changed, with transaction fees contributing 17-25% in May compared to 1-3% in the rest of 2023.

• This situation has forced pools to hold more Bitcoin reserves to handle the increased fees and potential losses during unlucky periods.

• The current fee situation provides a glimpse into the future when block rewards cease, and miners rely solely on transaction fees for compensation.

• This development is viewed, by many, as positive for Bitcoin's long-term security and highlights the importance of miners in maintaining the network's integrity.

Read Eliza Gritiski’s full article here 

Marathon Surpass Analysts’ Forecast in Their Quarterly Earnings 🏃 

• Revenue for the quarter was 51.1 MUSD, in line with the previous year's figure and slightly surpassing analysts' forecast of 48.8 MUSD.

• The company's operational hashrate increased by 64% QoQ to 11.5 EH/s. During the quarter, Marathon achieved a record Bitcoin production of 2,195 BTC (worth approximately 80 MUSD).

• The company has shifted its strategy of holding onto mined Bitcoin and instead sold most of its production in February.

• Marathon has been working to reduce debt levels and terminated a credit facility with Silvergate Bank after paying 30 MUSD to the now-defunct bank.

• The SEC issued another subpoena to Marathon, investigating related-party transactions that may have violated federal securities law.

• Following the announcement of the SEC subpoena, Marathon's shares fell over 2% in pre-market Nasdaq trading.

Marathon Joint Venture to Open up a 250 MW Site in Abu Dhabi 🇦🇪 

• Abu Dhabi will host the first large-scale Bitcoin mining operations in the Middle East, developed by Marathon Digital Holdings and Zero Two. The joint venture will operate two mining sites with a combined capacity of 250 MW.

• One site, with a capacity of 200 MW, will be located in the Masdar City sustainability hub, while the other, with a capacity of 50 megawatts, will be in the port zone of Mina Zayed.

• The companies have developed technology to keep the mining rigs cool in Abu Dhabi's hot desert climate, making mining feasible in this region.

• Excess energy in Abu Dhabi will be leveraged for mining operations, and any non-sustainable electricity will be offset with clean energy certificates.

• Zero Two will hold an 80% stake in the venture, with Marathon holding the remaining 20%.

• The companies expect to contribute 406 MUSD in capital for the development period in 2023, and mined assets will be distributed twice a month based on equity ownership.

• Both mining sites are planned to start operating before the end of the year, with a combined hashrate of 7 EH/s.

• The United Arab Emirates (UAE) has seen increased crypto-related activity, with some seeking more favorable regulatory environments amidst uncertainty in the United States. Coinbase's executive team recently visited the UAE to meet with regional policymakers.

Hut8 Make Progress While Revenues Drop by 64% 🧱 

• Hut 8 reported a significant drop in first-quarter revenue of 64% compared to the previous year due to accelerated depreciation, depressed digital asset mining economics, and unexpected impairment charges.

• The company's first-quarter revenue was 19 MUSD, representing a 13% decline from the previous quarter and falling short of analyst expectations of 21.2 MUSD.

• Hut 8 had to turn off approximately 8,000 machines at its Ontario facility due to a dispute with its energy provider in mid-November.

• The company has only managed to bring back around 1,000 machines online since the dispute, resulting in a decreased operational capacity.

• Electrical problems at Hut 8's Drumheller facility in Alberta have further impacted its operations, with the site operating at just 15% capacity.

• Hut 8's stock remained relatively stable in pre-market trading on the Nasdaq, showing a minimal decrease of 0.55% at 1.82 USD at the time of writing.

• Despite the recent decline, Hut 8's stock has more than doubled in price in 2023 but remains lower by 34% on a year-over-year basis.

• Hut 8 is currently undergoing a merger with U.S. Bitcoin Corp. (USBTC), a private miner with operations in New York and Texas.

CleanSpark Grows Revenue by 53% QoQ 📈 

• CleanSpark mined 1,871 bitcoin in its fiscal 2023 second quarter, a 109% increase over same prior year period. CleanSpark reported Q2 revenues of 42.5 MUSD, a 14% increase from the same period last year.

• Net loss of 18.5 MUSD for the quarter, compared to a net loss of 0.2 MUSD in the same period last year.

• Sequentially, revenues increased by 14.7 MUSD or 53% compared to the preceding first quarter.

• Adjusted EBITDA decreased to 12.7 MUSD from 19.6 MUSD in the same period last year.

• CleanSpark's cash balance was 10.3 MUSD, with an additional 5.3 MSD in bitcoin holdings. The company paid down 1.9 MUSD or approximately 11% of its outstanding debt during the second quarter.

• The company's hash rate increased to 6.7 EH/s, resulting in the mining of 1,871 Bitcoins during the quarter.

• CleanSpark plans to more than double its hash rate by the end of the calendar year and has secured 99% of the machines needed to reach its targets.

• The company is expanding its mining operations in Washington and Sandersville, which will add significant operational capacity.

• Cost per Bitcoin mined increased due to difficulty increases and higher energy costs, but decreased compared to the previous quarter.

• CleanSpark expects its blended breakeven price per Bitcoin mined to remain in the range of 11,000 USD to 13,000 USD.

Cipher Beat Revenue Estimates and Hits 6 EH/s 🦾 

• Revenue from Bitcoin mining in the first quarter of 2023 was 21.9 MUSD surpassing estimates by 5.6%.

• The total costs and operating expenses amounted to 28.1 MUSD. The operating loss for the quarter was 6.2 MUSD.

• The net loss for the first quarter of 2023 was 6.2 MUSD, resulting in a net loss per share of 0.03 USD.

• Cipher completed the first phase of growth at its Odessa facility, achieving a self-mining capacity of over 6.0 EH/s.

• The company purchased an additional 11,000 miners from Canaan, expected to be delivered and energized in the third quarter, completing the buildout at the Odessa facility and bringing the total self-mining capacity to over 7.2 EH/s.

• Cipher has deployed over 6.0 EH/s across its four initial data centers.

• The weighted average power price at the company's sites under contract is approximately 2.7 c/kWh, with 96% of the portfolio energized through fixed-price power.

Iris Energy Increased Mining Revenues by 109% MoM 🚀 (April Update)

• Iris announced earnings and that the company achieved an average operating hashrate of 3,965 PH/s, in April, representing a 107% increase compared to March.

• They mined 319 bitcoins, producing mining revenue of 9.0 MUSD, a significant 109% MoM.

• The revenue per Bitcoin was 28,331 USD while electricity costs per Bitcoin were 13,118 USD.

• Iris Energy's increased the operating hashrate by 118% to 5.5 EH/s as of May 3.

  

• Received a refund of 18.4 USD related to its AEP (Average Effective Power) and implemented new research and development initiatives.

• The Childress data center in Texas, USA, with a capacity of 20MW, became operational and is undergoing final commissioning activities.

• They also energized a 600 MW bulk power substation and a 100 MW primary substation, leaving 580 MW spare power capacity for future expansion.

  
  

The White House’s Bitcoin Mining Tax Undermines Itself - Nic Carter ⭐️ 

• The proposed Digital Asset Mining Energy (DAME) excise tax on Bitcoin mining in the U.S. could drive miners overseas, increasing emissions and depriving the grid of a valuable "demand response" mechanism.

• Singling out the Bitcoin mining industry for responsibility over grid emissions sets a dangerous precedent, as it is the responsibility of grid architects to decarbonize electricity generation.

• The tax may not be legal and could be seen as a violation of First Amendment rights, as argued by appellate attorney W. Aaron Daniel.

• Holding Bitcoin miners accountable for grid emissions while other industries are not treated the same way is unfair and opens the door for targeting politically disfavored energy consumers.

• Empowering America's adversaries like Russia, China, Venezuela, and Iran, who have state-sanctioned mining operations, would be a direct consequence of driving miners out of the U.S.

• Taxing mining in the U.S. does not reduce Bitcoin mining overall as it is a highly competitive industry, pushing miners to jurisdictions with dirtier energy sources.

• Bitcoin miners do not impose significant costs on local communities and actually contribute to grid stability by participating in demand response programs and turning off during grid scarcity events.