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Bitcoin miners are turning their attention to the booming AI sector, and Marathon Digital isn't any different.
Marathon Digital Holdings (MARA), one of the largest publicly traded Bitcoin miners in the world, aims to keep pointing investments specifically designed to build out applications on the Bitcoin blockchain, including developments in the AI sector.
“It's very critical that data that gets published can be validated as authentic and there's no better way to do that than using a blockchain with technology like the Bitcoin blockchain as it is fully decentralized," Marathon CEO Fred Thiel said in an interview with Decrypt.
He emphasized that the Bitcoin blockchain can't be controlled or manipulated by the central authority or government, which means there's no censorship. This, according to Thiel, makes it “a perfect place to store data."
“We believe that over time you're going to see that blockchain technologies and AI have a very tight coupling,” said Thiel.
Earlier this year, Marathon invested in Auradine, a privacy-focused blockchain and AI startupas part of this theis.
Thiel, who is also on the Auradine’s board of directors, described the startup as a technology company that is focused on doing things operating at the intersection of blockchain technology, AI, and edge computing.
According to him, this is “a very important intersection” as AI tools become more and more capable of driving companies' operations, such as supply chains, assembly lines, manufacturing, and process control systems.
“There needs to be a way to ensure that the transactions the systems are doing are properly logged and validated, that the funds that they're using to pay for things […] are operating on a blockchain," Thiel told Decrypt. "If you think about the speed at which these systems make decisions, they need to have a similar speed of transaction processing and transaction execution."
Marathon’s international expansion
Earlier this year, Marathon partnered with digital assets infrastructure company Zero Two to spin up a new mining facility in Abu Dhabi. The large-scale site is expected to include two mining sites with a combined 250-megawatt capacity and is currentlhy being rolled out.
Critically, the new venture marks the firm's first foray into international markets.
“Marathon is very focused on [diversification]," said Thiel. "In the U.S., for example, we're not concentrated with all our mining in Texas like many other miners: we have Texas, we have North Dakota, we have Nebraska, we have some other states."
He added that the mining firm is also looking into expanding in Latin America, Africa, and also Asia.
“We believe there are some very interesting opportunities in Africa, Latin America, and in parts of Asia, and over time it will likely be 50/50 between the U.S. and the rest of the world,” he told Decrypt.
A recently published CoinGecko research shows that Bitcoin mining is profitable in just 62 out of the 147 nations, with Lebanon, Iran, Syria, Ethiopia, and Sudan topping the charts of the cheapest destinations.
Marathon, however, is not considering any of these countries, as regime-risk and stability are the two very important factors to take into account.
“Obviously, as a U.S. based company, we have a need to operate in countries that have stable regimes, regimes that are not under sanctions," said Thiel. "And where we can make a large capital investment because these states that we build are very expensive."
According to him, with the estimated cost of the UAE facility being $400 million, “you're not going to spend that type of money on a site unless you are fairly certain that you'll be able to operate it and recoup your investment over the long term.”
Marathon looks to increase its Bitcoin holdings
Overall, the Marathon CEO says he believes the firm has achieved many of its goals for this year so far.
“We ended last year at about 7 EH/s of capacity, and we now have 23 EH/s of installed capacity and growing,” said Thiel, adding that, from a production perspective, in July Marathon hit record production numbers among all of the largest publicly traded miners.
According to Marathon’s latest Bitcoin production and mining operation report, the company mined a record 179 Blocks in July 2023, while producing 1,176 BTC, or $30.6 million at current prices, in that month, and 6,297 BTC ($163.9 million), since the start of the year.
Marathon, which is currently the second-largest corporate Bitcoin holder after MicroStrategy, holding a total of 12,964 BTC ($337.5 million), also opted to sell 750 BTC in July, with the company stating that it intends to sell a portion of its Bitcoin holdings in the future “to support monthly operations, manage its treasury, and for general corporate purposes.”
“We only sell Bitcoin typically to cover our operating expenses. Otherwise, any excess Bitcoin that we mined, we continue to add to the balance sheet,” Thiel told Decrypt. “Each of the past few months, if you look at our production reports or our earnings releases, you'll see we have added to our Bitcoin holdings, with the excess Bitcoin produced after paying for our operating expenses, and we'll continue to do that. We believe that it's in our shareholders’ benefits that we continue to increase our holdings of Bitcoin.”