Bitcoin Miner Marathon Digital Misses Revenue Expectations Due to Production Setbacks

Marathon Digital, a Bitcoin mining company, did not meet revenue expectations set by Wall Street analysts in its first-quarter 2024 report.

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

Marathon faced digital production setbacks

Although year-over-year revenues grew by 223% to $165.2 million a statement On May 9, the company's performance still trailed the expected estimate of $193.9 million by 14.80%, according to investment analysis firm Zacks.

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

Marathon CEO Fred Thiel addressed the company's performance in an earnings call on May 9. He said the production setbacks were due to unexpected equipment failures, especially transformers at sites hosted by third parties, severe weather-related disruptions at several sites, and maintenance of the utility company's transmission lines.

The company noted that adverse weather conditions impacted its Garden City location in Central Texas and elsewhere, including a newly acquired location in Texas as of April 2. Despite these challenges, the company operated at a “record level” of 27 exahashes per second. Thiel highlighted the company's goal of reaching 50 exahash/second by the end of the year, which was revised upward from a target of 35 to 37 exahash/second in late April.

Thiel noted that Marathon was able to adapt and overcome operational challenges in the first quarter. The company redistributed equipment to newly acquired sites while repairs were underway.

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

Marathon shares in the first quarter beat expectations

Marathon Digital reported first-quarter earnings per share of $1.26, which initially appeared well above Wall Street's expectations of $0.02. However, these numbers are not directly comparable because the company adopted fair value accounting rules newly adopted by the Financial Accounting Standards Board (FASB). The market-to-market adjustment was appropriate, influenced by the significant increase in Bitcoin prices.

Following the May 9 report, Marathon Digital (MARA) participated. Projection About 2.19% to close at $19.65, with an additional 1% decline in after-hours trading according to Google Finance. Year to date, the company's stock price has declined 14.30% since peaking at $31.03 on February 28, 2024.