Q4 2023 Marathon Digital Holdings Inc Earnings Call

Unknown Executive: Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Good day, ladies and gentlemen, welcome to Marathon Digital Holdings fourth quarter and fiscal year 2023 earnings webcast and conference call. I'd now like to turn the call over to your host, Charlie Schumacher, Vice President of Corporate Communications. Please go ahead, Charlie.

Yes.

[music].

Charlie Schumacher: Thank you, Kevin. Good afternoon, and welcome to Marathon Digital Holdings' fourth quarter and fiscal year 2023 earnings call. Thank you for joining us on our call today. With me on today's call are Chairman and Chief Executive Officer Fred Thiel and our Chief Financial Officer, Salman Khan. Before we get started, I'd like to remind everyone that our prepared remarks may contain forward-looking statements and that we may make additional forward-looking statements during the question and answer session. These forward-looking statements are subject to risks and uncertainties, and actual results may differ materially.

Yes.

Good day, ladies and gentlemen, welcome to Marathon digital holdings fourth quarter and fiscal year, 'twenty twenty-three earnings webcast and conference call.

Now I'd like to turn the call over to your host probably Schumacher Vice President of corporate Communications. Please go ahead Charlie.

Thank you Kevin and.

Good afternoon, and welcome to Marathon digital holdings fourth quarter and fiscal year 2023 earnings call. Thank you for joining us for our call today with me on today's call are chairman and Chief Executive Officer, Fred Seal and our Chief Financial Officer, Salmaan Cod before we get started I'd like to remind everyone that our prepared remarks may contain forward looking statements and that we may make additional four.

Looking statements during the question and answer session. These forward looking statements are subject to risks and uncertainties and actual results may differ materially.

Charlie Schumacher: When used in this call, the words anticipate, could, enable, estimate, intend, expect, believe, potential, will, should, project, and similar expressions as they relate to Marathon Digital Holdings are, as such, forward-looking statements. Please refer to our earnings release for a full recitation of our forward-looking statements. Investors are cautioned that all forward-looking statements involve risks and uncertainties, which may cause actual results to differ materially from those anticipated by Marathon at this time. Some of these risks and uncertainties are more fully described in Marathon's public filings with the U.S. Securities and Exchange Commission, which can be viewed at www.sec.gov and ir.mara.gov. Finally, please note that on today's call, we will refer to certain financial measures that were not prepared in accordance with generally accepted accounting principles in the United States, including adjusted EBITDA and non-GAAP total margins. Marathon believes these non-GAAP financial measures are important indicators of its operating performance because they exclude certain items that are unrelated to and may not be indicative of its GAAP financial performance.

When used in what's called the words anticipate could enable estimate intend expect believe potential will should project and similar expressions as they relate to marathon digital holdings are at such a forward looking statements. Please refer to our earnings release for a full reputation of our forward looking statements.

<unk> are cautioned that all forward looking statements involve risks and uncertainties, which may cause actual results to differ materially from those anticipated by marathon at this time. Some of these risks and uncertainties are more fully described in marathons public filings with U S Securities and Exchange Commission, which can be viewed at www dot SEC dot Gov, and IR Dot Maura dot.

Com.

Finally, please note that on today's call, we will refer to certain financial measures that were not prepared in accordance with generally accepted accounting principles in the United States, including adjusted EBITDA and non-GAAP total margin Marathon believes these non-GAAP financial measures are important indicators of its operating performance because they exclude certain items that are.

Weighted too and may not be indicative of its GAAP financial results. Please refer to the company's periodic reports on Form 10-K, and 10-Q and to our website for a full reconciliation of these non-GAAP performance measures to the most comparable GAAP financial measures.

Charlie Schumacher: Please refer to our company's periodic reports on Form 10-K and 10-Q and to our website for a full reconciliation of these non-GAAP performance measures to the most comparable GAAP financial measures. We'll begin today's call with prepared remarks from Fred and Salman. After their comments, we will go through some of the more popular questions from our investors before transferring to a live Q&A with our covering analysts. And with that out of the way, I'm going to turn the call over to Fred to kick things off. Okay, Fred?

We will begin today's call with prepared remarks from Fred and some on after their comments, we will be going through some of the more popular questions from our investors before transferring to a live Q&A with our covering analysts.

And with that out of the way I'm going to turn the call over to Fred to kick things off Fred.

Frederick G. Thiel: Thank you, Charlie. We had two primary objectives for 2023, which we outlined on our first quarter earnings call last year. The first was to energize our previously purchased mining rigs to reach our target of 23x hash rate, and the second was to optimize our performance to become more effective and more. As the record operational financial results we published today clearly demonstrate, 2023 was an immensely successful year for Marathon, in which we achieved both of our primary objectives. Today, Marathon is one of the largest Bitcoin miners in North America.

Thank you Charlie.

We had two primary objectives for 2023, which we outlined on our first quarter earnings call last year.

The first was to energize, our previously purchased mining rigs to reach our target of 23 SaaS.

And the second was to optimize our performance to become more effective and more efficient.

As the record operational and financial results, we published today clearly demonstrate 2023 wasn't immensely successful year for marathon in which we achieved both of our primary objective.

Today Marathon is one of the largest bitcoin miners in North America, and whether it be financially operationally or technologically. We believe we are setting the pace for this industry.

Frederick G. Thiel: And whether it be financially, operationally, or technologically, we believe we are setting the pace for this industry. In 2023, we grew our hash rate 253% from 7x a hash to 24.7x a hash, surpassing our target of 23x a hash. At the end of last calendar year, we had over 210,000 Bitcoin miners operating across 11 different sites on three continents, which we believe makes us the largest and most diversified publicly traded miner today. At the same time, we became much more efficient at converting energy into economic value, which is the heart of what we do.

In 2023, we grew our hatch rate, 253% from seven <unk> to $24 seven excess surpassing our target of 23 ex ash at the end of last calendar year, we had over 210000 bitcoin mining operating across 11 different sites on three continents.

Which we believe makes us the largest and most diversified public contributed miner today.

At the same time, we became much more efficient at converting energy into economic value.

Which is the heart of what we do.

Frederick G. Thiel: During the year, we improved our fleet's efficiency by 21% from 30.9 joules per terahash to 24.5 joules per terahash, which means that, on top of our scale and our diversified operations, we have one of the most efficient fleets in the industry. Our operations team dedicated significant efforts to enhance the performance of our facilities. In August of 2023, our site in King Mountain only operated at an average of 51% of its operational capacity, and the site in Granbury only averaged 56% of its total capacity. Our team took charge of the situation, flying in to assess and address the issues.

During the year, we improved our fleet's efficiency, 21% from 39 joules per share of <unk> $24, five joules per Terra house, which means that on top of our scale and our diversified operations. We have one of the most efficient fleets in the industry.

Our operations team dedicated significant efforts to enhance the performance of our facilities.

In August of 2023, our site in Kings Mountain only operated at an average of 51% of its operational capacity in the site and Grandberry only averaged 56% of its total capacity. Our team took charge of the situations flying into assess and address the issues by the end of 2023, our team had authorized.

Frederick G. Thiel: And by the end of 2023, our team had optimized both sites such that King Mountain operated at an average of 92% of its capacity, and Granberry at an average of 99% of its capacity in December. While site performance will fluctuate with seasonality and maintenance, the significant improvements we made underscore the positive impact that our team and our processes can have on our operations. This testament shows that we are not just effective capital allocators but excellent operators as well. Our operational expertise is one of the many reasons we are confident that we will be able to successfully integrate and ultimately optimize the two data centers we recently acquired from Generate Capital and any other sites we may acquire in the near or distant future. In 2023, the total Bitcoin network's hash rate experienced a significant increase, doubling from 253 exahash to 509 exahash. This increase in hash rate has the equivalent impact of a halving of it. With the hash rate doubling, difficulty essentially doubled, and that effectively reduced the reward for mining a block by half, holding all else constant.

With sites such that King Milton operated an average.

92% of its capacity and granberry at an average of 99% of its capacity in December.

While <unk> performance will fluctuate with seasonality and maintenance the significant improvements we made underscore the positive impact that our team and our processes can have in our operation.

Estimate that we are not just effective capital allocators, but excellent operators as well.

Our operational expertise as one of the many reasons. We are confident that we will be able to successfully integrate and ultimately optimize the two data centers. We recently acquired from generate capital and any other sites, we may acquire in the near or distant future.

In 'twenty two 'twenty three the total bitcoin networks hash rate experienced a significant increase doubling from 253 extra hash to 590 <unk>. This increase in hash rate has the equivalent impact of of having events.

With hash rate doubling difficulty essentially doubled and that effectively reduced the reward for mining are blocked by half holding all else all else constant.

Frederick G. Thiel: Meanwhile, Marathon grew more than twice as fast as the rest of the network as we increased our hash rate by 253%. At the same time, we improved our operational efficiency, improving our fleet efficiency by 21%. As a result, we produced a record amount of Bitcoin in 2023. We increased our Bitcoin production 210% year over year from 4,144 Bitcoin in 2022 to 12,852 Bitcoin in 2023. Production improved throughout the year, but the fourth quarter really stood out operationally and financially. By the end of the fourth quarter of 2023, we were operating near full strength after Garden City was fully energized in October, following several months of regulatory delays.

Meanwhile, marathon grew more than twice as fast as the rest of the network as we increased our hatch rate, 253% last year at the same time, we improved our operational efficiency, improving our fleet efficiency, 21% as a result, we produced a record amount of bitcoin in 2023, we increased our bitcoin production, 210% year.

Year over year from 4144, Bitcoin in 2022 to 12850 to bitcoin in 2023.

Production improved throughout the year, but the fourth quarter really stood out operationally and financially.

By the end of the fourth quarter of 2023, we're operating near full strength. After garden City was fully energized in October following several months of regulatory delays in.

Frederick G. Thiel: In December, we averaged 90% capacity across all sites, and at the same time, we benefited from a huge surge in transaction fees on the Bitcoin network. In December 2023 alone, we produced 1853 Bitcoin, with 380 Bitcoin or 22% of our total production coming from fees. As a result, we produced a record 4,242 Bitcoin in Q4.

In December we averaged 90% capacity across all sites and at the same time, we benefited from a huge surge in transaction fees on the Bitcoin network.

In December 2023 alone, we produced 1853, bitcoin with 380, bitcoin or 22% of our total production coming from fees. As a result, we produced a record 4242 big corn in Q4.

Frederick G. Thiel: In Q4 2023 alone, we produced more Bitcoin than we did in all of 2022 and made more Bitcoin than three of our top competitors combined. In addition to Q4's record Bitcoin production, we announced several new expansions at the end of last year that are indicative of how we see Marathon evolve. The first announcement was our inaugural pilot project powered by renewable off-grid energy from a landfill in Utah.

In Q4, 2023 alone we produce more bitcoin than we did at all of 2022.

More bitcoin then three of our top competitors combined.

In addition to Q4 record Bitcoin production, we announced several new expansions at the end of last year that are indicative of how we see marathon evolving.

The first announcement was our inaugural pilot project powered by renewable energy from a landfill in Utah.

Frederick G. Thiel: Our team is still working on finalizing the data, but the preliminary results of this project demonstrate that Bitcoin miners can actually help reduce emissions. The data suggest that the model we helped pioneer of turning trash into cash by mining Bitcoin with stranded methane from landfills is economically viable for miners, for the landfill operator, and is more effective at reducing methane emissions than flaring. Following the landfill gas project in Utah, we also announced our second international expansion and our first deployment into Latin America. In Paraguay, we're working to convert 27 megawatts of unused hydropower into 1.1 exahash of Bitcoin mining. By Marathon standards, this deployment is really just a large-scale pilot, and it serves as an excellent case study for the value that Bitcoin mining can bring to regions throughout the world with excess power.

Our team is still working on finalizing the data, but the preliminary results of this project demonstrates the bitcoin miners can actually help reduce emissions.

The data suggests that the model, we helped pioneer of turning trash into cash by mining bitcoin with stranded methane from landfills is economically viable for minors for the landfill operator and is more effective at reducing methane emissions in flaring.

Following the landfill gas project in Utah, We also announced our second international expansion and our first deployment into Latin America and.

<unk> why we're working to convert 27 megawatts of unused hydro power into one onex, a hash of bitcoin mining capacity.

By Marathon standards as deployment is really just a large scale pilot and it serves as an excellent case study for the valley of the bitcoin mining can bring to regions throughout the world with excess power.

Frederick G. Thiel: It also demonstrates our ability to replicate the joint venture model that we developed in Abu Dhabi, which allows us to partner with regional experts to quickly and effectively expand our diversified portfolio of Bitcoin mining assets. This experience is essential as we look to grow our footprint internationally and educate the world on the value that Bitcoin mining can bring as a technological solution to the energy sector. Perhaps the most significant announcement from last quarter was our $179 million acquisition of our first fully-owned data centers in Kearney, Nebraska, and Granbury, Texas. The acquisition closed last month, and the purchase price is subject to customary closing adjustments.

It also demonstrates our ability to replicate the joint venture model that we developed in the Abu Dhabi, which allows us to partner with regional experts to quickly and effectively expand our diversified portfolio of bitcoin mining assets.

This experience is essential as we look to grow our footprint internationally and educate the world on the value of Bitcoin mining can bring is they took a lot of technology solutions to the energy sector.

Perhaps the most significant announcement from last quarter was our $179 million acquisition of our first fully owned data centers in Kearney, Nebraska in Grand Prairie, Texas.

The acquisition closed last month and the purchase price is subject to customary closing adjustments with this acquisition marathon transformed from a company with 584 megawatts of capacity, 3% of which we directly owned or operated for one with 910 megawatts of capacity, 45% of which power sites we directly.

Frederick G. Thiel: With this acquisition, Marathon transformed from a company with 584 megawatts of capacity, 3% of which we directly owned or operated, to one with 910 megawatts of capacity, 45% of which powers sites we directly own. We've already spoken about the strategic importance of owning these sites, the creative nature of this transaction, and of the opportunities we have to reduce our operational costs at these sites. So I'll refrain from going into detail today.

We've already spoken about the strategic importance of owning these sites of the accretive nature of this transaction and of the opportunities we have to reduce our operational cost at these sites, so I'll refrain from going into detail today.

Salman H. Khan: We will be assuming full operational control of them by April 30th or earlier, allowing us to accelerate operational cost savings and optimization. While we're not yet the operators, our team is currently intently focused on engaging the local communities to ensure that we can be the best neighbors possible as we go through the transition process. We believe Bitcoin mining can positively change the world, and that starts with the local communities in which we operate, where our operations create highly skilled jobs and economic contributions for the people of those communities. Before going too far into our future plans, I'm going to turn the call over to Salman to discuss our financial results for the fourth quarter and fiscal year ended 2023. Salman.

We will be assuming full operation to control of them by April 30th or earlier, allowing us to accelerate operational cost savings and optimization.

While we're not yet the operators. Our team is currently intensely focused on engaging the local communities to ensure that we can be the best neighbors possible as we go through the transition process.

We believe bitcoin mining can positively change the world and that starts with the local communities in which we operate where our operations create highly skilled jobs and economic contributions for the people of those communities.

Before going too far into our future plan I'm going to turn the call over to Phil to discuss our financial results for the fourth quarter and fiscal year ended 2023 months.

Thank you Fred.

Salman H. Khan: Thank you, Fred. We had an excellent fourth quarter to cap off what was an incredibly successful year for Marathon. We produce record revenues, net income, and adjusted EBITDA, and we've entered 2024 with a strong balance sheet that has us well-positioned for the upcoming having and being. Well, let me dig into the details. The company reported net income attributable to common stockholders of approximately $152 million, or $0.62 per diluted common share, in the quarter, compared to a net loss of approximately $392 million, or $3.13 per share, in the prior year quarter.

Had an excellent fourth quarter to cap off what was an incredibly successful year for marathon.

Produced record revenues net income and adjusted EBITDA and we entered 2024 with a strong balance sheet that has that has us well positioned for the upcoming having and beyond.

Let me dig into the details.

The company reported net income attributable to common stockholders of approximately $150 2 million.

Our 62 cents per diluted common share in the quarter compared to a net loss of approximately $392 million or $3 13 per share in the prior year quarter.

Salman H. Khan: For the full year, we reported net income of $261 million, or $1.06 per diluted share, compared to a net loss of $694 million, or $6.12 per share, in the prior year. In both the quarter and the year, the improvement in profitability was partially due to us choosing to early adopt the new FASB fair value accounting rules. Had the company not early adopted the new FASB fair value accounting rules, our net income attributable to common stockholders for the fourth quarter of 2023 would have been a net loss of 5 million, or a loss of 2 cents per diluted share, and net income of $33 million, or 17 cent I will discuss these changes and their impact in more detail shortly.

For the full year, we reported net income of $261 million or $1 and <unk> <unk> per diluted share compared to a net loss of $694 million or $6 12 per share in the prior year.

Both the quarter and the year the improvement in profitability was partially due to us choosing to early adopt the new fast be fair value accounting rules.

Had the company not early adopted the new FASB fair value accounting rules, our net income attributable to common stockholders for fourth quarter of 2023 would have been a net loss of $5 million or loss of <unk> <unk> per diluted share and net income of $33 million or 17 cents per diluted share for the year.

Ended December 31 2023.

I will discuss these changes and the impact in more detail shortly.

Salman H. Khan: But first, let's dive into mining. Both quarter revenues were a record $157 million, significantly higher than prior year revenues of $28 million, and were driven by a 172% increase in Bitcoin production, coupled with a 101% higher average price, For the full year, we recorded revenues of approximately $388 million, also a significant improvement compared to $118 million in the prior year. The improvement year over year was driven by a 210% increase in Bitcoin production and a 2% average price of Bitcoin in 2023 compared to 2020. It is important to note that in 2023, we benefited from the absence of a $333 million impairment of mining of equipment and advances to vendors, a $183 million impairment of digital assets, an $85 million loss on digital assets held within the investment fund, and a $56 million impairment of deposits, loan, and investment due to vendor bankruptcy, partially offset by an $84 million gain on sale of equipment net of disposals in 2022, are hosting an energy costs for the three months ended December 31 were 75 million compared to $30 million last, For the year, hosting and energy costs were $223 million compared to $73 million in 2022.

But first let's dive into mining results.

Fourth quarter revenues were a record $157 million <unk>.

Significantly higher than prior year revenues of $28 million.

And were driven by a 172% increase in bitcoin production, coupled with a 101% higher average price of bitcoin.

For the full year, we recorded revenues of approximately $388 million also a significant improvement compared to $118 million in the prior year.

The improvement year over year was driven by a 210% increase in bitcoin production and a 2% average price of bitcoin in 2023 compared to 2022.

It is important to note that in 2023, we benefited from the absence of a $333 million impairment of mining equipment and advances to vendors and $183 million impairment of digital assets and $85 million loss on digital assets held within the investment fund.

And $56 million impairment of deposits loans and investment due to vendor bankruptcy, partially offset by an $84 million gain on sale of equipment net of disposals in 2022.

Our hosting and energy costs for the three months ended December 31 were $75 million compared to $30 million last year for.

For the year hosting and energy costs were $223 million compared to $73 million in 2022.

Salman H. Khan: In both time periods, the increase was primarily due to growth in our mining fleet and related costs. Total cost of revenues, which includes depreciation and amortization, was $146 million in Q4 of 2023, compared to $44 million in Q4 of 2022, an increase of $235 million. For the full year, this was $403 million, 166% from $151 million in 2022. Depreciation and amortization for the fourth quarter was $71 million, an increase of $57 million compared to the same period in the prior year.

In both time periods. The increase was primarily due to growth in our mining and related costs.

Total cost of revenues, which includes depreciation and amortization was $146 million in Q4 of 2023 compared to $44 million in Q4 of 2022, an increase of 235%.

For the full year this was $403 million, 166% from $151 million in 2022.

Depreciation and amortization for the fourth quarter was $71 million increase increased by $57 million compared to the same period in the prior year for the full year depreciation and amortization was $280 million compared to $79 million in 2022.

Salman H. Khan: For the full year, depreciation and amortization was $180 million compared to $79 million in 2022. In both periods, the change was predominantly the result of growing our energized hash rate from 7 exahash to 24.7 exahash. We have also early adopted FASB's accounting for and disclosure of crypto assets, which actually requires the measurement of crypto assets at fair value. The adoption of new accounting guidance resulted in a cumulative effect adjustment at the beginning of 2020. In 2023, we increased our Bitcoin holdings 24% from 12,232 Bitcoin to 15,126. Because of the significant amount of Bitcoin we hold on our balance sheet, we recognized a gain on digital assets of $214 million during the fourth quarter of 2020, and again on digital assets of $331 million for the full year under this new accounting guidance.

In both periods. The change was predominantly the result of growing our energized hash rate from seven <unk> to $24 seven ex ash.

We have also early adopted FASB accounting for and disclosure of crypto assets, which is which actually requires the measurement of crypto assets at fair value.

The adoption of new accounting guidance resulted in a cumulative effect adjustment at the beginning of 2020.

In 2023, we increased our bitcoin holdings, 24% from 12232 Bitcoin to 15000 102006.

Because of the significant amount of bitcoin, we hold on our balance sheet, we recognized a gain on digital assets of $214 million during the fourth quarter of 2023, and again on digital assets of $331 million for.

For the full year under this new accounting guidance.

As one of the largest holders of bitcoin among publicly traded companies, we expect the new fair value accounting of bit to bitcoin to continue to impact our bottom line going forward as the price of bitcoin fluctuates.

Salman H. Khan: As one of the largest holders of Bitcoin among publicly traded companies, we expect the new fair value accounting of bit to Bitcoin to continue to impact our bottom line going forward as the price of Bitcoin fluctuates. The company's non-GAAP total margin, excluding depreciation and amortization, was $82 million this quarter, compared to a loss of $1 million in the same quarter last year.

The Companys non-GAAP total margin, excluding depreciation and amortization was $82 million this quarter compared to a loss of $1 million in the same quarter last year.

Salman H. Khan: For the fiscal year 2023, our non-GAAP total margin excluding depreciation and amortization was $164 million compared to $45 million in 2022. In both cases, the change was predominantly related to higher Bitcoin prices, increased production, and increased operation efficiency. In Q4 of 2023, adjusted EBITDA improved to $260 million versus a $374 million loss in the prior year. For the full year, adjusted EBITDA improved to $420 million from a loss of $543 million in 2020. The drivers of the adjusted EPDOT improvement in both periods include total margin improvement, excluding depreciation and amortization, gains on digital assets, and the absence of impairment charges. Due to the impairment charges of $572 million in 2022, we had a gain of over $700 million, which had a positive impact on earnings when compared to last year. General and administrative expenses, including stock-based compensation, were $20.5 million in Q4 of 2023, compared to $13 million in the prior year period. For the fiscal year 2023, GNA excluding stock-based compensation was $63 million compared to $32 million in 2020.

For the fiscal year 2023, our non-GAAP total margin, excluding depreciation and amortization was $164 million compared to $45 million in 2022.

In both cases, the change was predominantly related to higher bitcoin prices.

Increased production and increased operational efficiency.

In Q4 of 2023, adjusted EBITDA improved to $260 million versus $374 million loss in the prior year period.

For the full year adjusted EBITDA improved.

The $420 million from a loss of $543 million in 2020 to the drivers of the adjusted EBITDA improvement in both periods include total margin improvement, excluding depreciation and amortization gains on digital assets and the absence of impairment charges.

Due to the impairment charges of $572 million in 2022, we had a gain of over $700 million, which had a positive impact to earnings when compared to last year.

General and administrative expenses, excluding stock based compensation were $2 5 million in Q4 of 2023 compared to $13 million in the prior year period.

For the fiscal year 2020 through G&A, excluding stock based compensation was $63 million compared to $32 million in 2022.

Salman H. Khan: This increase in expenses was primarily due to the increasing scale of the business, including payroll and benefits, professional fees, and other costs. At the end of 2023, we had approximately 60 employees, up from 30 a year ago, and we continue to opportunistically add talent across the organization. Turning to our Bitcoin holdings and cash position, unrestricted cash and cash equivalents totaled $357 million at December 31, 2023, up $254 million compared to last. Also, at December 31, we held approximately 15,126 Bitcoin with a carrying value of $640 million on the balance. The company's combined balance of unrestricted cash and cash equivalents and Bitcoin was approximately $1 billion as of December 31, 2020.

This increase in expenses was primarily due to the increase in scalable business, including payroll and benefits professional fees and other costs.

At the end of 2023, we had approximately 16 points up from 30, a year ago, and we continue to Opportunistically add talent across the organization.

Turning to our Bitcoin holdings in cash position unrestricted cash and cash equivalents totaled $357 million at December 31, 2023.

Up to $2 $54 million compared to last year.

Also at December 31, we held approximately 15126, bitcoin with a carrying value of $640 million on the balance sheet.

The company's combined balance off.

Restricted cash and cash equivalents and bitcoin was approximately $1 billion as of December 31, 2023.

We sold 2365 bitcoin during Q4 of 2023, realizing cash proceeds of $83 million.

Salman H. Khan: We sold 2,365 Bitcoin during Q4 of 2023, realizing cash flows of $83 million. During the year, we sold 9,482 Bitcoin and realized cash proceeds of $264 million. These proceeds were utilized to fund operating expenses, including cost of revenues for energy hosting and other cash operating. During the year, we generated $608 million from at-the-market equity sales, which we primarily intend to use for growth capital and other general corporate purposes. As previously discussed, during the year, we took advantage of an opportunity to strengthen our balance sheets by exchanging $417 million in convertible notes for approximately $329 million in equity.

During the year, we sold 9482, bitcoin and realized cash proceeds of $264 million.

These proceeds were utilized to fund operating expenses, including cost of revenues for energy hosting and other cash operating expenses.

During the year, we generated $608 million from at the market equity sales, which we primarily intend to use for growth capital and other general corporate purposes.

As previously discussed.

During the year, we took advantage of an opportunity to strengthen our balance sheet by exchanging $417 million in convertible notes for approximately $329 million in equity.

Salman H. Khan: This transaction reduced our debt by 56% and saved approximately $101 million, or $0.55 per share, in cash for our stockholders. The combined cash and cash equivalents and Bitcoin on our balance sheet, along with reduced debt and access to an at-the-market facility, provides us ample amounts of liquidity and optionality to strategically evaluate opportunities as we approach. We believe the increased value of combined cash and Bitcoin, along with reduced debt, is prudent risk management and a source of strength for the company's balance sheet as we enter a potentially turbulent time for the United States. As mentioned in our January production report, our unrestricted cash balance at January 31 was $319 million, and we held approximately 15,741 Bitcoin with a fair value of $670 million. In total, we had approximately $1 billion in unrestricted cash and Bitcoin at the end of January.

This transaction reduced our debt by 56% and saved approximately <unk> 1 million or <unk> 55 per share in cash to our stockholders.

The combined cash and cash equivalents and bitcoin on our balance sheet, along with reduced debt and access to aftermarket facility provides us ample amount of liquidity and optionality to strategically evaluate opportunities as we approach having.

We believe the increased value of combined cash and bitcoin along with reduced debt is prudent risk management and source of strength of the company's balance sheet as we enter it potentially turbulent time for the industry.

As mentioned in our January production report, our unrestricted cash balance at January 31 was $319 million and.

And we held approximately 15741 bitcoin with a fair value of $670 million.

In total we had approximately $1 billion in unrestricted cash and bitcoin at the end of January.

We continue to actively manage and optimize our treasury by hedging portion of our Bitcoin holdings.

Salman H. Khan: We continue to actively manage and optimize our treasury by hedging portions of our Bitcoin holdings. The purpose is to mitigate the impacts of extreme volatility in the near term while maintaining the long-term strategy of maximizing the size and value of our trades. Given Bitcoin's historical volatility, we believe this strategy is integral to improving the resilience of our organizations, providing downside risk protection during volatile market conditions, and maximizing our Bitcoin valuation. We expect our Bitcoin holdings will generally increase but fluctuate depending on operating and market conditions. And again, due to the significant amount of Bitcoin we hold on our balance sheet, we expect these fluctuations to continue to impact our bottom line with the adoption of the new accounting standards. We intend to add to our Bitcoin holdings primarily through our production activities. And we will also continue to sell Bitcoin as a means of generating cash to fund monthly operating costs and for general corporate purposes. Given our positive financial results and our robust balance sheet, we believe Marathon is well positioned to achieve our 2024 growth targets and to capitalize on any opportunities that present themselves around the next. And that completes my update.

Purpose is to mitigate the impacts of extreme volatility in the near term, while maintaining the long term strategy of maximizing the size and value of our treasury.

Given this client's historical volatility we believe this strategy is integral to improving the resilience of our organizations, providing downside risk protection during volatile market conditions and maximizing our bitcoin valuation potential.

We expect our Bitcoin holdings will generally increase but fluctuate depending on operating and market conditions.

And again due to the significant amount of bitcoin, we hold on our balance sheet. We expect these fluctuations to continue to impact our bottom line with the adoption of the new accounting rules.

We intend to add to our Bitcoin holdings, primarily through our production activities and we will also continue to sell bitcoin as a means of generating cash to fund monthly operating costs and for general corporate purposes.

Given our positive financial results and a robust balance sheet.

We believe marathon is well positioned to achieve our 2024 growth targets and to capitalize on any opportunities that present themselves around the upcoming having.

And that completes my update I will now turn it back to Fred who will talk more about our operations and our ongoing plans right.

Frederick G. Thiel: I'll now turn it back to Fred, who will talk more about our operations and our ongoing plans. Thanks, Salman. Those of you who have been tracking our pool will know that Q4's record performance was followed by temporary operational challenges in North Dakota and Texas that started in mid-January and have now been resolved. These sites, operated by Applied Digital, had unplanned outages due to transformer and transition line maintenance.

Thanks, Tom.

Those of you who have been tracking our pool will know that Q4s record performance was followed by temporary operational challenges in North Dakota, and Texas started in mid January and have now been resolved. These sites operated by applied digital had unplanned outages due to transformer and transition line maintenance in both instances our team immediately begin working.

Frederick G. Thiel: In both instances, our team immediately began working with our hosting provider to find solutions to the issues, which are now resolved. As of this week, Ellendale is nearly back to full strength, and Garden City is re-energized. While these maintenance issues are now resolved, we do currently expect Q4.

With our hosting provider to find solutions to the issues, which are now resolved as of this week <unk> is nearly back to full strength in garden City has re energized.

While these maintenance issues are now resolved we do currently expect Q4s.

Record performance to outshine, the first quarter of this year due to the prolonged impact regardless, we're confident that the best and most exciting times for our operation are still to come.

Frederick G. Thiel: Record performance to outshine the first quarter of this year due to the prolonged impact. Regardless, we're confident that the best and most exciting times for our operation are still to come. One year ago, the world was a very different place for Bitcoin miners and for Marathon. We were in a bear market with Bitcoin's price hovering around $23,000. Marathon itself represented less than 3% of the Bitcoin network with only 7x a hash online. We had a 280 megawatt portfolio of Bitcoin mining assets, all based in the United States. We had $226 million of liquidity, and we carried $798 million of debt on our balance sheet. Today, however, is a very different story.

One year ago, the world was a very different place for bitcoin miners and for marathon.

We were in a bear market with bitcoin price hovering around $23000 marathon itself represented less than 3% of the bitcoin network with only seven exit hash online. We had 280 megawatt portfolio of bitcoin mining assets all based in the United States, We had $226 million of liquidity and we carried 798.

The depth of our balance sheet.

Today is a very different story.

But <unk> prices hovering around 60000, I just strike out the 55000 in my script, because bitcoin kept moving up in price today.

Frederick G. Thiel: Bitcoin's price is hovering around $6,000. I just struck out the $55,000 in my script because Bitcoin kept moving up in price. Marathon represents approximately 5% of the Bitcoin network with over 26x a hash online and more coming. We have a 900 megawatt portfolio of Bitcoin mining assets diversified across 11 sites in three different continents. We have $1 billion of liquidity on our balance sheet and have reduced debt by over $411 million while saving our shareholders $100 million in the process, resulting in net debt of $331 million.

Marathon represents approximately 5% of the bitcoin network with over 26 sector hash online and more problems. We have a 900 megawatt portfolio of bitcoin mining assets diversified across 11 sites.

Three different continents.

We have $1 billion of liquidity on our balance sheet and have reduced debt by over $411 million, while saving our shareholders $100 billion in the process, resulting in net debt.

$331 million.

We're integrating our first major acquisitions and taking direct control of nearly half of our hatch rates, but we're only just getting started.

In 2024, we plan to grow our operational hash rate more than 35% to approximately 35% to 37 excess cash by the end of 2025, we plan to be at 50, <unk>, which is approximately double our current capacity. These targets are based on our current machine orders and pipeline. However, we believe there are opportunities to accelerate.

Frederick G. Thiel: We're integrating our first major acquisitions and taking direct control of nearly half of our hashrate, but we're only just getting started. In 2024, we plan to grow our operational hash rate by more than 35% to approximately 35 to 37 exa hash. By the end of 2025, we plan to be at 50 exa hash, which is approximately double our current capacity. These targets are based on our current machine orders and pipeline.

The timeline and realize these targets even sooner.

So you may ask how are we going to get there.

To start we have orders and options for machines that represent upwards of 45 additional excess cash with orders for 'twenty two exit how should miners already placed an inbound with the option to add another 23 extra hazard capacity.

Frederick G. Thiel: However, we believe there are opportunities to accelerate the timeline and realize these targets even sooner. So you may ask, how are we going to get there? To start, we have orders and options for machines that represent upwards of 45 additional ExaHash, with orders for 22 ExaHash of minors already placed and inbound, with the option to add another 23 ExaHash of compatible minors.

Additionally, marathons investment in Oregon has already begun to pay dividends by providing us with an additional avenue to increase tax rate at an accelerated pace. If we choose to execute on these orders we have the potential to reach $69 seven extra hash one thing John.

Please procuring machines is not a constraint marathons growth. The obvious question is where do we deploy the next 45 X a hash of miners.

Frederick G. Thiel: Additionally, Marathon's investment in Auradon has already begun to pay dividends by providing us with an additional avenue to increase the hash rate at an accelerated pace. If we choose to execute on these orders, we have the potential to reach 69.7 exahash once the orders are entered. Since procuring machines is not a constraint on Marathon's growth, the obvious question is where do we deploy the next 45x of hash power of miners? The two sites we recently acquired are the first part of the answer. Granbury in particular has substantial expansion potential, which we've discussed in press releases and on our last call. But to meet our appetite for growth, we will need to do much more, which will consist of both organic and inorganic growth domestically and internationally, with a focus on optimized cost to mine and a sustainable energy source.

The two sites, we recently acquired or the first part of the answer Granberry in particular has substantial expansion potential which we've discussed in press releases and on our last call, but to meet our appetite for growth, we will need to do much more which will consist of both organic and inorganic growth domestically and internationally with a focus on optimized cost to mine it.

A sustainable energy source this is where our balance sheet comes into play.

We have been building up a substantial stockpile of dry powder now totally over $1 billion between cash and bitcoin and we intend to utilize it to continue growing our business through organic and inorganic means as opportunities arise. So far in 2024, we have raised $489 3 million at an average share price of 19.

And 82.

As our 10-K will show, we have filed a new shelf, giving us the option to raise an additional $1 $5 billion by at the market equity offering.

Frederick G. Thiel: This is where our balance sheet comes into play. We have been building up a substantial stockpile of dry powder, now totaling over $1 billion between cash and Bitcoin, and we intend to utilize it to continue growing our business through organic and inorganic means as opportunities arise. So far in 2024, we have raised $489.3 million at an average share price of $19.82.

This would bring our total potential war chest over $2 $5 billion, if it were fully exercised.

The shelf that is.

Today, the majority of our 900 megawatt bitcoin mining portfolio predominantly consists of machines and large data centers that reside in their power stations.

Good.

We believe there exists significant opportunities to develop utility scale mining operations based on stranded energy outside the United States like our UAE in Paraguay site.

Frederick G. Thiel: As our 10K will show, we have filed a new shelf, giving us the option to raise an additional $1.5 billion at the market equity office. This would bring our total potential war chest to over two and a half billion dollars if it were fully exercised. Schultz

We will look for more opportunities in places such as the Middle East Africa, Latin America and elsewhere.

But our organization is evolving and with it we believe we can revolutionize the way people think about bitcoin mining.

Our long term vision for marathon is a diverse global organization that Leverages bitcoin mining technologies to build a more sustainable and inclusive future bitcoin miners excel at two things consuming stranded energy and generating heat and while most of our competition is focused on underutilized utility scale grid energy, we are always asking ourselves.

Frederick G. Thiel: Today, the majority of our 900 megawatt Bitcoin mining portfolio predominantly consists of machines and large data centers that reside near power stations in the United States. We believe there exist significant opportunities to develop utility-scale mining operations based on stranded energy outside of the United States, like our UAE and Paraguay systems. We will look for more opportunities in places such as the Middle East, Africa, Latin America, and also...

What is the best way to utilize our technology and its unique attributes to create the most value.

We believe one of those is through bitcoin mining its version of recycling, which basically means converting what is currently a waste product into a productive resource the pilot project in Utah, where we converted methane gas generated from a landfill into a productive source of power for Bitcoin mining is only one example, there are some.

Frederick G. Thiel: But our organization is evolving, and with it, we believe we can revolutionize the way people think about Bitcoin mining. Our long-term vision for Marathon is a diverse global organization that leverages Bitcoin mining technologies to build a more sustainable and inclusive future. Bitcoin miners excel at two things, consuming stranded energy and generating heat. And while most of our competition is focused on underutilized utility-scale grid energy, we are always asking ourselves, what is the best way to utilize our technology and its unique attributes to create the most value? We believe one of those is through Bitcoin mining's version of recycling, which basically means converting what is currently a waste product into a productive resource. The pilot project in Utah, where we converted methane gas generated from a landfill into a productive source of power for Bitcoin mining, is only one example.

New projects, our team had been developing that have a higher IRR than traditional bitcoin mining based on using waste to generate energy and leveraging the heat from bitcoin mining profitably for low grade industrial process.

It would be premature to discuss details at this time, but given the scale and diversity of applications, we believe the market opportunity here.

Substantial and the prospects are incredibly exciting.

Reuse is a concept that we see becoming more significant and scalable in the coming years.

Bitcoin miners are more efficient to generating heat from electricity than most other alternatives, including most space heaters, which do nothing but creates heat by consuming electricity.

We are currently exploring projects that involve using heat from our mining systems that both large and small scale to provide heat for industrial processes commercial buildings homes and even just the living room, it's only a matter of technology and capability and marathon.

Frederick G. Thiel: There are some new projects our team has been developing that have a higher IRR than traditional Bitcoin mining, based on using waste to generate energy and leveraging the heat from Bitcoin mining profitably for low-grade industrial processes. It would be premature to discuss details at this time, but given the scale and diversity of applications, we believe the market opportunity here is substantial and the prospects are incredibly exciting. Heat reuse is a concept that we see becoming more significant and scalable in the coming years. Bitcoin miners are more efficient at generating heat from electricity than most other alternatives, including most space heaters, which do nothing but create heat by consuming electricity.

Marathons technology group is finalizing the development of our highly scalable immersion technology that enabled heat reuse projects in many different form factors sizes and applications and we'll be speaking more about this in the near future.

Over the next five years, our objective is to have one gigawatt of power dedicated to these various applications that are separate from the utility scale mining we're known for today, but that are directly in line with our core competencies at the heart of these initiatives is our technology, while our growth team initiates potential new projects and our operations team develops and scale.

Our site our technology team has been hard at work building and launching new tools and services for those who are building the future of bitcoin.

The first of these is slipstream.

Which is the direct transaction submission service, we announced last week.

Frederick G. Thiel: We are currently exploring projects that involve using heat from our mining systems at both large and small scales to provide heat for industrial processes, commercial buildings, homes, and even just the living room. It's only a matter of technology and capability, and Marathon has both. Marathon's technology group is finalizing the development of a highly scalable immersion technology that enables heat reuse projects in many different form factors, sizes, and applications.

For the Bitcoin community direct submissions are designed to mitigate censorship and encourage development on bitcoin.

For marathon to higher fees may help increase revenue and as far as we know marathon is the only minor capable of offering a direct submission service and benefiting from the potential increase in transaction fees. Because we are the only minor that operates its own learning pool.

This is one of the many reasons. We believe there is a strategic value to owning our own pool and focusing on vertically integrating our technology stack.

Frederick G. Thiel: And we'll be speaking more about this in the near future. Over the next five years, our objective is to have one gigawatt of power dedicated to these various applications that are separate from the utility-scale mining we're known for today but that are directly in line with our core competencies. At the heart of these initiatives is our technology. While our growth team initiates potential new projects and our operations team develops and scales our site, our technology team has been hard at work building and launching new tools and services for those who are building the future of Bitcoin. The first of these is Slipstream, which is the direct transaction submission service we announced last week. For the Bitcoin community, direct submissions are designed to mitigate censorship and encourage development on Bitcoin.

And <unk>, which we announced earlier today is another innovation, we have been hard at Brookdale, We believe enduro, maybe the world's first most bit coordinated layer two network and it is intended to serve as infrastructure for the next generation of bitcoin applications.

This is something we have helped incubate, but it is not something that we own enduro is for the pioneers striving to redefine blockchain adoption. Therefore, it will be community led and community driven.

Why give something like us away for free to the community.

It's actually quite straightforward, we have a vested interest in the bitcoin ecosystem. We're the second largest holder a bit quite among publicly traded companies and the largest single publicly traded organization working to process breakpoint transactions and secure the network.

Frederick G. Thiel: For Marathon, the higher fees may help increase revenue. And as far as we know, Marathon is the only miner capable of offering a direct submission service and benefiting from the potential increase in transaction fees because we're the only miner that operates its own mining. This is one of the many reasons we believe there is strategic value to owning our own pool and focusing on vertically integrating our technologies. Enduro, which we announced earlier today, is another innovation we have been hard at work on. We believe Enduro may be the world's first Bitcoin native layer two network, and it is intended to serve as infrastructure for the next generation of Bitcoin applications. This is something we have helped incubate, but it is not something that we own.

Our core competency is converting energy and economic value in the form of bitcoin. Therefore, it's bitcoin flourishes. So two weeks. This is also why we helped raised approximately $800000 in just four days last year to support <unk> core developers 500000 of which was contributed by marathon itself.

We believe that enduro could have a positive impact on the community, but we also recognize that different people have different views on how best to extend the utility of bitcoin, we believe in testing iterating and letting the market decide what works best.

It is that experimental and natural mindset that is core to marathons DNA and as we look to scale in 2024 and beyond it will remain one of the primary differentiator success marathon apart.

Frederick G. Thiel: Enduro is for the pioneers, striving to redefine blockchain adoption. Therefore, it will be community led and community driven. Why give something like this away for free to the community? It's actually quite straightforward.

Marathons leadership team consists of people, who think differently and are willing to try divergent ways to execute and deliver on our vision.

Frederick G. Thiel: We have a vested interest in the Bitcoin ecosystem. We're the second largest holder of Bitcoin among publicly traded companies and the largest single publicly traded organization working to process Bitcoin transactions and secure the network. Our core competency is converting energy into economic value in the form of Bitcoin. Therefore, if Bitcoin flourishes, so will we. This is also why we helped raise approximately $800,000 in just four days last year to support Bitcoin core developers, 500,000 of which was contributed by Marathon itself. We believe that Enduro can have a positive impact on the community, but we also recognize that different people have different views on how best to extend the utility of Bitcoin. We believe in testing, iterating, and letting the market decide what works best. It is that experimental and agile mindset that is core to Marathon's DNA. And as we look to scale in 2024 and beyond, it will remain one of the primary differentiators that sets Marathon apart. Marathon's leadership team consists of people who think differently and are willing to try divergent ways to execute and deliver on our vision.

While 2023 was a banner year for 'twenty for marathon, we have never been more optimistic about marathons future and we look forward to building on our accomplishments to leverage all of our assets to build a more sustainable and inclusive future and with that I'll turn it back to Charlie for Q&A.

Yes.

Thanks, Brad.

At this time, we're going to commence the Q&A section of todays call I will start by answering some of the most popular questions submitted by investors through our Q&A platform.

So the first question comes from rescue from Rex are who asks the company more profitable after BTC having.

I'll take that question. Thank you Rex. Thank you for asking the question just just for the benefit of everybody. Having is are unique to this industry and bitcoin and force the industry to become more efficient every four years.

<unk>.

The drop in the blocker reward forces.

Sure.

The inefficient operators out.

And the most efficient one remains and this will we expect this likely will help us gain market share as we go through the having.

The impact on marathon will depend on where the best bitcoin.

Bitcoin prices go from here, obviously, there has been a great run in the bitcoin price recently and.

And all depends on how much the competition falls from here as well with us.

Minors.

Which could drive some interesting activity in the market place.

With that we have we have a significant bitcoin holding on our balance sheet and and.

Charlie Schumacher: While 2023 was a banner year for Marathon, we have never been more optimistic about Marathon's future, and we look forward to building on our accomplishments to leverage all of our assets to build a more sustainable and inclusive future. And with that, I turn it back to Charlie for Q&A. Thanks, Fred.

And given that fact.

We do the math simple terms every $10000.

And bitcoin price.

Results in approximately $200 million.

Change in our EBITDA on an annualized basis.

And in.

In the current price environment, we expect.

Charlie Schumacher: At this time, we're going to commence the Q&A section of today's call. We'll start by answering some of the most popular questions submitted by investors through our Q&A platform. So the first question comes from Rex R, who asks, Is the company more profitable after the BTC habit? I'll take that question. Thank you, Rex.

To be profitable.

And the assumption that the.

The competition.

Certain of those machines will go down and it will provide us opportunity to grow.

Create more value for our stockholders.

Hopefully that answers I think.

One thing I'll just pile on.

Public fell months great answers.

The fact that we are very focused.

On growing parts of our business.

Salman H. Khan: Thank you for asking the question. For the benefit of everybody, halvings are unique to this industry and Bitcoin and force the industry to become more efficient every four years, and the drop in the block reward forces the inefficient operators out, and the most efficient ones remain. And we expect this likely will help us gain market share as we go through the halving. The impact on Marathon will depend on where the Bitcoin prices go from here. Obviously, there has been a great run in the Bitcoin price recently, and it all depends on how much the competition falls from here as well as with those inefficient miners, which could drive some interesting activity in the market.

That generate higher IRR has been traditional bitcoin mining. So we have one of the most.

Efficient fleets in the industry and if you think about the 45 extra hash of machines that we have.

On the inbound between orders and options.

And you just look at the orders that are.

Locked for delivery at this point, our efficiency will drop from 24 joules per Terra hash down to somewhere around 22 were near 21 joules per care house again, maintaining the most efficient fleet in the industry.

Our technology investments in heat reuse projects in areas adjacent to bitcoin mining will allow us to mine bitcoin.

Charlie Schumacher: With that, you know, we have a significant Bitcoin holding on our balance sheet. And, and, and given that fact, if we do the math, in simple terms, every $10,000 change in the Bitcoin price will result in approximately $200 million change in our EBITDA on an annual basis. And in the current price environment, we expect to be profitable with the assumption that the competition will, certain of those machines will go down, and it will provide us with an opportunity to create more value for our stock. Hopefully, that answers your question.

At large scale, though across multiple smaller.

Installations at.

At costs that May at times sometime approached near zero energy cost because of the fact that were actually paid to generate electricity in some cases, we believe is a minor if we can target being in that lower quartile of miners no matter, what the price of bitcoin.

Frederick G. Thiel: One thing I'll just pile on top of Salman's great answers. The fact that we are very focused on growing parts of our business that generate higher IRRs than traditional Bitcoin mining. So we have one of the most.

And what the global hash rate as will always be able to operate red.

Relatively profitably.

Alright, Thank you both.

Our next question comes from <unk> <unk>.

Says I love your work and think Youre heading in the right direction a lot of critics are worried that if the crypto market fluctuate your company won't be able to handle the fluctuation.

Frederick G. Thiel: Efficient fleets in the industry, and if you think about the 45 exahash of machines that we have on the inbound between orders and options, and you just look at the orders that are locked for delivery at this point, our efficiency will drop from 24 joules per terahash down to somewhere around 22 or near 21 joules per terahash, again, maintaining the most efficient fleet in the industry. Our technology investments in heat reuse projects and areas adjacent to Bitcoin mining will allow us to mine Bitcoin, at large scale, though across multiple smaller installations, at costs that may at times approach near zero energy costs because of the fact that we're actually paid to generate electricity and so on. We believe as a miner, if we can target being in that lower quartile of miners, no matter what the price of Bitcoin and what the global hash rate is, we'll always be able to operate relatively profitably. Great, thank you both.

Thread some on how do you address that concern.

I'll take that what we've been focused on building resiliency, we're investing in technology diversifying across the business and paying down debt positioning ourselves for the worst of storms.

No matter what might happen, we have one of the strongest balance sheets in the sector with $1 billion in cash and bitcoin, which gives us the strength to survive whatever comes our way in.

Most importantly, this is not our first cycle of America was built during the last down cycle.

And we maneuvered it well that have come out on top of the industry again.

And we've never been more confident in our future. So I hope that answers your question.

Thanks Fred.

Frederick G. Thiel: Our next question comes from Tarek A, who says, I love your work and think you're heading in the right direction. But a lot of critics are worried that if the crypto market fluctuates, your company won't be able to handle the fluctuations. Fred, Salman, how do you address that question? I'll take that.

We have two questions like that or a little similar so I kind of back to back.

The first is from <unk>, who asks why did marathon use equity to purchase $183 five checkpoint in January after stating on the Q3 earnings call in November that equity was only to be used to drive growth and hatch rate also please explain the 2020 for treasury strategy I E. What is your target heart all cash for having and the end of 2024 and then similar.

Frederick G. Thiel: We've been focused on building resiliency. We're investing in technology, diversifying across the business, and paying down debt, positioning ourselves for the worst of storms, no matter what might happen. We have one of the strongest balance sheets in the sector, with a billion dollars in cash and Bitcoin, which gives us the strength to survive whatever comes our way. And, most importantly, this is not our first cycle. You know, Marathon was built during the last down cycle.

Really severe EE as well the company purchased any more decline on its balance sheet. So.

Either of you would like to take that and speak a little bit to marathons Treasury management strategy.

Sure I'll take that.

Thank you. Thanks for asking the question look the company has.

Stated in the past that we want to utilize equity for growth purposes.

Investment in <unk>.

Frederick G. Thiel: And we've maneuvered it well and have come out on top of the industry again, and we've never been more confident in our future. So I hope that answers your question. Thanks, Fred.

As we've utilized bitcoin for pain for our operating costs.

And that's primarily that's primarily what our stated strategy has been and will be followed that along in terms of.

We have used cash opportunistically.

Charlie Schumacher: We have two questions next that are a little similar, so I'll kind of ask them back to back. The first is from CT, who asks, Why did Marathon use equity to purchase 183.5 Bitcoin in January after stating on the Q3 earnings call in November that equity was only to be used to drive growth and hash rates? Also, please explain the 2024 Treasury strategy, i.e. What is your target model cash for having at the end of 2024? And then similarly, Samir A. asks, Will the company purchase any more Bitcoin on its balance sheet? So either of you would like to take that and speak a little bit about Marathon's Treasury management strategy? I'll take that.

We have looked at the cash to take advantage of.

Drop in bitcoin pricing in certain cases.

As you know cash sitting in the balance sheet.

Cash amount of cash that we raised.

Is that yields about 5%.

U S treasuries and when you look at it we look at it from an investment standpoint, how can we maximize our are investments either in cash or bitcoin and.

Then there are there opportunities that arise like an unusual situation that happened in January.

The ETF launches in.

Price went down.

But temporarily we knew that the price was going to come back up and that was a great opportunity to create more value for our stockholders and we took a small position.

And.

And that is that has been a very profitable investment for us instead of 5% rate of return on treasuries.

Salman H. Khan: Thank you guys for asking the question. Look, the company has stated in the past that we want to utilize equity for growth purposes and investment in Exahash, whereas we've utilized Bitcoin for paying for our operating costs. And that's primarily what our status strategy has been, and we've followed that along. In terms of how we have used cash, opportunistically, we have looked at the cash to take advantage of a drop in Bitcoin pricing in certain cases. As you know, it is sitting in the balance sheet with the amount of cash that we raised. That yields about 5% in U.S. Treasuries, and when we look at it, we look at it from an investment standpoint. How can we maximize our investments, either in cash or in Bitcoin?

But our core business remains bitcoin mining and our primary focus and source of equity is going to be growth investment.

Okay.

Given the unique situation of bitcoin price.

This is this was an unusual opportunity.

We don't expect these kind of opportunities to regularly range, but we will be opportunistic in nature.

Our first small scale if you like.

Our hobbled position in cash provides us a great mechanism to fight any downturns.

Good point price.

Different cycles that goes through having of course through the up cycle down cycle, we are in their <unk>.

<unk> positioned from that perspective. It also provides us a great opportunity for investors to write the prices bitcoin price appreciates from here.

Salman H. Khan: And there are opportunities that arise like an unusual situation that happened in January with the ETF launches and... price went down temporarily. We knew that the price would come back up, and that was a great opportunity to create more value for our stockholders, and we took a small position, and that has been a very profitable investment for us instead of a 5% rate of return on the U.S. Treasury. But our core business remains Bitcoin mining, and our primary focus and source of equity is going to be growth. Given the unique situation of the Bitcoin price, and this is an unusual opportunity, we don't expect these kinds of opportunities to regularly arise, but we will be opportunistic in nature up to a small scale.

Just to summarize and future you may monetize the corn for investing in our company, our general corporate purposes, but as of now our focus remains to use equity.

Growth and the costs of operating costs.

Great. Thanks Ahmad.

Our next question comes from Michael <unk>, who asks what is your Eth or theory on mining percentage and your bitcoin mining percentage and overall mining capacity as of today amidst bitcoin and ethereum are on hand at the company currently Fred do you want to take that one.

Sure we don't mind it.

Period.

Next question.

Short and Sweet Alright next question comes from Monarch see who asks what are your plans to compete with competitors based on the hashing power metrics.

It does hold a lot of decline, but the efficiency is somewhat less as compared to write in clean spark are there any plans to address that.

Salman H. Khan: Our hobby position and cash provide us a great mechanism to fight any downturns as the Bitcoin price goes through different cycles, it goes through the halving, it goes through the upcycle, and downcycle. We're in a driving position from that perspective. It also provides us a great opportunity for investors to write the price that the Bitcoin price appreciates from. Just to summarize, in the future, we may monetize Bitcoin for investing in our company or general But as of now, our focus remains to use equity for growth and Bitcoin for operations. Thanks, Salman.

We're constantly focused on really two things in our mining business energizing more hash rate in optimizing the hatch rates that we have.

And our efficiency has increased significantly year over year, partially because of the machines that we deploy and having one of the most energy efficient fleets in the industry continuing to have that will be a stalwart part of that strategy.

We also are the most efficient minor of the publicly traded miners or one of the most efficiently.

Frederick G. Thiel: The next question comes from Michael S., who asks, what is your ETH or Ethereum mining percentage and your Bitcoin mining percentage and overall mining capacity as of today? How much Bitcoin and Ethereum are on hand at the company currently? Fred, do you want to take that one?

On an SG&A basis, and you have to look at the total cost of mine you can't just look at your marginal cost of minor bitcoin you have to look at the overall costs.

What is the corporate cost of mine Bitcoin when you add all of the expenses and allocations to it that we believe that we operate.

Frederick G. Thiel: Sure, we don't mind either. (inaudible) Next question. Short and sweet. All right, the next question comes from Monhar C., who asks, what are your plans to compete with competitors based on the hashing power metric? Mara does hold a lot of Bitcoin, but the efficiency is somewhat less as compared to Riot and CleanSpark. Are there any plans to address this? We're constantly focused on really two things in our mining business, energizing more hash rate and optimizing the hash rate that we have. And our efficiency has increased significantly year over year, partially because of the machines that we deploy. And having one of the most energy efficient fleets in the industry, continuing to have that will be a stalwart part of that strategy. We also are the most efficient miner of the publicly traded miners, or one of the most efficient on an SG&A basis. And you have to look at the total cost of mine.

One of the more efficient miners using that metric already today, but we are very focused on optimization, we're going to continue to rollout more and more parts of our technology across our fleet, which we think is going to offer increase our operational efficiencies even more.

And now as we take control of more and more sites.

If you compare us for example to clean spark and riots who own their sites predominantly.

Whereas marathon historically has not own their site, we now own and control, 44% of our hatch rate and we expect to see that number grow considerably to the point, where the vast majority of our hatch rate is owned and operate which means that we have a significant opportunity for cost reductions just through the operating line.

Which we believe will put us on par if not better in both of those players.

Great. Thanks, Brent.

I think we'll do one more just kind of in the interest of time. This last question at least of the prepared questions comes from Michael W. Two as what is the planned post having to ensure revenue stays the same or goes higher I think we've addressed this a little but Fred do you want to take that one.

Frederick G. Thiel: You can't just look at your marginal cost of mining Bitcoin. You have to look at the overall costs. What is the corporate cost to mine Bitcoin when you add all of the expenses and allocations to it?

Frederick G. Thiel: And we believe that we operate as one of the more efficient miners using that metric already today. But we are very focused on optimization. We're going to continue to roll out more and more parts of our technology across our fleet, which we think is going to increase our operational efficiencies even more. And now, as we take control of more and more sites, If you compare us, for example, to CleanSpark and Riot, who own their sites predominantly, whereas Marathon historically has not owned their sites, we now own and control 44% of our hash rate, and we expect to see that number grow considerably to the point where the vast majority of our hash rate is owned and operated, which means that we have a significant opportunity for cost reductions just through the Great, thanks, Fred. I think we'll do one more, just kind of in the interest of time.

Okay.

Well.

When.

Having occurs.

You produce happens many bitcoin for the same amount of attach rate provided global.

Cash rate stays the same one of the reasons, we have set such aggressive growth targets is to make sure. We continue to grow our attach rate and grow our percentage of the global hatch rate.

For all miners. So our focus is rapid growth our focus is optimizing existing.

Operating metric and continuing to generate revenues that are complementary to mining from our technology products as well as things adjacent to them.

Great.

At this time, we'll wrap up the prepared questions and again, we really appreciate all the questions and the interest from our investors and the consistent dialogue. So please feel free to keep submitting those and contact us anytime and at this point I'm not going to turn the back the call back to our operator, Kevin to open the line to questions from our covering analysts so Kevin back to you.

Frederick G. Thiel: This last question, at least of the prepared questions, comes from Michael W, who asks, What is the plan post having to ensure revenue stays the same or goes higher? I think we've addressed this a little bit. Fred, do you want to take that one?

Thank you now conducting a question and answer session with marathons covering analysts.

We'd like to be placed in the question queue. At this time. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May press star two if you'd like to remove your question from a Q1 moment. Please while we poll for questions.

Charlie Schumacher: Well, when a hiccup occurs, you produce half as many Bitcoin for the same amount of hash rate provided the global hash rate stays the same. One of the reasons we have set such aggressive growth targets is to make sure we continue to grow our hash rate and grow our percentage of the global hash rate for all miners. So our focus is rapid growth; our focus is optimizing existing operating metrics and continuing to generate revenues that are complementary to mining from our technology products as well as things adjacent to them.

Our first question is coming from Tyler <unk> from <unk>. Your line is now live.

Yes, hi, everyone. Thank you for taking the time and good afternoon.

Congrats on the excellent 2023 as well.

I'm just curious here, we've made a lot of strides on expanding the hash rate as we rollout.

Different technology offerings.

As you look out for the rest of this year and into 2025, I mean, how do you think about prioritizing the expanding of your own hash versus maybe some of these other tech offerings and kind of going back and forth between the two.

Unknown Executive: So at this time, we'll wrap up the prepared questions. And again, we really appreciate all the questions and the interest from our investors and the consistent dialogue. So please feel free to keep submitting those and contact us anytime. And at this point, I'm now going to turn the call back to our operator, Kevin, to open the line to questions from our covering analysts. So, Kevin, back to you.

Sure Great question. So you can think about our business is organized around three predominant silos. One is what we call utility scale mining. This is our traditional business like Kings mountain or Granberry pardon me.

Unknown Executive: Thank you. We will now be conducting a question and answer session with Marathon's covering analysts. If you would like to be placed in the question queue at this time, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue.

And what were kind of doing in <unk>.

Et cetera, large scale sites hundreds of megawatts sitting behind the meter or adjacent to the power source.

And helping balance.

Grid.

We see very large opportunities for that internationally.

Unknown Executive: You may press star 2 if you would like to remove your question from the queue. One moment, please, while we poll for questions. Our first question is coming from Tyler DiMatteo from BTIG. Your line is now live. Yeah, hey, everyone. Thank you for taking the time and good afternoon.

E sites, together or 250 megawatts.

Today, we have opportunities to expand further not just in the Gulf region, but also in Africa, and Latin America, where we're currently operating in Paraguay, and we will continue to do that we believe that's kind of low hanging fruit. We also believe there are great opportunities.

Frederick G. Thiel: Congratulations on the excellent 2023 as well. Fred, you know, I'm just curious here. We've made a lot of strides in expanding the hash rate as we roll out these different, you know, technological offerings. As you look out for the rest of this year and into 2025, I mean, how do you think about prioritizing the expanding of your own hash versus maybe some of these other tech offerings and kind of just going back and forth between the two? Sure, great question. So you can think about our businesses organized around three predominant silos.

Domestically.

Both in the area of Greenfield sites as well as the existing site similar to what we do the transactions, we did kind of with granberry incarnate.

The second silo is what we call energy harvesting this is where we leverage bitcoin mining.

As a producer of heat and we predominantly find sources of energy such as methane flare gas and other forms of.

Let's just call them.

Cyclable Biofuels.

Frederick G. Thiel: One is what we call utility scale mining. This is our traditional business, sites like King Mountain, Granbury, Harney, and what we're kind of doing in the UAE, etc. Large scale sites, hundreds of megawatts sitting behind the meter or adjacent to the power source, and helping balance grids.

That we used to generate energy in some cases, we're actually even paid to do that to take that material and then recycle heat back into an industrial process, which were paid for it yet again.

And mine and that way our technology group has developed solutions and together with the partners.

Frederick G. Thiel: We see very large opportunities for that internationally. You know, the UAE sites together are 250 megawatts. Today, we have opportunities to expand further, not just in the Gulf region, but also in Africa and Latin America, where we're currently operating in Paraguay, and we'll continue to do that. We believe that's kind of low-hanging fruit.

That we started developing relationships with we're able to build these projects.

At kind of small medium and large scale and so I think youll see news later this year of some of the first of those projects.

Arise and Thats the sector of the business that we expect to grow to over a gigawatt of power over the next five years.

Frederick G. Thiel: We also believe they're great opportunities domestically, both in the area of greenfield sites, as well as existing sites, similar to the transactions we did with Granbury and Harney. The second silo is what we call energy harvesting. This is where we leverage Bitcoin mining as a producer of heat, and we predominantly find sources of energy such as methane, flare gas, and other forms of... call them recyclable biofuels that we use to generate energy.

The technology sector or silo, if you would.

Today consists of things like pool software firmware.

Controller boards, a variety of other technologies.

As well as now flip stream and enduro, while enduro is.

<unk> technology, we have helped incubate and is not currently owned by US that we won't generate revenues from it slipstream does generate revenue.

<unk>.

We already have customers.

I'd have thought and are using our firmware.

Frederick G. Thiel: In some cases, we're actually even paid to do that, to take that material and then recycle heat back into an industrial process, where we're paid for it yet again. And in that way, our technology group has developed solutions. And together with the partners that we started developing relationships with, we were able to build these projects at kind of a small, medium, and large scale. And so I think you'll see news later this year of some of the first of those projects. And that's the sector of the business that we expect to grow to over a gigawatt of power over the next five years. The technology sector, or silo, if you would, today consists of things like cool software, firmware, Controller Boards, a variety of other technologies, as well as now Flipstream and Enduro. While Enduro is a technology we have helped incubate and is not something owned by us, meaning we won't generate revenues from it, Flipstream does generate revenues.

We expect to see more sales in those areas.

As our next generation of immersion technology.

Comes to market later this year, we expect that to begin to generate significant revenues as well. So if you look over a five year period.

And sorry for the long winded answer.

But if you look over a five year period, I think what youll see kind of by the next having in 2028.

50% of our revenues coming from traditional utility scale mining, 50% of the revenues coming from elsewhere.

And 50% of the revenues domestically, 50% of the revenues internationally and I hope that answers your question.

Okay, great. Thank you really appreciate it very helpful. And then on your comments on slipstream, there I mean, how should we think about.

The rollout of that and the actual implementation and generally and Matt how are you thinking about bringing that kind of scaling that to market.

So slipstream is really neat technology, it's an API. It's a submission system. So you don't have to call. A salesperson you don't do anything you go to the website you submit a block you pay the price for submitting a block and that block goes into a queue.

Frederick G. Thiel: So, we already have customers that have bought and are using our firmware. We expect to see more sales in those areas. And as our next generation immersion technology comes to market later this year, we expect that to begin to generate significant revenues as well.

Off it goes.

Our hands free system.

We think of it as simple as.

Frederick G. Thiel: I'm sorry for the long-winded answer, but if you look over a five-year period, I think you'll see kind of by the next halving in 2028. 50% of our revenue is coming from traditional utility-scale mining, 50% of the revenue is coming from elsewhere, and 50% of the revenue is domestically, and 50% of the revenue is internationally. And I hope that answers your question. Okay, no, great. Thank you.

Uploading pictures to the.

The icloud or something like that it's very simple the whole idea is it's meant to be hands free. So if you are an artist and water submit a block you can do that if you're a financial institution.

And you want to ensure that transactions youre doing will have priority you could potentially.

Frederick G. Thiel: Very helpful. And then Fred, on your comments about Flipstream there, I mean, how should we think about the rollout of that and the actual implementation, and, generally, as management, you know, how are you thinking about bringing that and kind of scaling that to market? So Slipstream is this really neat technology. It's an API. It's a submission system, so you don't have to call a salesperson. You don't do anything. You go to the website.

<unk> purchased blocks and events and essentially.

Submit blocks.

As you need them.

There are lots of opportunities I think for people to use this again we're iterating.

Simple tool.

This is technology that.

The key enabler here is you have to be a minor who operate the pool. That's large enough. So that you can.

Submit blocks and Prost.

Process blocks wind blocks with enough frequency, so that the temporal nature of the.

Frederick G. Thiel: You submit a block. You pay the price for submitting a block, and that block goes into a queue. And off it goes. It's a hands-free system.

Use of the product makes total sense.

Okay, great. Thank you I'll turn it back to the queue really appreciate the time.

Yes. Thank you.

Thank you next question is coming from Joe Flynn from Compass Point Research your line is ally.

Frederick G. Thiel: Submit Blocks as you need them. So there are lots of opportunities, I think, for people to use this. Again, we're iterating. It's a simple tool.

Hi, guys it looks like power prices.

A bit from the third quarter.

Back to endless like point.

At this 0.5 levels.

Frederick G. Thiel: This is technology that the key enabler here is you have to be a miner who operates a pool that's large enough so that you can submit Blocks and Process Blocks, and Win Blocks with enough frequency so that the temporal nature of the use of the product makes total sense. Okay, great. Thank you. I'll turn it back to the queue. Really appreciate the time.

Just kind of curious if you could provide more color there and how we should think about.

Empower and hosting costs as you guys transition to 40%.

Owned data Center model.

So one way to look at that is.

You have.

Normal model pre being an owner operator.

Many times, we don't get the benefit of curtailment win.

Frederick G. Thiel: Thank you. Thank you. Next question is coming from Joe Flynn from Compass Point Research. Your line is now live. I guess. Looks like PowerPlace. Creeped up a bit from the third quarter.

Operator of a site curtailed and they get the economic benefit of the curtailment and there were some winter.

Events.

In Q4.

Frederick G. Thiel: Back then, let's, or a 6.5 cents level. I'm just kind of curious if you could provide more color there and how we should think about, you know, all-in power and hosting costs. So one way to look at that is, in our normal model, before being an owner operator, many times we don't get the benefit of curtailment when an operator of a site curtails, and they get the economic benefit of the curtailment. And there were some winter events that had an impact there.

That.

And of course had an impact there you also had because it's wintertime energy prices may have fluctuated, well I think historically, our energy and <unk>.

All in cost has been in there around the <unk> per kilowatt hour basis.

As we take more control of our sites.

The operational side of it I think you'll see the cost per kilowatt hour dropped somewhere between 1% to one 5%, possibly more for kilowatt hour or the other advantage that we have by being an owner operator is we can now take advantage of economic curtailment. We can now take advantage of power hedges, we cannot take advantage of buying in.

Frederick G. Thiel: You also had, because it's wintertime, energy prices may have fluctuated more. I think historically, our energy and our all-in costs have been in and around the $0.06 per kilowatt-hour range. As we take more control of our sites, the operation side of it, I think you'll see the cost per kilowatt-hour drop somewhere between $0.01 to $0.015, possibly more per kilowatt-hour. The other advantage that we have by being an owner-operator is that we can now take advantage of economic curtailment. We can now take advantage of power hedges. We can now take advantage of buying and selling power and doing that. We have already seen the economic benefit of that on a handful of occasions this year already. I think time will tell, but the goal is that we should be able to operate where the operating cost above the power cost is somewhere between three-quarters of a cent to $0.0125 per kilowatt-hour. Take the power cost at about $0.75 to $1.25, and that should be where you could model longer-term what the model looks like.

Selling power and doing that and we have already seen the economic benefit of that.

On a handful of occasions.

This year already so I think.

Time will tell but the goal is that we should be able to operate.

Where the operations cost above the power cost is somewhere between three quarters of the <unk> to 125 kilowatt hour.

Take the power cost at about <unk> 75 to $1 25, and that should be where you could model longer term what the model looks like.

Yes, just to add to that.

Q4, we had a record production and.

It's all about the scale how much of that cost of that production can you can you squeeze out of that cost associated with that there is a fixed component of the cost and the transaction fee being at a record high this quarter that certainly helped us as well from a unit cost perspective.

Frederick G. Thiel: Yeah, just to add to that, in Q4, we had a record production. And it's all about the scale. How much of that cost of that production can you squeeze out of that cost associated with that? There's a fixed component of the cost, and there's a transaction fee being at a record high this quarter. That certainly helped us as well from a unit cost perspective. Hopefully, that helps ensure it. [inaudible] Thank you. The next question today is coming from Reginald Smith from J.P. Morgan. Your line is now live. Hey, good evening.

Hopefully that helps answer your question.

Great. Thanks, guys Thats all for me.

Yes.

Yeah.

Thank you. Your next question today is coming from original Smith from Jpmorgan. Your line is now live.

Hey, good evening, thanks for taking the question.

I guess, most most topics have been covered.

But first I wanted to get your opinion.

Yes.

Obviously, a lot of public miners have announced fairly large.

ATM offerings.

Competitively as you kind of look across the.

The landscape.

Both private companies and public companies.

Thank you.

Frederick G. Thiel: Thanks for taking the question. I guess most topics have been covered, but Fred, I wanted to get your opinion. You know, obviously, a lot of public minors have announced, you know, fairly large ATM offerings competitively as you kind of look across the landscape to both private companies and public companies. Do you have a sense of how much capital is out there, maybe on the private side as well, to fund growth? And I'm curious, should we expect, or do you expect that the public miners will continue to garner a larger and larger piece of the network cash And then the final question, the follow-up to that is just, you know, kind of. What does industry capex kind of look like on a normalized basis? I know these are all hard questions, but I figure you're the best person to apply.

How much capital is out there maybe on the private side as well.

To kind of fund growth and I'm curious should we expect or do you expect the public miners will continue to kind of garner a larger and larger piece of the network cash rate and then a final question on the follow up to that is just kind of.

Whats industry Capex kind of look like on a normalized basis.

And these are all hard questions, but.

The thing to do the best person to our 2009.

Okay I will do my best to answer your question.

So I think that generally speaking this industry has three choke points three constraints its access to capital as you mentioned, it's access to capacity sites deployed miners and its access to miners.

In different cycles, there have been different constraint point than the last than the prior cycle access to machines.

Was the constraint point.

Frederick G. Thiel: Okay, I will do my best to answer your question. So, you know, generally speaking, this industry has three choke points, three constraints. It's access to capital, as you mentioned, it's access to capacity, sites to plug miners in, and it's access to miners. In different cycles, there have been different constraints.

You had.

$85 per Terra hash pricing on machines and today, we're still sub 20.

That's obviously not a constraint today and is based on the machine orders you've seen our peers announce in the numbers, we just announced obviously the manufacturers seem to have plenty of capacity to supply us all so that's not a constraint.

Frederick G. Thiel: In the last, in the prior cycle, access to machines was the constraint point. You had, you know, $85 per terahash pricing on machines, and today, we're still under 20. So that's obviously not a constraint today. And, based on the machine orders you've seen our peers announce and the numbers we just announced, obviously, the manufacturers seem to have plenty of capacity to supply us all. So that's not really a constraint.

On the capital side, the public miners that are ASR eligible able to raise money through ATM have a significant advantage over everybody else.

The investment community today is desperately.

Looking for and moving towards a flight of quality, if theyre looking for the miners, who are able to grow and execute and scale.

The smaller miners.

Our challenged by a couple of things one is.

Frederick G. Thiel: On the capital side, the public miners that are ASR eligible, able to raise money through ATMs, have a significant advantage over everybody else. The investment community today is definitely looking for and moving towards a flight of quality, if you will. They're looking for miners who are able to grow and execute and scale. And the smaller miners are challenged by a couple of things. One is, you know, there's a certain fixed cost to operate as a miner, if you would, your SG&A. And if you can scale that over a very large capacity, you can be super efficient. But if you're a small-scale miner, that's a lot more difficult. The other thing a small-scale miner has the challenge of doing is getting a site, putting deposits down for PPAs, and having the capital to buy miners. You know, the big challenge today is that this is a big boy capital game.

There is a certain fixed cost to operate as a miner fjord your SG&A and if you can scale that over very large capacity.

Can be super efficient.

But if youre a small scale miner, that's a lot more difficult. The other thing. It's multiple monitor has the challenge of doing is getting a site putting deposits down for ppas and getting having the capital to buy miners.

The Big Challenge today is this is a big boy capital game.

If you can't raise large amounts of money youre going to get left behind as you know bitcoin mining as a zero sum game. There are only so many bitcoin available per day, and if youre growing.

Growing your hash rate, you're falling backwards and the innovation cycles are accelerating.

Frederick G. Thiel: If you can't raise large amounts of money, you're going to get left behind. And, as you know, Bitcoin mining is a zero-sum game. There are only so many Bitcoin available per day, and if you're not out there growing your hash rate, you're falling backwards. And the innovation cycles are accelerating. And so if you think about it this way, the S19J Pro by Bitmain was a machine that started being delivered in late 2020 or early 2021 that had an efficiency of about 30 joules per terahertz. The XP started being delivered in early 2022, and it has an energy efficiency of 21 joules per terahash, almost a 30% decrease in energy use.

And so if you think about it this way the EF 19, J pro by Pittman, who is the machine that started being delivered in late 2020 early 2021.

That had an efficiency of about 30 joules per Terre Haute.

The XP started being delivered in early 2022.

And that has an energy efficiency of 21 joule for Terra hash almost a 30% decrease in energy use and so if you are paying for one megawatt of power and.

And you had J pros and you replace those J pros with xps.

Then you essentially increased your tax rate by almost 30% overnight.

Frederick G. Thiel: And so if you are paying for one megawatt of power, and you have J-PROs, and you replace those J-PROs with XPs, then you essentially increase your hash rate by almost 30% overnight without having to pay for any additional power or add any additional capacity. In Marathon's case, you know, we came out of the last cycle buying the latest state-of-the-art machines. The vast majority of our fleet today are XPs or better. We're now currently deploying S21s and other machines like them that are even more efficient than the XPs.

Without having to pay any additional power or add any additional capacity.

In marathons case, we came out of the last cycle buying the latest state of the art machines. The vast majority of our fleet today, our xps or better and we are now currently deploying F 'twenty ones and other machine like them, they're even more efficient than the equities.

So there is this capex cycle, you just have to keep up with and there is unfortunately, nothing called normalized capex here because.

Frederick G. Thiel: So there's this CapEx cycle you just have to keep up with. And there is, unfortunately, nothing called normalized CapEx here because we're entering the phase where maintenance CapEx starts to catch up with life. You know, the J Pro is on the bubble of being profitable when it arrives here in just a few weeks. XPs will still be profitable, again, providing you have the right power loss, and obviously, the S-21s and that next generation will be profitable for some time yet to come.

We're entering the phase where maintenance capex starts to catch up with binders.

The <unk> pro is on the bubble of being profitable come to having here in just a few weeks.

Yeah.

Xps will still be profitable again, providing you have the right power costs and obviously the F. 'twenty, one and that next generation will be profitable for some time, yet to come but the miners who are operating.

That's 9000 Seventeens S 19, EF 19 pros.

They are going to be in a position where they may have to shut off a lot of those machines come to having now a bitcoin has been behaving extremely well some of you may remember I.

Frederick G. Thiel: But the miners who are operating... S-9s, S-17s, S-19s, S-19 Pros, you know, they are going to be in a position where they may have to shut off a lot of those machines come to having. Now, Bitcoin has been behaving extremely well. Some of you may remember, I have spoken a number of times over the past six months, where my expectation was that Bitcoin's price was going to be in the 40s as we went into the holiday season, and here we are, and we're at $61,000 today. So this is providing an extra gasp of breath, if you would. [inaudible] on equipment, right?

We've spoken a number of times over the past six months, where my expectation was that bitcoins price was going to be in the 40% as we went into the having and here we are and were at $61000 today.

This is providing an extra gas abreast if you would.

Four miners, who have these older generations of machine and it's giving them an opportunity to raise some money.

Right now and so youre seeing some capital going into the private markets, which you don't have this cycle that you did have in prior cycles as nobody is lending.

On equipment right you can't go call night egg or Galaxy, and say, Hey guess, what I want you to.

Frederick G. Thiel: You can't call NYDIG or Galaxy and say, Hey, guess what? You know, I want you to lead me and pay me the money for these minors. And so the only way to do that is to convince somebody like Bitmain, a hardware vendor, to do it for you.

Let me interrupt me the money for these miners.

And so the only way to do that is to convince somebody like <unk> a hardware vendor to do it for you and then what Youre really doing is just operating a hosting site on their behalf and youre getting paid a little bit of extra to do that and so I think this is the cycle, where you start to see consolidation where hash rate moves.

Frederick G. Thiel: And then what you're really doing is just operating a hosting site on their behalf, and you're getting paid a little bit of extra to do that. And so I think this is the cycle where you start to see consolidation, where hash rate moves towards the larger miners. That being said, publicly traded miners' market share of global hash rate is declining. Why?

Towards the larger miners that being said.

Publicly traded miners market share of global hash rate is declining.

Frederick G. Thiel: Because sovereign nations as well as large, very well-funded private companies are getting into this business, buying the latest machines without this maintenance capex cycle hanging over them and building a lot of capacity. You know, you're familiar with the Kingdom of Bhutan working with Bitdeer to add 200 megawatts of capacity. You're seeing miners now in Ethiopia, Chinese miners moving to Ethiopia and producing hundreds of megawatts of power. There is lots of power available if you can find it. And if you have the money to do it, the problem is most of the mom and pop miners, any miner who has less than 10x a hash, in my mind, will be out of business by the end of this cycle. They just can't raise the money.

Why because sovereign nations as well as large very well funded private companies are getting into this business buying the latest machines without this maintenance capex cycle hanging over them and building a lot of capacity.

Familiar with the Kingdom of Bhutan, working with bit Dear to add 200 megawatts of capacity Youre seeing miners now in Ethiopia, Chinese miners moving to Ethiopia doing hundreds of megawatts of power. There is lots of power available. If you can find it and if you have the money to do it the problem is most of the moment.

Pop minors, any miner, who is less than <unk> in my mind.

I'll be out of business by the end of the cycle.

They just can't raise the money they don't have the critical mass to do it.

Frederick G. Thiel: They don't have the critical mass to do it, and that doesn't mean that they're gonna get bought up by ourselves and Riot and Clean Spark and people like that. It just means they're gonna go out of business. And so, meanwhile, the global hashrate is going to continue to grow everywhere else. So, you know, this is, unfortunately, a business where, kind of like in the jungle, you know, a gazelle gets up every morning and has to run faster than the lion that's chasing it, and the lion has to get up every morning and run faster than the gazelle so it can eat and survive. And that's kind of what just happened here. It's this constant drive to grow, grow, grow.

And that doesn't mean that they're going to get bought up by ourselves and riot in clean spark and people like that it just means they're going to go out of business and.

So Meanwhile, global Hampshire, it's going to continue to grow everywhere else.

This is very much unfortunately.

A business where.

Kind of like an.

The jungle.

A gazelle gets up every morning and has to run faster than the line that's chasing it and the line has to get up every morning and run faster than developed so we can eat and survive and thats kind of what happens here. It's this constant drive to grow grow grow.

And.

As bitcoin now starts developing into this asset class, which institutions hold.

Frederick G. Thiel: And as Bitcoin now starts developing into this asset class, which institutions hold. You know, you're already starting to see this with the ETFs, record inflows into the ETFs. As of last week, total AUM in ETFs was 40% of the total AUM in gold ETFs, which is insane.

Youre already starting to see this with Etfs record inflows into Etfs as of last week total AUM and Etfs was 40% of the total AUM in gold Etfs, which is insane.

Frederick G. Thiel: And as money keeps going into those areas, it's Bitcoin that won't cycle back out into the market. So you look at exchanges today, their lowest volume of crypto available, of Bitcoin available on exchanges, kind of historically when you normalize for where we are in the cycle. So I think it's going to be very hard for people in this industry to keep up because Bitcoin's price is going to grow and the volatility is going to start to decrease. It's going to start to normalize. And at that point, margin compression will happen in the business. And if you don't have scale, you'll be out of business. And our goal of being one of the largest miners in the world is to have the scale, the operational capacity, the optimized cost structure, and the revenue streams that are adjacent to and associated with Bitcoin mining, think of it this way, can subsidize our cost of mining, or that, because of the revenue streams coming in through heat The operator who is kind of at the lead of this pack in the bottom quartile cost-wise.

And as money keeps going into those areas, it's bitcoin that won't cycle back out into the market.

And so you look at exchanges today, the lowest volume of crypto available a bitcoin available on exchanges.

Kind of historically when you normalize for where we are in the cycle. So.

I think it is going to be very hard for people.

In this industry to keep up because bitcoins price is going to grow and the volatility is going to start to decrease its going to start to normalize and at that point margin compression will happen in the business and if you don't have scale youll be out of business.

And our goal of being one of the largest miners in the world is to have the scale the operational capacity.

Optimized cost structure and the revenue streams that.

Our adjacent to and associated with Bitcoin mining that think of it. This way can subsidize our cost of mine ore that because of the revenue streams coming in through heat reuse et cetera, do subsidize the cost of mine makeup.

The operator, who is kind of at the lead of this pack in the bottom quartile cost wise. So we will always be operational, but we'll always be able to mine no matter, what the price of bitcoin.

Frederick G. Thiel: So we will always be operational, we'll always be able to mine, no matter what the price of Bitcoin is, you know, obviously within reason, right? So hopefully that answered your question. That was a great, great answer. I feel like I just had a masterclass on Bitcoin mining. I just didn't use tuition or something. Now, I appreciate that. Austin DeVille.

Obviously within reason right. So hopefully that answered your question.

And that was a great great answer.

Had a master class on bigger.

Tuition or something.

No I appreciate that bill.

Frederick G. Thiel: All right. Thank you. The next question is coming from Kevin Dede from H.C. Wainwright. Your line is now live. Thank you. Hi, Fred.

Growth.

Okay.

Thank you. Our next question is coming from Kevin <unk> from H C. Wainwright. Your line is now live.

Thank you Hi, Fred sorry.

Frederick G. Thiel: Thanks for having me on the call. A little more granular here, Fred, 22 X2Hash to come out this year and 35 to 37, potentially. Can you give us some insight on how you see adding it to your network? Sure, if you're thinking, "where are we going to put it?" Well, one of the reasons I apologize, Fred, you made that clear in your prepared remarks. I'm more concerned about the timing, just so we have, You know, a view of how you see marathon hash rates increase through the course of the year. Sure. [inaudible] If we had historically been a kind of de novo site developer, I could give you a whole pipeline with a chart of, okay, these sites will be energized this month, et cetera. But that's not been our historical model.

Thanks for having me on the call.

A little more granular here Fred.

22 extra hash to come out this year.

35% to 37 potentially can you give us some insight on how you see adding it to your network.

Sure if youre thinking where are we going to put it well one of the reasons no no no.

Graham.

I apologize for it you've made that clear in your prepared remarks I'm more concerned about the timing just so we have.

Our view to how you see marathons hash rate increase through the course of the year.

Sure.

Sure.

If we had.

<unk> had historically been a.

It kind of de Novo site developer I could give you a whole pipeline with a chart of okay. These sites will energize on this month's et cetera, that's not.

And our historical.

Frederick G. Thiel: Our historical model has been, as you know, agile and grow quickly. And we're now in the business of... being more of an owner operator and vertically integrating. So you can think of sites across three buckets.

Our historical model.

As you know agile grow quickly and we're now in the business.

Being more of an owner operator in vertically integrating so you can think of sites across three buckets there.

Frederick G. Thiel: There's the bucket of I'm going to go buy things, like Granbury and Kearney, where there's excess capacity with an ability to grow. And as the hosting customers at those sites age out, as those contracts age out, we will absorb all that capacity ourselves. So we're looking, think of it this way, you know, you have a site with 100 megawatts, maybe 80 megawatts is used, okay, we can plug 20 megawatts of miners in, and then over the next two years, half of those contracts for the 80 megawatts will age out, and we'll start deploying more and more miners there, and oh, by the way, that site could potentially add 100 or So not to give everybody our playbook, you can send me an email. I'll be happy to send it to you.

There is the bucket of I'm going to go buy things like Grandberry and Kearney.

Theres excess capacity with an ability to grow.

And as the hosting customers at those sites the age out as those contracts age out.

We will absorb all that capacity ourselves. So we're looking think of it. This way you have a site with a 100 X 100 megawatts. Maybe 80 megawatts is used okay. We can plug 20 megawatts of minors and then over the next two years.

Half of those contracts for the 80 megawatts will age out and will start deploying more and more miners there at Oh by the way that site could potentially add 100 or 200 megawatts more because of the substation and we'll develop that and add that capacity. So.

Not to give everybody. Our playbook you can send me an email happy to send it to you, but that's how you look at that bucket.

Frederick G. Thiel: But that's how you look at it. If you look at the next bucket, it's sites that somebody may have permitted, somebody has gotten some form of allocation of power, there's a substation available, they may even have transformers on the ground, but they haven't built the site yet because they don't have money. And this is kind of back to Reggie's question, right?

If you look at the next bucket it's sites that.

Somebody may have permitted somebody has gotten.

Some form of allocation of power, there's a substation available they may even have transformers on the ground.

But they haven't built quite yet because they don't have money.

And this is kind of.

To register questions.

Frederick G. Thiel: It's the, you know, there are people who have sites locked up because they can't raise the money to develop them because investors aren't willing to give you money in today's kind of market for Bitcoin mining and data centers because they prefer to give money to people building AI data centers because there's a lot more money to be made there if you believe people who believe that that's the case. [inaudible] We happen to believe Bitcoin mining is the place to be, but we'll let the rest of that be up to contention. So those are kind of, think of them as halfway done sites. Somebody, it's kind of like in the real estate development world; it's not raw land. You've actually bought the land, got it platted, you've laid the sewage and utility lines, and now you're going out calling to the home builders and saying, hey, you know, I've got 16 lots here, you wanna build a home?

There are people, who have sites locked up that they can't raise the money to develop them because investors aren't willing to give you money.

In today's kind of market for bitcoin mining.

Data centers, because they prefer to give money to people building AI data centers, because there is a lot more money to be made there. If you believe people who believe that that's the case.

<unk>.

We happen to believe that remains the place to be but.

We'll let the rest of it will be up to contention.

So those are kind of think of them as halfway done site somebody's, it's kind of like in the real estate development World, It's not raw land, you've actually bought the land got it entitled you've laid the sewage and utility lines and now youre going out calling.

To the homebuilders, and saying Hey, I've got 16 lots here you want to build a home.

So thats kind of middle bucket. These are sites that could be energized and online in a six to 18 month window.

Frederick G. Thiel: So that's that kind of middle bucket. These are sites that could be energized and online in a 6 to 18 month window. Then you have the true Greenfield side. You know, where we have folks that are out today scouring opportunities to acquire access to power, access to land, access to transmission, interconnect, et cetera, on a global basis, uh... not just in the U.S., And those are kind of 18 to 24, 36 month-type projects. And so we believe that as a global, world-class Bitcoin miner. You need to build a stack, if you will, of staggered projects that give you immediate capacity, mid-term capacity, and long-term capacity, but that all have optionality. So I'll give you an example. Granbury, Texas, has about a...

Then you have the true Greenfield sites.

Where we have folks that are out today scouring opportunities to acquire access to power access to land access to transmission Interconnects et cetera.

On a global basis.

Not just in the U S.

And those are kind of <unk>.

18 to $24 36 month type projects.

And so we believe that as a global world class Bitcoin miner.

You need to build a stack if you would.

Staggered projects that give you immediate capacity midterm capacity and long term capacity, but that all have optionality. So I'll give you an example, granberry.

Texas.

That's about all.

Almost 300 megawatts of capacity today.

Frederick G. Thiel: Almost 300 megawatts of capacity today, but there's an opportunity to expand it because the power station has lots of power. So that gives us optionality. We could add more capacity to it if we want to invest the money. So you already have a site, you already have a power partner, you already have access to substations, etc. It's just a question of... When do you want to start developing it, and how much money do you want to spend on developing it?

As an opportunity to expand because of the power station has lots of power.

So that gives us optionality.

Could add more capacity to it if we want to invest the money to them.

So you already have a site you already have a power partner you already have access to Substations et cetera. It's just a question of.

When do you want to start developing it and how much money do you want to spend to develop it.

And what are you going to use that site for emerging Eric Hoover.

Frederick G. Thiel: And what are you going to use that site for, emerging air coolant? With the longer-term site... The optionality is it's very inexpensive to tie up an option on long-term power, access to a substation, relatively speaking, when you talk on a per megawatt hour basis, and lease land. And you can sit there, and this is, you know, the business that, in the old days, the kind of ComputeNorths of the world used to do, which is they would go out and they would tie up a deal with a power The King Mountain site in Texas was done that way, right?

With the.

Longer term sites the.

The Optionality is it's very inexpensive to tie up an option on long term power.

Access to a substation relatively speaking.

When you talk on a per megawatt hour basis.

And lease land and.

You can sit there and this is the business that in the old days, the kind of compute notes of the world used to do which is they would go out and they would tie up a deal with the power company and then Diego find a miner who is essentially.

Be willing to fund the build out of the site and then 12 18 months later you plug in the King Mountain site in Texas was done that way right, we engaged with compute north back in the day, they engaged with Nextera energy and they've got the power they got everything permitted or not and then they built the site and then became.

Frederick G. Thiel: We engaged with ComputeNorth back in the day. They engaged with NextEra Energy, and they got the power, they got everything permitted, and then they built the site, and then we came in. In this case, we're acting as the builder and operator, right, of those sites. And so we're working on all three of those tranches, if you would, today, with partners and directly ourselves. And so we, our goal is essentially to have a store, a storehouse full of either, readily available immediately today.

Yeah.

In this case, we're acting as the builder operator right of those sites.

And so we're working along all three of those.

Tranches, if you would.

Today.

With partners and directly ourselves.

And so we our goal is essentially to have a.

Think of it as a store.

Storehouse full of either.

Readily available immediately today.

Frederick G. Thiel: Mining Capacity, mid-term available capacity, that's, there's an option for us, you know, we know that when we need it 12 months out, we just turn the crank, and it'll be operational, already permitted, you know, you already have all the transmission, etc. And then the longer-term sites where we want to build 100 megawatts, 200 megawatts, 500 megawatts at a location where we may have 700 megawatts of potential capacity if we're willing to do the longer-term investment. And especially internationally, those longer terms, you know, that last bucket. There is a lot of available opportunity there. Ethiopia, Paraguay, et cetera, et cetera.

Mining capacity.

Midterm available capacity, that's there as an option.

For us we know that when we need it to 12 months out we just turned the crank and it'll be operational already permitted you already have all the transmission et cetera, and then the longer term sites where do.

We want to build a 100 megawatts 200 megawatts 500 megawatts.

At a location, where we may have 700 megawatts of potential capacity.

If we're willing to do the longer term investment and especially internationally.

Those longer term.

That last bucket.

There is a lot of available opportunity there the opiate, Paraguay et cetera et cetera.

Frederick G. Thiel: So, you know, the goal here to build a really resilient system is to build a huge pipeline and lock up potential capacity of sites with optionality to it. It's not like we have to take all the power. We can actually, in the event of really bad pricing in the marketplace, scale it back. So we have ultimate optionality, which is the best thing, right? So you look for creating a portfolio of capacity that is short, medium, and long-term. You want to have a portfolio and access to technology, which is short, medium, and long term, and I'll touch on that bucket right now.

Sure.

The goal here to build a really resilient business.

As you build a huge pipeline and lockup potential capacity.

Alright.

With optionality to it and by that I mentioned, one thing the Granberry site for example, the way the PPA works there is that.

It felt like we have to take all the power we can actually in the event of a really bad pricing in the marketplace scale. It back so we have ultimate optionality there.

Which is the best thing right. So you look for creating a portfolio of capacity.

That is short medium and long term excuse me you looked at the portfolio and access to technology, which is short medium and long term and I'll touch on that bucket right now.

Short term is.

Frederick G. Thiel: Short term is Bitmain, ship me the S21. All right, medium term is, you know, MicroBT, Bitmain, Canon, I want access to your chip. I'm going to lock up a supply of chips, you're going to sit on them for me, and then I'm going to tell you when I want you to build the miners. This is a very different model; this is a model from the PC industry and the technology industry. And no small player can do that.

<unk> shipped me F 'twenty one.

Alright.

Medium term is.

Yes.

<unk> EBIT main can on I want access to your chips.

Sure.

I'm going to lock up a supply chips, you're going to sit on them for me and then I'm going to tell you and I want you to build the miners. This is a very different model. This is the model from the PC industry.

In the technology industry and no small player can do this you have to be able to write a $500 million check to one of these people say I want so many wafers here chips and then when I tell you to I want you to turn in the minors.

Frederick G. Thiel: You have to be able to write a $1,500 million check to one of these people and say, I want so many wafers of your chips. And then when I tell you to, I want you to turn it into a minor. And in that way, I can lock up capacity, and I have no worry about getting access to Chips. And the last one is what we've done with Auradon, where we actually own part of the company who's designing this. Why is that important?

And in that way I can lock up capacity and I have no worry about getting.

Access to title to chips and the last one is what we've done with <unk>.

Where we actually own.

A part of the company who's designing the chips.

Why is that important because we can get miners that have spec specifically suited to our needs and use cases.

Frederick G. Thiel: Because we can get computers that have specs specifically suited to our needs and use cases. And when you see the two-phase immersion technology that we'll be releasing later this year, you will see the benefit of that, where any other traditional miner, whether it's Riot or CleanSpark, if they don't know how to build technology products, they are going to be buying off-the-shelf PCs when we're busy building custom And that's the differentiator, longer term, that we believe is the biggest moat with these guys. I'm very much looking forward to seeing them. Ardyne's product in action

And when you see the two phase immersion technology that we'll be releasing later this year you will see the benefit of that.

Were any other traditional minor whether it's right or clean spark if they don't know how to build technology products.

They are going to be buying off the shelf Pcs when were busy building custom built high performance system.

And that's the differentiator longer term that we believe is the biggest moat with these guys.

I'm very much looking forward to seeing.

<unk> product and inaction. So thank you for that color can we can we peel the onion back just a little bit more of the Fred now based on the numbers that you offered this afternoon.

Frederick G. Thiel: So thank you for that color. Can we peel the onion back just a little bit more, Fred? You know, based on the numbers that you offered this afternoon, you're at 24 now. Does that mean you'll be 27 by the end of March? Does that mean you're... Or if you're going for 35, does that mean you're at... [inaudible] In 40 by the end of June? How should we think about how that capacity actually comes online through the year? So we're already at 27. We were both at 27 at the end of the year, pretty much so.

22 extra hash Youre 24, now does that mean, you're at 27 by the end of March does it mean, you're or if you're going to for 35 does it mean you're at.

Yes.

40 by the end of June how should we think about how that capacity actually comes online through the year.

So we're already at 27, we were at 27 at the end of the year pretty much so okay.

Frederick G. Thiel: Okay. So I think the way you have to look at it, Kevin, is I'm not going to lay it out for you, because we are going to play the game here where in 2022, you know, we said we'd deploy this hashrate, we had these machines, and then I was getting the question, hey, are they sitting on, are they plugged in yet? Are they plugged in yet?

So I think.

The way you have to look at it Kevin here.

Okay.

Because we are going to play the game here where.

In 2022.

We said, we're going to deploy the attach rate. We had these machines and then I was getting the question hey are they sitting here.

Or they are plugged in yet or are they plugged in they plugged in yet.

So.

Frederick G. Thiel: So we're just going to talk about stuff when it goes live going forward. So we're giving you an idea as to what our pipeline of equipment is. Unfortunately, I can't help you model the when, because you're going to see it come in very interesting lumps. No, excuse me.

You're just going to talk about stuff when it goes live going forward. So we're giving you an idea as to what our pipeline of equipment is.

I. Unfortunately, I can't help you model the win.

Because youre going to see it will come.

And very interesting lumps.

Smoothly.

Frederick G. Thiel: But when it comes, it's going to come in a combination of at a rush and then in blocks, so I wish I could say more, but all right. Thank you. Our next question is coming from Lucas Pipes from B Reilly Securities. Your line is now live. Thank you very much, operator. Good afternoon, evening, everyone.

But when it comes it's going to come a combination of at a rush.

And then in blocks and so I wish I could say more bucket.

Thank you. Our next question is coming from Lucas pipes from B Riley Securities. Your line is now live.

Thank you very much operator, good afternoon evening everyone.

Fred My My My my question is around the capital budget for 2024.

Frederick G. Thiel: Fred, my question is around the capital budget for 2024. What is it, and would you be able to break it down between miners and infrastructure? Thank you very much.

What is it and what should be able to break it down between minors and infrastructure. Thank you very much.

Let's see.

So long answer to that question.

Salman H. Khan: Yeah, Lucas, it's I think we talked about it last time as well. This is what we're looking at from our, From a total capital perspective, with the targeted growth that we talked about earlier today, we're somewhere around north of $200 million, so somewhere between $200 to $245 million, somewhere in that range. And that includes our minor purchases and roughly..., you know, approximately $180 million or so. Just a quick reminder, we have been buying and paying for some of these minors, so some of those payments may have already happened.

Yes, Lucas I think we talked about it last time as well. This is what we're looking at from a.

From a total capital perspective.

That would be targeted growth that can talk and Fred talked about earlier today.

Somewhere around north of $200 million.

So somewhere between $230 million to $45 million somewhere in that range.

And that includes.

That includes our minor purchases and.

Roughly.

Approximately $180 million or so.

Just a quick reminder, we have been buying in pain.

Some of these minor so some of those payments that have already happened I'm just talking about the accounting capital here.

Salman H. Khan: I'm just talking about the accounting cap. In terms of the rest of the stuff, we have other, you know... Technology businesses, and other ancillary businesses that Fred talked about, a small portion of that will be allocated to those. And then, on top of that, we also purchased Generate's assets in Kearney and Nebraska and also Granbury in Texas.

In terms of the rest of the stuff that you have other.

Technology businesses other ancillary businesses that Fred talked about a small portion of that will be allocated to that and then on top of that we also purchased generates assets in kearney.

Nebraska and also Cranbury in Texas and that will be added to the capital which was just some concept that statement that that was about approximately $180 million.

Salman H. Khan: And that will be added to the capital, which is sunk cost at this stage, but that was about, approximately 180 million. And that, of course, is separate and on top of the other numbers you mentioned. And if I heard it right, it's kind of $245 million for 2024, and about $180 million of that is for mine.

And.

That of course is separate and on top of it.

The other numbers you might yes.

Yes.

I heard it right, it's kind of $200 million to $245 million for 2024, and about $180 million of status for minors.

Salman H. Khan: That is correct. I appreciate it. Thank you very much.

That is correct.

Alright I appreciate it thank you very much.

Salman H. Khan: Good luck. Thank you. The next question is coming from Brian Dobson from Charting Capital Markets. Your line is now live. Hey, thanks.

Got it.

Thank you. Our next question is coming from Brian Dobson from Chardan capital markets. Your line is now live.

Okay. Thanks, Thanks for taking my question.

Frederick G. Thiel: Thanks for taking my question. Um, so you mentioned as we head into the halving, it's very likely for smaller miners to be pushed out of business. Do you have a view on the potential magnitude of the decline we could see in global halving? And could that decline potentially be offset by some of the other players you mentioned, like nation states or large private entities? Oh, great question. So one way to look at this is to look at the non-sanalysis work that a number of people have done that's been published readily and readily available, where you essentially can see the amount of hash rate coming from what category of machine, and in some cases, locations, and even energy pricing data, if you have the ability to do that analysis. So there's a... The industry average efficiency today is somewhere around 30 joules per terahash, you know, 30-33, kind of varies depending on how many machines are on at any given time when you look at alchemy.

So you mentioned as we as we head into the having it's very likely or smaller miners to be pushed out of the business do you have a view on the potential magnitude of the decline we could see in global ash.

And could that decline potentially be offset by some of the other players you mentioned like nation states or large private entities.

Great question so.

One way to look at this is look at the non <unk> worked at a number of people have done it's been published readily readily available where you essentially can see the amount of cash right.

Coming from what category of machine and in some cases location.

And even energy prices approaching data if you have the ability to do that analysis.

So there is a.

The industry average efficiency today is somewhere around 30 jewels procure house 30 33.

It kind of varies depending on how many machines or on at any given time when you look at them.

Frederick G. Thiel: So, at 33 joules per terahash and Bitcoin at kind of, you know, 55,000 after halving, you'll likely see anywhere from 11 to 18% of the hash rate come off. Now, it may not come off all at once, you know; some people may have a few million dollars in the bank, and they're willing to say, you know what? I'm not going to shut off because I'm going to let the other suckers shut off so that I get the benefit of the hash rate dropping, and now I'm profitable again. And so I'm willing to take a loss for a month or two or three Um, so I would kind of say if you have to look at kind of the window, kind of.

So.

At 33 jewels for Terra hash.

And bitcoin.

55000.

Post, having you'll likely see anywhere from 11% to 18% of the hash rates come off.

It may not come off all at once.

Some people may have a few million dollars in the bank and they are willing to say you know what I'm not going to shut off because I'm going to let the other suffered shut off so that they get the benefit of the hatch rate dropping in a profitable way down and so I'm willing to take a loss for a month or two or three or four maybe.

So I would kind of say if you have to look at kind of the window.

Kind of.

Having over and then the first six months post having that's when you're going to see kind of the low <unk>.

People, who are hanging on for Dear life, we're going to hang on to as long as I can other people are going to say I'm.

I'm going to shut down and wait for better days, where it's a big corn price to go up or down which you are not going to see based on the announcements of ourselves and our peers is the rest of the world slowdown.

Frederick G. Thiel: And so you may very well have a world where, by the end of this year, the global hash rate is 20 to 30% higher than it is today. You may have a world worth the exact same as this today. What I will tell you is that obviously it's very dependent on the price of Bitcoin and the fact that the I'll go back to the thing about the ETF. When, with the ETF sucking up Bitcoin, and realize nobody can print Bitcoin. Yeah, people talk about supply shock of having yet you go from 900 Bitcoin to 450 in a day. So what? If everybody, you know, 450 Bitcoin a day isn't going to do anything to the supply in the market, what is doing it?

And so you may very well have a world where by the end of this year global hatch rate is 20% to 30% higher than it is today.

You may have a world where the exact same into this theory.

What I will tell you is that obviously, it's very dependent on the price of bitcoin.

And the fact that it will.

I'll go back to the thing about the Etfs.

<unk>.

With the Etfs sucking up.

Bitcoin and realize nobody can print bitcoin people talk about supply shock of the having you go from 900 Bitcoin to 450 a day so.

If every mined 450, <unk>, Dave I'm going to do anything to the supply in the marketplace.

What is doing in what is creating a problem.

Frederick G. Thiel: What is creating a problem is the ETFs as they continue to vacuum up Bitcoin, and I don't really see it abating. It may not grow, but I don't see it abating based on the. Conversations I'm having with institutional investors, certainly, are that the available supply of Bitcoin in the market is going to start drying up.

The Etfs does it continue to vacuum up bitcoin.

And I don't really see it abating.

It may not grow, but I don't see it abating based on the.

Conversations I'm, having with institutional investors certainly.

Is that the available supply of bitcoin and the market is going to start drawing up it already has it's at record lows on exchanges what that does is causes huge volatility swings in pricing.

Frederick G. Thiel: It already is. It's at record lows on exchanges. What that does is causes huge volatility swings in price. Right, that's where somebody at night when the ETFs aren't buying can short Bitcoin, drop the price down because there's no real demand. And then in the morning, when demand comes up, the price goes back up, and there are already traders doing this. You may have seen a couple of days last week or the week before where quant funds went in and 10x the volume that a couple of ETFs were doing as a test for this exact strategy.

Alright, Thats, where somebody at night, when Etfs arent buying can short bitcoin dropped the price down because theres no real demand and then in the morning when demand comes up the price goes back up and there are already traders doing it.

You may have seen.

A couple of days last week or the week before where quant funds went in.

And 10 X the volume that a couple of Etfs were doing as a test for this exact strategy.

Frederick G. Thiel: I'm going to go short Bitcoin, let's spot Bitcoin outside of the ETF markets, drop the price, buy it up, and let the ETFs come back, drive it right back up and sell it again. So you are going to see a market that is going to be having a lot of gyrations. And when that happens,

I'm going to go short bitcoin.

That spot bitcoin outside of the ETF markets drop the price.

And then let.

Let the Etfs come back drive it right back up and some of it again so.

You were going to see a market that is going to be.

Having a lot of gyrations in it.

And when that happens.

Frederick G. Thiel: Some miners will say, Oh my god, the Bitcoin price dropped. I'm going to shut down. Oh my god, the Bitcoin price is going back up. I'm going to turn it on, and you're going to see the hashrate bouncing up and down, up and down, up and down, up and up. And it's going to make for a crazy world. So, I think some miners are going to become sporadic miners if they have the right type of energy pricing contract. Miners that have PPAs, whether it's take or pay, they have to buy all 50 megawatts of the energy they're contracted to, especially hosted miners.

Some miners will say Oh, my God Bitcoin price dropped I'm going to shut down Oh, My God bitcoin prices going back up I'm going to turn on and Youre going to see Ashford bouncing up and down up and down up and down from that and it's going to make for kind of crazy world. So.

I think some miners are going to become sporadic miners. If they have the right type of energy pricing contract miners that have ppas, where the take or pay they have to buy.

All 50 megawatts of the energy they are contracted to especially hosted miners.

Frederick G. Thiel: Let me take a minute and say that the third-party hosting business is dead. Nobody who's hosting S19J pros and paying six and a half cents, seven cents, eight cents can be in business anymore. Unless Bitcoin just goes on a real tear, um, because they just won't be able to afford to do it. (Inaudible) My hosting contract, you want to buy the minors I have plugged in here and just take them over for me. And so I foresee that business dying. And so there'll be a certain portion of the hash rate that temporarily will come off. But by the same token, there's somebody like me saying, you know what? I'm calling every third-party hosting guy and saying, Hey, listen, you know, do you want to, you know, if you have an empty shelf. You know, I may be interested in buying the shelf from you. I'm not going to pay you a hosting fee, but I'll buy the shelf that was made by you if you're interested in it.

Let me take a minute and say that the third party hosting business is dead.

Nobody can.

Who is hosting S 19, J pros and paying 6578 can be in business.

Anymore post to having unless bitcoin just goes on a real ter.

Because they just won't be able to afford to do it.

Because they're not getting the economic benefit of curtailment, they can't subsidize their mining costs through other means.

And so it's the third party hosting business.

The retail hub stores.

And people, who want a host because they do at preventative purposes.

I really don't see that business.

I get calls very frequently and often people or hosting miners and location, saying, Hey, do you want to buy.

My hosting contract do you want to buy the miners had plugged in here and just take them over for me.

And so I foresee that business dining and so that'll be a certain portion of hatch rate temporarily will come off but by the same token. There is somebody like me, saying you know what I'm, calling every third party hosting guys, saying, Hey listen you.

Wanted to.

If you have an empty shelf.

I may be interested in buying the shelf from you're not going to pay you a hosting fee, but all by the shelf from you.

Made by you.

If you're interested in it and so this is where I think youre going to see the consolidation.

Frederick G. Thiel: And so this is where I think you're going to see the consolidation. And this is where the balance sheet is so important and just the availability of cash. So anyway. We could go on for a long time on this, but I won't.

And this is where our balance sheet makes is so important and just availability of cash flow.

Hey.

Could go on for a long time on this.

Frederick G. Thiel: Yeah, no, I think as just a quick follow-up to that. So is that where you see the lion's share of appealing M&A post-acquisition activity in that third party hosting segment? To some extent, you know, again, who can afford to do it? You know, I don't see you know, Riot, and Clean Spark ourselves. Yes, but probably not at all.

Yes, I think just a quick follow up to that so is that where you see call. It the lion's share of appealing M&A post having sort of that third party hosting segment.

To some extent again.

Who can afford to do it I don't see.

Right clean spark ourselves.

Oh, yes, but core most probably not.

Frederick G. Thiel: You know, they're, they're, Core's business model is predicated on a seven cent hash price. You know, we'll be at four cents for having. So, you know, miners with a lot of debt, miners with balance sheets that are kind of wonky, can't raise capital, you know, aren't gonna be able to do much. And, you know, in the case of Core, they have a big brother, whose name is Bitmain, who's able to plug miners in. They can do a kind of a red share deal that way. But that's not a way to serve $700 million in debt. So, yeah, I. Yeah, the large-scale hosters other than Riot and Core are kind of disappearing and converting to self-mining, and the small-scale hosters can't afford to buy their own miners. So I don't know what they're going to do, and if they don't have good power prices, nobody's going to want to buy them.

<unk>.

They're there.

Core business model is predicated on a <unk> price.

We will be at <unk>, having so.

I think miners with a lot of that miners with balance sheets that are kind of wonky can't raise capital.

Or it can be able to do much in <unk>.

Case of core live or Big brother, whose name is that main who is able to.

Plug miners in that you can do a kind of a rev share deal.

That way, but that's not a way to service $700 million of debt.

Yes.

Yes.

The large scale homesteaders or others right.

Core or kind of disappearing and converting to self mining and the small scale <unk>.

They can't afford to buy their own miners.

So I don't know what theyre going to do and if they don't have good power prices nobody's going to one of items.

Frederick G. Thiel: Thank you. We've reached the end of our question and answer session. I'd like to turn the floor back over to Charlie for any further closing comments.

Okay.

Thank you we've reached end of our question and answer session I would like to turn the floor back over to Charlie for any further or closing comments.

Charlie Schumacher: Thanks, Kevin. Thank you all for your time today. If you have questions that were not answered during today's call, please feel free to contact our investor relations team at IR@Mara.com. Thank you, and enjoy the rest of the day. Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.

Thanks, Kevin and.

Thank you all for your time today, if you have questions that were not answered during today's call. Please feel free to contact our investor relations team at IR at Mara Dot Com. Thank you and enjoy the rest of the day.

Thank you that does conclude today's teleconference and webcast you may disconnect. Your line at this time and have a wonderful day, we thank you for your participation today.