Fred Thiel, Marathon CEO, highlighted that the equity markets aren’t getting any looser, the debt markets aren’t getting any cheaper, and the deals miners are doing for financing are pretty expensive.
He said it’s wise for Bitcoin mining companies with ample cash reserves and up-to-date new machinery to build than it is to buy. Many mining companies during the bull run in late 2021 raised money to seal agreements and order containers. They saw capital markets start to close leaving them with unused hosting capacity.
Thiel said companies built out third-party hosting capacity for higher growth but fell far short of their projections. He revealed that they are getting a lot of phone calls. Companies that were looking at self-mining are actively looking to offer to host capacity to a third party. Thiel believes there are more attractive deals.
But the price of new machines has plummeted in recent months. Jamie Leverton, Hut 8 Mining CEO, had said last month that asset-based M&A deals with other firms can be tricky. He explained that if one paid $70 or $80 per terahash for their equipment, the company will not take the buyer’s debt for overpriced machines when it can be bought straight-up for $20 or $25 per terahash. Frank Holmes, the executive chair of HIVE Blockchain Technologies, said his firm will evaluate buys of equipment and potentially mining companies over the next six months.
Thiel pointed out that energy prices are hitting some companies particularly hard. He said the consolidation and the kind of cleansing that will happen will reveal which businesses are professionally run and well-financed, and which ones aren’t. On October 6, Marathon said its fleet of 57,000 represents a capacity of around 5.7 exahashes per second (EH/s). It wants to hit 13 EH/s by the end of 2022 and 23 EH/s by mid-2023.