Marathon Digital's Thiel on Bitcoin Halving, Mining Outlook

Summary

The transcript discusses the impact of Bitcoin ETFs on market capitalization and the anticipation of the Bitcoin halving event. It highlights Marathon's strategic shift towards asset ownership to reduce costs and improve margins. The conversation emphasizes the importance of energy efficiency in mining and explores potential future developments, including international expansion and innovative energy harvesting initiatives to achieve zero-cost energy for Bitcoin mining.

Takeaways

• 📈 The approval of Bitcoin ETFs has been a significant success, attracting capital and potentially accelerating price appreciation.
• 🚀 Four of the 11 ETFs have become the most successful launches on record, with capital surpassing 50% of gold ETF assets under management.
• 🤑 The Bitcoin halving event is expected to reduce the supply of Bitcoin by about 450 coins per day, impacting price dynamics.
• 🌐 Marathon, a major miner, has scaled quickly using an asset-light model, relying on third parties for infrastructure.
• 🛠️ Marathon is transitioning to owning over 53% of its facilities, reducing costs and improving margins for shareholders.
• 💡 The company's fleet is among the most energy-efficient in the industry, which is crucial for surviving in a competitive market.
• 🌍 Marathon aims to have 50% of its revenues from outside the U.S. by 2028, diversifying its operations globally.
• 🔄 The average cost to mine Bitcoin for Marathon is in the low $20,000 range, which may double after the halving due to increased energy requirements.
• 🌱 Marathon is exploring energy harvesting initiatives, such as using stranded methane gas from landfills, to offset energy costs for Bitcoin mining.
• 📊 The future of Bitcoin mining may involve smaller, more distributed sites that also contribute to heating various industrial and agricultural processes.

Q & A

How has the approval of Bitcoin ETFs impacted the market and price appreciation?

The approval of Bitcoin ETFs has been a significant success, attracting capital into the market and potentially bringing forward price appreciation that would typically be seen 3 to 6 months post-approval. This has resulted in a part of the expected future appreciation being realized now.

What is the significance of the success of the 11 Bitcoin ETFs in comparison to gold ETFs?

The success of the 11 Bitcoin ETFs is notable as four of them have become the most successful ETF launches on record. The total amount of capital in these ETFs has already surpassed 50% of the assets under management in gold ETFs, which is an impressive achievement in a much shorter time frame compared to gold's 20-year history.

How does the halving event affect the supply of Bitcoin and its potential impact on price?

The halving event reduces the supply of Bitcoin by approximately 450 coins per day. While the new emissions will have some impact on price movements, it is expected that the high efficiency of miners like Marathon will allow them to continue mining profitably even with the reduced rewards.

What measures is Marathon taking to optimize its mining operations ahead of the halving?

Marathon is optimizing its operations by transitioning from a reliance on third-party infrastructure to owning over 53% of its facilities. This allows them to eliminate the middleman and reduce costs, thereby improving margins and shareholder value.

How does the halving affect the daily Bitcoin production for Marathon, and what is the potential impact on global hash rate?

Marathon's average daily Bitcoin production of 28.7 as of February will be reduced to roughly 14 per day post-halving. The impact on the global hash rate will depend on how the halving affects all miners. The key is to be one of the most energy-efficient miners, which Marathon's fleet is, allowing them to remain competitive.

What is the average cost for Marathon to mine a Bitcoin, and how will this change after the halving?

Marathon's average cost to mine a Bitcoin is in the low $20,000 range, including energy costs and operating overhead. After the halving, the marginal cost of mining Bitcoin is expected to double to around $46,000, due to the increased effort and energy required to mine with reduced rewards.

How is Marathon expanding its business internationally, and what is the goal for non-U.S. revenue?

Marathon operates on three continents and aims to have 50% of its revenues from outside the U.S. by 2028, which is the next halving event. The company is focused on both organic and inorganic growth, expanding through owned and operated facilities globally.

What is Marathon's strategy for diversifying revenue streams and optimizing operations?

Marathon is focused on a vertically integrated technology stack, including pool software, firmware in miners, and investments in technology through companies like ORDAIN. They are also exploring immersion cooling technology and emerging solutions that could interest the AI industry, aiming to diversify revenue and optimize existing operations.

How is Marathon preparing for potential industry washouts due to reduced Bitcoin rewards?

Marathon believes in striving for zero-cost energy for Bitcoin mining, which involves offsetting energy costs by using stranded methane gas from landfills, biomass from various industries, and generating heat from mining operations. This innovative approach aims to subsidize the cost of mining Bitcoin and ensure long-term survival.

What is the future vision for Bitcoin mining according to Marathon's strategy?

Marathon envisions a future where Bitcoin mining moves away from large data centers to smaller sites integrated into various industrial processes and heating needs, such as in Finland, greenhouses, shrimp farms, and ethanol plants. This would allow for a more distributed and sustainable model of mining.

How does Marathon plan to utilize the heat generated by Bitcoin mining?

Marathon plans to utilize the heat generated by mining through energy harvesting initiatives. They aim to capture stranded energy forms like methane and biomass, convert them into energy, and then use the heat produced during mining to补贴 industrial processes, effectively reducing the cost of mining Bitcoin.