Mining Companies Financial Report: Marathon and Riot's Revenue Falls Short of Expectations, Stock Prices Plummet Over 8% in a Single Day
The mining companies Marathon Digital and Riot Platforms have recently released their 2024 Q2 financial reports, both of which did not meet the revenue and loss expectations set by Wall Street analysts. As a result, their respective stock prices have dropped by around 7% to 8%.
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Marathon Digital
Revenue Misses Expectations for Two Consecutive Quarters
The report first pointed out that although revenue in the second quarter of this year increased by 78% compared to the same period last year, rising from $81.75 million to $1.451 billion; however, it was still slightly below analyst expectations of $1.578 billion, falling short by 9%.
It is reported that the company's first-quarter revenue also increased by 223% year-on-year to $1.652 billion, but still fell short of expectations of $1.939 billion.
Meanwhile, Marathon's earnings per share (EPS) dropped sharply from -0.07 in the same period last year to -0.72, causing investors to lose confidence. Following the company's financial report announcement yesterday, MARA's stock price plummeted by over 7.78%.
It is evident that the company is almost consistently in an operating loss position, especially with a nearly $148 million loss on the books after recognizing cryptocurrency income at fair value, compared to the $488 million gain in the first quarter.
51% of Bitcoin Production Sold This Quarter
Furthermore, Marathon's overall hash rate has grown by 78% from 17.7 EH/s in the second quarter of last year to a record high of 31.5 EH/s this year, while production has decreased from 2,926 BTC to 2,058 BTC, a 30% decline.
The company admitted in a statement that it had sold 51% of the BTC produced this quarter to cover operating costs.
CEO: Halving Event Had Broad Impact
Marathon CEO Fred Thiel stated:
In the second quarter of 2024, our BTC production capacity was affected by unexpected equipment failures at Applied Digital's Ellendale facility, maintenance of power lines, the global hash rate increase, and the halving event in April.
He added, "However, these issues have been resolved, and we expect hash rate to reach 50 EH/s by year-end."
Riot Platforms
First Quarterly Loss Since 2022
Firstly, Riot reported its first quarterly net loss since 2022 in the second quarter of this year, amounting to $84.44 million or $0.32 per share, surpassing estimates and last year's $0.16 per share.
The expanded loss is likely due to a significant decline in overall revenue, which decreased by 8.76% to $70.01 million compared to the same period last year, slightly below expectations.
Another contributing factor may be the increase in selling and general administrative expenses, rising from $19.83 million in the same period last year to $61.18 million in the current period, an increase of over $41.35 million.
Hash Rate Doubles, Production Plummets
Additionally, Riot announced that due to the impact of the halving event, Riot's mining production decreased by 52% to 844 BTC compared to 1,775 BTC in the same period last year, while this quarter's Bitcoin mining cost increased by 340%, from $5,734 to $25,327.
Despite this, benefiting from the rapid rise in the price of Bitcoin, the company's Bitcoin mining revenue was $55.8 million, a 12% increase from $49.7 million in the same period last year.
Furthermore, the company's strategic acquisition strategy is gradually paying off, with the operating equipment's hash rate almost doubling to 22 EH/s, expected to reach the target of 36.3 EH/s per second by the end of 2024.
Aggressive Acquisition of Other Miners
Riot CEO Jason Les stated that the recently acquired Block Mining has over 60 megawatts of generating capacity, which will be put into operation immediately:
By the end of 2025, generating capacity will grow to over 300 megawatts; by the end of 2027, we will achieve our ambitious goal of 100 EH/s hash rate.
However, this statement seems not to have convinced investors. Following the release of the second-quarter report, Riot's stock price dropped by 8.54% today. Year-to-date, the company's stock price has fallen by nearly 39.75%.
Prior to this, the company has continued to express a strong acquisition attitude towards miner Bitfarms, attempting an unsuccessful $950 million acquisition and still in negotiations.