On January 3, 2024, MARA, a leading mining company formerly known as Marathon Digital, announced that it had lent out 7,377 Bitcoins to third parties. This development is part of the company’s Bitcoin lending program, which has been active throughout 2024.
Vice President of Investor Relations Provides Insight
In an announcement, Vice President of Investor Relations Robert Samuels provided more information about MARA’s Bitcoin lending activity. According to Samuels, the company’s Bitcoin lending program focuses on short-term arrangements with well-established third parties. While he did not provide specific numbers, Samuels stated that the program generates a modest single-digit yield.
Purpose of the Lending Program
Samuels explained that the primary purpose of MARA’s Bitcoin lending program is to generate income to offset operating expenses incurred by mining. Mining is an energy-intensive business with challenging fundamentals due to reduced block subsidies every four years during the Bitcoin halving. The last halving occurred in April 2024, reducing the block reward to 3.125 BTC per block mined.
Reduced Block Subsidies: A Challenge for Miners
The block subsidy reduction is a significant challenge for miners like MARA. To mitigate this risk, the company has implemented various strategies, including its Bitcoin lending program. By generating additional income through lending, MARA can offset some of the reduced revenue from mining.
MARA’s Bitcoin Holdings Breakdown
According to a recent announcement, MARA acquired 22,065 Bitcoins at an average price of $87,205 per coin in 2024. The company also mined an additional 9,457 BTC, bringing its total Bitcoin holdings to 44,893 BTC.
MARA Raises $1.9 Billion through Senior Convertible Note Offerings
In November and December 2024, MARA raised $1.9 billion in capital through two senior convertible note offerings. The funds were used to purchase 15,574 Bitcoins for the company’s corporate treasury. Both note offerings featured zero-interest coupons, with the first offering maturing in 2030 and the second one maturing in 2031.
Praise from MicroStrategy Co-Founder Michael Saylor
MARA’s pursuit of Bitcoin as a treasury reserve asset has drawn praise from MicroStrategy co-founder Michael Saylor. Saylor recently stated that he expects MARA to be the next Bitcoin company to join the Nasdaq 100 stock market index, a weighted index of the 100 largest companies by market capitalization listed on the Nasdaq stock exchange.
A Note on Investment Advice
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
Conclusion
MARA’s Bitcoin lending program is an innovative strategy to generate additional income for the company. By focusing on short-term arrangements with well-established third parties, MARA can mitigate some of the challenges associated with reduced block subsidies. As the mining industry continues to evolve, it will be interesting to see how companies like MARA adapt and innovate to remain competitive.
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