According to Fred Thiel of Marathon Digital Holdings (MARA), the price of Bitcoin would have to fall by 80% for the coin to cease to be lucrative for the company, putting it in a difficult situation. Marathon is unconcerned about the recent drop.
During a Bloomberg QuickTake Stock interview, Fred Thiel, the CEO of Marathon, a Las Vegas-based company, voiced confidence in Bitcoin’s future, claiming that Bitcoin mining is “clearly a highly profitable business” and that the company can “ride this market for quite a long time.”
Thiel stated that, when operating mining costs (energy and hosting) are taken into account; Bitcoin’s breakeven rate is around $6,500, implying that the digital coin would have to drop by at least 80% for Marathon to face significant difficulties, so a price of Bitcoin below $60,000 still translates to profits for them.
What’s not in that cost, if you would, is the depreciation in the miners that we buy. We depreciate our miners over five years, so the payback on that is less than a year at today’s margins. (…) We are a very small team from an operational overhead perspective, so that gets covered very quickly.
Thiel believes Marathon is “one of the most efficient miners in the industry today” because of their nimble methodology, which focuses on investing in “the miners that produce the most return.”
Are Miners Selling Their Bitcoin?
In the middle of Bitcoin’s turbulent week; speculative social media posts claim that many miners have been selling their BTC in recent days. Thiel was questioned by Bloomberg reporters about the company’s choice when the currency fell below $60,000. Thiel stated that they have been holding Bitcoin for a long time and have no plans to sell.
We went into the market in January and; bought $150 million of Bitcoin and investment has paid off very handsomely for us. We bought it at an average price of $31,000. So Bitcoin where it is today has paid off very nicely. But we intend to be a long-term holder.
Thiel stated that the corporation is bullish on Bitcoin’s future. They are confident that “as a limited supply asset;” its value and appeal will continue to rise, as seen by daily headlines “about new use cases and more uses.”
He also described the United States as “a very fascinating centre for Bitcoin mining” because to its plenty of electricity, in contrast to Europe’s predicament, and said that “some Bitcoin miners need to sell their Bitcoin holdings only to cover their operations,” unconcerned about speculations.
What’s The Future Of Marathon’s $650M Offering
Thiel explained that the $150 million debt increase was made in order to have; “cash on the balance sheet” and; stay in “a position of liquidity” so they could potentially take advantage of opportunities in the marketplace that could accelerate their growth; such as buying more miners; mining companies that could expand their mining capacity, or investing in improving their mining operation’s energy efficacy.
He also stated that the company is not interested in using the bonds to buy Bitcoin on the open market because they produce it; “unless there are some pricing opportunities” such as; a $10,000 drop, but that they would carefully examine the projections because they want to be “very good custodians” of their shareholders’ money.