Miners’ Q2 Report Cards – Bitdeer, CleanSpark, Marathon Digital, Riot Platforms and more

More publicly-traded companies have continued reporting their second-quarter financial results this week. Here is a recap of the latest quarterly earnings reports from crypto mining firms and other developments in the mining industry:

CleanSpark saw a remarkable third quarter in terms of growth and revenue

Bitcoin miner CleanSpark shared its third quarter FY 2023 results on Wednesday, reporting a revenue of $45.5 million against a net loss of $14.2 million. The quarterly revenue figure represented a substantial uptick compared to the same period in 2022, when the company tracked a revenue of $31 million. The Nevada-based mining firm also shared an update on its plan to realize a hash rate target of 16 EH/s by the end of the year from the current 9 EH/s capacity.

CFO Gary Vecchiarelli hailed the firm's flexible balance sheet, which consists of cash and bitcoin assets, as a critical element in pursuing its growth strategy. CleanSpark controlled a deployed fleet of more than 87,000 units per its July mining and operations update. The unaudited report also showed it mined 575 BTC across the month, bringing its total BTC holdings at the end of the month to 1,061 BTC. In the coming months, the company plans to expand its campus site in Sandersville in a move that will add 6 EH/s to its total hash rate.

­­Marathon Digital achieved 18.8 EH/s in July and an average of 17.7 EH/s in Q2

Meanwhile, Marathon Digital Holdings has continued cementing its position as the biggest publicly traded Bitcoin miner, as evidenced by its substantial self-mining hashrate. Marathon reported an operational computational power equivalent to 17.7 EH/s as of the end of June. This upstaged the previous leader in the public mining sector, Core Scientific, whose installed mining machines summed to 15 EH/s, and moving into July, Marathon's hashrate surged further to reach 18.8 EH/s.

Core Scientific remains entangled in the labyrinth of bankruptcy proceedings since December 2022, with its self-mining hashrate showing marginal shifts since the filing.

Notwithstanding the challenges posed by unfavorable weather and operational disruptions seen last year, Marathon has embarked on a spree to integrate more Bitcoin miners in 2023. This vigorous endeavor has nearly tripled the operational hashrate, attaining the notable milestone of 15 EH/s in May. Marathon’s Q2 performance report released earlier this week showed that it hit $81.8 million in revenue during the quarter, a 228% increase from the same period the previous year. The average energized hash rate across the three months was 17.7 EH/s.

Core Scientific's restructuring plan would see Bitmain take a stake in the firm

In related news, court documents filed on Tuesday indicated that Core Scientific's bankruptcy process is tending towards an agreement with two notable players of the crypto space – miner Bitmain and Anchorage Digital, a major crypto platform. This week's development comes as Core Scientific reshapes its structure, with an updated reorganization plan awaiting the nod from creditors. However, it's crucial to note that a host of settlements detailed in the plan are contingent on court approval.

According to official filings in the bankruptcy court, Core Scientific is planning to acquire an impressive 27,000 units of the potent Bitmain Antminer S19j XPs, an air-cooled model with substantial power. The price tag is a hefty $77.1 million, and this venture will be financed through a mix of $23 million in cash and a considerable $54 million in equity. This unique financial blend effectively slashes Core Scientific's immediate capital requirements by $30 million.

The said investment by Bitmain would mark its first-ever stake in a publicly listed mining entity. Creditors who had extended financial support to Core Scientific for equipment procurement now face two choices. They can either transition their claims fully into equity or choose a more secure path by engaging in debt with the emerging company at 80% of their claim's value.

Anchorage Digital, which held a $29 million loan when bankruptcy struck, is seemingly the only one inclined towards the equity route. The remaining creditors (likely to lean towards the secure debt option) are BlockFi, Barings, Mass Mutual Asset Finance, Trinity Capital, and 36th Street Capital Partners, holding a combined loan portfolio of around $193 million as of the Petition date.

Novogratz’s Galaxy Digital records a significant decline in trading revenue

The second quarter financial report of the Mike Novogratz-led Galaxy Digital presented a nuanced picture of an evolving landscape, despite the challenges stemming from the crypto credit crisis and industry-wide bankruptcies. Galaxy saw a $46 million net loss, and its trading activity was hammered, facing a substantial decline of 54% in revenue from the previous quarter. Liquidity challenges, regulatory uncertainties, and dwindling volumes across exchanges all contributed to this slump.

While Galaxy Digital's lending business declined in quarterly loan originations, its loan book remains substantial at $550 million, giving the company a competitive edge in the current post-credit crisis environment. Traders seeking leverage have limited options, and Galaxy Digital presents an attractive proposition for these potential counterparties.

Another of the standout achievements in Q2 for Galaxy Digital was a 619% increase in revenue from its asset management unit, reaching $33.8 million. The revenue surge was fueled by gains in the venture side and inflows into active and passive funds. Galaxy Digital's mining activities thrived, with revenue hitting $15.4 million. The acquisition of the Helios Bitcoin mining facility and an emphasis on low energy costs contributed to a healthy 64% direct margin as the company continues its strategic expansion towards diversifying its portfolio.

Bitcoin spot ETF talk

Mike Novogratz's perspective on a potential Bitcoin ETF in the US is that approval will come within the next six months, citing sources at BlackRock and Invesco. This development will reshape how crypto is offered as several contenders seek to gain a foothold in the market upon approval.

However, the prospect of a Bitcoin ETF's endorsement raised inquiries regarding the SEC's position on crypto. Analysts believe that a verdict favoring Grayscale, in its ongoing tussle with the SEC, could pave the way for concurrent endorsements of spot Bitcoin ETFs, potentially accelerating the schedule for the said timeline.

Bitdeer establishes an even stronger footing in Bhutan with a new mining facility

Jihan Wu's Bitdeer has been making inroads into the Himalayan kingdom of Bhutan, aiming to leverage its abundant share of energy supply. Among the initiatives it has pursued was a collaboration with Bhutan’s state-owned investment company Druk Holding and Investments, targeting to establish a $500 million fund to facilitate mining operations. It followed up with the Bitdeer Green Bitcoin Fund last month.

Bitdeer revealed this week that it has completed a new mining facility in the nation. This latest operational update disclosed that about 15,000 fresh mining machines arrived at its Gedu data center in the country last month, with around 11,000 units already operational and stable. The mining company said 23,000 of the recently acquired mining rigs had been delivered to the Gedu facility.

It expects that once the entire batch of the newly procured mining machines is activated, they will collectively yield a hash rate of about 2.5 EH/s. CEO Matt Linghui Kong highlighted the substantial progress achieved on operational and infrastructure fronts. Particularly, the company mined 220 Bitcoin through the self-mining business in July, indicating an impressive 41% increase compared to the previous year.

Riot Platforms posted quarterly revenue of almost $77 million in Q2

Colorado-headquartered Riot also posted its Q2 financial results on Wednesday, revealing revenue of $76.7 million and a trimmed net loss of $27.7 million in Q2. The core Bitcoin mining operations contributed $49.7 million, while the engineering exploits and data center hosting business generated $19.3 million and $7.7 million respectively. The second-quarter revenue slightly surpassed the quarterly figure of ~$72 million from the year-ago period.

Riot's bitcoin production increased by 27% from the same period the previous year as the company mined 1,775 BTC across the second quarter as a result of more deployment of mining units.  It additionally earned $13.5 million in power curtailment credits – a notable increase from $5.7 million in Q2 2022 per the Aug 9 company’s earnings report. The miner also logged an adjusted earnings per share loss of $0.17 against analyst estimates of $0.20.

“The scale of our vertically integrated operations and financial strength allowed us to execute on our power strategy at unmatched scale this quarter, driving our average cost to mine to $8,389 per Bitcoin in the second quarter, compared to an average Bitcoin price of $28,024,” Riot CEO Jason Les remarked.

The company's mining facility posted a record hash rate of 10.7 EH/s. Riot targets a self-mining hash rate capacity of 12.5 EH/s in Q4, having missed the initial second half of 2023 timeline. The miner expects to manage a self-mining hash rate capacity of 20.1 EH/s by mid-2024 and 35.4 EH/s in 2025.

“[For] the next phase of our growth, Riot signed a long-term purchase agreement with MicroBT to acquire 33,280 next-generation miners, with an option to purchase an additional 66,560 miners on the same price and terms. The miners are designed from the ground up for immersion cooling, will be manufactured in the United States, and will add 7.6 EH/s in capacity for Riot by mid-2024.”

Though Riot anticipates more challenges in the industry down the road, the company execs assured that the company is set to benefit from the “period of consolidation” ahead of its competitors thanks to its strong financial position and liquidity.