MARA Holdings, Inc. (MARA) Q1 2025 Earnings Call Transcript

Access earnings results, analyst expectations, report, slides, earnings call, and transcript.

Overview

The earnings call revealed strong financial performance but was overshadowed by a significant net loss due to Bitcoin's price drop, leading to an unrealized loss. Despite positive developments like increased mining capacity and energy efficiency, the Q&A highlighted uncertainties, such as vague timelines for partnerships and unclear responses on tariff impacts. Although the company holds substantial Bitcoin assets, the market's focus on Bitcoin price volatility and operational challenges suggest a negative sentiment, likely resulting in a stock price decline between -2% to -8%.

Key Financial Performance

Revenue $213.9 million (30% increase from $165.2 million in Q1 2024); driven by a 77% increase in average Bitcoin price contributing approximately $90.7 million to revenues.

Net Loss $533.4 million (compared to a net income of $337.2 million in Q1 2024); primarily due to an unrealized fair market value loss of $510.2 million from a 12% decrease in Bitcoin price since December 31, 2024.

Adjusted EBITDA Loss of $483.6 million (decreased from a loss of $542.1 million in Q1 2024); reflects the impact of market conditions and operational challenges.

Purchased Energy Cost per Bitcoin $35,728 per coin; reflects the company's focus on low-cost energy solutions.

Cost of Revenue per Petahash per Day Declined 10% sequentially; despite increased network difficulty, indicating improved operational efficiency.

Energized Hash Rate Increased 95% to 54.3 exahash per second from 27.8 exahash per second in Q1 2024; reflects successful expansion of mining capacity.

Bitcoin Holdings Over 48,000 Bitcoin; since the HODL announcement in July 2024, Bitcoin price increased approximately 52%.

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Operating Highlights

Custom Miners Development: MARA is manufacturing custom miners specific to its needs, providing unique cost and performance advantages.

MARA Pool Software: MARA Pool enables the company to capture higher revenues and retain 100% of transaction fees, outperforming network averages by over 10%.

2PIC Technology Deployment: The 2PIC technology is being deployed at two sites, with preliminary data indicating increased operational hash rates and potential CapEx reduction by up to one-third.

Bitcoin Holdings: MARA currently holds over 48,000 Bitcoin, with a strategy to accumulate Bitcoin through mining and purchases.

Market Positioning: MARA is transforming into a vertically integrated digital energy and infrastructure company, focusing on long-term low-cost energy solutions.

Energy Partnerships: MARA is in discussions with governments and global energy corporations to achieve lower energy costs and greater CapEx efficiency.

Operational Efficiency: MARA's daily cost per petahash improved by 25% year-over-year.

Energy Cost per Bitcoin: The purchased energy cost per Bitcoin was $35,728.

Hash Rate Growth: Energized hash rate increased 95% to 54.3 exahash per second in Q1 2025.

Vertical Integration Strategy: MARA is focused on transforming into a vertically integrated digital asset and energy company.

Long-term Partnerships: The company is prioritizing long-term partnerships for low-cost energy strategies.

Investment in Digital Energy Technologies: MARA is investing in digital energy technologies to improve operational efficiency and diversify revenue streams.

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Risk or Challenges

Market Volatility: The company acknowledges a volatile start to the year, with global markets pulling back momentum, which can negatively impact stock performance.

Bitcoin Price Fluctuations: The average price of Bitcoin declined significantly compared to the previous quarter, leading to an unrealized fair market value loss of $510.2 million.

Network Difficulty and Hash Rate: Increased network difficulty and rising global hash rate have negatively impacted Bitcoin production, affecting operational performance.

Competitive Pressures: Competitors are pivoting towards hosting and AI GPU operations, which may affect MARA's market position and valuation.

Regulatory Risks: The company is in discussions with governments and global energy corporations, which may involve regulatory challenges.

Economic Factors: The company's stock performance is correlated with broader market sentiment towards Bitcoin, which can lead to fluctuations in stock value.

Operational Costs: Despite a focus on low-cost energy solutions, the company faces challenges in maintaining cost efficiency amid rising operational costs.

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Guidance & Outlook

Strategic Growth and Low-Cost Energy: MARA is focused on delivering long-term, low-cost energy solutions and transforming into a vertically integrated digital energy and infrastructure company.

Digital Energy Technologies: MARA is investing in and developing digital energy technologies to improve operational efficiency and diversify revenue streams.

Infrastructure Ownership: MARA aims to own infrastructure and self-generate power to drive capital and operational proficiency.

Partnerships with Energy Corporations: MARA is in discussions with governments and global energy corporations to achieve lower energy costs and greater CapEx efficiency.

Custom Miners Development: MARA is manufacturing custom miners through its investment in Auradine, providing unique cost and performance advantages.

2PIC Technology: MARA is deploying its 2PIC technology to increase operational hash rates and reduce CapEx by up to one-third.

Revenue Expectations: MARA expects significant value creation through its strategy of accumulating Bitcoin and mining at low energy costs.

Q2 Financial Outlook: If Bitcoin price strength continues, it could positively impact Q2 results, with a potential fair value gain of over $800 million.

Operational Efficiency: MARA believes it is well-positioned to reduce operating costs over time as it expands its own initiatives.

CapEx Efficiency: MARA's discussions with energy corporations aim to achieve greater CapEx efficiency.

Hash Rate Growth: MARA's energized hash rate increased 95% year-over-year to 54.3 exahash per second.

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Shareholder Return Plan

Bitcoin Accumulation Strategy: MARA has adopted a strategy of accumulating Bitcoin through mining and purchases, which is expected to create significant value for shareholders over time.

Bitcoin Holdings: MARA currently holds over 48,000 Bitcoin on its balance sheet.

Shareholder Return Outlook: The company anticipates that the recovery in Bitcoin prices could lead to a fair value gain of over $800 million in Q2 2025.

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Key Q&A

Q:Can you elaborate on where you see the market disconnect between your fundamentals and share performance and why you see Bitcoin price behaving less like a risk asset going forward?

A:The market values us for our Bitcoin holdings but gives us no credit for our Bitcoin mining operations. We believe the company is more valuable than how the market currently sees it. There are new companies and states investing in Bitcoin, which will drive demand and price up.

Q:Can you elaborate on the public-private partnerships with governments and energy companies that you're currently in discussions with?

A:We are executing on a vision of partnering with energy companies to monetize stranded energy. We are in discussions with large energy companies and focusing on a mix of thermal, wind, solar, and flare gas.

Q:Any guidance on the timeline of when we should expect those partnerships to start coming to fruition?

A:We are not guiding to specific exahash numbers, but you will see good progress this year and some announcements indicating potential future developments.

Q:How do you expect your hash cost position to impact your operations over the next 3 years?

A:We expect our hash cost to continue to decline due to capital and operational efficiencies, and we are prepared for both upside and downside scenarios.

Q:Can you address concerns that lower hash cost for off-grid mining may be offset by trade-offs like reduced rig uptime?

A:The IRRs for our ARP program are significantly higher than traditional models, and we expect to drive costs down further.

Q:Can you share more early market feedback from your 30-megawatt 2PIC immersion pilot project?

A:The 2PIC deployments have shown the ability to overclock systems, leading to substantial CapEx savings.

Q:Can you disclose your ownership stake in Auradine and your interest in pursuing a majority position?

A:We own a little under 15% of Auradine and do not plan to pursue a majority position.

Q:How are tariffs impacting procuring mining rigs?

A:We are manufacturing our own miners to minimize the impact of tariffs and have a strong supply chain team to optimize costs.

Q:What is the strategic rationale for choosing an ATM program over taking on additional leverage?

A:We are focused on raising capital responsibly and deploying it in accretive projects, maintaining flexibility in our capital sources.

Q:Do you plan to maintain the full HODL strategy through '25 and beyond?

A:Yes, we plan to maintain the HODL strategy, as it benefits our stockholders and positions us well for future price increases.

Q:Review of Unclear Management Responses

A:Management avoided giving a direct answer regarding the timeline for partnerships, stating only that progress would be seen this year without specific details. Additionally, there was a lack of clarity on the impact of tariffs on infrastructure costs, as the response was somewhat vague and did not provide specific data.

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Earnings Word Cloud

The most frequently occurring keywords in this quarter's earning call

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