Marathon Digital Holdings didn’t sell any of its Bitcoin in June.
The decision marks a growing trend among United States-based Bitcoin (BTC) miners, who are choosing to keep the Bitcoin they mine rather than sell it.
Cointelegraph spoke to Salman Khan, Marathon’s chief financial officer, to better understand how miners decide when to accumulate their Bitcoin and when to move them onto the market.
“It’s a very systematic process that we go through from an internal process standpoint,” Khan told Cointelegraph. “There are market dynamics that you have to consider [...] in the short term, the Bitcoin price could fluctuate, and your decision could be impacted as a result of that.”
Khan explained why Bitcoin is different from other asset classes when it comes to these considerations.
“If we were an oil company and we were producing oil, we would sell all our oil from whatever we produce because that would be our primary source of revenue and cash flows,” Khan explained. “In this space, it’s a little bit different. Bitcoin is a digital asset, and it can stay on your balance sheet and doesn’t require any cost to store. You don’t need big barrels to store Bitcoin.”
Marathon holds 18,536 Bitcoin worth over $1 billion, up 48% from 2023’s total of 12,538.
“Last year, the rate of return on this asset class was 150% over the last few years. When you look at the average rate of returns, it’s been outclassing or outperforming other asset classes that are typically available for corporations to invest in,” Khan said, adding:
“We obviously are a big believer in the Bitcoin price going up further from here. We don’t need to sell Bitcoin every month.”
US miners accumulate BTC
Marathon is not the only US Bitcoin miner accumulating BTC right now. Riot Platforms has not sold Bitcoin since January, while CleanSpark has only sold nominal amounts.
Given that these firms mine hundreds of Bitcoin every month, the clear trend among the big US mining firms is accumulation.
CleanSpark CEO Zach Bradford told Cointelegraph that the strategy is born out of pragmatism.
“We are not ideological about hodling Bitcoin, but rather we view it as strategically important in the current environment,” Bradford said. “We expect the price of Bitcoin to continue to be volatile, but as this cycle progresses, and over the long-term basis, we do expect it to increase in value. We monitor the market in real time, which drives our decisions.”
Recent: Switching from MetaMask? Here are 5 alternative crypto wallets
According to Bradford, market indicators a year ago prompted the company to begin accumulating.
“Last June, we felt the market was starting to gain momentum and began hodling most of what we mined. Since that time, we have grown our treasury to over 6,500 Bitcoin,” he said.
Upping BTC mining capacity fast
Besides hodling, US miners are also engaged in a mining arms race, rapidly upping capacity.
Bradford told Cointelegraph, “CleanSpark is expected to achieve and surpass 50 EH/s in 2025 as we continue to execute our aggressive growth strategy.”
Marathon currently mines at a hashrate of 31.5 exahashes per second (EH/s). Its most recent mining update said the company is on track to reach 50 EH/s by year-end.
Riot anticipates it will reach 41 EH/s in 2024, rising to 100 EH/s by 2027.
Further accumulation strategies
While mining is one way miners can accumulate Bitcoin, Marathon is not averse to accumulating BTC in other ways. For instance, in January, the company purchased 183.5 Bitcoin.
Khan explained why miners may choose to purchase BTC as well as mine it.
“I joined the company in June of last year. And when you look at the Bitcoin price at that point in time versus today [...] I wish I could have invested a lot more money from my personal investment standpoint — if I could go back in time,” Khan said.
Khan also points to institutional investors entering the space.
“There’s BlackRock, and there’s Fidelity. There’s a lot of big names out there who are coming in the space and investing heavily,” Khan said. “If you do the math, obviously, that shows that the price is likely going to go up.”
A cash-rich business
A quick examination of Marathon’s balance sheet shows the company is extremely cash-rich. Cointelegraph asks Khan about the company’s treasury management.
“We have $1.5 billion in cash and Bitcoin on our balance sheet,” Khan confirms.
“This space is not as developed as some traditional industries like oil, natural gas and other commodities where you can do sophisticated hedging strategies and other things,” Khan said. “It’s warming up, and there have been certain opportunities that we’ve tested the waters on, but it still requires a lot more years for it to warm up and get to that sophistication level.”
Recent: Supreme Court ruling ‘changes the game’ for US crypto firms
Khan went on to add, “There are some interesting opportunities out there. But it’s still a long way to go from an industry perspective.”
So, for now, the bulk of Marathon’s capital will remain highly liquid, either as cash or Bitcoin.
“Liquidity is important in this space. This is a capital-intensive business,” Khan said.