By hodling the Bitcoin they mine, US mining companies are bewildering pre-halving expectations.
In June, Marathon Digital Holdings did not sell any Bitcoin.
The choice represents a growing trend among Bitcoin BTC$62,853 miners in the United States, who opt to hold onto their mined cryptocurrency instead of selling it.
From an internal process perspective, we go through a reasonably thorough procedure, Khan said. “You must take into account market dynamics. In the near run, the price of Bitcoin may fluctuate, which may have an impact on your decision.”
Khan outlined how Bitcoin differs from other asset types regarding these factors.
“Our primary source of revenue and cash flows, if we were an oil company producing oil, would be selling all of our oil from whatever we produce,” Khan clarified. It’s a little different in this area. As a digital asset, bitcoin doesn’t require storage fees and can remain on your balance sheet. Large barrels are not necessary to hold Bitcoin.
With 18,536 Bitcoin valued at over $1 billion, Marathon now has 48% more than it had in 2023 (12,538 total).
The rate of return on this asset class over the last few years was 150% last year. The average rate of return has been outperforming or outclassing other asset types that are generally accessible for corporate investment, according to Khan.
“We obviously are a big believer in the Bitcoin price going up further from here. We don’t need to sell Bitcoin every month.”
US miners amass Bitcoin.
Not all US Bitcoin miners are currently hoarding Bitcoin, like Marathon. While CleanSpark has only sold small quantities of Bitcoin, Riot Platforms has not sold any since January.
Since these companies harvest hundreds of bitcoins monthly, accumulation is apparent among the significant US mining companies.
Zach Bradford, CEO of CleanSpark, said that the approach is pragmatic.
Bradford stated, “We see Bitcoin as strategically important in the current environment, rather than being ideological about hodling it.” “We anticipate that the price of Bitcoin will remain unstable for the foreseeable future, but we also believe its value will rise as this cycle continues. Our decisions are based on real-time market monitoring.
Bradford claims that market signs pushed the company to start building a year ago.
As the market began to pick up steam in June of last year, we started hodling most of the material we had mined. We have increased our treasury to over 6,500 Bitcoin since then,” he stated.
Accelerating the mining of Bitcoin
In addition to hodling, US miners quickly increase capacity through a mining arms competition.
“CleanSpark is expected to achieve and surpass 50 EH/s in 2025 as we continue to execute our aggressive growth strategy,” Bradford stated.
Marathon hashes at a rate of 31.5 exahashes per second (EH/s). As per the latest mining update, the company is expected to achieve 50 EH/s by the end of the year.
According to Riot, it will rise to 41 EH/s in 2024 and 100 EH/s in 2027.
Additional accumulation techniques
Marathon is open to miners accumulating Bitcoin in other ways, even though mining is one way. For example, the business bought 183.5 Bitcoins in January.
Khan clarified why miners would decide to buy Bitcoin in addition to mining it.
“In June of last year, I started working for the company. If I could go back in time, I would have liked to have made much larger personal investment decisions given the difference between the price of Bitcoin then and now, Khan added.
Khan also mentions the entry of institutional investors in the market.
“There is Fidelity, and there is BlackRock. According to Khan, many well-known brands are entering the market and making significant investments. “The math indicates that there will probably be a price increase.”
A profitable enterprise
A cursory look at Marathon’s financial sheet reveals that the business is incredibly cash-rich Khan is questioned over the company’s treasury management.
Khan affirms, “We have Bitcoin and $1.5 billion in cash on our balance sheet.”
“This industry is not as developed as some traditional industries where you can do sophisticated hedging strategies and other things, like oil, natural gas, and other commodities,” Khan stated. “Though there have been some opportunities to test the waters, it will take a lot more years for it to warm up and reach that level of sophistication,”
“There are some interesting opportunities out there,” Khan continued. However, from the industry’s standpoint, much work still needs to be done.
Therefore, most of Marathon’s capital will be liquid for now, either cash or Bitcoin.
“We need liquidity in this market. This company requires a lot of finance,” Khan remarked.