Marathon Digital (MARA) and Riot Blockchain (Riot), two of the largest North American listed miners, greatly benefited from being the first two US Bitcoin miners to be listed on the Nasdaq stock exchange.

Access to greater liquidity from retail and large institutional investment companies, such as Vanguard, BlackRock and Fidelity, gave them both the ability to raise significant funds in 2020-2021 and execute on ambitious growth strategies.

These two companies chose two totally different Bitcoin mining strategies, with Marathon Digital preferring to use a host provider for its miners and Riot Blockchain choosing to build its own infrastructure.

For Marathon, which has struggled to get the majority of its ASICs online, the strategy has arguably backfired. Thousands of units have sat idle in storage waiting for hosting providers to go live. Of course, in the age of supply chain disruptions, these consequences are not uncommon in heavy industry.

A new hosting deal, however, securing 254 megawatts (MW) with an option to increase toward 324 megawatts (MW) announced July 12 may just save the day.


A hosting and datacenter prodiver, the agreement with Applied Blockchain (APLD) has secured approximately 200 MW of hosting capacity for Marathon Digital.

APLD will host 90 MW of Marathon units at its facility in Texas, and a further 110 megawatts of hosting capacity at its second facility in North Dakota. These sites, currently under construction, will host a total of 66,000 miners or 9.2 EH/s across both facilities.

Installations are due to begin during Q4 2022 and completed by mid-year 2023. The five year agreement also allows Marathon Digital with the option to increase hosting capabilities by 70 megawatts in North Dakota, taking the total amount of hosting across all of Applied Blockchain’s facilities to 270 megawatts if the option is exercised.

As a result, Marathon believes it has now secured ample hosting arrangements to support the Company’s previously stated goal of approximately 23.3 exahashes per second (“EH/s”) of computing power for Bitcoin mining.

Self mining in Montana

Marathon Digital commenced a rigorous entry into Bitcoin mining in early 2020, beginning with its agreement with Beowulf Energy to co-locate at the Big Horn Data Hub. The facility comprises 20 acres of land adjacent to Beowulf’s Hardin Generating Station, a 105 MW power facility located in Hardin, Montana. Beowulf provides power from the Hardin plant to the mine at a production cost of $0.028/kWh.

Marathon Digital’s decision to appease ESG-friendly investors required a tough decision – to leave Hardin. The firm announced its intentions in April 2022. Marathon Digital signed colocation deals with Compute North in order to honor its commitment for 100% carbon neutrality by the end of 2022.

Hosting with Compute North

Marathon’s machine orders have not slowed down, regardless of hosting considerations. The mining giant made significant orders with Bitman over the past two years for a total of 199,000 mining rigs, providing  23.3 EH/s by early 2023. A sizable amount of machines are slated for hosting by Compute North.

As Fred Thiel shared with Mining Memo at the AIM Summit in May, the decision to host versus building out a facility comes down to three main factors: the price of Bitcoin, the energy cost and the ability to deploy and access hardware.

Bitcoin’s price is certainly volatile. But energy costs and hosting arrangements with Compute North fit Thiel’s bill. Marathon Digital currently has a long term hosting agreement with Compute North at a total energy (including hosting) cost of $0.042 a kilowatt hour for five years.

Regulatory pauses can cause unforeseen headaches and necessitate model adjustments. As Thiel put it in a May investor update:

“Although we continue to install miners at the Texas facilities, we have experienced delays in energization as Compute North’s energy provider awaits federal agency confirmation of its exempt status for tax purposes based upon its arrangements with Compute North . . .While these delays have been disappointing, our current understanding is that miners should start to come online this month. We continue to work closely and actively engage with Compute North to gain more insight into the energy provider’s timeline and to ensure that these delays, once resolved, will not impact our future deployments.”

Even still, Marathon Digital expanded its hosting arrangements with Compute North to include an additional 42 megawatts of hosting capacity at Compute North’s facility near Granbury, Texas in early July. The site is currently under construction and the company expects to have 26,000 miners, providing 3.6 EH/s, installed at the facility before the end of 2022.

Hard times at Hardin

Although one of the largest North American Bitcoin miners, Marathon Digital has not produced anywhere near the Bitcoin levels expected in terms of deployed hash rate. For comparison, Marathon Digital produced approximately 69% of the expected output against Hive Blockchain (HIVE), Bitfarms (BITF) and Iris Energy (IREN) self-released numbers. Power outages, maintenance and software upgrades and poor miner pool returns have all been named as causes for lower than desired performance.

Read: Understanding Bitcoin mining monthly production updates

One large factor, certainly, was a storm disrupting service at the Hardin, Montana site in early June. The thunder storm caused enough damage to the facility to leave not only all miners offline, but possibly expedite departure from the facility.

Due to the storm, the current operating mining fleet was reduced to some 6,300 active miners producing approximately 0.7 EH/s. Bitcoin production was significantly reduced in June with only 140 self-mined bitcoin produced during the month.

Concluding thoughts

On a positive note Marathon Digital now holds 10,055 Bitcoin with a fair market value of $198.9 million, a large amount of capital that should help the firm weather bear market blues.

Still, when reflecting on Marathon Digital’s early days in 2020, the firm was then seen as the ‘darling’ of the mining sector. Marathon Digital consistently placed the largest orders while growing at a rate many of its peers could only watch and admire. Its market capitalization rose to over $8 billion by November 2021, whereas a little more than 8 months later it currently stands at $1.04 billion. Quite the climb and fall. They’ve had more than their fair share of operational issues over the past year, but with these recent hosting agreements, maybe they have turned a corner.  Only time will tell.

The next article will consider Riot Blockchain and their strategy of building infrastructure for the future.

Read: Part 2: A tale of two strategies: Marathon Digital and Riot Blockchain