$MARA - Q4 update. The Starwood news is definitely bullish, because any use of their MWs is better than mining. PnL of their mining ops -- particularly the "vertically integrated" portion -- is abysmal. Assuredly losing money at $30 hashprice.
In Q4 they self-mined 1,044 BTC (vertical), and mined 923 from their hosted rigs (hosted). Here are the costs they delineate in 10K and 10Q:
Direct Costs:
- energy costs (for vertical): $50.8m
- ops/maint (presumably for vertical): $27.5m
- hosting costs (for hosted): $79.4m
Other Costs:
- cash SG&A: $55.2m (this excludes SBC, acquisition and integration costs)
- taxes other than on income: $1.3m
All told, they lost about $11.9m mining in Q4. Blended hashcost of around $45.80. This was in a period where hashprice averaged $42.
Hashprice it is now around $30... meaning they're losing about $15 for every EH/s they operate. If they operate at, say, 50 EH/s, that's paying per day $2.3m to mine $1.5m of BTC.
In all likelihood, Q1 will be the worst quarter they'll have on record Adj EBITDA wise (ex change in FV of BTC). Hashprice in Q1 has averaged, to date, ~$36. If it maintains $30 in March, that'd drag it down to $34 for Q1. That'd result in a burn of around -$50m in Adj EBITDA (ex change in FV of BTC) for the quarter.
Or they could possibly have less uptime/BTC, and post less revenue but at higher net margins than they would otherwise. More on that later.
Costs I Ignore:
- R&D: $3.6m
- other non-operating income: $24m
- SBC: the most dramatically undeserved figure imaginable
If you include these costs, they basically lost $39.5m of cash in the quarter (vs revenue, which is value of BTC when mined). A quarter which, again, averaged $42 hashprice vs the present $30. Yikes.
With this data we can break down the cash hashcosts for both vertical and hosted. (More accurately, the costs that hit adjusted EBITDA.)
Note: they started breaking down costs from a lump sum of "mining" into: "energy", "3p hosting", and "op/maint" in 2025Q1, but you can back populate 2024 using the "year ago" figures in 2025's 10Qs, which I've done below.
-------
One question is how to split up some costs between "vertically integrated" mining ops, and "hosted".
Eg, when they already pay ~$0.075/KWH for their hosted ops... how much of ops/maint is allocated to the hosted operation? How much SG&A does it take to run hosted ASICs?
I've taken a stab at it below, by ballparking 20% SG&A to hosted, and 0% of ops/maint to hosting.
If you disagree with this, then fine. The undisputed blended numbers are provided at the end, and when you blend "shit" with "ass" you still get "shit ass".
You might also wish to argue that SG&A shouldn't all be allocated to mining.. after all, you have to pay the great minds at $MARA to strategize, do PR and marketing, etc... To which my response is: every penny of revenue has thus far been from mining.
All of that being said, Starwood news is bullish.. but to me it depends on the economics of how the JV deals work, which seems to be contained in Exhibits/Appendixes that were not disclosed.
On to the numbers....
------
VERTICALLY INTEGRATED SEGMENT
The direct energy cost clocks in at $20.47 hashcost, which is likely profitable for most of their fleet.
But it's the overheads that absolutely destroy them.
When you include "operating and maintenance" costs, hashcost clocks in at $31.57. Hard to imagine they can mine without these costs -- but they're probably not elastic like energy costs... so I'm they'll probably keep most rigs running (or they can fire staff, and stop repairing so much).
When you include cash SG&A, you get a disgusting hashcost of $49.39. Present day hashprice is $30. They are incinerating cash. Maybe BTC will jump to $110,000, and they'll just about breakeven on a cashflow basis.. meaning they'd only have incinerated the $1.3b spent on ASICs.
If I recall correctly, the push to vertical integration was supposed to be some big cost-saving thing, but it doesn't really seem like it. Seems like it has just allowed the "Energy Cost" line item, and related gross margins, to appear improved... while the cost of SG&A, ops/maint, etc, continue to balloon.
Uptime is also suffering quite a bit. They still generally have 15% or greater downtime... which means all that overhead is not really being used as efficiently as it could.
---------
HOSTED SEGMENT
If the only cost to host ASICs was "third-party hosting" .. then it is/was indisputably cheaper for $MARA to be asset light. Comes in at $36.20, which is cheaper than the vertical segment.
Regardless, a hashcost of $36.20 is not at all profitable in current conditions.. and I wonder how much this will impact Q1 and onwards BTC-mined / revenue. (In Q4, average hashprice was ~$42.. so they were "fine" keeping the machines one.)
How are their hosting contracts are structured? Are they billed per KWH consumed? Is there some flat fee per KWH capacity, even if not used?
The answer to these questions will, in part, determine how much they slash hashrate in hosted rigs.
Assuming the contracts allow it, and they behave with fiscal responsibility, production should meaningfully decline.
Fiscally responsible is the key word here. My gut tells me they'd rather just eat losses in order to post maximal revenue and BTC mined numbers. It's not as though their shareholders are the most discerning audience, nor do they have an attention span strong enough to resist "we make money from electrons now".
Again, I'm not sure how much of "ops/maint" is attributed to third party hosted ops -- I've allocated $0. And, for cash SG&A, I've allocated 20% (likely overkill).
Anyway.. if you add 20% of SG&A, you get to $41.24. Still not sustainable, but better than Vertically Integrated. Which is kind of absurd if you also consider that CapEx spent on their owned sites.
--------------
COMBINED
Grand total of $45.84 cash hashcosts. Current hashprice is $30. A cash incinerator.
What's excluded: R&D, "other non-operating income" (which is usually quite negative), the INSANE capex (look at depreciation), and the cherry on top is mgmt paying themselves stock based comp (and selling pretty much each month).
The mining business is a black hole for cash, and even if BTC were to meaninfully rally, there's hardly any chance $MARA comes anywhere near to posting a net profit after excluding change in FV of BTC.
In other words, in the past two years they sank ~$1.3b on ASICs and have hardly any shot of breaking even because they spend so much cash operating them.
----------
The takeaway:
If $MARA is rational, and if contracts are elastic enough to allow it, expect meaningful declines in realized hashrate (hitting negatively: BTC mined, revenue) in Q1 and further. But, they might not be fiscally rational... preferring instead to hit higher revenue/BTC mined... in which case, just buckle up for more cash burn and PR.
$MARA has by far the worst mining PnL. They've actually spent money (on sites, ASICs, etc) to have a higher cashburn business than asset-light.
This shows up as depreciation, and if you include that in hashcost or $/BTC it gives you a holistic view of their genius ivory tower strategizing they've been claiming to have done for these past years.
The upside...
In exchange for burning some of this cash on sites, they are in a position to (finally) maybe pivot to a business that makes money.. which is AI/HPC. Despite Fred having poo-poo'd the whole idea for a long time... or somehow claiming they are distinct (and better) than peers.
Anyway, I applaud them landing a "deal" with Starwood, but without providing the economics, it's hard to figure out what that's worth.
The details of how $MARA's assets are appraised when being folded into the JV, and how much equity of the JV will cost, elude me. They seem to be contained in Exhibits/Appendixes that were not included in the filing.
Still, I would never really trust anything they say, nor would I believe for a moment that "responsible capital allocation" is something they are capable of.
Without AI/HPC they are up shit's creek unless BTC rallies hard. Enterprise as it stands is utterly worthless.. they are essentially a holding company for BTC, power assets, and in the meantime pretend they're good at mining and pay themselves 1-2% of float per year as a management fee, while just incinerating cash.
Finally, don't buy into the whole "mining as an offload for AI/HPC". The rights to do that on potential JV sites is worthless... it is entirely unsustainable to buy ASICs and run them intermittently. You are competing with ASIC buyers that can run at close to 100%.... and $MARA's so bloated it hardly matters if they got them for free.
The "mining as an offload" story is, at best, a graveyard for the existing overpaid-for fleet.
