MARAMARA

Key highlights

• Bitcoin price drop hits earnings: The company reported a net loss of $611.3 million, which is a sharp reversal from the $808.2 million profit a year ago. Management attributed this $1.4 billion swing mostly to a $343 million drop in the market value of its Bitcoin holdings as the price of the digital currency fell 28% during the period.
• Mining efficiency improving: The cost to process data, or cost per petahash per day, improved by 4% to $27.7 compared to $28.7 last year. This lower cost helped the company produce 2,422 Bitcoin this quarter, which is a 3% increase over the same period last year despite higher global competition.
• Operating expenses scaling up: General and administrative costs rose to $69.5 million from $40.1 million last year as the company grew its headcount and global footprint. This total includes $15.4 million for buying and integrating new businesses and a $10.2 million payment to settle a patent lawsuit.
• Power costs rising: Energy costs for company-owned sites reached $48.8 million, up from $41.7 million a year ago. While the cost per kilowatt hour stayed flat at $0.04, the total bill grew because the company expanded its fleet and faced higher power prices caused by extreme weather.
• Strategic push into AI: The company is expanding its power portfolio to 4.8 gigawatts, which is more than double its current size, by securing rights to a new 2 gigawatt site in Texas. Management expects this massive power capacity will allow them to sign at least one lease for an artificial intelligence data center before the end of 2026.

Our take: A weak quarter that reflects the volatility of the company's transition from a pure Bitcoin miner to a power infrastructure provider. The massive $611.3 million loss is a reminder that earnings are currently tied to Bitcoin prices, but the push to secure 4.8 gigawatts of power capacity is the real long term story here.