Q4 2024 MARA Holdings Inc Earnings Call
[inaudible]
Dale Simon: This Dale Simon documentary was produced by the Ohio Department of Collections, gonna.org
Ted: He won't give up until he finally. That's what Ted said. I won't give up. TEDxHI.org
and many more. Thank you. Thank you.
Speaker Change: Greetings and welcome to Marrow's Q4 2024 earnings call. At this time, all participants are in a listen-only mode.
Ted: If anyone should require operator assistance during the conference, please press star zero on your telephone keypad.
Speaker Change: Please note that this conference is being recorded. I will now turn the conference over to our host, Robert Samuels, Vice President, Investor Relations. Thank you. You may begin.
and many more. Thank you. Thank you.
Robert Samuels: Thank you, Operator. Good afternoon and welcome to Mara's fourth quarter and full year 2024 earnings call. Thank you for joining us today. With me on today's call are our Chairman and Chief Executive Officer Fred Thiel and our Chief Financial Officer Salman Khan.
Robert Samuels: Certain statements made during this call may be considered forward-looking statements within the meaning of the federal securities laws. In particular, any statements about our future growth plans and performance, our liquidity position, our growth opportunities, and our future financial performance are forward-looking statements.
Robert Samuels: These statements are identified by the use of words such as anticipate, believe, estimate, intend, design, may, plan, project, would, and similar expressions or variations.
Robert Samuels: Investors are cautioned not to place undue reliance on these forward-looking statements.
Robert Samuels: All forward-looking statements made on today's call involve risks and uncertainties.
Robert Samuels: While we may elect to update these forward-looking statements at some point in the future, we have no current intention of doing so except to the extent required by applicable law.
Robert Samuels: Our actual results and outcomes may differ materially from those included in these forward-looking statements as a result of various factors including, but not limited to, the factors discussed under the heading risk factors in our most recent annual report on Form 10-K and any other periodic reports that we may file with the Securities and Exchange Commission.
Robert Samuels: 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.
Robert Samuels: Mara believes these non-GAAP financial measures are important indicators of its operating performance because they exclude certain items that we do not believe directly reflect our core operations and may not be indicative of our recurring operations.
Robert Samuels: Please refer to the earnings release for a full reconciliation of these non-GAAP financial measures to the most comparable GAAP financial measures.
Robert Samuels: We hope you got the chance to read our shareholder letter, and we look forward to your feedback.
Speaker Change: We'll begin with some prepared remarks from Fred and Salman. After their comments, we are going to be conducting an analyst interview with management. Today's session will be conducted by Brett Knobloch, analyst at Canterford Sherald.
Speaker Change: Once Fred is finished, we will go through some of the more popular questions from our retail investors. And with that out of the way, I'm going to turn the call over to Fred to kick things off. Fred?
Speaker Change: Thank you, Rob. Thanks, everyone, for joining us this afternoon. I'm very proud to report record high revenues, net income, and adjusted EBITDA for the fourth quarter in full year 2024. In addition, our direct energy cost for Bitcoin for 2024 was $28,000 from our own sites.
Speaker Change: Our shareholder letter this quarter walks through the transformation that we set in motion last year to transform Mara from AssetLite into a vertically integrated energy and technology solutions provider, a transformation that we are accelerating in 2025.
Speaker Change: We secured 300% more energy capacity, expanding our total portfolio from approximately 5 gigawatts to 1.7 gigawatts, and deployed our first owned power generating assets, reducing our reliance on grid power and lowering our cost to mine.
Speaker Change: By owning energy assets, we lower our single biggest input cost, energy. Where the average grid-connected miner may be paying $40 a megawatt, at sites where we use owned energy assets, our energy costs could be as low as $10 a megawatt, or even less in some cases.
Speaker Change: This is what allows us to extend the life of our single largest CapEx item, Compute. By potentially doubling the useful life of miners, our need for maintenance CapEx is reduced, which we believe will make us more capital efficient and less dependent on replacing our fleet at these sites every three to four years, like our peers.
Speaker Change: This also means we potentially would be able to mine at times when others will have to curtail because the marginal cost to mine is too high, allowing us to benefit from likely reduction in global hash rate while some others cannot.
Speaker Change: The other area we're very focused on in regards to energy transformation is developing solutions that help us and the customers of our solutions optimize how power is consumed, stored, and distributed. This allows us to activate new services for data centers, AI operators, and energy markets.
Speaker Change: We can co-locate with them, balance their load, and generate revenue to offset costs in ways that grid-reliant miners simply cannot.
Speaker Change: We're proud of our transformation, but we're far from done. While we remain bullish on Bitcoin and our mining business, we're continuing to explore how Marriott can emerge as a leader in the next major opportunity, artificial intelligence.
Speaker Change: with a focus on inference AI where we intend to deploy an initial set of pilots totaling 30 megawatts of inference AI compute using our two-pick liquid cooling technology this year.
Speaker Change: at our own sites, as well as our partner and a customer site. We'll discuss our AI plans in more detail next quarter, and you can read more about it in our shareholder letter.
Speaker Change: In conjunction with our emerging technology business, we're taking steps today, including investing in research and development to establish our presence in AI and adjacent markets, which we expect will create additional revenue opportunities over the long term.
Speaker Change: We expect our costs to decline as we realize savings from owning our own sites and generating our own power. And we will be laser focused on efficiency as we drive towards our goal of near zero cost of energy.
Speaker Change: I'd like to thank our employees for their hard work and our shareholders for their support. And with that, I'll turn it over to Salman for some highlights from the quarter. Salman.
Salman Khan: Thank you, Fred. As Fred mentioned, we reported record results for the fourth quarter and full year. You can see the details in our letter, but I wanted to highlight a few key metrics.
Salman Khan: In 2024, we strategically transitioned into a vertically integrated energy and digital infrastructure company by acquiring five data centers, which we own, increasing our percentage of owned capacity to approximately 70%.
Salman Khan: This is a critical step forward, achieving greater operational control and efficiency, as Fred mentioned.
Salman Khan: All financial details will be available in our Form 10-K to be filed timely with the SEC upon completion of the audit process. Now let me provide financial highlights for the quarter.
Thank you.
Salman Khan: Revenue increased 37% to $214.4 million in Q4 of 2024, from $156.8 million in Q4 of 2023.
Salman Khan: For 2024, revenues grew 69% to $656.4 million from $387.5 million in 2023.
That income, on the other hand, increased 248%.
to $528.3 million or $1.24 per diluted share.
Salman Khan: in Q4 2024 from net income of $151.8 million or 66 cents per diluted share.
Net income includes
Income on Fair Value of Digital Assets.
Salman Khan: Bull year net income grew 107% to $541 million compared to net income of $261.2 million in the prior year period.
Salman Khan: On the other hand, adjusted EBITDA increased to $794.4 million in Q4 of 2024. Just a reminder, this is a new benchmark for the industry.
Salman Khan: That increase from last year's or Q4 of 2023, $259 million.
Salman Khan: Full year adjusted EBITDA was $1.2 billion compared to adjusted EBITDA of $417.1 million in the prior year period.
Salman Khan: Finally, our direct energy cost for Bitcoin, as Fred mentioned, was $28,801 and cost per kilowatt hour was 3.9 cents for our own sites in 2024.
Salman Khan: Cost of revenue per petahash per day excluding depreciation continued to improve by 5% this quarter and 17% for the full year.
Salman Khan: With that, I'll turn it over to Brett from Candra Fitzgerald to start our management interview.
Brett Knobloch: Perfect, thank you for having me here today and I'm excited to have a good dialogue here.
Speaker Change: Maybe to start, I know you guys talked a bit about AI and expectations to give us more detail on what your plans are for next year.
Speaker Change: But a lot of your peers in the space are kind of looking to do a co-location model where they're maybe spending capex to build the infrastructure and leasing it out to a tenant. Is that something you are interested in or are you just interested in helping call it balance the load at those locations?
Oh, I think, you know, a couple things. One is,
Speaker Change: while there is a huge demand from AI hyperscalers or let's just say hyperscalers and AI HPC vendors because there are some that where AI isn't the primary load.
Speaker Change: for capacity today. A lot of those sites that they're looking for are 500 megawatts and more. I mean, there's been talk in the press recently about a real focus from the hyperscalers on these larger sites. And a number of our peers in the industry have even talked about this in their most recent earnings.
We believe that...
Speaker Change: as this build out occurs, you know, essentially space becomes a commodity.
Speaker Change: And when you're providing power, ping, and rack space, essentially, you really are a commodity. And I think if you go back to the time...
Speaker Change: In the first internet boom, you had this huge data center build out, and then you had an overbuild of capacity.
Speaker Change: And then as the next wave came, the second wave, companies like Digital Realty Developed and others, who really became experts at this business. We think with AI, the trend is slightly different. There's a need for large learning centers, but the capacity in those centers
Speaker Change: is shifting in that now people are very much more focused on reasoning models and AI agents.
Speaker Change: And this is going to shift the demand for what these sites do and how they're operated. And I think you'll continue to see in the press more and more people talking about how
Speaker Change: People are moving away from the need to scale already, expensive training runs.
and moving more towards reasoning systems.
Speaker Change: So, we don't want to be chasing a ball that we think is moving very quickly and where investments are going to have to shift.
Speaker Change: The power needs per rack are hugely increasing with each generation of Blackwell, and it's going to be very hard for a lot of our peers to keep up.
Speaker Change: The real profit in AI is going to come from inference. Inference is where you actually make money.
Speaker Change: from AI. Once you have a model you load it into an inference site. That inference site typically is located in close proximity to a customer, not miles and miles away in the areas where you have low-cost energy.
Speaker Change: They need to be near where the customers are, because the customers need low latency, the customers need rapid response, and the customers don't want the data to leave their control often. And so small inference AI sites, we believe, are the future, and we want to be able to provide a complete solution to customers.
Speaker Change: for inference AI at the edge and that's something we're going to be very focused on as opposed to just trying to scale and build very big sites where you're having to deal with customers with leases who are going to be putting in their own equipment.
Speaker Change: Understood, very helpful. I feel like 2024, as you guys noted, was a transformational year going from, you know, a largely hosted Bitcoin miner to a vertically integrated miner, and in your prepared remarks you outlined
Speaker Change: that you expect to accelerate that trend in 2025. Should we expect you to, you know, go out and acquire as much power in 2025 as you did in 2024? And any thoughts on regions or locations of where you would look to do that?
Speaker Change: That's a great question. So we've stated previously that we expect to...
Speaker Change: essentially have 50% of our capacity coming from international markets by 2028.
Speaker Change: And we think there's an important difference in the U.S. domestic market and the international market as regards how energy infrastructure and the energy industry operates. The U.S. is a highly fragmented market with lots of generators.
Speaker Change: and distribution of energy, IPPs, all sorts of other providers. And it's a market where it's very fragmented. The international markets are centrally controlled.
Speaker Change: If you look at what we did in UAE, which is by far one of our most successful projects when it comes to collaborating with an energy company, we went from contracts with the sovereign to a fully operational
Speaker Change: That is what happens when you can partner with an energy company.
Speaker Change: and we have begun speaking with energy companies internationally about the opportunity to not be vendors of power to us but rather to be partners.
Enjoy Adventures!
Speaker Change: where energy price is less of an issue. You can view that as a capital contribution.
More focus.
on building very large-scale opportunities internationally together with energy partners.
Speaker Change: where we can help them balance their grids, help provide them with curtailable load so that as they begin to add things.
like hyperscaler sites.
and A.I.
Speaker Change: They have the ability to provide curtailment for those sites, allowing those sites to use extra capacity on their grid. You may have seen the Duke University study, which recently came out, which said that the U.S. had 78 gigawatts of additional capacity if the load on it was curtailed 5% of the time.
And so, we believe...
Speaker Change: that in centrally controlled energy markets, partnering with the energy provider and being in business with them, not being a customer of them is the way those future markets will develop. In the U.S., however, we will continue to focus on acquiring energy assets.
is critical.
Speaker Change: to making Bitcoin mining viable for the long term. We have another halving opportunity coming in not very long time.
and another one four years after that.
Speaker Change: grid energy is only going to get more expensive and so miners will have to have extremely low cost energy and be in control of their own energy assets or as I said back in 2021 it might be disrupt. You'll have to be a partner with the energy company and not a customer.
Speaker Change: So, you'll see us grow internationally using one model, you'll see us grow domestically using another, but over time, our sites will be split about 50-50 between the two markets.
in terms of owning the energy assets.
Ciao.
Speaker Change: How does that compare to maybe just, you know, I guess being a vendor instead of owning in terms of scalability? Like how quickly can you spin up ExaHash if you're going down the energy asset ownership route?
Speaker Change: Here's the interesting thing. If you look at this wind farm in Texas that we acquired, for example.
Speaker Change: That's a wind farm that sells energy today. So we can scale into that site and still be generating cash flow from the site.
Speaker Change: And what we end up doing is optimizing every electron from that site. Wind and solar assets aren't able to sell 100% of their nameplate capacity 100% of the time.
Speaker Change: It's only during certain peak periods where they really can maximize profits, and these sites have to be able to be very profitable the few times that they're able to actually sell energy with high margin, because as you're familiar with the duck curve, there's negative pricing.
Speaker Change: due to all the intermittent generation that exists in places like Texas during certain times of the day.
Speaker Change: But if we instead can utilize every single electron that comes off that wind farm.
were able to maximize the profit per electron.
Speaker Change: and so it allows us to really be almost an energy trader where we're our own customer but we can still remain as a vendor to the grid so we don't have to build a site and fully populate it we can do it over time and the strategy of having very low cost energy which wind is there's almost near zero marginal cost to generate wind energy
allows you to more importantly
Speaker Change: take machines that have been running grid-connected and extend their lives by now moving them to this very low-cost energy site which may not run full-time. It may run four hours a day, it may run five hours a day.
Speaker Change: But because those machines are fully depreciated, and your energy cost is significantly lower than grid-attached,
you're now able to continue to generate hash rate.
Speaker Change: with a machine that's already depreciated at a much lower cost per ex-ash.
Speaker Change: and extend the life. And we believe that lowers maintenance capex, which lowers your overall capex and makes you more capex efficient, which in the long-term benefits shareholders because you're not having to spend as much capital.
Speaker Change: to maintain your capacity, which means that you don't have to do things like take on, necessarily, excessive debt or issue excess amount of equity to be able to continue to grow and stay competitive.
Speaker Change: But I want to point out that historically we used to be at 0% on an operative company beginning with last year.
Speaker Change: and we exited the year at 70% when it operated. If you look at our matrix, we are very focused on value creation for our stockholders, which means that return on capital employed is an important matrix for us. And our ROSE or ROSI is
Speaker Change: more than 30% on an annualized basis versus our competition, which is single digit. So when you think about acquisitions we've used historically, we've acquired these megawatts and electrons, and we've used our MARA playbook by improving the sites to our standards.
Speaker Change: improving the capacity. So, for example, at Granbury, Texas, we increased our capacity by 200% with hash rate going by 200% from Q1 to Q4. In addition, we also reduced our cost per petahash per day by 45% on this.
Speaker Change: So, all in all, while our eyes, as Fred mentioned, is towards the future, when you look back, we are very careful of the acquisitions that we do. They are mindful of the use of the capital, and also it actually unlocks more value for our stockholders, ultimately.
Thank you.
Speaker Change: Maybe just one more question on the power front before moving on. The 25 megawatt partnership with Engon, I guess, how is that progressing and how should we think about this model scaling past the initial 25 megawatts? At what point would you have enough information to make those decisions?
Speaker Change: So the 25 megawatts will be fully operational by the end of Q1 this year and it's progressing.
Speaker Change: you know as planned with no hiccups and we think that it's going to be a great success for us.
This has taught us the ability to generate on-site.
Speaker Change: is something very practical actually. And when you look at the challenge at the other end of the data center spectrum, the hyperscalers are looking at doing is they're all looking at generating their own electricity.
and so there are opportunities for us to scale this.
Speaker Change: along areas where you have access to natural gas in addition to flared gas. You have gas that's essentially stranded in pockets.
where you can deploy larger scale generation.
Speaker Change: and take advantage of generating your own energy and mining Bitcoin.
Speaker Change: At the same time, if you build those assets in places where you have AI optionality, they become even more attractive.
Speaker Change: And so we believe in the long run, owning these types of energy assets are going to be a very valuable asset for the company as we continue to expand our footprint in Bitcoin mining and at the same time as we begin to enter the world of AI.
and many more. Thank you. Thank you.
Perfect. Maybe switching gears to Bitcoin a bit.
Speaker Change: I guess longer term, you know, network usage and adoption and those fees are going to be more important. I guess when you look at the Bitcoin ecosystem, what specific projects or use cases are you guys looking?
Speaker Change: You know tracking right now that kind of get you the most excited And then it's follow-up to that, you know Bitcoin has certainly proven to be cyclical You know, what part of the cycle do you think we're in?
Well, I think Bitcoin has become highly correlated to equities.
Speaker Change: growth, the rapid growth of the ETFs is certainly proof of that and if you look at the outflows from the ETFs over the past few days it clearly shows that it operates very similarly.
Speaker Change: to the equities markets. And so when Bitcoin is correlated to equities, the ebbs and flows in and out of Bitcoin are going to be the same as the stock markets.
and you have recessionary signals hitting now. You have...
Speaker Change: yield curve inversion again, and you have a belief amongst consumers that inflation is running high still and that there's risk. You know, if you talk to the average person on the street, things are still expensive out there. Prices haven't come down.
Speaker Change: So I think you're starting to see more and more of a risk-off environment, and that's an environment where Bitcoin typically sells off.
Speaker Change: You're also seeing the dollar still very high. And Bitcoin and the dollar tend to move in opposite directions.
Speaker Change: And you're seeing gold really being a store of value that people are focused on. One of the reasons is you have governments buying so much of that. I think the catalysts now for Bitcoin
Speaker Change: are really going to be the, you have 24 states in the U.S. that have bills on the books to essentially create Bitcoin strategic reserves.
Thank you. Thank you. Thank you.
you know if they do 2% of their
Assets.
Speaker Change: in Bitcoin, that'll have a significant impact on the market and the price of Bitcoin if the federal government follows suit.
Speaker Change: then that would also have an impact, especially as other countries will continue to do the same. So I don't think the long-term trend is broken at all. I think we're still very much in the early stages of institutional adoption of Bitcoin.
Speaker Change: What I think is exciting in the Bitcoin ecosystem today, outside of Bitcoin as an investment instrument.
You know, as an asset.
Speaker Change: are all the applications that are being built around side chains.
Speaker Change: where you're starting to look at monetizing or rather tokenizing real world assets and you're starting to build use cases for Bitcoin that don't necessarily have to do with payments or investment assets.
So I think the exciting stuff is yet to come.
Speaker Change: When it comes to use cases, there's a lot of stuff certainly being built, I think.
Speaker Change: You know, the world of Ethereum has certainly been suffering and it's become more and more of a centralized, it's appearance is that more and more of a centralized.
Speaker Change: network and under kind of central control and I think that Bitcoin is viewed as the premier and most secure network that people want to build on and tools are being developed and I think we'll see a lot of exciting stuff come even from the traditional trad firewall over the next two years
Speaker Change: Yeah, I agree. I think Bitcoin's where all the capital is and having the capital there makes it the most preferred destination to build on.
Yep
All right.
Speaker Change: As you look at your Bitcoin holdings, and I know over the last
quarter, you know, you guys made it meaningful.
Yeah.
Speaker Change: evolution of your capital market strategy in issuing a couple of converts, using those converts to buy bitcoin. So maybe if you could just comment on that strategy, you know, why you chose to issue the converts to buy bitcoin, maybe rather than go out and buy, you know, energy generation assets or additional miners or grow your infrastructure.
Speaker Change: And is that, you know, a part of a longer capital markets strategy that we should think of? You know, is this something you would expect to do, you know, on a more frequent basis?
Speaker Change: We started buying Bitcoin to put on our balance sheet back in early 2021.
Speaker Change: and then we paused for a while because we were so busy and focused on growing our total exohash in our capacity.
Speaker Change: Last year, in the back half of the year, we had a theory.
Speaker Change: that Bitcoin price was going to appreciate, especially as the trends for the election outcome started becoming more and more evident. And if an administration that had
by a degree of
Speaker Change: acceptance for Bitcoin would come in place that Bitcoin price would appreciate. And so you have to look at what's the best use of your capital in that moment.
Speaker Change: Can you get a great return by buying Bitcoin at a lower price now and then being able to leverage it over the long term to generate yield? Or are you going to invest that in an asset where the first Bitcoin that comes from that asset won't be produced for at least 12 or 18 months?
to leverage.
converts as a way to buy Bitcoin and you take
an appreciating asset and use that as the basis.
Speaker Change: for those bonds, which is better than using converts necessarily for buying depreciating assets such as miners. Back in late 2021, we did a convert
Speaker Change: where we raised $850 million, which we invested in mining infrastructure. And we learned a lot in doing that process. And we were...
Speaker Change: successful in buying back a fair amount of that at a discount which created some great value for our shareholders but
Speaker Change: We believe that convert debt is best used for buying appreciating assets, and that's certainly what Michael Saylor has done and been successful with it, and we'll see if it continues to be. He continues to buy a lot of Bitcoin, and we're more opportunistic with how we view that.
Speaker Change: And just to add, as I read, this is a capital allocation question.
Speaker Change: And as you can imagine, as the largest player in this space as a public company, we have multiple initiatives and we allocate capital to the best use of that dollar. And it made sense for us to go out and invest in Bitcoin.
Speaker Change: And you look at the history, we've created almost 63% yield on that on a per share basis.
Speaker Change: which we're very happy about. Now, in terms of our sources of capital, as you can see, we've been diversifying our source of capital. For example, last year, the year before that, actually, in 2023, we had almost 100% reliance on ATMs.
Speaker Change: And last year, we reduced that to under 45%, approximately 43% or so.
Speaker Change: and the rest of the capital was sourced towards from the converts and also known against Bitcoin and that we expect will give us a return better than sitting that cash sitting on the balance sheet or from a treasury management standpoint.
Certainly, I agree.
Thank you.
Speaker Change: How should we be thinking about hashrate growth this year? I know...
Speaker Change: Network has pulled back a little bit over the last couple of weeks, but it also has hit.
Speaker Change: Do you envision maintaining that 5.6% share you had in the fourth quarter or improving that as we progress throughout the year and would you want to give any targets to hash rate 425?
and many more. Thank you. Thank you.
Speaker Change: I think, I'm not going to give a hash rate target per se, I think
Speaker Change: Global hashrate is going to grow very dependent on the profitability of mining Bitcoin.
Speaker Change: you know one thing we saw recently is essentially Bitmain creating US publicly traded large-scale miners
Speaker Change: like this company Kango, who overnight had 32 exahash of capacity because Bitmain essentially
to deal with them, to take their older machines.
Speaker Change: and have them take them over. And I think what we're seeing is now
Speaker Change: especially in China. There is so much excess power in China and the cities in China.
Speaker Change: have now been essentially given what appears to be the green light to use that excess power to mine Bitcoin as a way to generate revenues for those cities.
Speaker Change: due to the condition of the economy. And so I think you're starting to see Chinese miners wanting to raise capital quickly to be able to begin mining in China again. So there are some people who believe the global hash rate will go to somewhere around 1.2.
Speaker Change: GEDA hash or 1200 EXA hash by the end of this year.
if Bitcoin price
Speaker Change: remains at its current levels where it is today, I don't think we'll see that type of growth. I think we'll see growth actually potentially slow down and maybe even stop on kind of that large scale.
Speaker Change: So, our intention is to continue to grow, and we're going to grow in an opportunistic manner. We don't believe that it is prudent for us
Speaker Change: to grow no matter what the cost. We think that right now the marketplace for compute for Bitcoin miners is still very attractive from a price perspective. But we also have
Speaker Change: the advantage that, you know, this company that we co-founded a few years ago, Aurodyne, has very successfully built and designed
mining silicon, the three nanometer.
which is beginning to compete very effectively against.
is some of the best mining hardware in the world.
and we have the unique ability amongst our peers currently.
Speaker Change: at least some of them, to be able to build our own miners to our own form factors specific to our own immersion technology, which allows us to create a performance curve on those miners that's highly optimized.
Speaker Change: And so, we are going to depend less and less on.
Speaker Change: the Chinese mining manufacturers, because there's also a risk that you have to look at. The Trump administration is moving quite quickly to begin to apply tariffs to Chinese manufactured goods.
They recently announced...
Speaker Change: what I would call the reverse syphilis, which is essentially looking at
Speaker Change: companies in the U.S. whose beneficial owners are Chinese nationals or Chinese national entities.
And if that's the case.
and as this potential trade war heats up.
Speaker Change: then, A, the cost of these miners may be more difficult to stomach, especially coming from China. And we've recently seen some issues where some miners were being stopped in customs. And so I think it's really important.
Speaker Change: in the Bitcoin mining business today to make sure your supply chains have some
Speaker Change: alternative sources. And that's one of the reasons why we're so glad we made this investment in Auradon, because it gives us the ability to really scale our supply.
quite flexibly. That being said, it's also a question of
Speaker Change: power and sites and I think you know we'll continue to be very opportunistic and we prefer to grow now at a rate where we're being much more capital efficient as opposed to necessarily just growing to hit a number.
Speaker Change: You know, we grew very successfully to be the biggest in the industry.
But we're still not the most efficient in the industry.
Speaker Change: And I believe that capital efficiency almost starts becoming more important in scale.
and being the biggest.
Speaker Change: And so our focus is starting to shift towards things like operating at places like wind farms and other sites where we can use older generation technology, spend less on capex, have lower operating costs, have lower energy costs.
Speaker Change: and make much more efficient use of our capital because this market is only going to get more competitive over time.
Speaker Change: it's not going to get more profitable necessarily. And so I think we all need to be focused on being really efficient users of capital and really efficient operators.
Speaker Change: And we all have to move towards getting close to near zero cost energy because
Speaker Change: We are so dependent otherwise on the price of Bitcoin going up and transaction fees going up. And that's a bit of hopium. I'm an optimist around the price of Bitcoin. I think it will continue to go up.
Speaker Change: But you can't build a business based on that hope. You have to build a business based on being the most efficient operator.
Speaker Change: and we now have the scale where we're now beginning to be able to be very efficient at what we do from both a capital and an operating perspective.
Speaker Change: No, I think that's very well said. On the, I guess the energy front plus, you know, maybe geopolitical front, do you think there's something that this administration or even future administrations can do to help
Speaker Change: make the industry more competitive when it comes to energy costs, given miners do help balance the load. They are a net benefit to the grid. You know, do you think there's something that could be done to ultimately help lower the energy costs for miners?
You know, I think what you're going to see is
of additional capacity and you allow Bitcoin miners.
and AI operators to operate behind the meter freely.
Speaker Change: Then what you'll see is the commercial markets, the private markets and commercial markets go in and do upgrades to the grid in this country, which the public utilities can't do.
Speaker Change: And I think it's, I'm not saying privatize energy, but what I think that you'll see this administration being focused on doing is, how do we remove the friction in increasing energy generation, transmission, and making consumption more efficient? And that's all you need to do to make Bitcoin miners more successful.
Speaker Change: You know, we have today, if you look at global hash rates,
Speaker Change: publicly traded miners make up roughly 35% of global hash rate and the U.S. arguably has about 40% of
Speaker Change: global hash rates within its borders. The U.S. could have much more.
Speaker Change: if energy generators had an incentive to work with them. And that's a business decision. That's not the government mandating anything. But if the government would remove the friction from building new capacity from Bitcoin miners,
Speaker Change: acquiring capacity, operating behind the meter, same thing for the AI operators, I think you would see things take off because what is good for the AI industry in regards to energy is very good for Bitcoin.
Rob: Perfect. I think that's a great place to leave it. Rob, maybe back to you for some of the retail questions.
and many more. Thank you. Thank you.
Rob: Thanks, Brett. Yeah, we really appreciate all the questions. Let's turn now to some questions from our retail investors. The first question we got was Fred, with the increasing competition in the crypto mining sector and potential regulatory changes in the U.S. and abroad, what strategies is Mara implementing to sustain profitability and ensure long-term growth? And what is the end goal for us? Are we going to be a store-of-value company like MicroStrategy or Strategy or continue to mine Bitcoin?
Speaker Change: If you think about Morrow, we are an energy transformation company. We're in the business of turning energy into digital value. So we call it digital energy.
Speaker Change: And if you look across the spectrum of what we're doing, we're becoming more and more vertically integrated from energy all the way to the holding of the actual asset.
Speaker Change: and maximizing every piece of the value stack, if you would, and maximizing every share of wallet in the process that we can by becoming one of the top operators. Bitcoin mining is a zero-sum game. If you're the most efficient operator,
Speaker Change: lowest cost operator, you will always be able to operate regardless of cost unless there is a major, major crisis. But you will always be able to operate and
Speaker Change: When you have those types of cash flows, if you're an efficient deployer of capital, you can use your capital wisely, then you can grow and actually build significant shareholder value with less and less dilution over time. And I think
The Bitcoin mining business needs to become
Speaker Change: more capital efficient and really the business needs to mature into the scale that the large miners have received. I think there's going to be a lot of consolidation over the coming years as most of the small miners just won't be able to operate efficiently.
Speaker Change: where we're really headed is in leveraging the low-cost energy that we're in the process of acquiring.
Speaker Change: for uses in the AI world and to develop technologies that support inference AI. Our liquid cooling technology is one of the best in the world, especially for inference at the edge. And I think if
You were to see some of the
Solutions
using our 2PIC technology.
Speaker Change: for small-scale inference at the edge. You realize that you now make deploying modular small data centers very easy, where you can put them inside buildings, where you don't need these...
Speaker Change: massive cores and things like that and they generate no noise. And so we are becoming more and more a technology company.
and more and more of a solutions company.
Speaker Change: and I believe you'll start seeing us becoming more tightly integrated with data center operators at both a hardware level, a software level, and a services level.
Speaker Change: and will continue to grow Bitcoin mining and that technology together and they'll provide a very well-balanced business.
Speaker Change: Terrific. Our next question, friend Salman, that we received is will there be any potential government partnerships or sponsorships in the near future?
You know, the...
Speaker Change: and many more. Thank you. Thank you. Thank you. Thank you.
I think what you'll see is
Speaker Change: In Bitcoin mining specifically, government partnerships will be more of an international
occurrence. I think domestically it'll be with
Speaker Change: utilities and the actual power generators. I think what the government really wants to do is essentially
Speaker Change: try and remove the friction for Bitcoin miners and AI developers and they'll start putting together programs to do that across the country I think especially as relates to power generation and we're super excited about that. Now
Speaker Change: As I mentioned earlier, 24 states in the U.S. have said they're going to do, that they have Bitcoin strategic reserve measures or initiatives on their ballots.
Thank you.
Speaker Change: initiative in the Senate to do the same thing for the US. Other countries are starting to look at that. And so then you start looking at, you know, do governments want to go into partnerships with large holders of Bitcoin and do things? That's a totally separate area. And I think that's
Speaker Change: an area that will be explored over the next two years most probably.
and many more. Thank you. Thank you.
Speaker Change: Great, and our last question ties into that one. What role does Mara expect to have with the Trump administration and their stated intention to ensure that Bitcoin is made in America? Are we working directly with the administration?
Speaker Change: I think all of the large Bitcoin miners are working with the administration in some shape, form or manner.
We're very focused, obviously, in...
Speaker Change: driving support for Auradon miners made in USA. We're very focused on mining blocks in USA. We stamp every block that Mara Pool makes with Made in USA and we're trying to really build out
Speaker Change: block space within the U.S. because we believe it's of strategic importance to the United States, not just having a strategic reserve of Bitcoin, but also having a predominant amount of block space.
Speaker Change: such that the U.S. can project power and defend the Bitcoin blockchain regardless of what other nations do. So we'll collaborate with the government both
Speaker Change: at the executive branch and the legislative branch, at the federal level, at the state level, to make sure that what's best for the industry gets put forth and executed.
Speaker Change: Terrific. Well, that's all the time we have for today. Thanks, everyone, for joining us. If you have any questions that were not answered during today's call, please feel free to contact our investor relations team at iratmara.com. And with that, I'll turn it back to you, operator.
Speaker Change: and many others. I hope you enjoyed this video. If you did, please subscribe to my YouTube channel. I'll be posting weekly. Thank you for watching. I'll see you in the next video.