Bitcoin slumps after U.S. job growth beat expectations in March: CNBC Crypto World

Summary

The crypto market experiences a dip following strong US jobs growth, affecting Bitcoin and Ether values. Athena Labs' USDE synthetic dollar integrates Bitcoin to scale and enhance user safety. Coinbase becomes Canada's largest licensed crypto exchange after regulatory crackdown. Marathon Digital Holdings' CEO, Fred Treal, discusses the company's strategic acquisitions and expansion in preparation for the upcoming halving event, emphasizing Marathon's energy-efficient mining fleet and innovative heat generation for industrial processes, setting it apart in the industry.

Takeaways

• 📉 Bitcoin and ether prices decline after a stronger-than-expected US jobs report, reducing hopes for earlier interest rate cuts by the Federal Reserve.
• 🔄 Athena Labs is adding Bitcoin to the assets backing its USDE synthetic dollar, aiming to scale significantly and provide a safer product for users.
• 💹 The addition of Bitcoin also allows Athena Labs to maintain USDE's price stability and pay a yield back to USDE holders, contributing to the asset's growing popularity.
• 🏦 Coinbase becomes the largest crypto exchange in Canada, obtaining a restricted dealer registration and meeting the country's strict crypto guidelines.
• 🚀 Marathon Digital Holdings is expanding its footprint by acquiring more Bitcoin mining data centers and increasing its owned and operated capacity.
• 🌐 Marathon Digital's total mining capacity is over 1 gigawatt of power, with plans to grow to about 70 exahash in the next two years.
• 💡 Post-halving, Marathon Digital expects smaller miners to face financial stress, potentially leading to industry consolidation by larger players.
• 🌱 Marathon Digital stands out with three business pillars: pure Bitcoin mining, energy harvesting, and a technology sector focused on energy efficiency and innovative solutions.
• ♻️ The company is utilizing Bitcoin mining to generate heat for industrial processes, leveraging biomass and reducing energy costs through selling the generated heat.
• 🛠️ Marathon Digital has developed its own firmware, mining pool, and a two-phase immersion technology to improve energy efficiency and reduce mining costs.
• 🌐 The crypto market is closely watching the preparations of major Bitcoin miners like Marathon Digital for the upcoming halving event and its potential impact on the industry.

Q & A

How did the US jobs report impact the crypto market recently?

The strong US jobs growth indicated by the recent jobs report led to a dip in the crypto market. Bitcoin fell by 2.3% and Ether fell by 1.3% as the report dashed hopes of an earlier interest rate cut by the Federal Reserve, which would typically benefit the crypto market.

What is Athena Labs' USDE and how is it backed?

Athena Labs' USDE is a synthetic dollar pegged to the US dollar. Unlike traditional stablecoins, users deposit another stablecoin to receive USDE. Initially, the deposited stablecoin was sold for Ether to protect against Ether's price volatility. Athena Labs has now added Bitcoin to the assets it buys and shorts to maintain USDE's value, providing a safer product for its users.

How has Marathon Digital Holdings been preparing for the upcoming halving event?

Marathon Digital Holdings has been expanding its footprint by acquiring more Bitcoin mining operations. They have closed two acquisitions and now own and control 53% of their capacity. Their total mining power is just over 1 gigawatt, and they have plans to grow to about 70 exahash over the next two years.

What are the benefits of Marathon Digital's recent acquisitions?

The recent acquisitions have allowed Marathon Digital to own and operate more of their mining sites, which lowers their operational costs and makes them more efficient. They have been able to acquire these sites at lower than replacement costs, leveraging other people's capital to expand quickly.

How does Marathon Digital's energy efficiency compare to the global average?

Marathon Digital's fleet is one of the most energy-efficient, consuming about 24 joules per terahash. This is 25 to 30% more efficient than the global average, giving them a competitive advantage, especially when it comes to the cost of energy.

What is Marathon Digital's strategy for energy harvesting?

Marathon Digital engages in energy harvesting by working with excess methane, flare gas from oil fields, and biomass from manufacturing processes like ethanol and methanol production. They convert these into energy and generate heat, which is used in manufacturing processes, thus reducing their mining costs and contributing to environmental sustainability.

How does Marathon Digital's immersion technology differ from traditional Bitcoin mining methods?

Marathon Digital's two-phase immersion technology allows for more production from the same number of miners at a more energy-efficient rate. This groundbreaking innovation in the industry reduces the need to purchase additional miners to increase capacity.

What impact does the halving event have on smaller miners?

The halving event may put financial stress on smaller miners, potentially leading to unprofitable operations. It is estimated that about 15% of the global mining capacity may come under pressure, with some miners possibly shutting down their operations.

How does Marathon Digital's business model differ from its peers?

Marathon Digital operates on three pillars: pure Bitcoin mining, utility scale where they partner with power companies and act as load balancers, and energy harvesting. This diversified approach, along with their own developed firmware and immersion technology, sets them apart from their peers.

What is the significance of Marathon Digital's heat generation for manufacturing processes?

Marathon Digital's heat generation from Bitcoin mining is used in manufacturing processes that require heat, such as ethanol and methanol production. By feeding the generated heat back into these processes, they not only mitigate methane emissions but also reduce their mining costs, as their energy cost is subsidized.

What is the potential growth trajectory for Marathon Digital post-halving?

Marathon Digital expects to reach about 50 exahash by the end of the next year, but they may accelerate this growth depending on the availability of capacity and growth options. Their strategic acquisitions, energy harvesting, and technological innovations position them for significant expansion.

Outlines

00:00

📉 Crypto Market Reacts to Strong Jobs Report

The crypto market experiences a downturn following a robust jobs report indicating the US labor market's continued strength. Bitcoin and ether prices drop as the report's implications dash hopes for an earlier interest rate cut by the Federal Reserve. Athena Labs, the company behind the Ethereum-focused USDE synthetic dollar, announces the addition of Bitcoin to its backing assets, aiming to scale significantly and provide a safer product for its users. The report also discusses concerns about the backing mechanism of USDE, contrasting it with the failed Terraform Labs' US project. Furthermore, Coinbase secures a license to operate as the largest crypto exchange in Canada, expanding its reach after a regulatory crackdown on Binance. The segment concludes with a discussion on Bitcoin miners preparing for the upcoming halving event, with Marathon Digital Holdings' CEO Fred Teal highlighting the company's strategic acquisitions and expansion plans.

05:01

🚀 Marathon Digital's Expansion and Innovation in Bitcoin Mining

Marathon Digital Holdings, a leading Bitcoin mining operator, is aggressively expanding its operations in anticipation of the upcoming halving event. The company has recently acquired a 200-megawatt Bitcoin mining data center in Texas, significantly increasing its owned and controlled capacity. Marathon's total mining capacity now exceeds 1 gigawatt of power, with over 500 megawatts owned and operated. The strategic acquisition of sites at lower than replacement costs has allowed Marathon to lower operational and mining costs, enhancing its competitive position. Fred Teal, Marathon's CEO, forecasts a potential industry consolidation post-halving due to financial stress on smaller miners. He also discusses Marathon's unique business model, which includes utility scaling, energy harvesting, and proprietary immersion cooling technology. These initiatives not only set Marathon apart from its peers but also contribute to a more sustainable and cost-effective mining operation in the long term.

Keywords

💡Bitcoin

Bitcoin is a decentralized digital currency that operates without a central authority or government. It is the most well-known cryptocurrency and works on a peer-to-peer network. In the video, Bitcoin's price movement is discussed in relation to the US jobs report and its impact on the crypto market. The mention of Athena Labs adding Bitcoin to the assets backing its USDE synthetic dollar also highlights Bitcoin's significance in the financial technology space.

💡USDE

USDE is a synthetic dollar token focused on the Ethereum network, created by Athena Labs. It is pegged to the US dollar, meaning its value is designed to match that of the US dollar. The token operates differently from traditional stablecoins by allowing users to deposit another stablecoin to receive USDE. The backing mechanism of USDE is a key point of discussion in the video, emphasizing its unique approach compared to other projects like Terraform Labs.

💡Marathon Digital

Marathon Digital Holdings is a Bitcoin mining company that operates large-scale mining facilities. The company's focus is on expanding its mining operations and maintaining a competitive edge in the industry. In the video, Fred Teal, the CEO of Marathon Digital, discusses the company's strategy for acquisitions and its preparation for the upcoming halving event, which is a significant technical event for Bitcoin miners.

💡Halving

Halving is an event in the Bitcoin network that occurs approximately every four years, reducing the mining reward by half. This reduces the rate at which new Bitcoins are created and can have significant effects on the mining industry and the overall Bitcoin market. The halving is a key technical event that miners prepare for, as it can impact their profitability and the economics of mining operations.

💡Crypto Market

The crypto market refers to the collective trading and exchange of cryptocurrencies, such as Bitcoin and Ethereum. It is a global and decentralized market that operates 24/7, with prices often influenced by various economic, technological, and regulatory factors. The video discusses the impact of the US jobs report on the crypto market, indicating how macroeconomic events can influence the prices of cryptocurrencies.

💡Stablecoin

A stablecoin is a type of cryptocurrency designed to minimize price fluctuations by pegging its value to a reserve of assets, often a fiat currency like the US dollar. The goal is to combine the benefits of cryptocurrencies, such as fast and cheap transactions, with the stability of traditional currencies. In the video, the USDE token is mentioned as an example of a synthetic dollar that is not called a stablecoin but operates similarly by being pegged to the US dollar.

💡Coinbase

Coinbase is a digital currency exchange company that provides a platform for trading cryptocurrencies like Bitcoin, Ethereum, and Litecoin. It offers various services including trading, wallet services, and an index fund, and is known for its user-friendly interface and compliance with regulatory standards. In the video, it is mentioned that Coinbase has become the largest crypto exchange in Canada after securing a license to operate within the country.

💡Interest Rates

Interest rates are the cost of borrowing money or the return on investment for saving or investing money. Central banks, like the Federal Reserve in the United States, adjust interest rates to control inflation and stabilize the economy. In the context of the video, the strong jobs growth data affects expectations around when the Federal Reserve might cut interest rates, which in turn has implications for the crypto market.

💡Yield

In finance, yield refers to the return on an investment, often expressed as a percentage. It can be derived from various financial instruments, such as bonds or in the case of the video, from short positions in assets like Bitcoin or Ether. The yield is an important consideration for investors as it represents the income generated from their investments.

💡Energy Efficiency

Energy efficiency refers to the ratio of useful energy output to the energy input required to perform a specific task. In the context of Bitcoin mining, energy efficiency is crucial as it affects the cost of operations and the environmental impact of the mining process. Companies like Marathon Digital strive for higher energy efficiency to reduce costs and improve their sustainability.

💡Load Balancer

A load balancer is a device or software that distributes network or application traffic across multiple servers. In the context of the video, Marathon Digital uses their Bitcoin mining operations as a load balancer for power utilities, providing a service that helps to manage the power grid efficiently. This diversification of services contributes to the company's competitive advantage and operational efficiency.

Highlights

Bitcoin and ether's value dips after a strong jobs report indicates a robust US labor market, reducing the chances of an early interest rate cut by the Federal Reserve.

Athena Labs is enhancing the backing of its USDE synthetic dollar by adding Bitcoin to the assets, aiming to scale significantly and provide a safer product for its users.

USDE, Athena Labs' synthetic dollar, has rapidly grown in popularity due to its yield-paying short position, which is funded by assets including Bitcoin and Ether.

Coinbase becomes the largest crypto exchange in Canada, obtaining a restricted dealer registration and meeting the country's strict crypto guidelines.

Marathon Digital Holdings, a Bitcoin mining operator, is expanding its footprint by acquiring more mining sites and machines in preparation for the upcoming halving event.

Marathon Digital has increased its ownership and control of its mining capacity from 3% to 53%, significantly lowering operational costs.

Marathon Digital's mining fleet is one of the most energy-efficient, with a rate of 24 joules per terahash, which is 25-30% more efficient than the global average.

Marathon Digital is focusing on three business pillars: Bitcoin mining, energy harvesting, and a technology sector that includes its own firmware and immersion technology.

Marathon Digital's energy harvesting initiative turns excess methane, flare gas, and biomass into energy, subsidizing the cost of mining with the sale of generated heat.

The company's two-phase immersion technology allows for increased production from the same number of miners at a more energy-efficient rate.

Marathon Digital's strategic acquisitions and expansion plans aim to make it predominantly owned and operated, enhancing its position in the industry.

Fred Teal, CEO of Marathon Digital, expects smaller miners to face financial stress after the halving, potentially leading to industry consolidation.

Marathon Digital's unique business model, combining mining, energy harvesting, and technological innovation, positions it to have a lower cost to mine over the next four to five years.

The crypto market's reaction to the jobs report and its implications on interest rates and the overall market performance.

The impact of the strong US labor market on the 10-year treasury yield and its effect on cryptocurrencies.

The significance of Coinbase's expansion into Canada and its implications for the broader crypto industry.

Transcripts

today Bitcoin dips after another month

of strong jobs growth Athena Labs adds

Bitcoin to the backing of its usde

synthetic dollar and Fred teal of

marathon digital breaks down how the

Bitcoin miner is preparing for the

having welcome to cnbc's crypto world

I'm Brandon Gomez the crypto Market

moving lower after a fresh jobs report

this morning showed the US Labor Market

is still going strong by noon Eastern

Bitcoin fell 2 thir of a percent and

ether fell

1.3% just as the 10-year treasury yield

jumped thanks to that hotter than

expected jobs number now a stronger US

Labor Market dashes some hope that the

FED will cut interest rates sooner than

later and that trickles down to bad news

for the crypto Market today's losses

adding to the weekly declines for

Bitcoin and ether which are down 2% and

4.8% respectively in the past 7

Days okay let's run through today's top

stories Athena Labs the def5 platform

behind the ethereum focused usde

synthetic dollar is adding Bitcoin to

the assets backing Athena announced the

move on Twitter yesterday and said

taking on bitcoin would allow usde to

scale significantly while also allowing

the protocol to provide a safer product

for its users as a quick overview of

usde it's pegged to the US dollar but

Athena Labs avoids calling it a stable

coin users deposit another stable coin

to receive usde and in the past that

initial deposit was sold for ether to

protect against the volatility of

ether's price Athena would also take a

short position betting against ether's

price at the same time now Athena is

adding Bitcoin to the types of assets it

buys and shorts in order to maintain

usd's price that short position also has

the benefit of paying a yield back to

the holders of usde which has led to the

rapidly growing popularity of the asset

Athena synthetic dollar launched at the

beginning of this year and has already

ballooned to $2 billion in value still

some have expressed concerns about the

backing of the asset Athena though

insists the backing mechanism is very

different than the likes of terraform

Labs us which was algorithmically backed

by Bitcoin that project of course

collapsed in 2022 leading to the

upheaval of the crypto Market next

coinbase is officially the largest

crypto Exchange in Canada after securing

a license in the country earlier this

week coinbase says it's the first crypto

exchange to be granted a restricted

dealer registration by Canadian

officials meaning it meets the country's

strict crypto guidelines and can legally

operate inside Canada's borders the

expansion comes after a Crackdown by the

Nations regulator that pushed binance

out of the country and as coinbase faces

a legal battle with the SEC here in the

US no real surprise here though coinbase

has said repeatedly it would look to

expand abroad as the US pushes on with

its growing scrutiny of the crypto

industry all right time now for our main

story Bitcoin miners have been hard at

work preparing for the having event

that's taking place in just a few weeks

crypto world's Talia Kaplan spoke with

Fred teal CEO of marathon digital

Holdings about how the mining operator

is expanding its footprint ahead of the

key technical

event and speaking on CNBC last month

you discussed how marathon is

positioning itself for the upcoming

having you pointed to your two recent

acquisitions and noted that Marathon

will keep acquiring just a few days ago

a marathon closed its previously

announced acquisition of a 200 megawatt

bit coin mining data center in Texas

speaking on this show the end of last

year you mentioned that you believe

scale is very important can you take us

through your Acquisitions and how they

can help your company get through the

upcoming having event absolutely so in

December of last year we owned only 3%

of our operations meaning the sites

where we were posted uh because we had

used an asset light model to grow our

capacity very quickly we started doing

Acquisitions at the end of last year

we've now closed two uh today we now own

and control 53% of our capacity that's a

pretty big jump in just a few number of

months our total capacity now that we

mine under is just over one gwatt of

power and we own and operate just over

500 megawatts of power so it gives you a

feel for uh how quickly things can

change when you set your mind to it uh

the benefit of owning and operating

these sites is that it essentially

lowers our cost to operate it lowers our

cost to mind Bitcoin because we're now

taking out the middleman if you would

the other thing that's been a very

positive impact of this is we've been

able to acquire these sites at lower

than replacement cost meaning a cost

below what it would have cost us to

build them in the first place so this is

a a great way of kind of being able to

expand quickly leverage other people's

Capital they build the sites and then we

come in when the market gets a little

weaker for sites and acquire the sites

and it's been a very good strategy for

us so far but we'll continue to acquire

sites and our objective is to be

predominantly owned and operated going

forward in the

future other big miners like Riot

expanded Bitcoin mining operations ahead

of the having acquiring more than 31,000

mining machines what other steps are you

and other miners taking in preparation

for the having so most miners have been

expanding capacity aggressively uh as

you mentioned in your comment Riot has

placed an order for a large number of

machines Marathon has as well we have a

large order as well as options on

machines which essentially eliminate the

constraint on being able to acquire

miners as we acquire more capacity based

on the orders we have in place today and

the options we have for additional uh

machines we could grow to about 70 ex

aash which if you think about where we

ended last year which was about 28 xah a

considerable jump in our capacity over

the next two years and we've publicly uh

announced that we expect to be at about

50 xahh by the end of next year U but we

may accelerate that depending on

availability of capacity and growth

options when speaking with CNBC you

mentioned that post having you think the

smaller miners will come under Financial

stress which will cause the bigger

miners to consolidate the industry we

spoke with clean spark CEO recently and

he forecasted that 15 to 30% of miners

will have to shut down following the

having do you think that's a realistic

range I think if you look globally uh

potentially about 15 % of the capacity

may come under pressure and by that I

mean that those operations may be

unprofitable uh and then it's a question

of whether the miner wants to continue

to mine even though they're unprofitable

or if they just want to shut down

operations there are still a lot of

machines that are of the older

Generations that aren't as energy

efficient marathon is one of the most

energy efficient fleets at about 24 Jews

per terahash and as you look at other

miners the industry average is somewhere

north of 30 Jews per has so the way to

think about that is to essentially think

that uh you know marathon's Fleet is

anywhere from 25 to 30% more efficient

than the global average and so those M

miners that have machines that are above

the global average in energy consumption

will likely come under pressure so we'll

have to see but I think most of the

publicly traded miners are fairly well

positioned at this point is there

anything you're doing right now to set

you apart from your peers well one thing

we do very differently than our peers is

we really have three pillars in our

business most of our peers just do pure

Bitcoin mining yet what we call utility

scale where you partner with the power

company you build a data center 50 100

200 megawatts and then when the power

utility needs the power you curtail that

energy and act as a load balancer for

them on their Grid in the case of

marathon we also have a part of our

business which is energy harvesting and

this is where we work with

parties that have uh excess methane

flare gas for example an oil field

landfill methane gas and also biomass

from the manufacturing of things like

ethanol and methanol we can take that

turn that into energy and then generate

heat with our miners which we feed back

into a process 50% of industrial energy

is used for generating heat for

manufacturing processes heating

buildings Etc we believe that we can

leverage Bitcoin mining to generate heat

for those process processes and so we

currently have a number of pilots in

place today where we are deploying

Bitcoin miners whether it's on landfill

gas whether it's going to be flared gas

from methane or biomass and I think

you'll see that part of our business

grow the important part of that business

though other than the fact that we're

mitigating methane we're helping the

environment we're not using energy Off

the Grid so we're not taking energy Off

the Grid but more importantly our cost

of energy is subsidized by processing

the biomass and in selling the heat back

which means our cost to mine becomes

much lower and over time and by that I

mean over the next four to five years

our cost to mine will be below the

industry average because we're not

having to buy energy off their grid

we're not having to buy energy from

utilities we're able to generate our own

energy and that's a key thing lastly our

technology sector um we currently have

developed our own firmware our own uh uh

pool for operating our miners but most

importantly we've developed our own

immersion technology and at the ow

conference in Houston last week we

launched our two-phase immersion which

essentially allows you to take Miners

and get a lot more production out of the

same number of miners at an energy

efficient rate which is going to be

really a

groundbreaking uh event I think in the

industry allowing you to not have to buy

um as many miners to get the same amount

of

capacity all right that wraps things up

for us at crypto world this week we'll

be back here again on Monday

[Music]