Bitcoin Miner Marathon Digital does not have revenue expectations due to production setbacks

Marathon Digital, a Bitcoin mining company, failed to meet the revenue expectations set by Wall Street analysts in its first quarter 2024 report.

The company cited adverse weather conditions and malfunctioning equipment as contributing factors to the lower-than-expected performance.

Digital Marathon facing setbacks in production

Despite a 223% year-over-year revenue growth to $165.2 million, as disclosed on May 9, the company’s performance still beat the forecast estimate of $193.9 million in a 14.80%, according to investment analyst firm Zacks.

During the first quarter of 2024, Marathon Digital reported mining 2,811 BTC, valued at $176.7 million, which is a 28% increase compared to the previous year. However, this is a 34% decrease from the 4,242 BTC mined in Q4 2023.

Marathon CEO Fred Thiel addressed the company’s performance on a May 9 earnings call. He said production setbacks were due to unexpected equipment failures, especially transformers at third-party hosted sites, high weather-related outages at many sites and transmission line maintenance by utility companies.

The company noted that adverse weather conditions affected its Garden City site in central Texas and other locations, including a newly acquired Texas location beginning April 2. Despite these challenges, the company operated at a “record high” of 27 exahashes per second. Thiel highlighted the company’s goal of reaching 50 EH/sa by the end of the year, which was revised upwards from a target of 35 to 37 EH/sa at the end of April.

Thiel noted that Marathon was able to adapt and overcome operational challenges during the first quarter. The company redeployed the equipment to newly acquired sites while ongoing repairs were being made.

Marathon also introduced several new advanced products during the quarter, including Slipstream, aimed at improving Bitcoin transaction speed, and the MARA UBC 2100 control panel, designed to improve mining efficiency. Through strategic acquisitions, Marathon has expanded its mining capacity to 1.1 and is currently operating at 54% of its total capacity.

Marathon’s Q1 stock beat expectations

Marathon Digital reported first-quarter earnings per share of $1.26, which initially looked significantly higher than the $0.02 projected by Wall Street. However, these figures are not directly comparable because the company has adopted the FASB’s recently approved fair value accounting rules. The market value adjustment was favorable, influenced by the substantial increase in Bitcoin prices.

After the report on May 9, shares of Marathon Digital ( MARA ) fell about 2.19% to close at $19.65, with an additional decrease of 1% in trading off the schedule for Google Finance. Year to date, the company’s stock price is down 14.30% since hitting a high of $31.03 on February 28, 2024.

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