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Highly Regarded Bitcoin Miner
Opinion

Highly Regarded Bitcoin Miner

Matt discusses Marathon Digital Holdings (MARA), a US Bitcoin miner criticized for OFAC censorship, spamming the network and mining altcoins. With stock price and revenue down — survival is uncertain.
Matthew Kratter
Matthew Kratter
Jun 28, 2024June 28, 20245 min read5 minutes read
Bitcoin University

Bitcoin University

Bitcoin University is an educational channel devoted to Bitcoin, financial freedom, and self-sovereignty. Matthew also covers relevant macro and financial news.

Today, we are taking a closer look at, which in my opinion, is one of the worst Bitcoin mining companies in America. 

Necessary Disclosures: I’ve never owned any MARA shares and never will, and you’re going to see the reasons in this video.

This is Marathon Digital Holdings, an American Bitcoin mining company. 

Wikipedia

The CEO and Chairman of the Board, which presents some governance issues, is Fred Thiel. 

Mata Digital Holdings Website

Marathon used to be a patent troll holding company, and then in 2020 and 2021, they transitioned to becoming a Bitcoin mining company. 

crypto.marketswiki

They own ASICs and, in addition, they run a Bitcoin mining pool called the MARA Pool, which currently controls approximately 4% of the total hash rate of the network.

MemePool

Marathon has a long history of being a generally pretty crappy actor in the Bitcoin space. 

For example, they were the first Bitcoin mining company in America to earn their OFAC knee pads. OFAC, of course, is an office under the Department of the Treasury; it’s the Office of Foreign Assets Control. 

OFAC.gov

In May of 2021, Marathon became the first North American enterprise miner to produce fully AML and OFAC-compliant blocks. 

mara.com/news

What does this mean? 

It means that one of Fred Thiel’s first moves after becoming CEO was to direct Marathon to censor real Bitcoin transactions that Janet Yellen didn’t like. Imagine getting into the Bitcoin space in order to immediately audition for the role of Judas Iscariot.

Fortunately, the Bitcoin community was watching and shamed MARA, and then MARA did the right thing and stopped censoring Bitcoin transactions in June of 2021, done playing the OFAC game. 

Coindesk

What were they going to do next? 

They decided to start spamming the chain instead. They were responsible for the fourth-largest Bitcoin transaction ever being included in a block, at least at the time. 

theminermag.com

They earned 0.85 BTC for inscribing this monstrosity into a block. It’s a 56-second video that was said to be paying homage to the builders, artists, and collectors in the Ordinals ecosystem. 

ord.io

Due to the video’s large size, this block included only three transactions compared to the usual several thousand.

So, what they’re doing here too is misusing the blockchain by spamming the chain. Not enough? 

Why not do something that will piss people off even more? 

MARA began to mine shipcoins and, in effect, helped to prop up ecosystems that are trying to compete with Bitcoin. MARA diversifies revenue streams with Kaspa mining and expanded leadership in digital asset compute. 

mara.com/news

Typical corporate speak.

Now, I get it, Bitcoin mining is a really, really tough business, which suggests that if you’re in that business, you should actually be 150% focused on Bitcoin mining itself, especially if your financials and stock performance have been abysmal. 

If we take a look at their total revenues over the past few years, they’ve been completely flat. When you subtract out the cost of those revenues, you end up with actually negative gross profit. 

finance.yahoo

So, this is a company that’s been hemorrhaging money and would actually make more money if they didn’t do anything. 

MARA’s stock price has actually gone down since Fred Thiel became CEO on April 26th, 2021. On that date, the stock closed at $36.78 and is currently trading just under $20. So, this has been a disaster.

Tradingview

The one chart that has gone up, though, has been Fred’s compensation. It’s gone from $18 million in 2021 to $7 million in 2022 to $36 million in 2023, in spite of the abysmal stock performance. 

MorningStar

This is the problem, though. 

This is the problem when you have very, very poor corporate governance. You should never have the CEO also be Chairman of the Board of Directors. This provides huge conflicts of interest and basically allows CEOs to vote themselves raises when they clearly don’t deserve it. 

It looks like holders are dumb enough to have recently approved, as of yesterday, a proxy statement in which shareholders voted to increase the compensation of people who work at MARA by 15 million shares. 

ir.mara.com

Put this into the cookie jar so management can help themselves some more. This involves diluting shareholders even more. 

ycharts.com

We can see that since Fred took over and really since this became a Bitcoin mining company, the share count has gone up even as the stock price has gone down. This is a leech, it is a blood-sucking parasite. Don’t be like a leech. 

You shouldn’t be paying yourself so much out of the cookie jar when you’re providing such poor returns to shareholders.

Is any of this bad news for Bitcoin? 

Fortunately, it’s not. Highly regarded actors like MARA always do a good job of shooting themselves in the foot, and if I had to bet, MARA is going to be one of those companies that’s simply not going to make it. It would seem that short sellers agree with me. 

If we take a look at the short interest, 26% of the float is currently sold short, which is quite a large short position and is a sign that many people are betting against this company as they continue to pay their management and dilute shareholders and provide quite poor performance. 

finance.yahoo

In a last act of desperation, they started mining shipcoins.

Bitcoin University is an educational channel devoted to Bitcoin, financial freedom, and self-sovereignty. Matthew also covers relevant macro and financial news. 

Learn more at: https://www.bitcoinuniversity.com/  
Follow him on Twitter: @mattkratter
Join Bitcoin University: https://www.bitcoinuniversity.com/join

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Matthew Kratter

Matthew Kratter

Matthew Kratter is the founder of Bitcoin University YouTube channel, which currently has over 235,000 subscribers.

Before going down the Bitcoin rabbit hole, he founded and ran Trader University, focusing on trading and investment strategies for stocks, options, and futures. Given his hedge fund background and decades of trading experience, Matthew provides a unique perspective.

In late 2019, after finally recognizing Bitcoin’s importance, he began liquidating his stocks and other investments and moving his savings into Bitcoin.

Now, Matthew is all in on Bitcoin, devoting the majority of my time to producing Bitcoin educational content on YouTube and on this site.

In his free time, he enjoys skiing and hiking in the Rockies with his wife, kids, and dogs.

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