MARA Holdings, Inc. Q2 FY2025 Earnings Call

Greetings, and welcome to the MARA Q2 2025 Earnings Call. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Robert Samuels, Vice President, Investor Relations. Please go ahead.

Thank you, operator. Good afternoon, and welcome to MARA's Second Quarter 2025 Earnings Call. Thank you for joining us today. With me on today's call are our Chairman and Chief Executive Officer, Fred Thiel; and our Chief Financial Officer, Salman Khan. Today's call includes forward-looking statements, including those about our growth plans, liquidity, and financial performance. These involve risks and uncertainties, and actual results may differ materially. We disclaim any obligation to update these statements, except as required by law. For more details, see the Risk Factors section of our latest 10-K and other SEC filings. We also reference non-GAAP financial measures like adjusted EBITDA and return on capital employed which we believe are important indicators of MARA's operating performance because they exclude certain items that we do not believe directly reflect our core operations. Please see our earnings release for reconciliations to the most comparable GAAP measures. We hope you've had the chance to read our shareholder letter and look forward to your feedback. We'll begin with some prepared remarks from Fred and Salman. After their comments, we are going to be conducting an analyst interview with management. Today's session will be conducted by Chris Brendler, analyst at Rosenblatt Securities. And with that out of the way, I'm going to turn the call over to Fred to kick things off. Fred?

Good afternoon, everyone, and thank you for joining us. Q2 was a record-breaking quarter for MARA, setting new highs in revenues, adjusted EBITDA, net income, energized cash rate, lead efficiency, and blocks produced in a single month in May. Beyond performance, we continued to invest in the infrastructure that underpins our business from scaling low-cost flexible load data centers to exploring international opportunities in regions with abundant energy and growing demand for sovereign compute. This quarter, in support of our strategy to support the load balancing needs of AI HPC data centers, we announced strategic partnerships with TAE Power Solutions backed by Google and Pado AI backed by LG. Together, we're co-developing grid-responsive load balancing platforms that support the next generation of AI infrastructure, enabling us to monetize our energy and compute capabilities across broader markets. As part of our low-cost energy strategy, we completed construction of a new behind-the-meter data center at our wind-powered site in Hansford County, Texas. This gives us access to low-cost power directly from the source, improving our margin structure and boosting energy efficiency. Subsequent to the quarter-end, our holdings surpassed 50,000 bitcoin, a milestone that solidifies MARA as the second largest bitcoin holder globally. More importantly, this is a treasury we built through disciplined infrastructure development, scaled operations, and focused execution. While some may see us as a bitcoin treasury company, given the size of our bitcoin holdings, we don't consider ourselves as one. We're invaders, builders, and operators. We're actively managing our bitcoin holdings to create long-term value for shareholders. Bitcoin remains our reserve asset, and we will continue to build on our holdings, whether through production or opportunistic purchases depending on market conditions. To that end, we made a minority investment in Two Prime, a digital asset management firm specializing in risk-optimized yield strategies who have been managing a portion of our holdings. We will continue to make prudent decisions around allocation and risk exposure based on broader macro and market conditions. Regarding the current price of bitcoin, our view is that things feel a little frothy at the moment. While there is persistent demand for bitcoin, this is balanced by an ample supply owing to long-term holders taking profits from bitcoin held in some cases since the earliest years of its inception. Supply is currently being absorbed relatively well. However, if buying demand were to subside, we could see downward pressure as sellers attempt to lock in gains at these high price points. With our recent convertible notes offering, we have significantly bolstered our balance sheet to have the flexibility to act across a range of strategic priorities, including opportunistic bitcoin purchases, debt repurchase, M&A, and general corporate purposes. Whether bitcoin goes up or down, we believe we are positioned to benefit. We're positioning MARA at the forefront of what's increasingly being recognized as digital energy or the use of technologies and data to make energy systems more efficient, reliable, and sustainable. This strategic focus enables us to capture value at the intersection of compute and energy, a convergence that will define next-generation infrastructure economics. We're exploring ways to design infrastructure for hybrid workloads such as AI inference, a rapidly emerging dominance in AI infrastructure. Another area of potential value is sovereign edge infrastructure, allowing enterprises and public sector customers jurisdictional and operational control over data, compute, and AI outputs. We see growing demand for compute infrastructure that is geographically sovereign, energy-aligned, and secure by design. We believe the addressable market is accelerating, particularly in Europe and emerging markets where data sovereignty and energy efficiency are critical purchasing determinants. Our intent is to extend MARA's vertically integrated Compute platform into edge environments that meet latency-sensitive, compliance-driven, and workload-diverse needs. We're working closely with government officials and major energy partners to extend our reach into global markets, laying the groundwork for a regional headquarters in Saudi Arabia and establishing an entity in France as a European headquarters. We believe this approach will provide us access to low-cost energy by partnering with energy companies and infrastructure capital providers. Through these efforts, we've built a global growth pipeline exceeding 3 gigawatts, positioning us to scale efficiently across key markets. When put together, as inference increasingly becomes the dominant cost center in AI, control over geography, latency, and energy cost becomes a strategic advantage. We'll continue to invest in this area to ensure MARA is well-positioned to capitalize on this demand. We're excited to host our first-ever Investor Day this fall. This inaugural event will offer a deep dive into our long-term roadmap with insights into how we are activating our digital energy strategies across mining, infrastructure, and AI. To join us, please reach out to our Investor Relations team. To wrap up, Q2 was a milestone quarter. We grew our treasury, expanded our infrastructure, and proved once again that MARA is far more than a bitcoin mining company. We are the category leader in bitcoin mining, but our value lies in the infrastructure that underpins it, infrastructure we are now leveraging to shape the future of compute. Thank you for your continued support as we build what’s next. Now I'll turn it over to Salman for additional insights on the quarter.

Thank you, Fred. In Q2, we delivered record financial performance, driven by strong execution and an improving bitcoin price environment. Over the past year, we've remained laser-focused on aligning shareholder interests with bitcoin ownership through disciplined operational execution. Between Q2 of 2024 and Q2 of 2025, our bitcoin holdings surged by over 170%, going from approximately 18,500 BTC to nearly 50,000 bitcoin. During the same period, our energized hashrate expanded by 82%, increasing from 31.5 exahash per second to 57.4, and the market value of our bitcoin holdings increased by more than $4.2 billion, or 362% year-over-year. Let me provide some financial highlights for the quarter. We broke some records. Revenues increased 64% to $238.5 million from $145.1 million in the second quarter of 2024. This was the highest revenue quarter in the company’s history, primarily driven by a 50% increase in the average bitcoin price, contributing $77 million. We produced an average of 25.9 BTC each day during Q2 compared to 22.9 BTC each day in Q2 of 2024, resulting in 300 more BTC earned. Furthermore, we saw a 52% increase in the number of blocks won in the quarter compared to the second quarter of last year. May 2025 was the highest single month in our history, reporting a net income of $808.2 million, or $1.84 per diluted share, compared to a net loss of $199.7 million, or $0.72 per diluted share in the second quarter of last year. We recorded a $1.2 billion gain on digital assets, including BTC receivable during the second quarter of 2025. This reflects the impact of bitcoin holdings on our balance sheet. Now let's turn to our cost structure. Our purchased energy cost per bitcoin for the quarter was $33,735 per coin, which we believe is among the lowest in the sector. Our daily cost for petahash per day improved 24% year-over-year, reflecting our growing fleet of owned and operated sites which now account for approximately 70% of our total hashrate. That transition continues to pay dividends, both operationally and financially. Now let me talk about our bitcoin holdings and asset management. MARA is the second largest corporate public holder of bitcoin, and we seek to generate returns on our holdings as the bitcoin price appreciates. Our dedicated bitcoin asset management team, made up of seasoned professionals with decades of experience in hedge funds and crypto asset management, actively pursues risk-adjusted return opportunities to generate cash flows that support our operating expenses. We deploy bitcoin across a diversified portfolio of investment strategies, including lending, trading, and other structured arrangements designed to unlock incremental value. Our approach combines the potential for long-term bitcoin appreciation with disciplined efforts to generate returns while managing risk. To a lesser extent, we’ve also used bitcoin as collateral to borrow under lines of credit. During the quarter, we entered into a separately managed account (SMA) agreement with Two Prime, which is an external full-service registered adviser, transferring 500 bitcoin in mid-May of 2025, followed by an additional 1,500 bitcoin in late June of 2025. As of June 30, 2025, a total of 2,004 bitcoin were held and actively managed within that SMA. The 500 bitcoin transferred in May 2025 generated an additional 4 bitcoin, or an additional $0.4 million, in a short period. We manage the SMA to generate returns while limiting risk, maintaining liquidity with short-term notice following an initial one-year lockup. In addition, our bitcoin asset management team may from time to time engage in various bitcoin-denominated trades such as auctions, futures, swaps, covered calls, and spot transactions to generate additional returns on our bitcoin holdings. I want to highlight that subsequent to quarter-end, we issued $950 million of 0% convertible senior notes due 2032. With this upsized convertible notes offering, we've significantly bolstered our balance sheet. This additional liquidity provides us the flexibility to act strategically, whether by acquiring more bitcoin, funding M&A, or repaying debt. Its purpose is not to fund day-to-day operations, and we are under no pressure to deploy capital immediately. Instead, we are positioned to respond to market conditions to maximize long-term shareholder value. We are different from other BTC treasury companies, as our core business is bitcoin mining and large-scale data center operations, even as we hold the second largest bitcoin worldwide among public companies. Looking ahead, what sets us apart is our thought leadership, worldwide operational scale, and capital and operational efficiency. As of June 30, 2025, we held over $5 billion in liquid assets and with approximately $1 billion raised since, this gives us flexibility to fund domestic growth and pursue international expansion. Unlike passive treasury companies, we treat our bitcoin as a productive risk-managed asset through a disciplined asset management strategy. Our holding strengthens the balance sheet and helps fund operations, which we believe will enhance long-term shareholder value. We don't just hold bitcoin; we put it to work. Finally, we remain on track to reach our 75 exahash goal by the end of the year with all miners secured and funded except for $150 million, which we expect to pay in the second half. We are laying the groundwork for 2026 and beyond, executing on a pipeline of energy infrastructure projects both in the U.S. and internationally. We expect these investments to expand our capabilities while continuing to keep costs low. With that, I'll turn over to Chris Brendler from Rosenblatt Securities to begin our management interview. Chris?

Thanks, Salman and thanks so much for inviting me to do this. This is super exciting to be able to dig through the results with you guys. Also sort of an update on the strategy, a lot going on in bitcoin and crypto these days. So I wanted to start with the mining business, the core mining business. Maybe for Fred, just sort of give me an update on the current thinking around mining versus HPC. We've seen a lot of competitors increasingly look to move their power assets towards high-performance compute, and potentially could see a slowing of bitcoin mining competition. But at the same time, I think the network hashrate is reaching new highs again, even though we're in the middle of a pretty hot summer. I’d love to just hear your sort of 10,000-foot view on the bitcoin mining business as it stands today.

Thank you, Christopher, for joining us today. As you look at the marketplace today, there's a shift occurring. Companies previously positioned in the mid-tier of bitcoin mining have been transitioning to HPC, trying to leverage their energy assets. You’ve really seen a couple of things happen. Not many of them have been able to secure contracts with hyperscalers, and some have attempted to acquire customers directly. We think that, over time, this business will become very price competitive, leading to margin compression. Bitcoin miners are primarily providing power, and with significant investments coming in, enterprises want partners who have hosted before and understand how to run these types of data centers—most bitcoin miners do not possess this experience. Thus far, there have not been many successful transitions to HPC outside of a handful. At the same time, new entrants are coming into the market, such as Tether and Bitmain, which recently took control of Cango and is now a significant competitor. Tether aims to be the largest bitcoin miner in the world. We remain focused on being a bitcoin miner, though we’re exploring the convergence of inference AI and the needs of enterprises around sovereign data, which we believe sets us up for long-term success. That's why we’ve been developing relationships with governments and energy companies in these developing regions, looking to capitalize on significant investments to expand our business.

That's very helpful. I guess I'm going to drill down a little bit on the sovereign topic. You mentioned these in your prepared remarks, the potential for headquarters in Saudi Arabia as well as France, and mentioned location's importance regarding inference. Does this suggest that you potentially will enter this business directly? Or do you envision doing it through partnerships?

Exactly. The focus here is through partnerships, specifically with energy companies. Some may recall my presentation at Mining Disrupt four years ago, where I stated that bitcoin miners will either partner with energy companies or be overtaken by them. If you don’t own your energy generation, your only realistic option is to collaborate with energy providers. In regions like Europe and the Gulf, partnerships with government-owned or heavily government-influenced energy companies are essential. These enterprises demand sovereignty over their data and AI, meaning they want that data managed locally. We believe this partnership approach in operating data centers will allow us to succeed significantly.

Makes sense. Would this be similar to the experience and the success you've had in the UAE or a joint venture, or are you envisioning a different type of partnership regarding these relationships?

Great that you mentioned the UAE. That transaction focused on bitcoin mining and remains one of our most successful data centers from an operational perspective, shaping how we interact with sovereigns in that region. Future partnerships will have even greater emphasis on energy collaboration, and we'll exercise more control over deal terms.

Great. Speaking of bitcoin mining, I wanted to ask about acquiring power assets. MARA's growth seems to have slowed a bit based on conversations and the pipeline you disclosed. Is this due to balancing your needs with investments, or is increased competition impacting the queue for power assets?

We wouldn't have a pipeline of 3 gigawatts if we were competing tooth and nail with hyperscalers for assets. We've decided to grow with the right types of assets rather than just growth for its own sake, which can be dangerous in markets where bitcoin prices rise. We started as an asset-light company, and our growth relied on a specific set of constraints that allowed for rapid expansion. Today, if you’re using grid-attached energy at an average price of around $0.045 to $0.05 per kilowatt-hour, you must replace your machines roughly every three years, creating high capital costs. Usually, it’s essential to manage energy assets effectively while still growing our bitcoin mining business, which we are committed to.

Excellent. Is it safe to assume that the majority of that 3-gigawatt pipeline is outside the United States?

That would be undisclosed. However, as we've stated, by 2028, we expect about 50% of our revenue to come from international markets, and we remain focused on that.

I wanted to discuss bitcoin mining in the quarter. Analysts have noted the randomness of bitcoin mining operations, where some months go well and others don't. In particular, market share bounced around between April and May, with excellent performance since then. Was there any structural uptime, downtime, or curtailment that affected those numbers, or is it merely random?

Examining the year, seasonality plays a significant part. A large portion of our production arises in Texas, and as we enter June, warmer months result in curtailments. Various maintenance cycles may impact operations at any site intermittently. May was an incredible month where our operations benefited greatly from the random variables in play. Over an extended period, we have experienced favorable luck, but the summer months naturally lead to higher curtailment percentages in states like Texas.

I’d love to get your views on the market now, regarding bitcoin treasury strategy companies. When it comes to evaluating the competitive landscape, how do you think MARA differentiates itself?

Someone recently said, 'Bitcoin treasury companies are the new ICOs.' In 2017, you saw numerous companies raise money with undefined strategies and the narrative may be be risky today as well. Recently, $82 billion has been raised for various cryptocurrency treasury companies, and it’s difficult to foresee all of them succeeding. The risk lies in those who implement these strategies without regard for market dynamics. Our own strategy is different; we’ve held wallets since bitcoin's inception, which enables us to make decisions based on long-term value rather than immediate market trends. We have observed that companies holding coins may face significant selling pressure as time progresses. Many even bought at the peak and now, if there's a price decline, selling pressure may kick in. It’s vital to maintain a prudent and cautious approach—too much of a good thing can often lead to disappointing returns. The market perception of these companies could shift, and we'd prefer to operate in our current fashion.

How do you view the MARA stack differently? Given it has grown significantly, now over 50,000 coin valued at over $5 billion, it seems like it delivers long-term value. Do you foresee building on this indefinitely or might you sell some based on market cap?

There’s always a point at which we would consider selling some bitcoin. For example, if bitcoin's appreciation and volatility decrease to make it more resemble a store-of-value asset like gold, we could see an optimal point to leverage our holdings or liquidate portions for operational funding, as demonstrated in 2023 when we sold bitcoin from production. Ultimately, we are a bitcoin company and aim to maximize returns for shareholders as bitcoin performs.

There has been some discussion regarding Two Prime's active management strategy. Could you update us on how large a portion of your bitcoin stack will be monetized? Does active management include hedging strategies?

When considering our bitcoin treasury, we see not only long-term capital appreciation but also a yield-generating strategy. Our objective is twofold: leverage our significant bitcoin stack as a treasury asset while also creating cash flows. We differentiate ourselves as a bitcoin mining company producing on a daily basis unlike treasury companies reliant on market acquisitions. We’ve tested various investment strategies over the past two years, and now about a third of our bitcoin is actively involved in asset management, generating yields, whether through covered calls or other trading strategies through partnerships with trustworthy entities. We are in the early stages of this new industry and will proceed systematically while adhering to the fiduciary responsibility we owe to our shareholders.

Thanks for that clarity, Salman. Moving on to diversification, how does the bitcoin treasury yield strategy fit in with the goal of diversifying revenues?

Ultimately, treasury yield aims to create cash flow off our bitcoin assets, akin to established models where assets generate income. The proceeds can alleviate pressures on core operations, enabling investment into diversification. We're heavily oriented towards developing sovereign data and inference AI while ensuring our current assets are maximizing value. When the time comes, we’ll announce diversification efforts that leverage our strong bitcoin assets alongside new revenue streams to secure company growth.

That logic leads perfectly into your international expansion goals, moving beyond the core U.S. mining business.

Absolutely.

To add to that, diversification can be achieved through two main vehicles: revenue diversification and cost reduction. As a reminder, MARA evolved from an asset-light strategy that quickly grew to a robust asset-heavy strategy, minimizing our electricity costs significantly. A part of our business retains the asset-light strategy from previous contracts, and as those contracts expire, we see further cost-saving opportunities. Our recent acquisition of a wind farm has positioned us for continued growth. While the marginal costs of traditional mining operations remain dramatically higher than our new methods, we will continue to diversify our income streams and prepare for additions to our efficiency strategies, such as in AI.

That’s fantastic. The improvement in costs has been a game changer, elevating profitability. A quick follow-up question, Salman. How much of the 75 exahash year-end target has been funded as of this quarter?

As we mentioned earlier, almost all of it is funded, with the exception of $150 million in minor capital required; there will be additional equipment-related expenses that we need to cover to reach the 75 exahash target. We are committed to making it work.

Thanks so much for the time and your insights. I'm looking forward to future announcements on your growth plans. I'll turn it back over to Rob.

Thanks, Chris. We're now going to take just a few questions from our retail shareholders. The first one I'm going to address to you, Salman, and it's one that we get asked quite often: Can you talk a little bit more about MARA's cost to mine per bitcoin?

That’s an important question, and I want to address it plainly. As you consider our financials, you need to assess our company evolution. Previously an asset-light model, we grew quickly, meaning our costs were higher compared to peers. However, we pivoted to an asset-heavy strategy, where we own and control our sites, acquiring at reduced prices and minimizing build costs compared to market standards. As a result, our electricity costs per bitcoin are among the lowest in the industry. Additionally, while it may be unjust to compare overall costs, our costs hover around $50,000 per mined bitcoin and are more than 50% cheaper than market acquisitions. With third-party contracts expiring, we expect our overall costs to decline as we scale further with initiatives like wind power to optimize our operations.

Great. The second question is for Fred. How will the signing of the GENIUS Act affect MARA's path to bitcoin mining?

The GENIUS Act essentially opens the door for stablecoins to integrate with the traditional financial system. Recently, Circle announced partnerships with Fiserv and FIS to incorporate Circle into their payment systems, similar to credit card companies launching their own stablecoins. Stablecoins facilitate liquidity flowing 24/7. Currently, transferring money to acquire bitcoin typically requires banking hours, meaning trading occurs predominantly during that window. With stablecoins, consumers can hold values in a controller currency that allows for swift transfers to exchanges. This development will likely attract more trading activity into bitcoin markets, enhancing liquidity overall. It fosters an environment where liquidity can drive greater trading in bitcoin and potentially enhance its market position.

Terrific. That's all the time we have for today. Thanks, everyone, for joining us. If you have questions that were not answered during today's call, please feel free to contact our Investor Relations team at ir@mara.com. Thanks very much, and enjoy the rest of the day.

Thank you. That does conclude today's teleconference and webcast. You may disconnect your lines at this time, and have a wonderful day. We thank you for your participation today.