OVERVIEW

Q1 2024 Crypto Mining Report

Something very, very important happened today. The U.S. Senate voted to overturn the SEC’s SAB 121. What is SAB 121? 🟢

SAB 121 threw a wrench into the usual accounting for crypto. Listed companies, including banks, have to list crypto assets as both an asset and a liability on the balance sheet. Forget the old-school way where assets under custody didn’t make an appearance because they belonged to the client. 

It passed 60 to 38. One of the rare bipartisan moments and it’s crypto that brought it all together.

In today’s Litepaper, we’re focusing entirely on the crypto miners. This is a big mega-thread on how eight publically traded cryptocurrency miners did in Q1 2024. 📰

Also on deck: some updates in the NFT, Web3, and GameFi space. 🌐

Before we dive in, here’s today’s crypto market heatmap:

And here’s a look at crypto’s total and altcoin market cap YTD:

BITCOIN
Q1 2024 Crypto Miner Earnings Summary 📓 

Welcome to the crypto-mining megathread. We’re looking at eight of the publically traded crypto mining companies and their most recent Q1 2024 performance. 💵 

To save space, we only talked about the best and worst performers below, but if you want to see the full list, click here for the web version.

In Q1 2024, the cryptocurrency mining sector showcased significant achievements, operational challenges, and strategic advancements. Marathon Digital Holdings ($MARA) emerged as the standout performer with record revenue of $165.2 million.

Conversely, Bitfarms Ltd. ($BITF) struggled with a net loss of $6 million. 👎️ 

TeraWulf Inc. ($WULF) and Riot Platforms Inc. ($RIOT) demonstrated strong revenue and net income growth. TeraWulf effectively reduced debt, while Riot Platforms focused on maintaining low production costs despite a dip in $BTC output.

Core Scientific ($CORE) and Cleanspark Inc. ($CLSK) expanded their operations and improved efficiency. Hut 8 ($HUT) and Cipher Mining ($CIFR) also reported strong results, with Hut 8 holding the highest self-mined Bitcoin reserves and Cipher Mining maintaining low electricity costs.

Looking forward, the industry is set for further growth, with companies focusing on energy efficiency, sustainable operations, and AI integration. The landscape will likely see more M&A activity post-Bitcoin halving as companies strive to optimize efficiencies and expand market share. 🚀

BITCOIN
Q1 2024 Earnings Overview of Crypto Mining Companies 🔨 

Marathon Digital Holdings

• Revenue: $165.2 million (+223% YoY)

• Net Income: $337.2 million (+184% YoY)

• Adjusted EBITDA: $528.8 million (+266% YoY)

• Hash Rate: Increased to 27.8 EH/s (+142% YoY)

• BTC Produced: 2,811 (+28% YoY)

• New Initiatives: Introduced Anduro (multi-chain Bitcoin layer-two network) and launched several Bitcoin ecosystem products and services.

• Acquisitions: Expanded mining portfolio to 1.1 gigawatts capacity through multiple acquisitions.

TeraWulf Inc.

• Revenue: $42.4 million (+82.2% QoQ)

• Non-GAAP Adjusted EBITDA: $32.0 million (+95.4% QoQ)

• Bitcoin Mined: 1,057 (+8.9% QoQ)

• Hash Rate: 8.0 EH/s

• Debt Reduction: Paid down approximately $63.6 million of debt in 2024.

• Expansion Plans: Target to reach 10.2 EH/s in Q3 2024 and 13.3 EH/s by Q1 2025.

Riot Platforms Inc.

• Revenue: $79.3 million (+18% YoY)

• Net Income: $211.8 million (+1045% YoY)

• Adjusted EBITDA: $245.7 million (+200.7% YoY)

• Bitcoin Mined: 1,364 (-36% YoY)

• Bitcoin Holdings: 8,490 BTC

• Power Curtailment Credits: $5.1 million (+64.5% YoY)

Core Scientific Inc.

• Revenue: $179.3 million (+48.6% YoY)

• Net Income: $210.7 million (up from a $0.4 million loss YoY)

• Adjusted EBITDA: $88.0 million (+118% YoY)

• Bitcoin Mined: 2,825

• Infrastructure: Managed 745 megawatts, the largest owned infrastructure footprint in North America.

Cleanspark Inc.

• Revenue: $73.8 million (+165% YoY)

• Net Income: $25.9 million (up from a $29.0 million loss YoY)

• Adjusted EBITDA: $69.1 million (up from negative $2.0 million YoY)

• Hash Rate: Surpassed 12.5 EH/s, targeting 20 EH/s by mid-2024.

• Balance Sheet: Total assets at $862.7 million with $48.5 million in cash.

Hut 8 Corp.

• Revenue: $51.7 million (+231% YoY)

• Net Income: $250.9 million (up from $17.3 million YoY)

• Adjusted EBITDA: $297.0 million (+2580% YoY)

• Bitcoin Mined: 716 (+37% YoY)

• Bitcoin Holdings: 9,102 BTC

Cipher Mining Inc.

• Revenue: $48 million (up from $43 million QoQ)

• Net Earnings: $40 million (up from $11 million QoQ)

• Adjusted Earnings: $63 million (up from $28 million QoQ)

• Bitcoin Mined: 924

• Bitcoin Inventory: 2,033 BTC

• Hash Rate: 7.7 EH/s

Bitfarms Ltd.

• Revenue: $50 million (+9% QoQ, +67% YoY)

• Gross Mining Margin: 59% (up from 52% QoQ and 41% YoY)

• Hash Rate: 7.0 EH/s (up from 6.5 EH/s at year-end)

• Bitcoin Mined: 943

• Expansion Plans: Targeting 21 EH/s and 21 w/TH in 2024.

EARNINGS
Best Performing Miner in Q1 2024: Marathon Digital Holdings 🥇 

Marathon Digital Holdings outperformed its peers across multiple metrics in Q1 2024. Here's why Marathon stands out:

Financial Performance 💵 

• Revenue: Marathon reported an impressive $165.2 million, a 223% increase year-over-year. This growth rate is unmatched among its peers.

• Net Income: net income of $337.2 million, an 184% increase. This is the highest net income reported, showing strong profitability.

• Adjusted EBITDA: adjusted EBITDA soared by 266% to $528.8 million, the highest among its competitors, indicating strong operational efficiency.

Operational Metrics 🚂 

• Hash Rate Growth: energized hash rate increased by 142% to 27.8 EH/s.

• BTC Production: 2,811 $BTC were produced, a 28% increase from the previous year and significantly higher than other companies.

Strategic Initiatives 🎏 

• Product Launches: introduced several new products and services to support the Bitcoin ecosystem, such as the Anduro network and innovative cooling systems.

• Acquisitions: expanded its mining portfolio to over 1.1 gigawatts of capacity through multiple acquisitions, with 54% of this capacity directly owned and operated by the company.

Comparison with Peers 👨‍👩‍👧‍👦 

• Revenue Growth: 223% YoY revenue growth far exceeds the next highest, Core Scientific, which reported a 48.6% increase.

• Net Income: net income of $337.2 million is the highest, compared to Riot Platforms’ $211.8 million and Core Scientific’s $210.7 million.

• EBITDA: adjusted EBITDA of $528.8 million dwarfs TeraWulf’s $32.0 million and Riot Platforms’ $245.7 million.

High Points 🔼 

• Record-breaking financial results with significant revenue, net income, and EBITDA growth.

• Successful launch of new products and acquisition strategy enhancing operational capabilities.

• Largest increase in hash rate and BTC production among peers.

Low Points ⤵️ 

• Faced operational challenges leading to a 34% QoQ decline in Bitcoin production. However, the overall performance remained strong despite these challenges.

Conclusion

Not much needs to be written here. Marathon’s performance compared to its peers isn’t even apples to oranges. It’s rocket ships to paper airplanes. 🚀

EARNINGS
Worst Performing Miner in Q1 2024: Bitfarms Ltd. 💩

Among the companies reviewed, Bitfarms Ltd. was the worst in Q1 2024 based on several metrics.

Financial Performance 🤑 

• Revenue: Bitfarms reported $50 million in revenue, which, although up 67% year-over-year, is one of the lowest revenue figures among its peers.

• Net Loss: reported a net loss of $6 million.

• Adjusted EBITDA: adjusted EBITDA of $21 million was an improvement, it still falls short compared to the significantly higher EBITDA figures of others.

Operational Metrics 🔪 

• Bitcoin Mined: mined 943 BTC in Q1 2024, which, although steady, did not keep pace with the higher production rates of competitors like Marathon and Core Scientific.

• Hash Rate: hash rate of 7.0 EH/s, while showing growth, is lower than many of its peers.

Challenges and Low Points 🪫 

• Increased Costs: Bitfarms faced increased production costs, with the direct cost of production per BTC rising to $20,500 from $16,200 in the previous quarter.

• Operational Loss: The company reported an operating loss of $24 million, which included significant non-cash charges for depreciation and impairments.

• Liquidity Issues: Despite having liquidity, Bitfarms' financial flexibility and ability to fund future growth appear constrained compared to competitors.

Comparison with Peers 🧭 

• Revenue: Bitfarms’ $50 million in revenue is relatively low compared to Marathon’s $165.2 million and Core Scientific’s $179.3 million.

• Net Income/Loss: net loss of $6 million contrasts with the substantial net incomes reported by Marathon, Riot Platforms, and Core Scientific.

• Growth Metrics: BTC production and hash rate, were outpaced by most of its peers.

High Points 🤷 

• Some revenue growth and improved EBITDA compared to the previous quarter.

• Continued expansion with new miner purchases and power capacity increases.

Conclusion

Bitfarms Ltd. underperformed in several key areas compared to its peers in Q1 2024. The company’s lower revenue, net loss, increased production costs, and relatively slower hash rate growth really piled on the suck. In a highly competitive environment, Bitfarms’ performance is not great, to say the least. Maybe a future acquisition by one of the bigger players? Let’s wait and see. 😔

WEB3
Here's Another Round of NFT, Web3, and GameFi Updates. ⌨️ 

NFT Market Plunge: A Crash Course in Digital Assets

Remember when NFTs were hotter than grazing goat’s ass in a jalapeno field? Well, now they're about as valuable as a used napkin.

A recent report has confirmed what we've all been suspecting: the NFT market has taken a nosedive, with a 97% drop in trading volume since its 2021 peak, and 95% of NFT projects are now worth zilch.

Two years ago, NFTs were the new Eldorado. Beeple sold a digital collage for $69 million, creating overnight JPEG millionaires. Fast forward to today, and the landscape looks like a post-apocalyptic wasteland. The average NFT sale price has plummeted to under $200, with daily sales dropping from 87,000 in 2021 to a measly 2,000 in 2024. 🤦 

Guild of Guardians: Mobile Gaming's New Hope

Meanwhile, as NFTs struggle, the mobile gaming sector is buzzing with excitement. Immutable ($IMX) Games has announced the global launch of its mobile-based fantasy RPG, "Guild of Guardians," on both Apple ($AAPL) and Android devices. To spice things up, they're offering up to $1 million in prizes in their $GOG token. 

With over 1 million pre-registered users, the game is poised to make a big splash. Immutable Games is pulling out all the stops, emphasizing player ownership and community-driven gameplay—a rare feat for a mobile game in the web3 space. 🎮

Oasys and SBINFT Market: A New Frontier in Crypto Gaming

Lastly, Oasys, a blockchain network focused on gaming, has teamed up with SBINFT Market, an NFT platform operated by SBI Group. They hope to boost the crypto gaming sector in Japan by allowing Oasys developers to sell NFTs through the SBINFT Market. With connections to major video game publishers like Ubisoft ($UBI), Bandai Namco ($NCBDY), and Sega ($SGAMY), Oasys is positioning itself as a key player in the expanding blockchain gaming market. 😎 

NEWS
Crypto News In Three Sentences 📰

💰 South Korean Police in Crypto Bribery Scandal

Two South Korean police officers are on trial for allegedly accepting bribes in a $2.1 million crypto fraud case. The officers, identified as “A” and “B” reportedly took cash from a broker to aid a scam artist. The case has implicated 18 other individuals, including prosecutors and police officials. Full story at CryptoNews.

🏛️ Oklahoma Passes Blockchain-Friendly Law

Oklahoma Governor Kevin Stitt signed a bill creating a legal framework for blockchain and digital assets. The law prevents extra taxes on crypto transactions and legalizes home mining within noise limits. This move positions Oklahoma as a hub for digital innovation in the crypto industry. More from Cryptopollitan.

🔗 MIT Brothers Charged in $25M Crypto Heist

MIT graduates Anton and James Peraire-Bueno were arrested for allegedly exploiting Ethereum ($ETH) to steal $25 million in 12 seconds. They are charged with conspiracy to commit wire fraud, wire fraud, and money laundering. Prosecutors claim their scheme undermines the integrity of blockchain technology. Reuters has more.

🇺🇸 Circle Plans to Move Back to the US

Circle, the issuer of $USDC, is planning to redomicile from Ireland to the US. The company filed paperwork for an initial public offering (IPO) in the US, indicating a traditional approach to going public. This move suggests Circle is shifting strategies from previous SPAC merger attempts. From Blockworks.

Links That Don’t Suck 🔗

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👮‍♂️ South Korean police officers on trial in ‘crypto fraud bribes’ case

🤖 Scientists use generative AI to answer complex questions in physics

🫢 FTX repayments could create ‘bullish overhang’ for crypto markets — K33 Research

🥷 The Assassin's Creed Shadows reveal is saying all the right things to excite classic Assassin's Creed fans

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