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In this video, Marathon Digital Holdings CEO Fred Thiel discusses the profitability of Bitcoin mining post-halving. Despite Bitcoin's recent price fluctuations, mining remains lucrative due to lower production costs. Thiel explains the impact of institutional investments through Bitcoin ETFs on the market and the benefits of investing directly in miners. He also highlights Marathon's innovative energy harvesting strategies that significantly reduce mining costs by utilizing waste energy sources like methane and flare gas.
Transcripts are autogenerated. May contain typos.
Alright, Bitcoin has been waffling around the last couple of months, even with the halving that was supposed to be a bullish indicator for Bitcoin. This is where the Bitcoin reward for mining Bitcoin is cut in half for a deal. CEO of Marathon Digital Holdings joins us now. Our Bitcoin miner Fred, thanks so much for joining us.
So why didn’t we see the explosion to the upside, Fred?“Well, I think what ends up happening is the spot ETFs really sucked a lot of demand. Traditionally, we see about 6 months after the halving the run-up in price, and what we’ve seen is that essentially the ETFs pulled that demand forward.”
“But what’s interesting to notice, you have almost 1,000 13F filings used for institutional investors who invested in the ETF, from $11 billion worth of capital. Granted, you know, $50 billion of capital was retail, every billion is institutional. That is a huge success compared to the gold ETFs that in their first quarter only had about 95 institutional investors.”
“So overall, it’s been a huge success, but that pulled demand forward ahead of the halving, and we’ve had some choppiness. But now that I think there’s also a little bit of clarity on the macro, we’re starting to see Bitcoin, gold, and equities moving in unison, quite strong. So still optimistic about where Bitcoin’s going in the year, and still very positive about its trajectory.”
“Well, you know, with the advent of those ETFs really flooding the market, and to your point about uptake, I think it raises the question about these miners like yourself. You know, before the ETFs, there were very few ways to play in your traditional investment portfolios, cryptocurrencies in ways that were tax-advantaged.”
“But now that you can, what do you explain to people as the difference between holding a Bitcoin miner versus an ETF?”“Well, I think there are lots of different ways to invest in Bitcoin, and just like any other asset class, you can hold an individual stock or you can invest in an index, or you can invest in a fund. The benefit that you have in investing directly in a miner is that you get the beta of the potential profit or marginal benefit because the miners are mining Bitcoin at lower costs than what the spot price is, and so you get a beta because of it. It’s the same reason you look at something like MicroStrategy. MicroStrategy is not a miner, they’re just borrowing and raising capital through the equity markets and buying Bitcoin to hold, yet they perform with a beta to spot Bitcoin. So it’s all about getting this additional upside potential if you leverage.”
“The other thing is you have the CME that is looking to enter the market with spot Bitcoin. Why are they interested? Well, because if people are trading on the CME, they get the benefit of having the ability to leverage spot Bitcoin, go long, or use leverage, which creates potentially some more volatility down the road. That is going to take a fair amount of institutional dollar interest away from ETFs because it gives them a lot more leverage, the ability to really boost their returns, if you would.”
“But look at gold. Warren Buffett invests in gold miners instead of spot gold. I think it’s very similar to where Bitcoin miners are going.”“Mining—when you, you know, let’s talk about your company as people talk about gold mining companies. You mentioned the cost relative to the price.”
“What are your costs per BTC compared to what you can get in the market for Bitcoin?”“So a good way to look at it is to think of the cost to mine Bitcoin for most miners across the industry at somewhere between roughly $45,000 per Bitcoin, of course, to the low 50s. So with Bitcoin at $60,000 to $70,000 more or less today, it’s still quite profitable for the miners to be mining Bitcoin.”
“The key here is all about what price you have for your energy and if you are doing energy arbitrage—what you do to lower your cost to mine Bitcoin. And as a company, a diversified company, in our case, we’re diversifying into energy harvesting technology, product sales tied to Bitcoin mining digital infrastructure. And that helps lower the overall cost of mining because it is absorbed by the revenue streams and profits from those other businesses.”
“What is energy harvesting? Energy harvesting is essentially taking wasted or stranded energy. It could be methane from landfills, it could be flare gas from oil fields, it could be biomass from things like ethanol or methanol production. We take that material, turn it into energy, and then use that energy to mine.”
“When mining Bitcoin, you’re generating heat, and when you generate heat, you can feed that back into an industrial process. So, for example, an ethanol manufacturer has to preheat the biomass before they make ethanol. It’s a way to save them money, they pay us for that heat source. They pay us to process the waste material they have, and that effectively negates our energy costs. And then we’re mining Bitcoin for free. So it’s a different way of mining Bitcoin, but over time what will happen is it will dramatically lower the cost of Bitcoin mining compared to traditional utilities miners.”
“Do you have a number on how much that could reduce costs?”
“Well, in some cases, for example, if you look at landfill uses, it can drop your cost to mine Bitcoin by almost 40-50% in the case of a full cycle where you’re taking...”
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