Marathon Digital reaffirms commitment to Bitcoin-accumulation strategy

Marathon Digital Holdings will continue to accumulate reserves in the first cryptocurrency, despite the price decline. This was stated by vice president Charlie Schumacher to Cointelegraph.

According to him, although the firm’s operations are “not immune to the macroeconomic environment,” it has “good prospects” for weathering the current market downturn.

“For reference, in Q1 2022 the cost of producing 1 BTC for us was roughly $6,200. We also have a fixed price on electricity, so we are not exposed to changes in the energy market,” noted Schumacher.

He noted that the price of Bitcoin materially affects Marathon’s financial results due to dollar-denominated reporting. However, for an objective assessment of the business, the company prefers to focus on production of cryptocurrency, added Schumacher.

“Undoubtedly, Bitcoin is worth less in dollar terms at the time of mining, but if you believe the asset’s price can rise over the long term, earning more BTC is never bad,” said Marathon’s vice president.

As of May 31, the company generated 1258,6 BTC and posted a net loss of $13 million.

According to Schumacher, a drop in Bitcoin’s price will push out inefficient miners and reduce the difficulty of mining new blocks. This, he argues, will allow those who continue to operate to accrue more digital gold.

By June 18, hashrate, which correlates with mining difficulty, had fallen by more than 10% relative to the peak reached a few days earlier. At the time of writing, the seven-day smoothed moving average stands at 208 EH/s, according to Hashrate Index.

By June 16, analysts at the CryptoRank platform noted that the price of BTC had reached the average mining cost. This meant that for a certain portion of miners, operations were unprofitable.

📉#BTC Price Drops to Average Cost of Mining

Due to a significant drop in $BTC price over the past months, $mining has become less profitable. For some #Bitcoin miners, it might even be unprofitable at the moment.

👉https://t.co/nYhYMYoYXp pic.twitter.com/WOjCUSkG7x

— CryptoRank Platform (@CryptoRank_io) June 17, 2022

IDEG Singapore’s Investment Director Markus Tillen noted that most miners had based their annual budgets in late 2021, when market conditions were different. Therefore, the company believes some smaller players in the sector, lacking economies of scale, will shut down equipment. According to IDEG Singapore, their break-even level is $26,000-$28,000 per 1 BTC.

On June 18, the price of the first cryptocurrency dipped below the $18,000 mark. After a rebound, Bitcoin trades near the $20,000 level.

In April, Arcane Research named Marathon shares the most overvalued among publicly listed mining companies.

In June, Marathon’s shares were among the top decliners in the crypto-linked sector of the market.

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