An Update on the Operations of the Biggest Public Bitcoin Miners
Riot
Riot develops and operates enormous bitcoin mining facilities in Texas. The state's vast energy resources and deregulated electricity market makes it the perfect fit for Riot's power strategy, which centers around consuming enormous amounts of electricity and selling it back to the grid during electricity scarcity events. By helping to strengthen the ERCOT grid with this demand flexibility, Riot has achieved among the lowest all-in electricity rates in the bitcoin mining industry. The company has a fixed-price power purchase agreement, sparing it from the electricity price inflation that has harmed some of its competitors this year.
Riot operates three business lines. Self-mining is by a wide margin the biggest, but the company also provides hosting services for other miners and sells electrical infrastructure through its engineering business. Riot is vertically integrated and strives to do as much as possible in-house.
Riot currently has an operating hashrate of 7.7 EH/s, corresponding to a massive 148% growth from its 3.1 EH/s at the start of the year. The company anticipates further growing its hashrate to 12.5 EH/s by Q2 2023.
Riot has more than enough infrastructure under development to accommodate its future hashrate. Its Whinstone facility in Texas is the biggest in North America, with a total developed power capacity of 450 MW. The company is expanding its capacity towards 700 MW, making it the largest bitcoin mining facility in the world.
The company also recently broke ground on the first phase of development on its new facility in Corsicana, Texas. This site will have a total power capacity of 1 GW at its finalized stage, with the first phase having a power capacity of 400 MW in Q4 2023.
Riot has a solid balance sheet with no debt and enormous cash and bitcoin holdings, making it excellently positioned to take advantage of depressed machine prices and scale during the bear market. The company's financial strength is essential since its massive infrastructure buildouts require extensive financing.
Marathon
Marathon follows an "asset-light" strategy centered around only owning machines and not investing in data centers. The company instead pays data center operators to host its machines in facilities across the United States.
The tide is finally turning for Marathon after a tough year where the company struggled to get machines plugged in and maintain a desirable up-time. During the summer, it had to move its machines from a facility in Montana due to power outages. Shortly after, the company faced additional obstacles as its new hosting provider had problems with a power purchase agreement.
Marathon has moved most of its machines to two hosting providers: Compute North and Applied Digital. Compute North recently went bankrupt, creating considerable uncertainty about whether they can accommodate more of Marathon's machines. Marathon continues to work to secure new hosting agreements, but it isn't easy in the current landscape with limited hosting supply.
Although Marathon has been through some hardship, things are looking better than in a long time, with the company substantially increasing its operating hashrate during the past few months. In October, it had 7 EH/s online, a massive increase from the 3.2 EH/s just one month earlier. The company plans to grow its hashrate to 23 EH/s by mid-2023.
Marathon holds 11,285 bitcoin, making it the biggest hodler of the public miners. The company keeps all the bitcoin it mines and has recently taken on a bitcoin-backed loan to secure dollar liquidity for working capital. The company is in a reasonably strong position from a balance sheet perspective.
Hut 8
Hut 8 is a Canadian data center company operating in Alberta, Ontario, and British Columbia. Most of the company's business focuses on bitcoin mining, but it also has a growing high-performance computing division providing AI and simulation services.
Hut 8 has a total installed bitcoin mining capacity of 3.3 EH/s but currently operates at only 2.4 EH/s due to the suspension of its Ontario facility following a dispute with its energy provider. The company claims its power provider demands more money for power delivery than initially agreed under the power purchase agreement. A considerable share of Hut 8's future hashrate growth was planned to come from an expansion of this facility, so resolving the power purchase agreement issue is essential for the company's future growth.
In addition to mining bitcoin, Hut 8 mined ether before Ethereum transitioned to proof-of-stake on September 15th. The company has since redirected its GPU fleet from mining ether to doing high-performance computing (HPC). At the beginning of the year, Hut 8 also purchased several existing HPC data centers across Canada.
Hut 8 has a strong balance sheet with little debt and excellent liquidity. Its bitcoin holdings of 8,925 make it the second-biggest bitcoin holder of the public miners.
Bitfarms
Bitfarms is a Canadian bitcoin miner focusing on revitalizing existing energy infrastructure left over from energy-intensive industries that previously operated in North America. The company's operations are almost entirely powered by hydropower. Its focus area has historically been in Quebec, but it has recently expanded to Washington state, Argentina, and Paraguay.
Bitfarms currently operates at 4.4 EH/s, a 100% increase from the 2.2 EH/s by the start of 2022. The company has not grown its hashrate as fast as expected this autumn. It initially aimed at reaching 5 EH/s by year-end but recently revised this expectation due to challenges related to its Argentina expansion.
While most public bitcoin miners prefer to stick to their home turf in North America, Bitfarms is expanding into South America with its facilities in Argentina and Paraguay. While the 10 MW Paraguay facility draws hydropower from the country's vast hydro reservoirs, the Argentine site is behind the meter at a stranded natural gas asset. It currently operates at 10 MW, but Bitfarms plans to scale it to 50 MW by year-end.
Still, doing business in Argentina hasn't proven to be an easy task. The company has faced problems securing the necessary permits to import machines into the country but is working to find a solution. Solving these problems as fast as possible is essential as the company's scheduled hashrate growth depends on it.
Many public miners have seen their electricity costs rise due to the energy crisis. Bitfarms operates in hydro-powered grids that have limited exposure to the natural gas price. Therefore, the company has not seen similar increases in electricity prices as some of its competitors.
CleanSpark
CleanSpark is a former energy company that pivoted into bitcoin mining in 2020. The company primarily operates in Georgia but also hosts some of its machines at a New York facility. It is developing a sizeable wind-powered bitcoin mining site in West Texas in collaboration with the energy technology company Lancium.
CleanSpark currently has 5.5 EH/s of hashrate online, corresponding to a 189% growth from the 1.9 EH/s at the start of the year. The company has been the fastest-growing public bitcoin miner this year, leveraging its solid balance sheet to acquire mining infrastructure from distressed players. It bought two mining facilities in Georgia and thousands of mining machines during this bear market.
The company keeps being on the lookout for new potential acquisitions. CleanSpark's CEO Zach Bradford has stated that the company aims to dollar-cost average into mining equipment, which has proven to be a great strategy during this bear market. The company has a strong balance sheet with minimal debt, giving it the financial strength to pursue distressed opportunities.
