Ben Strack

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A range of bitcoin miners are set to report third quarter results in the coming days as several companies in the mining sector are struggling to cope with financial pressures. 



Marathon Digital, Stronghold Digital Mining and Hut 8 Mining are among the companies in the space set to host earnings calls this week.&nbsp;



While analysts are not necessarily expecting big pronouncements of bankruptcies or acquisitions during industry players’ upcoming calls, they will be listening for how mining executives intend to navigate the current environment.



“I’m always listening for cues on expectations — company-specific and industry-specific — and specific companies’ moves to address their expectations,” Kevin Dede, senior technology analyst at HC Wainwright &amp; Co. told Blockworks.



<a href="https://cms.blockworks.co/crypto-miner-consolidation-imminent-as-some-industry-players-struggle/" target="_blank" rel="noreferrer noopener">Industry watchers told Blockworks</a> earlier this month that miner consolidation is imminent, as some of the larger miners in the space could look to scoop up struggling companies and their assets. 



But Lucas Pipes, managing director at B. Riley Securities, said miners in a solid financial situation are still likely to take a wait-and-see approach.&nbsp;



“They want to make sure they’re all secured and shored up and build that treasure chest to the extent they can,” he said. “Are you going to have exceptions to this rule? Yeah, you might.”



<h3>Keeping bitcoin mining rigs humming during crypto winter </h3>



Core Scientific revealed in <a href="https://d18rn0p25nwr6d.cloudfront.net/CIK-0001839341/5d07f815-c426-4db9-b79a-a38d616cf35a.pdf" target="_blank" rel="noreferrer noopener">filings</a> last month <a href="https://cms.blockworks.co/core-scientific-stock-price-plummets-70-as-it-considers-bankruptcy/" target="_blank" rel="noreferrer noopener">it was considering bankruptcy</a>, and Argo Blockchain followed by saying a potential capital injection of $27 million it was expecting <a href="https://cms.blockworks.co/crypto-miner-consolidation-imminent-as-some-industry-players-struggle/" target="_blank" rel="noreferrer noopener">had fallen through</a>. 



“The space is distressed,” Pipes said. “There’s no other way of putting it.”&nbsp;



Dede added that as it becomes harder to raise money in public markets, miners are being forced to purge assets.&nbsp;



Core Scientific said Monday that it sold 2,285 bitcoins at an average price of $19,639, as proceeds totaled roughly $45 million. The company held 62 BTC and about $32 million in cash, as of Oct. 31.



Core Scientific and Argo Blockchain have not yet listed earnings call dates.&nbsp;



Iris Energy is <a href="https://cms.blockworks.co/bitcoin-miner-iris-energy-says-its-bad-debt-contained-in-rotten-arms/" target="_blank" rel="noreferrer noopener">also in financial distress</a>. The Australia-based bitcoin miner said in an SEC filing last week that it can generate $2 million in monthly gross profit by mining bitcoin, while monthly principal and interest repayments on its debt stands at $7 million.



Bom Shin, vice president of corporate finance at Iris Energy, told Blockworks last week that the company’s debt is structured within a number of special-purpose vehicles (SPVs), which had a market value worth about 35% less than its principal loans outstanding as of September’s end.



The company was engaged in ongoing discussions with its unnamed lender, Shin added.



Iris Energy said that if it is unable to restructure the loans, two of its SPVs would have to default on the loans, which would likely result in the lenders foreclosing on the mining rig collateral, according to a Nov. 3 research note by Compass Point Research and Research analysts Chase White and Joe Flynn.



The analysts added that while Iris Energy’s stock price dropped following the news — and that the company may have a hard time getting equipment-backed financing in the future — they believe the company will be in a better financial situation after its negotiations with its lenders.



“We believe the market misunderstands the implications of the situation, which we see as a potentially significant positive for [Iris] that will allow it to continue to operate without the burden of expensive debt,” White and Flynn said.&nbsp;



In addition to the more recent struggles in the space, crypto mining data center operator <a href="https://cms.blockworks.co/compute-norths-business-goes-south/" target="_blank" rel="noreferrer noopener">Compute North filed for bankruptcy</a> in Texas in September.



Dede said he expects it will take a bit more pressure before more bankruptcies and consolidation take shape.



“You can expect to see some suffering for a while, I think,” he added. “I’m in no position to say how long this bear market lasts, but people who are running these companies should position themselves to endure a lengthy one.”



<h3>The space’s potential acquirers could wait to buy&nbsp;</h3>



Marathon Digital posted <a href="https://cms.blockworks.co/crypto-miner-marathon-digital-posts-192m-net-loss-in-q2/" target="_blank" rel="noreferrer noopener">a net loss of $192 million</a> during the second quarter and is set to report its third quarter earnings on Tuesday at 4:30 p.m. ET. 



The company said on Nov. 2 that it added about 32,000 miners last month to raise its hashrate to roughly 7 exahashes per second (EH/s). It also produced a record 615 bitcoins in October, increasing its total holdings to 11,285 BTC.



Marathon seeks to hit roughly 13 EH/s by the end of 2022 and 23 EH/s by mid-2023, Marathon CEO Fred Thiel told Blockworks.



Thiel said last month that Marathon would keep an eye on cheap assets from struggling miners. He noted that the company could look to purchase a hosting site, for example, if such a buy made strategic sense.



Riot Blockchain is another company that has expressed interest in acquisitions, as CEO Jason Les called his firm <a href="https://cms.blockworks.co/riot-blockchain-ceo-firm-is-one-of-mining-spaces-best-positioned-acquirers/" target="_blank" rel="noreferrer noopener">one of the segment’s “best-positioned acquirers.”</a>



The company produced 509 bitcoins in October and held 6,825 BTC, as of Oct. 31. It seeks to reach 12.5 EH/s during the first quarter of 2023. Riot has a special meeting of stockholders set for Nov. 17.



Frank Holmes, executive chair of HIVE Blockchain Technologies, <a href="https://cms.blockworks.co/ex-eth-miner-hive-blockchain-eyes-buying-opportunities-post-merge/" target="_blank" rel="noreferrer noopener">told Blockworks</a> in September that his firm would be evaluating buys of equipment, and potentially mining firms, over the next six months. 



Cleanspark said on Nov. 1 that it acquired 3,843 units of Antminer S19J Pro bitcoin mining machines for $5.9 million. The machines appeared to have come from Argo Blockchain, which reported selling the same number of S19J Pro units last week.&nbsp;



Pipes said though he believes “we’re getting close” to seeing more mergers and acquisitions in the space, there are often relatively few operational synergies to take advantage of.&nbsp;



He added that Riot is likely in the best financial situation of any miner, while Marathon is also in a position to take advantage of opportunities. But, he noted, those companies may want to focus on their ambitious hashrate targets.



“I think it’s first things first — execute on the existing growth plan before you take precious capital to add in more growth that may not be as attractive as what you have planned for anyways” Pipes said.&nbsp;



<h3>Other miners to keep an eye on</h3>



After Marathon’s earnings call on Tuesday, Stronghold Mining and Hut 8 Mining are scheduled to host their own on Wednesday at 5:00 p.m. ET and Thursday at 10:00 a.m. ET, respectively.&nbsp;



Canada-based miner Bitfarms is set to report its third quarter results on Nov. 14 at 11 a.m. ET



Stronghold said last week that it eliminated all outstanding principal — totaling about $67 million — under its equipment financing agreements with NYDIG and The Provident Bank.&nbsp;



Stronghold CEO Greg Beard said in a statement that the company was rapidly deleveraging its balance sheet and enhancing liquidity to pursue acquisitions of bitcoin miners at attractive prices. Stronghold had roughly $30 million of liquidity in cash and bitcoin, as of Nov. 1.



Meanwhile, Hut 8 Mining produced 299 bitcoins in October to raise its holdings total to 8,687 BTC. Its installed hashrate capacity was 3.07 EH/s at the end of the month.



Hut 8 CEO Jaime Leverton said during Blockworks’ Digital Asset Summit in September that acquisitions are not necessarily the best thing in the current market environment, as the company can buy new machines at attractive prices.



Bitfarms, <a href="https://cms.blockworks.co/crypto-miner-bitfarms-sells-half-its-bitcoin-to-reduce-debt-boost-liquidity/">which resorted to selling bitcoin</a> earlier this year, mined 486 BTC in October and sold all of it.



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What To Expect on Miners’ Q3 Earnings Calls As Industry Remains ‘Distressed’

<div id="highlights-block_632389c426161" class="highlights">
 <ul>
 <li>Hive seeks to grow its bitcoin mining hash rate by 50% over the next six months, executive chairman says</li>
 <li>Ethereum Classic’s hash rate, formed in 2016 as a result of The DAO hack, roughly tripled following the Merge to about 215 terahashes per second (TH/s)</li>
 </ul>
 
</div>



Ethereum’s switch to an underlying <a href="https://cms.blockworks.co/ethereum-switches-to-proof-of-stake-after-7-years-of-work/" target="_blank" rel="noreferrer noopener">proof-of-stake consensus model</a> has forced ether mining operations to pivot, which industry watchers said could trigger a wave of acquisitions. 



Though some of the bigger Ethereum miners will be fine, White Rock Management CEO Andy Long told Blockworks, they will likely be looking for ways to acquire extra hash rate quickly.



Hive Blockchain Technologies, previously the largest publicly traded miner of ether (ETH), mined 821 bitcoins (BTC) and 7,675 ETH during the year’s second quarter. It has sold ether in recent months to buy new application-specific integrated circuits (ASICs) for bitcoin mining, including as part of <a href="https://www.hiveblockchain.com/news/hive-blockchain-announces-landmark-deal-to-buy-new-high-performing-asic-chips-from-intel-and-a-100-mw-renewable-energy-deal-in-texas/" target="_blank" rel="noreferrer noopener">an agreement with Intel Corporation</a>. 



Hive Executive Chairman Frank Holmes told Blockworks that the company has the cash to complete payments on Intel miners and is seeking other opportunities amid an oversupply of machines.



“We’re of the opinion that there’s going to be some great buys for equipment and for everything over these next six months,” Holmes said.&nbsp;



Hive entered into an <a href="https://www.hiveblockchain.com/news/hive-blockchain-establishes-us100-million-at-the-market-equity-program/" target="_blank" rel="noreferrer noopener">at-the-market equity offering agreement</a> earlier this month to sell up to $100 million of company shares to support the growth of its mining operations. The executive said the firm did so “in the event that something comes up that it can buy something 10 cents on the dollar.”



<h3>Hive and Hut 8 pivot after Merge</h3>



Hive Blockchain Technologies said <a href="https://cms.blockworks.co/miners-hive-blockchain-technologies-hut-8-prep-for-ethereum-merge/" target="_blank" rel="noreferrer noopener">last week</a> it was analyzing mining other coins with its fleet of graphics processing units (GPUs).



“Anyone who’s mined with GPUs has been thinking about this from the start,” Long said. “What [ether miners] do have is a lot of power…just like bitcoin firms, so it’s just a case of being able to deploy the hardware quickly.”&nbsp;



Holmes said Thursday after the Merge that it has switched over to mining Ethereum Classic (ETC) and would be holding those assets amid what he expected to be a few weeks of “choppy waters.” The company is assessing other coins to mine, such as ravencoin (RVN).



<a href="https://www.coinwarz.com/mining/ethereum-classic/hashrate-daily-chart" target="_blank" rel="noreferrer noopener">The hash rate of ETC</a>, formed in 2016 as a result of The DAO hack, roughly tripled following the Merge to about 215 terahashes per second (TH/s), as of 3:00 pm ET, according to Coinwarz.com. <a href="https://www.coinwarz.com/mining/ethereum-classic/hashrate-daily-chart" target="_blank" rel="noreferrer noopener">RVN’s hash rate also saw big growth</a> Thursday, rising to 18.8 TH/s at that time. 



Hut 8 Mining CEO Jaime Leverton told Blockworks in an email the company is watching to see how proof-of-work digital assets will ultimately be affected. 


<div class="wp-block-image">
<figure class="alignright size-medium"><img decoding="async" loading="lazy" width="300" height="169" src="https://blockworks-co.imgix.net/wp-content/uploads/2022/09/Jaime-Leverton-Hut-8-Mining-CEO-1-300x169.png" alt="Hut 8 Mining CEO Jaime Leverton" class="wp-image-31633" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2022/09/Jaime-Leverton-Hut-8-Mining-CEO-1-300x169.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2022/09/Jaime-Leverton-Hut-8-Mining-CEO-1-300x169.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2022/09/Jaime-Leverton-Hut-8-Mining-CEO-1-300x169.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2022/09/Jaime-Leverton-Hut-8-Mining-CEO-1-300x169.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2022/09/Jaime-Leverton-Hut-8-Mining-CEO-1-300x169.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2022/09/Jaime-Leverton-Hut-8-Mining-CEO-1-300x169.png?w=464 464w, https://blockworks-co.imgix.net/wp-content/uploads/2022/09/Jaime-Leverton-Hut-8-Mining-CEO-1-300x169.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2022/09/Jaime-Leverton-Hut-8-Mining-CEO-1-300x169.png?w=80 80w, https://blockworks-co.imgix.net/wp-content/uploads/2022/09/Jaime-Leverton-Hut-8-Mining-CEO-1-300x169.png?w=50 50w, https://blockworks-co.imgix.net/wp-content/uploads/2022/09/Jaime-Leverton-Hut-8-Mining-CEO-1-300x169.png?w=1600 1600w" sizes="(max-width: 300px) 100vw, 300px" /><figcaption>Hut 8 Mining CEO Jaime Leverton | DAS New York 2022</figcaption></figure></div>


“While Ethereum mining made up a very small portion of our operations, we are working with our mining pool as the hash rate migrates away from the Ethereum network to begin mining the next most profitable proof-of-work digital asset,” she added. “We have long been bullish on bitcoin and other proof of work assets, but we are also very committed to building out the infrastructure in our data centers to support the nascent blockchain and Web3 spaces.”



Hut 8’s 180 Nvidia GPUs that were mining ether are set to pivot to offer artificial intelligence, machine learning or visual effects rendering services.&nbsp;



<h3>Mining M&amp;A coming?</h3>



Long said the top ETH miners will survive, due to strong balance sheets and operations.&nbsp;



“I think there’s more of a challenge for the small, microcap miners who have more or less funded their businesses from scratch with debt and now maybe are struggling or only just making the debt payments,” he said. “And then they’ve got to figure out how to replace the hardware in a year or two from now, and you’re just on this endless treadmill.”



Eric Chen, CEO of Injective Labs, agreed a number of miners will likely struggle to evolve their operations, which could present a number of acquisition opportunities for larger players.&nbsp;



The executive added, however, that <a href="https://cms.blockworks.co/cryptos-equities-slide-as-traders-unpack-powells-jackson-hole-remarks/" target="_blank" rel="noreferrer noopener">hawkish rhetoric from the Federal Reserve</a>, coupled with what he called a “dismal” macro environment, has led to a major downfall in mergers and acquisitions (M&amp;A) activity across the board.



“The newer miners who have not lived through the past Ethereum fork will likely be impacted the most…due to their relative inexperience compared to the more veteran miner factions,” Chen said.&nbsp;



Crypto mining executives said during a panel at Blockworks’ Digital Asset Summit on Tuesday that M&amp;A may not be a good option for larger miners right now — despite smaller players potentially wanting to sell.&nbsp;



“What I’ve noticed is that most of the transactions that have happened…it’s about assets and it’s about horse trading as opposed to mergers,” Argo Blockchain CEO Peter Wall said during the panel.



He pointed to Riot Blockchain’s acquisition of Whinstone from Northern Data last year, as well as CleanSpark’s deal last week to buy a Georgia bitcoin mining facility from Mawson Infrastructure Group.



“All of us have baggage, all of us have management teams and some of us have debt,” Wall said. “And so if you’re able to acquire either infrastructure or rigs and leave out all the rest of the baggage, it becomes more interesting.”



But Leverton said that even asset-based deals with other firms can be “tricky,” as the price of machines has plummeted in recent months.&nbsp;



“There are more machines than we can possibly plug in in the next six to nine months,” she said. “If you paid $70 or $80 per tera hash for your equipment — and you’ve got some leverage on that — I’m not going to take your debt for overpriced machines, when I can just buy machines straight-up for $20 or $25 per tera hash.



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Ex-ETH Miner Hive Blockchain Eyes Buying Opportunities Post-Merge

<div id="highlights-block_62b5d93dbc438" class="highlights">
 <ul>
 <li>Longtime Facebook leader becomes CEO of Web3 advertising provider</li>
 <li>Activision Blizzard executive moves over to lead blockchain gaming company</li>
 </ul>
 
</div>



Though companies such as <a href="https://cms.blockworks.co/crypto-com-cutting-5-of-workforce-amid-digital-asset-downturn/" target="_blank" rel="noreferrer noopener">Crypto.com</a>, <a href="https://cms.blockworks.co/cryptocurrency-lender-blockfi-set-to-cut-staff-by-a-fifth/" target="_blank" rel="noreferrer noopener">BlockFi</a>, <a href="https://cms.blockworks.co/coinbase-cut-workforce-ceo-wary-of-potential-recession/" target="_blank" rel="noreferrer noopener">Coinbase</a> and <a href="https://cms.blockworks.co/gemini-joins-growing-list-of-crypto-exchanges-cutting-staff-amid-downturn/" target="_blank" rel="noreferrer noopener">Gemini</a> have recently revealed plans to cut staff or slow hiring, others continue sharing their intentions to grow their headcount.&nbsp;



Demand for talent is strong for firms looking to expand. A recent analysis of Google search data by Cryptojobslist.com found that searches for “remote crypto jobs” grew by 560% worldwide this month.



Crypto exchange OKX announced last week that it plans to increase headcount by 30%, growing by 1,500 people to about 5,000 over the next 12 months.



“Seeing people in our community losing their jobs is quite unsettling,” an OKX spokesperson told Blockworks. “Our focus right now is to see if we can be the home for the incredible talent in our industry who may have been impacted by the recent layoffs.”



The exchange is targeting professionals in product design, engineering and marketing as its main focus shifts to building a leading brand in the space.&nbsp;&nbsp;



OKX has seen a slight increase in applications since the onset of the bear market. It received more applications in April than in any previous month of the year, and even more were submitted in May, according to the company representative.



<blockquote class="wp-block-quote">“This is a great time to hire talent who are coming to the industry not just for the hype but rather because of their pure passion for building,” the spokesperson added.</blockquote>



Derivatives exchange Bitget is also seeing an influx of applicants, most likely due to headcount cuts from other companies, Managing Director Gracy Chen said.&nbsp;



Bitget revealed earlier this week that it seeks to double its workforce to 1,000 people by the end of the year. The company is focused on filling operations, product development and customer services roles across regions in which it has seen growth.&nbsp;



A crypto winter gives the firm “a golden window” to achieve low-cost, high-quality growth, Chen explained. Historical data has proven that with each market downturn, the recurring bull run will bring about even stronger and positive results, she added.



“Oftentimes, a company’s success is very visible during a bull market, however, the foundation was likely established during a bear market,” Chen told Blockworks. “Regardless of the market conditions, it was a pressing business need for us to push forward with our hiring plans to pave way for new developments to come.”



<h3>A look at this week’s hires</h3>



Web3 advertising provider <a href="https://c212.net/c/link/?t=0&amp;l=en&amp;o=3570727-1&amp;h=1983329226&amp;u=https%3A%2F%2Fpermission.io%2F%3Futm_source%3DBitcoin.com%26utm_medium%3DBlockman.pro%26utm_campaign%3Dpolygon_migration&amp;a=Permission.io" target="_blank" rel="noreferrer noopener">Permission.io</a> appointed longtime Facebook executive Thomas Shin as its CEO.&nbsp;



Shin has spent 28 years in the digital advertising space at companies such as Meta (formerly Facebook), Yahoo!, MediaMath and Efficient Frontier, which was acquired by Adobe. Most recently, he was head of the Americas business at mobile programmatic startup Moloco.&nbsp;



Permission.io founder and former CEO Charlie Silver is set to become executive chairman.



Crypto exchange OKX brought aboard Rachel Conlan to be its global head of brand marketing and partnerships.



Conlan is responsible for the company’s brand and marketing efforts through partnerships with Manchester City FC, Tribeca Festival and McLaren Racing. The latter collaboration, <a href="https://cms.blockworks.co/crypto-exchange-okx-inks-f1-mega-deal/" target="_blank" rel="noreferrer noopener">revealed in May</a>, came around the time OKX hired chief marketing officer Haider Rafique from competing exchange OKcoin.&nbsp;&nbsp;



Conlan previously led the global partnerships team at international sports and entertainment agency CAA Sports and also worked as global chief marketing operations officer for communications group Havas.



Hut 8 Mining named Aniss Amdiss as its chief legal officer. He will lead Hut 8’s legal and governance portfolios and serve as corporate secretary, reporting to CEO Jaime Leverton.&nbsp;



Prior to joining Hut 8, Amdiss served as vice president of legal, general counsel and corporate secretary at healthcare services company Greenbrook TMS Inc.



Digital asset custody company Digivault has added Greg Vosper as its chief commercial officer to drive the firm’s business development, partnerships and sales strategy.&nbsp;



Vosper was most recently the director of strategic partnerships at Zodia Custody, a crypto custody solution built by Standard Chartered’s venture arm and asset management giant Northern Trust. He was also previously the lead of new client development and sales at CME Group and a business advisory and tax committee manager at Nexia International.



Private markets investment management firm Hamilton Lane hired Victor Jung to its newly created head of digital assets role.&nbsp;



The company had about $900 billion in assets under management and supervision — $106 billion in discretionary assets and $795 billion in advisory assets — as of March 31.



Jung was most recently head of distribution partners and liquid private markets for the Asia-Pacific region at Partners Group, where he oversaw business development and led onboarding for the firm’s wealth technology platforms.



Mark Aubrey is set to join blockchain gaming company Catheon Gaming as its co-CEO on July 11.



Aubrey joins the company from Activision Blizzard, the creators of games such as Call of Duty and World of Warcraft; there he worked as managing director and head of its Asia-Pacific arm. Before that, Aubrey was a marketing director at Warner Bros. Entertainment.



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Latest in Crypto Hiring: OKX, Bitget Among Companies Boosting Headcount

<div id="highlights-block_629e53810fb42" class="highlights">
 <ul>
 <li>Hut 8 produced 309 bitcoins in May, bringing its total bitcoins in reserve to 7,078</li>
 <li>CEO expects monthly recurring revenue from data center acquisitions will grow by up to 18% this year</li>
 </ul>
 
</div>



Hut 8 Mining opened its third site after the number of bitcoins in its reserves hit 7,000 as the company continues to amp up capacity despite a broad-based crypto turndown.



The Canadian company’s mine in North Bay, Ontario began operating on 15 megawatts (MW) on June 2, adding roughly 400 petahashes per second (PH/s) to Hut 8&#8217;s operating capacity.&nbsp;



“We are adding both miners and capacity on site and are working to significantly increase production in the coming weeks and months,” Hut 8 CEO <a href="https://twitter.com/jaimeleverton?lang=en" target="_blank" rel="noreferrer noopener">Jaime Leverton</a> told Blockworks in an email, noting its goal is to ultimately reach 30 MW of power at the North Bay operation.



The executive declined to comment on whether the company plans to open additional facilities.



Hut 8 Mining, which also has two sites in southern Alberta, mined 309 bitcoins in May, bringing its total bitcoins in reserve to 7,078. Its current operating capacity is 2.64 exahashes per second (EH/s).



The latest monthly total was the same as its output in April but below its production of 345 bitcoins in March.



Hut 8 limited its consumption at its Drumheller facility when the price of power spiked, the company said Monday.



“Everything we mine, we keep, and 100% of our stack is unencumbered, meaning that in addition to operating efficiently and taking a very strategic approach to equipment purchases and consistently driving efficiencies in our mines, we have a level of flexibility that sets us apart from our peers,” Leverton said.&nbsp;



The company’s third facility follows its acquisition of wireless connectivity company TerraGo at the end of January for $30 million (CAD), which brought five data centers to Hut 8.&nbsp;



Sue Ennis, the firm’s vice president of investor and corporate development, <a href="https://cms.blockworks.co/bitcoin-miner-targets-gaming-web3-with-cloud-services-expansion/" target="_blank" rel="noreferrer noopener">told Blockworks in March</a> that Hut 8 is looking to set up scalable cloud services that provide an alternative to cloud computing giants such as Amazon Web Services, Google Cloud and Switch.



Leverton said the data centers purchase has given Hut 8 Mining a monthly recurring revenue stream from 400 enterprise-grade customers, which she expects will grow by up to 18% this year. The company’s certified repair shop provides further revenue and supply chain advantages, she added.



Hut 8’s stock price was $2.23 Monday afternoon, down roughly 70% year to date and down nearly 20% in the last five days.



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Hut 8 Mining Opens Third Facility, Hits 7,000 Bitcoins in Reserves

<div id="highlights-block_6227b74b85b0c" class="highlights">
 <ul>
 <li>Marathon Digital expects to have 199,000 bitcoin miners producing approximately 23.3 EH/s by early 2023</li>
 <li>Stronghold Digital Mining, which owns its power, seeks to buy additional plants and scale its mining equipment and operations this year</li>
 </ul>
 
</div>



Cryptocurrency miners will diversify their revenue streams and business models from one another this year, according to Compass Point Research and Trading.&nbsp;



The cryptocurrency research firm estimates the global hashrate will rise to 327 exahashes per second (EH/s) by the end of 2022 — a nearly 60% year-over-year increase, <a href="https://compasspoint.bluematrix.com/links2/secure/pdf-viewer/36c024b3-5d83-4e8c-af91-e7c207a26a67" target="_blank" rel="noreferrer noopener">according to a note</a> by Chase White. Hashrate could reach 587 EH/s by the end of next year, he added.



“While we believe our hash rate growth estimate is relatively aggressive compared to consensus, we see it as a more conservative approach given that miner revenues and per-BTC costs are directly related to global hash rate share, potentially suggesting upside to our estimates if growth is lower than expected,” White wrote.



Bitcoin traded around $38,800 at 2 pm ET on Tuesday.



Compass Point expects bitcoin prices to average roughly $49,000 this year — ending the year at $65,000 — and rise to an average of $81,000 in 2023. The expected rise is driven in part by BTC’s resilience during Russia’s invasion of Ukraine and expected increased adoption globally, especially among retail investors, White wrote.



“We do not believe all miners are created equal, and we believe 2022 is the year that investors will start to look at the differentiators between the companies and their businesses,” he wrote. &#8220;These factors lead us to favor Marathon (MARA) among the scaled miners and Stronghold Digital Mining (SDIG) among the small miners.&#8221;



<h3>Marathon versus Riot Blockchain</h3>



Marathon has 35,510 active miners producing approximately 3.8 EH/s, the company reported last week. It increased hash rate 8% from the prior month after deploying 2,800 miners.



Marathon mined 360.3 bitcoins in February — a 730% increase from 43.4 bitcoins in February 2021. The company now holds 8,956 bitcoins, currently valued at nearly $350 million.



While many miners are going the vertically integrated route by owning infrastructure and power sources, Marathon has taken the opposite tactic, according to Charlie Schumacher, vice president of corporate communications.



The company owns its machines but partners with other companies that provide infrastructure, as well as power companies that offer primarily renewable energy, he said. Buying infrastructure was not an attractive return on Marathon’s investment, Schumacher said.



“We could have spent $750 million to build a data center, but instead we spent $750 million to go out and buy machines and increase our hashrate,” Schumacher said. “We would rather buy assets that generate revenue than own assets that don’t.”



Hut 8 Mining, a company not included in Compass Point’s report, recently acquired five data centers as it looks to <a href="https://cms.blockworks.co/bitcoin-miner-targets-gaming-web3-with-cloud-services-expansion/" target="_blank" rel="noreferrer noopener">build out its cloud computing business</a>.



Marathon’s focus this year is to deploy the miners it has purchased. Marathon expects to have 199,000 bitcoin miners producing approximately 23.3 EH/s by early 2023, Schumacher said, and expects its mining operations to be 100% carbon neutral by the end of 2022.



The company’s status as a scaled miner with ample access to capital likely gives it the first look at any available hosting capacity, White wrote. He lowered Riot Blockchain’s rating from buy to neutral, noting that Marathon offers better upside.



Riot produced 436 bitcoins in February, bringing the total it holds to 5,783 BTC, the company reported last week. Riot, which has a fleet of 38,310 miners with a hashrate of 3.9 EH/s, anticipates a total self-mining hash rate capacity of 12.8 EH/s by January 2023.



As for other miners featured in the report, Compass Point retained its buy rating for Argo Blockchain and downgraded its rating for Iris Energy from buy to neutral.



<h3>Stronghold’s 2022 focuses</h3>



Compass Point’s preference of Stronghold compared to fellow smaller miners is driven by its relatively low power costs, diversified revenue streams and low-cost options on additional power capacity.



“We acknowledge there is execution risk on the path to capacity,” White wrote.



The company, which <a href="https://cms.blockworks.co/stronghold-digital-mining-ipo-opens-55-8-above-expected-stock-price/" target="_blank" rel="noreferrer noopener">went public last year</a>, generates power from the waste byproduct of legacy coal mining operations. It’s focused on maximizing the benefits of owning its power, which is typically the largest cost for miners.



“In owning our own power assets, we can continue to grow our mining operations and clean up the environment at the same time,” Stronghold CEO Greg Beard told Blockworks in an email. “It also allows us to stabilize the electricity grid in the region at a time of questionable energy security, not just locally and regionally, but globally.”



The company acquired its second plant, the Panther Creek Energy Facility in Pennsylvania, last November. It reported having about 14,000 miners with 1.3 EH/s of capacity in January.&nbsp;



“We are plugging in miners and expanding our mining power as fast as we can,” Beard said. “That will truly unlock the growth potential of our vertically integrated operation, as we will have the lowest cost of power in the industry.”



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Bitcoin Mining Operators Jostling for Market Share in 2022

<div id="highlights-block_61d6047bd727b" class="highlights">
 <ul>
 <li>Marathon Digital plans to add 167,000 bitcoin miners to its fleet between now and early 2023, which would boost its hashrate by nearly seven times its current level</li>
 <li>Hut 8 Mining’s upcoming Ontario facility expects to bring company’s total hashrate to 3.35 exahashes per second by the end of March</li>
 </ul>
 
</div>



Crypto miners such as <a href="https://marathondh.com" target="_blank" rel="noreferrer noopener">Marathon Digital</a> and <a href="https://hut8mining.com" target="_blank" rel="noreferrer noopener">Hut 8 Mining</a> look to continue increasing their hashrates after the overall metric recently hit an all-time high.&nbsp;



Las Vegas-based Marathon Digital’s existing mining fleet consists of 32,350 active miners producing roughly 3.5 exahash per second (EH/s).&nbsp;



But after purchasing a record number of Antminer S19 XP bitcoin miners from Bitmain in December, the company projects that it will have 199,000 bitcoin miners producing about 23.3 EH/s by early 2023, according to an announcement made on Monday



<figure class="wp-block-image size-large"><img decoding="async" src="https://blockworks-co.imgix.net/wp-content/uploads/2022/01/Marathon-hashrate-growth-chart-1024x662.png" alt="Marathon Digital hashrate growth chart" class="wp-image-13559"/><figcaption>Marathon Digital hashrate growth chart. Source: Marathon Digital</figcaption></figure>



“Today, we have access to top-tier hosting and renewable power, a strong balance sheet with $644.3 million in total liquidity, and nearly 167,000 industry leading bitcoin miners being added to our fleet between the start of this year and early 2023,” Marathon Digital CEO Fred Thiel said in a statement.&nbsp;



The company is installing machines at <a href="https://www.computenorth.com" target="_blank" rel="noreferrer noopener">Compute North</a>’s existing facilities and testing deployments at new locations, he added.



Marathon expanded its agreement with Compute North last month to host more than 100,000 of Marathon’s previously purchased bitcoin miners at multiple locations, including wind and solar farms across the US.



Hut 8 Mining, based in Canada, has an installed operating capacity of 2.0 EH/s, a 125% increase in hashrate from a year ago, the company announced on Wednesday.&nbsp;



The company purchased 2,505 MicroBT M30S machines from Foundry Digital that were already installed at the company&#8217;s site in Medicine Hat, Alberta, adding 228 petahashes per second (PH/s) during the month of December.



Electrical upgrades continue at the Medicine Hat site, which will allow for optimal hashrate efficiency from new MicroBT miners. These upgrades are on track to contribute an additional 450 PH/s in February 2022.



Hut 8 continues construction on its site in North Bay, Ontario, which it expects to have operational by the end of the first quarter. This will add roughly 850 PH/s of hashrate to its operations, bringing the company’s total hashrate to 3.35 EH/s by the end of March.



The company entered into a $30 million senior secured equipment financing term loan with Trinity Capital for new MicroBT machines being installed at the Alberta and Ontario sites.&nbsp;



<h3>Hashrate’s recent all-time high</h3>



Bitcoin hashrate, a measure of the amount of computing power that is securing the network, hit an all-time high of about 208 million EH/s on Jan. 1, according to Glassnode data. 



The previous high of 198.5 million EH/s, the data shows, was recorded on April 15.  



Bitcoin hashrate was at about 179 EH/s, as of Tuesday, according to BTC.com.&nbsp;



Compute North CEO Dave Perrill noted the bitcoin hashrate’s rebound in an email last month following its decline after Chinese miners were forced offline due to nationwide crypto bans.



<blockquote class="wp-block-quote">“Expect [bitcoin’s hashrate] to double next year, as major industry players promise that hundreds of megawatts of capacity will come online in 2022,” he wrote. “Even if this doesn’t entirely come to fruition, we will still see more than 3 [gigawatts] of power coming online in all corners of the US.”</blockquote>



Miners will likely continue to have a difficult time purchasing new gear in 2022 due to chip shortages and supply chain issuers, Perrill added, which could benefit the established players in the space.&nbsp;&nbsp;



“It isn’t just about having the funds but also being well connected to make the short-list to order gear before manufacturers sell out. Rather than new entities attempting to enter the mining space and bring new machines online, 2022 will see an increased investment in publicly traded blockchain companies that already have equipment online.



<h3>Holding bitcoin&nbsp;</h3>



Marathon Digital produced nearly 3,200 bitcoins in 2021, the company announced, which was an 846% year-over-year increase. More than a third of that came during the final three months of the year, including a record 484.5 self-mined bitcoins in December.&nbsp;



The company last sold bitcoin in October 2020, and since then, <a href="https://cms.blockworks.co/marathon-digital-hut-8-mining-building-up-bitcoin-reserves/" target="_blank" rel="noreferrer noopener">has been accumulating</a> all the bitcoin it generates. It currently holds 8,133 BTC, which had a value of about $365 million, as of 3 pm ET on Wednesday.&nbsp;



Hut 8 Mining meanwhile held 5,518 bitcoins on Dec. 31, which is 97% higher than a year ago. It mined 276 of those in December, up from 265 in November.



The value of its total reserves was nearly $250 million on Wednesday afternoon.



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Bitcoin Miners Marathon Digital, Hut 8 Plot Hashrate Growth

<div id="highlights-block_61c4e71ea46b2" class="highlights">
 <ul>
 <li>The returns of Amplify Investments’ Transformational Data Sharing ETF (BLOK) total about 35% in the trailing year, while bitcoin’s price is up 115% over that time</li>
 <li>The stock prices of companies NVIDIA and Silvergate have both surged by about 130% in the past 12 months, according to Google Finance data</li>
 </ul>
 
</div>



With no ETFs available in the US that invest directly in cryptocurrencies, some investors have sought exposure to digital assets through funds holding stocks considered to be correlated to the crypto and blockchain spaces. 



But how did the returns of such ETFs &#8211; and the companies they hold &#8211; compare to bitcoin itself?



Bitcoin’s price has increased by about 115% in the past 12 months, as of 3:30 pm ET on Dec. 23, according to CoinGecko. It stood at about $51,150 at that time.



Amplify Investments’ Transformational Data Sharing ETF <a href="https://amplifyetfs.com/blok.html">(BLOK)</a>, which has more than $1.3 billion assets, primarily invests in companies developing and using blockchain technologies. 



BLOK’s top 10 holdings are NVIDIA Corporation, Coinbase, Silvergate, CME Group, SBI Holdings, MicroStrategy, Galaxy Digital, PayPal Holdings, Hut 8 Mining Corp and Hive Blockchain Technologies.&nbsp;



The fund has returned nearly 35% in the trailing 12 months, as of Dec. 22, according to FactSet data.&nbsp;



Amplify’s offering launched in January 2018, just days before two competing funds: the Siren Nasdaq NexGen Economy ETF (BLCN) and the First Trust Indxx Innovative Transaction and Process ETF (LEGR). 



BLOK’s year-to-date returns compare favorably to BLCN and LEGR, which have roughly $260 million and $145 million assets under management, respectively. BLCN has returned 8.1% over the last year, while LEGR’s returns over that span total about 19.6%.



Nate Geraci, president of The ETF Store, told Blockworks that <a href="https://cms.blockworks.co/gap-wide-between-best-and-worst-performing-blockchain-etfs/" target="_blank" rel="noreferrer noopener">the performance of various blockchain ETFs</a> has been “a mixed bag,” but called the returns of such products disappointing overall.



“The universe of blockchain ETFs has mostly underperformed the spot price of bitcoin, in some cases rather significantly,” Geraci said. “Unfortunately, the SEC has allowed these products to proliferate instead of approving a spot bitcoin ETF – a disservice to investors seeking bitcoin price exposure in their existing brokerage and retirement accounts.”



More recently launched ETFs that hold crypto-related stocks include Bitwise Asset Management’s Crypto Industry Innovators ETF (BITQ), which launched in May, and Invesco’s Alerian Galaxy Crypto Economy ETF (SATO), which began trading in October.



BITQ, which has roughly $125 million in assets, has returned -24% in the last month, while SATO, which has about $10 million assets, has returned -22%. Bitcoin’s price is down about 10% from 30 days ago, Coingecko data shows.



<h3>Individual stocks </h3>



California-based NVIDIA is a technology company that sells crypto mining products. The company’s stock price, which has a roughly 5% weighting in BLOK’s portfolio, was up 128% from 12 months ago, as of Thursday afternoon, according to Google Finance data.&nbsp;



Like NVIDIA, Silvergate has also seen its stock price rise more than bitcoin over the past year, surging by 134%. Bitcoin mining companies Marathon Digital and Hut 8 Mining have seen their stock prices increase by 250% and 244%, respectively, from 12 months ago.



The stock prices of CME Group, SBI Holdings and MicroStrategy have increased by about 37%, 2%, and 74%, respectively, over the span.



MicroStrategy held about 121,000 bitcoin, <a href="https://cms.blockworks.co/microstrategy-announces-new-414-4m-bitcoin-buy/" target="_blank" rel="noreferrer noopener">as of the end of November.</a>



Coinbase <a href="https://cms.blockworks.co/coinbase-direct-listing-shares-are-limited-demand-is-high/" target="_blank" rel="noreferrer noopener">went public in April</a>, becoming the first cryptocurrency exchange platform to do so. Its stock price is up roughly 16% in the last six months, according to Google Finance, while bitcoin’s price is up about 60% over that period. 



Bill Miller, the founder, chairman and chief investment officer of Miller Value Partners, said during a conversation with author William Green in October that Coinbase <a href="https://cms.blockworks.co/bill-miller-is-willing-to-go-over-the-waterfall-with-bitcoin/" target="_blank" rel="noreferrer noopener">could be “the default position for growth investors”</a> that want exposure to the crypto market without investing directly in crypto assets. 



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