Marathon’s Thiel Says Company Not for Sale, as M&A Chatter Picks Up Among Crypto Miners

CoinDesk spoke to the CEOs of Marathon Digital and Bitfarms at last week’s Bitcoin 2022 Conference.

AccessTimeIconApr 11, 2022 at 9:04 p.m. UTC
Updated Apr 10, 2024 at 2:43 a.m. UTC
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MIAMI — Marathon Digital (MARA), one of the largest publicly traded bitcoin (BTC) miners, with a market cap of about $2.5 billion, isn’t interested in a sale and its stock is undervalued at current levels, said CEO Fred Thiel.

A key theme from the Bitcoin 2022 Conference in Miami: There are lots of deals – including potential mergers and acquisitions (M&A) – to be made. One participant called the conference “a real deal center.”

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  • With some speculation swirling around Marathon Digital as a possible target, CoinDesk caught up with company CEO Fred Thiel, who played down the chatter. “We are not interested in selling today,” Thiel said. “Especially given where the stock is, today, we're way undervalued, compared to where we were towards the end of last year.”

    MARA stock has had a rough run - down 33% in 2022 and off more than 70% from an all-time high hit in November. However, Thiel expects the market to begin paying up for the shares, noting company expectations to grow mining capacity about sixfold to 23.3 exahash per second (EH/s) this year.

    Potential buyers

    While Thiel may not be interested in selling, Marathon is a public company, so he said he would present to the board any offer at the right price.

    Potential acquirers? Perhaps an energy company with access to enough power to enable Marathon to continue its speedy growth. “It would have to be the right partner, because I view it as a partnership,” said Thiel. “And it has to be somebody who has sufficient power.”

    Thiel, though, would prefer the company remain independent, allowing it to partner with any number of power companies for energy needs. In a buyout, Marathon could be limited to just one energy supplier.

    “Now my growth rate is limited to what they are willing to allow me to have access to,” he argued. “So I think, from an investor's perspective, us getting acquired today doesn't make sense.”

    Thiel doesn’t totally dismiss energy companies getting into the mining industry, but says they’ll enter by dipping their toes into actual mining first – perhaps after the next Bitcoin halving in 2024. Once comfortable with the industry and regulatory risks, he said, the hosting and mining acquisitions are then more likely to begin.

    Rapid consolidation

    Also speaking with CoinDesk, Bitfarms (BITF) President Geoff Morphy fully expects plenty of M&A in the cryptocurrency industry in general, and mining specifically. “It's an evolving industry,” he said. "We're in the growth stage, and with the industry life cycle hypothesis you just know that there's going to be a consolidation that takes place. … Unlike other industries, it's going to happen at a more rapid pace [for miners] because of the halving coming up in approximately May 2024.”

    Another driver of deals is bitcoin’s current bear market – which has taken the price down about 50% from its all-time high of $69,000 late last year – along with compressed miner margins. That has dried up access to capital markets for the smaller miners, said Thiel. “If bitcoin doesn't move outside of this kind of band that we're in today, it's gonna get hard. … Smaller miners are having a really hard time raising capital.” The larger players, Thiel added, continue to be able to raise money.

    To that point, Riot Blockchain (RIOT) – like Marathon, one of the bigger miners – last week filed to sell up to $500 million of stock through an "at-the-market" offering, while Marathon raised almost $750 million in a convertible note sale in the fourth quarter. Rhodium Enterprises, on the other hand, had to postpone its initial public offering (IPO).

    The potential cash crunch means opportunity for those with capital, said Bitfarms' Morphy. “A lot of companies that were looking for SPACs and IPOs to fund their growth have not taken place. As a result, there's going to be some pretty neat opportunities, we think, this year, next year and beyond,” he said, adding that he sees his company as an acquirer, not a target..

    Bitfarms, he said, has seen a number of opportunities for acquisitions, but plans to be very disciplined, and will pull the trigger only if a company has the right management and power contracts. “We have hired a specialist in terms of M&A, we have brought in a special team of outside advisors to help us with this. So we're well positioned to look at growth through acquisition.”

    Bitfarms currently has 3 EH/s of hashrate and existing miner orders and contracted infrastructure expansion should allow a hashrate of about 7.2 EH/s by the end of 2022. That’s shy of the company target of 8.0 EH/s by year-end, but Bitfarms is looking at further development opportunities that could still help get to that level.

    On the question of whether Bitfarms might be a target of an energy company, Morphy’s answer aligned with Thiel’s: “If somebody comes and makes a worthy proposal to us, I will take it to the board and it's up to the board to figure out on behalf of shareholders if this is an attractive situation for our shareholders and to proceed or not,” Morphy said.

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    Aoyon Ashraf

    Aoyon Ashraf is managing editor with more than a decade of experience in covering equity markets


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