Marathon Digital Holdings Inc
NASDAQ:MARA
Earnings Call Analysis
Q4-2023 Analysis
Marathon Digital Holdings Inc
The year 2023 was marked by success for the company, closing on a particularly strong note in the fourth quarter. Two primary objectives set the company's direction: to energize previously purchased mining rigs to reach their target and to optimize their operations. By accomplishing these goals, the company demonstrated a stellar operational and financial performance, excelling in efficiency and effectiveness.
In the fourth quarter, net income soared to $152 million, a significant reversal from the previous year's substantial loss of $392 million. This profitability was largely influenced by an early adoption of new fair value accounting rules. For the full year, net income was reported at $261 million, contrasting sharply with the prior year's net loss of $694 million.
Revenues hit an all-time high in the fourth quarter, reaching $157 million, driven by a dramatic 172% increase in Bitcoin production and an average price of Bitcoin that was 101% higher than the previous year. Year on year, the company saw revenues surge from $118 million to approximately $388 million, a remarkable achievement attributable to an impressive 210% boost in Bitcoin production.
The company adopted a new FASB accounting method which emphasizes the fair value of crypto assets. With this change, the company, a substantial holder of Bitcoin, recognized substantial gains in digital assets—$214 million in the fourth quarter and $331 million for the full year. These positive adjustments show a proactive step towards aligning with contemporary accounting standards, directly benefiting the bottom line.
The company's balance sheet demonstrated remarkable health, with unrestricted cash and cash equivalents totaling $357 million, a significant increase over the previous year, and Bitcoin holdings valued at $640 million. Combined, unrestricted cash and Bitcoin holdings amassed a potent sum of approximately $1 billion, underscoring the financial resilience of the company.
With positive financial outcomes and a solid balance sheet, the company appears well-prepared to meet its growth targets for 2024. The company's earnings call was optimistic about the potential to leverage opportunities related to the anticipated Bitcoin 'halving' event, which historically influences market dynamics.
After achieving a record-breaking fourth quarter, the company faced and subsequently overcame operational issues at sites in North Dakota and Texas. These setbacks, owing to electrical system maintenance, were resolved with the help of hosting providers, putting the sites back near full operational strength. The management team expects the fourth quarter's exceptional performance to surpass the first quarter of 2024, which signifies a temporary setback due to maintenance-related downtime.
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Good day, ladies and gentlemen. Welcome to Marathon Digital Holdings Fourth Quarter and Fiscal Year 2023 Earnings Webcast and Conference Call. I'd now like to turn the call over to your host, Charlie Schumacher, Vice President of Corporate Communications. Please go ahead, Charlie.
Thank you, Kevin. Good afternoon, and welcome to Marathon Digital Holdings Fourth Quarter and Fiscal Year 2023 Earnings Call. Thank you for joining us for our call today. With me on today's call are Chairman and Chief Executive Officer, Fred Thiel; and our Chief Financial Officer, Salman Khan. Before we get started, I'd like to remind everyone that our prepared remarks may contain forward-looking statements and that we may make additional forward-looking statements during the question-and-answer session. These forward-looking statements are subject to risks and uncertainties, and actual results may differ materially. When used in this call, the words anticipate, could, enable, estimate, intend, expect, believe, potential, will, should, project and similar expressions as they relate to Marathon Digital Holdings are as such a forward-looking statement. Please refer to our earnings release for a full recitation of our forward-looking statements. Investors are cautioned that all forward-looking statements involve risks and uncertainties, which may cause actual results to differ materially from those anticipated by Marathon at this time.
Some of these risks and uncertainties are more fully described in Marathon's public filings with the U.S. Securities and Exchange Commission, which can be viewed at www.sec.gov and ir.mara.com. Finally, please note that on today's call, we will refer to certain financial measures that were not prepared in accordance with generally accepted accounting principles in the United States, including adjusted EBITDA and non-GAAP total margin. Marathon believes these non-GAAP financial measures are important indicators of its operating performance because they exclude certain items that are unrelated to and may not be indicative of its GAAP financial results. Please refer to our company's periodic reports on Form 10-K and 10-Q and to our website for a full reconciliation of these non-GAAP performance measures to the most comparable GAAP financial measures. We'll begin today's call with prepared remarks from Fred and Salman. After their comments, we will be going through some of the more popular questions from our investors before transferring to a live Q&A with our covering analysts. And with that out of the way, I'm going to turn the call over to Fred to kick things off. Fred?
Thank you, Charlie. We had 2 primary objectives for 2023, which we outlined on our first quarter earnings call last year. The first was to energize our previously purchased mining rigs to reach our target of 23x as and the second was to optimize our performance to become more effective and more efficient. As the record operational and financial results we published today clearly demonstrate 2023 was an immensely successful year for Marathon in which we achieved both of our primary objectives. Today, Marathon is one of the largest Bitcoin miners in North America and whether it be financially, operationally or technologically, we believe we are setting the pace for this industry. In 2023, we grew our hash rate 253% from 7 exahash to 24.7 exahash, surpassing our target of 23 exahash. At the end of last calendar year, we had over 210,000 Bitcoin miners operating across 11 different sites on 3 continents which we believe makes us the largest and most diversified publicly traded miner today. At the same time, we became much more efficient at converting energy into economic value, which is the heart of what we do. During the year, we improved our fleet efficiency 21% from 30.9 jewels per terahash to 24.5 duels per terahash, which means that on top of our scale and our diversified operations, we have one of the most efficient fleets in the industry. Our operations team dedicated significant efforts to enhance the performance of our facilities. In August of 2023, our site and King Mountain only operated at an average of 51% of its operational capacity and the site in Granbury only averaged 56% of its total capacity. Our team took charge the situation flying in to assess and address the issues. And by the end of 2023, our team had often lied both sites such that King Mountain operated an average of 92% of its capacity and Granbury at an average of 99% of its capacity in December. While site performance will fluctuate with seasonality and maintenance, the significant improvements we made underscore the positive impact that our team and our processes can have in our operation, a testament that we are not just effective capital allocators, but excellent operators as well. Our operational expertise is one of the many reasons we are confident that we will be able to successfully integrate and ultimately optimize the 2 data centers we recently acquired from Generate Capital and any other sites we may acquire in the near or distant future. In 2023, the total Bitcoin network hash rate experienced a significant increase, doubling from 253 exahash to 509 exahash. This increase in hash rate has the equivalent impact of a having event with hash rate doubling difficulty essentially doubled and that effectively reduced the reward reminding a block by half, holding all else constant.
Meanwhile, Marathon grew more than twice as fast as the rest of the network as we increased our hash rate 253% last year. At the same time, we improved our operational efficiency, improving our fleet efficiency 21%. As a result, we produced a record amount of Bitcoin in 2023. We increased our Bitcoin production 210% year-over-year from 4,144 Bitcoin in 2022 to 12,852 Bitcoin in 2023. Production improved throughout the year, but the fourth quarter really stood out operationally and financially. By the end of the fourth quarter of 2023, we were operating near full strength after Garden City was fully energized in October, following several months of regulatory delays. In December, we averaged 90% capacity across all sites, and at the same time, we benefited from a huge surge in transaction fees on the Bitcoin network. In December 2023 alone, we produced 1,853 Bitcoin with 380 Bitcoin or 22% of our total production coming from fees. As a result, we produced a record 4,242 Bitcoin in Q4. In Q4 2023 alone, we produced more Bitcoin than we did in all of 2022 and more Bitcoin than 3 of our top competitors combined. In addition to Q4's record Bitcoin production, we announced several new expansions at the end of last year that are indicative of how we see Marathon evolving.
The first announcement was our inaugural pilot project powered by renewable offered Energy from a landfill in Utah. Our team is still working on finalizing the data, but the preliminary results of this project demonstrates that Bitcoin miners can actually help reduce emissions. The data suggests that the model we help pioneer of turning trash into cash by mining Bitcoin with stranded methane from landfills is economically viable for miners for the landfill operator and is more effective at reducing methane emissions and flaring. Following the landfill gas project in Utah, we also announced our second international expansion in our first deployment into Latin America. In Paraguay, we're working to convert 27 megawatts of unused hydropower into 1.1 x hash of Bitcoin mining capacity. By Marathon Standards deployment is really just a large-scale pilot, and it serves as an excellent case study for the value that Bitcoin mining can bring to regions throughout the world with excess power. It also demonstrates our ability to replicate the joint venture model that we developed in Abu Dhabi, which allows us to partner with regional experts to quickly and effectively expand our diversified portfolio of Bitcoin mining assets. This experience is essential as we look to grow our footprint internationally and educate the world on the value that Bitcoin mining can bring as a technology solution to the energy sector. Perhaps the most significant announcement from last quarter was our $179 million acquisition of our first fully owned data centers in Kearney, Nebraska and Granbury, Texas.
The acquisition closed last month and the purchase price was subject to customary closing adjustments. With this acquisition, Marathon transformed from a company with 584 megawatts of capacity, 3% of which we directly owned or operated to one with 910 megawatts of capacity, 45% of which power sites we directly own. We've already spoken about the strategic importance of owning these sites of the accretive nature of this transaction and of the opportunities we have to reduce our operational costs at these sites. So I'll refrain from going into detail today. We will be assuming full operation control of them by April 30 or earlier, allowing us to accelerate operational cost savings and optimization. While we're not yet the operators, our team is currently intently focused on engaging the local communities to ensure that we can be the best neighbors possible as we go through the transition process. We believe Bitcoin mining can positively change the world, and that starts with the local communities in which we operate, where our operations create highly skilled jobs and economic contributions for the people of those communities.
Before going too far into our future plans, I'm going to turn the call over to Salman to discuss our financial results for the fourth quarter and fiscal year ended 2023. Salman?
Thank you, Fred. We had an excellent fourth quarter to cap off what was an incredibly successful year for Marathon. We produced record revenues, net income and adjusted EBITDA, and we've entered 2024 with a strong balance sheet that has us well positioned for the upcoming having and beyond. Well, let me dig into the details. The company reported net income attributable to common stockholders of approximately $152 million or $0.62 per diluted common share in the quarter compared to a net loss of approximately $392 million or $3.13 per share in the prior year quarter. For the full year, we reported net income of $261 million or $1.06 per diluted share compared to a net loss of $694 million or $6.12 per share in the prior year. In both the quarter and the year, the improvement in profitability was partially due to us choosing to early adopt the new FASB fair value accounting rules. As the company not early adopted the new FASB fair value accounting rules, our net income attributable to common stockholders for fourth quarter of 2023 would have been a net loss of $5 million or a loss of $0.02 per diluted share and net income of $33 million or $0.17 per diluted share for the year ended December 31, 2023.
I will discuss these changes and the impact in more detail shortly. But first, let's dive into mining results. Fourth quarter revenues were a record $157 million, significantly higher than prior year revenues of $28 million and were driven by a 172% increase in Bitcoin production, coupled with a 101% higher average price of Bitcoin. For the full year, we recorded revenues of approximately $388 million, also a significant improvement compared to $118 million in the prior year. The improvement year-over-year was driven by a 210% increase in Bitcoin production and a 2% average price of Bitcoin in 2023 compared to 2022. It is important to note that in 2023, we benefited from the accident of a $333 million impairment of mining equipment and advances to vendors, a $183 million impairment of digital assets an $85 million loss on digital assets held within the investment fund and a $56 million impairment of deposits, loan and investment due to vendor bankruptcy, partially offset by an $84 million gain on sale of equipment net of disposals in 2022. Our hosting and energy costs for the 3 months ended December 31 were $75 million compared to $30 million last year. For the year, hosting and energy costs were $223 million compared to $73 million in 2022.
In both time periods, the increase was primarily due to growth in our mining fleet and related costs. Total cost of revenues, which includes depreciation and amortization, was $146 million in Q4 of 2023 compared to $44 million in Q4 of 2022, an increase of 235%. For the full year, this was $403 million, 166% from $151 million in 2022. Depreciation and amortization for the fourth quarter was $71 million, increasing by $57 million compared to the same period in the prior year. For the full year, depreciation and amortization was $380 million compared to $79 million in 2022. In both periods, the change was predominantly the result of growing our energized cash rate from 7 exahash to 24.7 exahash. We have also early adopted FASB's accounting for a disclosure of crypto assets, which actually requires the measurement of crypto assets at fair value. The adoption of new accounting guidance resulted in a cumulative effect adjustment at the beginning of 2023. In 2023, we increased our Bitcoin holdings 24% from 12,232 Bitcoin to 15,126. Because of the significant amount of Bitcoin we hold on our balance sheet, we recognized a gain on digital assets of $214 million during the fourth quarter of 2023 and a gain on digital assets of $331 million for the full year under this new accounting guidance. As one of the largest holders of Bitcoin among publicly traded companies, we expect the new fair value accounting of Bitcoin to continue to impact our bottom line going forward as the price of Bitcoin fluctuates. The company's non-GAAP total margin, excluding depreciation and amortization was $82 million this quarter compared to a loss of $1 million in the same quarter last year.
For the fiscal year 2023, our non-GAAP total margin, excluding depreciation and amortization, was $164 million compared to $45 million in 2022. In both cases, the change was predominantly related to higher Bitcoin prices, increased production and increased operational efficiency. In Q4 of 2023, adjusted EBITDA improved to $260 million versus a $374 million loss in the prior year period. For the full year, adjusted EBITDA improved to $420 million from a loss of $543 million in 2022. The drivers of the adjusted EBITDA improvement in both periods include total margin improvement, excluding depreciation and amortization, gains on digital assets and the absence of impairment charges. Due to the impairment charges of $572 million in 2022, we had a gain of over $700 million, which had a positive impact to earnings when compared to last year. General and administrative expenses, excluding stock-based compensation, were $20.5 million in Q4 of 2023 compared to $13 million in the prior year period. For the fiscal year 2023, G&A, excluding stock-based compensation, was $63 million compared to $32 million in 2022. This increase in expenses was primarily due to the increase in scale of the business, including payroll and benefits, professional fees and other costs. At the end of 2023, we had approximately 60 employees, up from 30 a year ago, and we continue to opportunistically add talent across the organization.
Turning to our Bitcoin holdings and cash position. Unrestricted cash and cash equivalents totaled $357 million at December 31, 2023, up $254 million compared to last year. Also at December 31, we held approximately 15,126 Bitcoin with a carrying value of $640 million on the balance sheet. The company's combined balance of unrestricted cash and cash equivalents and Bitcoin was approximately $1 billion as of December 31, 2023. We sold 2,365 Bitcoin during Q4 of 2023, realizing cash proceeds of $83 million. During the year, we sold 9,482 bit point and realized cash proceeds of $264 million. These proceeds were utilized to fund operating expenses, including cost of revenues for energy hosting and other cash operating expenses. During the year, we generated $608 million from at-the-market equity sales, which we primarily intend to use for growth capital and other general corporate purposes. As previously discussed, during the year, we took advantage of an opportunity to strengthen our balance sheet by exchanging $417 million in convertible notes for approximately $329 million in equity. This transaction reduced our debt by 56% and saved approximately $101 million or $0.55 per share in cash for our stockholders. The combined cash and cash equivalents and Bitcoin on our balance sheet, along with reduced debt and access to at the market facility provides us ample amount of liquidity and optionality to strategically evaluate opportunities as we approach having.
We believe the increased value of combined cash and Bitcoin, along with reduced debt is prudent risk management and source of strength of the company's balance sheet as we enter it potentially turbulent time for the industry. As mentioned in our January production report, our unrestricted cash balance at January 31 was $319 million, and we held approximately 15,741 Bitcoin with a fair value of $670 million. In total, we had approximately $1 billion in unrestricted cash and Bitcoin at the end of January. We continue to actively manage and optimize our treasury by hedging a portion of our Bitcoin Holdings. The purpose is to mitigate the impacts of extreme volatility in the near term while maintaining the long-term strategy of maximizing the size and value of our treasury. Given Bitcoin's historical volatility, we believe this strategy is a temperate to improving the resilience of our organization, providing downside risk protection during volatile market conditions and maximizing our Bitcoin valuation potential.
We expect our Bitcoin holdings will generally increase but fluctuate depending on operating and market conditions. And again, due to the significant amount of Bitcoin we hold on our balance sheet, we expect these fluctuations to continue to impact our bottom line with the adoption of the new accounting rules. We intend to add to our Bitcoin holdings primarily through our production activities, and we will also continue to sell Bitcoin as a means of generating cash to fund monthly operating costs and for general corporate purposes. Given our positive financial results and our robust balance sheet, we believe Marathon is well positioned to achieve our 2024 growth targets and to capitalize on any opportunities that present themselves around the upcoming having. And that completes my update. I'll now turn it back to Fred, who will talk more about our operations and our ongoing plans. Fred?
Thanks, Salman. Those of you who have been tracking our pool will know that Q4's record performance was followed by temporary operational challenges in North Dakota and Texas that started in mid-January and have now been resolved. These sites operated by Applied Digital had unplanned outages due to transformer and transition line maintenance. In both instances, our team in MEA began working with our hosting provider to find solutions to the issues, which are now resolved. As of this week, Ellendale is nearly back to full strength and Garden City is reenergized. While these maintenance issues are now resolved, we do currently expect Q4 record performance to outshine the first quarter of this year due to the prolonged impact. Regardless, we're confident that the best and most exciting times for our operations are still to come. One year ago, the world was a very different place for Bitcoin miners and for Marathon. We were in a bear market with Bitcoin's price hovering around $23,000. Marathon itself represented less than 3% of the Bitcoin network with only 7 exahash online. We had 280 megawatt portfolio of Bitcoin mining assets, all based in the United States.
We had $226 million of liquidity, and we carried $798 million of debt on our balance sheet. Today is a very different story. Bitcoin's price is hovering around 60,000. I just strike out the 55,000 in my script because Bitcoin kept moving up in price today. Marathon represents approximately 5% of the Bitcoin network with over 26 exahash online and more coming. We have a 900 megawatt portfolio of Bitcoin mining assets diversified across 11 sites in 3 different continents. We have $1 billion of liquidity on our balance sheet and have reduced debt by over $411 million while saving our shareholders $100 million in the process, resulting in net debt of $331 million. We're integrating our first major acquisitions and taking direct control of nearly half of our hash rate, but we're only just getting started. In 2024, we plan to grow our operational hash rate more than 35% to approximately 35 to 37 exahash. By the end of 2025, we plan to be at 50x to ash, which is approximately double our current capacity. These targets are based on our current machine orders and pipeline. However, we believe there are opportunities to accelerate the time line and realize these targets even sooner. So you may ask how are we going to get there.
To start, we have orders and options for machines that represent upwards of 45 additional exahash with orders for 22 exahash miners already placed an inbound with the option to add another 23 exahash capacity. Additionally, Marathon's investment in Auradine has already begun to pay dividends by providing us with an additional avenue to increase cash rate at an accelerated pace. If we choose to execute on these orders, we have the potential to reach 69.7 exahash [indiscernible] since procuring machines is not a constraint on Marathon's growth, the obvious question is where do we deploy the next 45 exahash of miners. The 2 sites we recently acquired are the first part of the answer. Granbury, in particular, has substantial expansion potential, which we've discussed in press releases and on our last call. But to meet our appetite for growth, we will need to do much more, which will consist of both organic and inorganic growth domestically and internationally with a focus on optimized cost to mine and a sustainable energy source. This is where our balance sheet comes into play. We have been building up a substantial stockpile of dry powder, now totaling over $1 billion between cash and Bitcoin, and we intend to utilize it to continue growing our business through organic and inorganic means as opportunities arise. So far in 2024, we have raised $489.3 million at an average share price of $19.8. As our 10-K will show, we have filed a new shelf giving us the option to raise an additional $1.5 billion via at-the-market equity offering. This would bring our total potential war chest to over $2.5 billion if it were fully exercised the shelf that is.
Today, the majority of our 900-megawatt Bitcoin mining portfolio predominantly consists of machines in large data centers that reside near power stations in the United States. We believe there exists significant opportunities to develop utility-scale mining operations based on stranded energy outside of the United States, like our UAE and Paraguay side. We will look for more opportunities in places such as the Middle East, Africa, Latin America and elsewhere. But our organization is evolving and with it, we believe we can revolutionize the way people think about Bitcoin mining. Our long-term vision for Marathon is a diverse global organization that leverages Bitcoin mining technologies to build a more sustainable and inclusive future. Bitcoin miners excel at 2 things, consuming standard energy and generating heat. And while most of our competition is focused on underutilized utility-scale grid energy, we are always asking ourselves, what is the best way to utilize our technology and its unique attributes to create the most value. We believe one of those is through Bitcoin mining's version of recycling, which basically means converting what is currently a waste product into a productive resource.
The pilot project in Utah, where we converted methane gas generated from a landfill into a productive source of power for Bitcoin mining is only one example. There are some new projects our team has been developing that have a higher IRR than traditional Bitcoin mining based on using waste to generate energy and leveraging the heat from Bitcoin mining profitably for low-grade industrial process. It would be premature to discuss details at this time, but given the scale and diversity of applications, we believe the market opportunity here on substantial and the prospects are incredibly exciting. Heat reuse is a concept that we see becoming more significant and scalable in the coming years. Bitcoin miners are more efficient to generating heat from electricity than most other alternatives, including most space heaters, which do nothing but create heat by consuming electricity. We are currently exploring projects that involve using heat from our mining systems at both large and small scale to provide heat for industrial processes, commercial buildings, homes and even just a living room. It's only a matter of technology and capability in Marathon has both. Marathon's technology group is finalizing the development of a highly scalable immersion technology that enables heat reuse projects in many different form factors, sizes and applications, and we'll be speaking more about this in the near future.
Over the next 5 years, our objective is to have 1 gigawatt of power dedicated to these various applications that are separate from the utility scale mining we're known for today, but that are directly in line with our core competencies. At the heart of these initiatives is our technology. While our growth team initiates potential new projects and our operations team develops and scales our sites, our technology team has been hard at work building and launching new tools and services for those who are building the future of Bitcoin. The first of these is Slipstream, which is the direct transaction submission service we announced last week. For the Bitcoin community, direct submissions are designed to mitigate censorship and encourage development on Bitcoin. For Marathon, the higher fees may help increase revenue. And as far as we know, Marathon is the only minor capable of offering a direct submission service and benefiting from the potential increase in transaction fees because we're the only miner that operates its own learning pool. This is one of the many reasons we believe there is a strategic value to owning our own pool and focusing on vertically integrating our technology stack. Anduro, which we announced earlier today, is another innovation we have been hard at work on.
We believe Anduro may be the world's first most Bitcoin native layer 2 network, and it is intended to serve as infrastructure for the next generation of Bitcoin applications. This is something we have helped incubate, but it is not something that we own. Anduro is for the pioneers, striving to redefine blockchain adoption. Therefore, it will be community-led and community-driven. Why give something like us away for free to the community? It's actually quite straightforward. We have a vested interest in the Bitcoin ecosystem. We're the second largest holder of Bitcoin among publicly traded companies and the largest single publicly traded organization working to process Bitcoin transactions and secure the network. Our core competency is converting energy and to economic value in the for Bitcoin, therefore, it's Bitcoin furnished, so do we. This is also why we helped raise approximately $800,000 in just 4 days last year to support Bitcoin Core Developers, $500,000 of which was contributed by Marathon itself. We believe that Anduro can have a positive impact on the community, but we also recognize that different people have different views on how best to extend the utility of Bitcoin. We believe in testing, iterating and letting the market decide what works best. It is that experimental and natural mindset that is core to Marathon's DNA. And as we look to scale in 2024 and beyond, it will remain one of the primary differentiators that sets Marathon apart. Marathon's leadership team consists of people who think differently and are willing to try divergent ways to execute and deliver on our vision. While 2023 was a banner year for Marathon, we have never been more optimistic about Marathon's future, and we look forward to building on our accomplishments to leverage all of our assets to build a more sustainable and inclusive future. And with that, I'll turn it back to Charlie for Q&A.
Thanks, Fred. At this time, we're going to commence the Q&A section of today's call. We'll start by answering some of the most popular questions submitted by investors through our Q&A platform. So the first question comes from Rex, who asks, is the company more profitable after BTC having?
I'll take that question. Thank you,. Thank you for asking the question. Just for the benefit of everybody, having are unique to this industry in Bitcoin and force the industry to become more efficient every 4 years. And the drop in the [ Blocker ] board forces the inefficient operators out and the most efficient one remains. And we expect this likely will help us gain market share as we go through the having. The impact on Marathon will depend on where the Bitcoin prices go from here. Obviously, there has been a great run in the Bitcoin price recently. And it all depends on how much the competition falls from here as well with those inefficient miners, which could drive some interesting activity in the marketplace. With that, we have a significant discount holding on our balance sheet. And given that fact, if you do the math simple terms, every $10,000 change in Bitcoin price will result in approximately $200 million of change in our EBITDA on an annualized basis. And in the current price environment, we expect to be profitable and with the assumption that the competition will -- certain of those machines will go down and it will provide us opportunity to create more value for our stockholders. Hopefully, that answers.
One thing I'll just pile on top of Salman's great answers. The fact that we are very focused on growing parts of our business that generate higher IRRs than traditional Bitcoin mining. So we have one of the most efficient fleets in the industry. And if you think about the 45 exahash of machines that we have on the inbound between orders and options, and you just look at the orders that are locked for delivery at this point. Our efficiency will drop from 24 duels per terahash down to somewhere around 22 or near 21 jewels per terahash, again, maintaining the most efficient fleet in the industry. Our technology investments in heat reuse projects and areas adjacent to Bitcoin mining, will allow us to mine Bitcoin at large scale, though, across multiple smaller installations at costs that may at times sometime approach near 0 energy costs because of the fact that we're actually paid to generate electricity in some cases. We believe is a minor if we can target being in that lower quartile of miners, no matter what the price of Bitcoin and what the global hash rate is, we'll always be able to operate relatively profitably.
Our next question comes from Tarek A, who says, "I love your work and think you're heading in the right direction. A lot of critics are worried that if the crypto market fluctuates, your company won't be able to handle the fluctuation. Fred, so on, how do you address that concern?"
I'll take that. Well, we've been focused on building resiliency. We're investing in technology, diversifying across the business and paying down debt, positioning ourselves for the worst of storms, no matter what might happen. We have one of the strongest balance sheets in the sector with $1 billion in cash in Bitcoin, which gives us the strength to survive whatever comes our way. And most importantly, this is not our first cycle. Marathon was built during the last down cycle. And we maneuvered it well and have come out on top of the industry again. And we've never been more confident in our future. So I hope that answers your question.
Thanks, Fred. We have 2 questions necks that are a little similar, so I'll ask them back to back. The first is from CK who asked why did Marathon use equity to purchase 183.5 Bitcoin in January after stating on the Q3 earnings call in November, that equity was only to be used to drive growth in hash rate. Also, please explain the 2024 treasury strategy, i.e., what is your target [indiscernible] cash for having at the end of 2024. And then similarly, Samir A asked, will the company purchase any more Bitcoin on its balance sheet. So either if you would like to take that and speak a little bit to Marathon's treasury management strategy?
Sure. I'll take that. The question. Look, the company has stated in the past that we want to utilize equity for growth purposes and investment in exahash, whereas we've utilized Bitcoin in for our operating costs. And that's primarily what our stated strategy has been, and we follow that along. In terms of how we have used cash, opportunistically, we have looked at the cash to take advantage of drop in Bitcoin price in certain cases. As you know, cash sitting in the balance sheet with the cash amount of cash that we raised, that yields about 5% in U.S. treasuries. And when we look at it, we look at it from an investment standpoint, how can we maximize our investments either in cash or Bitcoin. And when there are opportunities that arise like an unusual situation that happened in January with the ETF launches and price went down temporarily, we knew that the price was going to come back up, and that was a great opportunity to create more value for our stockholders, and we took a small position and that has been a very profitable investment for us instead of 5% rate of return on U.S. treasury.
But our core business remains Bitcoin mining. And our primary focus and source of equity is going to be growth investment. Given the unique situation of Bitcoin price and this was an unusual opportunity, we don't expect these kind of opportunities to regularly arise, but we will be opportunistic in nature of just small scale, if you like. Our hotel position and cash it provides us a great mechanism to fight any downturns as the Bitcoin price different cycles, it goes through having it goes through the upcycle, down cycle. We're in a driving position from that perspective. It also provides us a great opportunity for investors to write the price as Bitcoin price appreciates from here. Just to summarize, in future, we may monetize good coin for investing in our company, our general corporate purposes. But as of now, our focus remains to use equity for growth and discount for operating costs.
The next question comes from Michael, who asks, what is your DTH or Ethereum mining percentage and your Bitcoin mining percentage in overall mining capacity as of today. How much Bitcoin and Ethereum are on hand at the company currently? Fred, do you want to take that one?
Sure. We don't mind it, period. Next question.
Short, sweet. All right. Next question comes from Mohar see who asked, what are your plans to compete with competitors based on the hashing power metrics? Marathon does hold a lot of Bitcoin, but the efficiency is somewhat less as compared to [indiscernible]. Are there any plans to address that?
We're constantly focused on really 2 things in our mining business, energizing more hash rate and optimizing the cash rate that we have. And our efficiency has increased significantly year-over-year, partially because of the machines that we deploy and having one of the most energy-efficient fleet in the industry and continuing to have that will be [ hostile ] work part of that strategy. We also are the most efficient miner of the publicly traded miners or one of the most efficient on an SG&A basis. And you have to look at the total cost of mine. You can't just look at your marginal cost of mine Bitcoin. You have to look at the overall costs. What is the corporate cost to mine Bitcoin when you add all of the expenses and allocations to it and we believe that we operate as one of the more efficient miners using that metric already today. But we are very focused on optimization. We're going to continue to roll out more and more parts of our technology across our fleet, which we think is going to increase our operational efficiencies even more. And now as we take control of more and more sites, if you compare us, for example, to Clean Spark and Riot who own their sites predominantly, whereas Marathon historically has not owned their sites, we now own and control 44% of our hash rate. And we expect to see that number grow considerably to the point where the vast majority of our hash rate is owned and operate, which means that we have a significant opportunity for cost reductions just through the operating line. which we believe will put us on par, if not better, than both of those players.
Great. Thanks, Fred. I think we'll do one more just in the interest of time. This last question, at least of the prepared questions comes from Michael W, who asks, what is the plan post having to ensure revenue stays the same or goes higher? I think we've addressed this a little. But Fred, do you want to take that one?
Well, when having occurs, you produce half as many Bitcoin for the same amount of hash rate, providing global hash rate stays the same. One of the reasons we have set such aggressive growth targets is to make sure we continue to grow our hash rate and grow our percentage of the global hash rate for all miners. So our focus is rapid growth. Our focus is optimizing existing operating metrics and continuing to generate revenues that are complementary to mining from our technology products as well as things adjacent to them.
Great. So at this time, we'll wrap up the prepared questions. And again, we really appreciate all the questions and the interest from our investors and the consistent dialogue. So please feel free to keep submitting those and contact us any time. And at this point, I'm now going to turn the call back to our operator, Kevin, to open the line to questions from our covering analysts. So Kevin, back to you.
Now conducting our question-and-answer session with Marathon's covering analysts. [Operator Instructions] Our first question is coming from Tyler DiMatteo from BTIG.
Congrats on the excellent 2023 as well. Fred, I'm just curious here, we've made a lot of strides on expanding the hash rate as we roll out the different technology offerings. As you look out for the rest of this year and into 2025, I mean how do you think about prioritizing the expanding of your own hash versus maybe some of these other tech offerings in just going back and forth between the 2.
Sure. Great question. So you can think about our business is organized around 3 predominant silos. One is what we call utility scale mining. This is our traditional business, sites like King Mountain or Granbury, Kearney and what we're doing in UAE, et cetera, large-scale sites, hundreds of megawatts sitting behind the meter or adjacent to the power source and helping balance grids. We see very large opportunities for that internationally. The UAE sites together are 250 megawatts. Today, we have opportunities to expand further, not just in the Gulf region, but also in Africa and Latin America, where we're currently operating in Paraguay, and we'll continue to do that. We believe that's low-hanging fruit. We also believe there are great opportunities domestically, both in the area of greenfield sites as well as the existing sites similar to the transactions we did kind of with Granbury and Kearney. The second silo is what we call energy harvesting. This is where we leverage Bitcoin mining as a producer of heat, and we predominantly find sources of energy such as methane flare gas and other forms of, let's just call them, recyclable biofuels that we use to generate energy. In some cases, we're actually even paid to do that, to take that material and then recycle heat back into an industrial process, which were paid for it yet again and mine in that way.
Our technology group has developed solutions and together with the partners that we started developing relationships with. We're able to build these projects at small, medium and large scale. And so I think you'll see news later this year of some of the first of those projects arise. And that's the sector of the business that we expect to grow to over 1 gigawatt of power over the next 5 years. The technology sector or silo, if you would, today consists of things like tool software, firmware controller boards, a variety of other technologies as well as now Slipstream and Anduro. While Anduro is technology, we have helped incubate and is not something owned by us that we won't generate revenues from it. Slipstream does generate revenues. We already have customers that have thought and are using our firmware. We expect to see more sales in those areas. And as our next-generation immersion technology comes to market later this year, we expect that to begin to generate significant revenues as well. And sorry for the long-winded answer. But if you look over a 5-year period, I think what you'll see by the next having in 2028, 50% of our revenue is coming from traditional utility-scale mining, 50% of the revenue is coming from elsewhere. And 50% of the revenue is domestically, 50% of the revenue is internationally. And I hope that answers your question.
Okay. No, great. I really appreciate it. Very helpful. And then, Fred, on your comments on Slipstream there. I mean, how should we think about the rollout of that and the actual implementation and generally as management, how are you thinking about bringing that and scaling that to market.
So Slipstream is us really unique technology. It's an API. It's a submission system. So you don't have to call a salesperson, you don't do anything. You go to the website, you submit a block, you pay the price for submitting a block, and that block goes into a queue off it goes. It's a hands-free system. Think of it as simple as uploading pictures to the iCloud or something like that. It's very simple. The whole idea is it's meant to be hands-free. So if you are an artist and want to submit a block, you can do that. If you're a financial institution and you want to ensure that transactions you're doing will have priority, you could potentially purchase blocks in advance and essentially submit blocks as you need them. So there are lots of opportunities, I think, for people to use this. Again, we're iterating, it's a simple tool. This is technology that the key enabler here is that you have to be a miner who operates a pool that's large enough so that you can submit blocks and wind blocks with enough frequency so that the temporal nature of the use of the product makes total sense.
Your next question is coming from Joe Flynn from Compass Point Research.
Looks like power prices creeped up a bit from the third quarter, backed into like $0.065 levels. Just curious if you could provide more color there and how we should think about all-in power and hosting costs as you guys transition to the 40% owned data center model.
So one way to look at that is you have in our normal model, pre being an owner-operator, many times, we don't get the benefit of curtailment when an operator of a site curtails and they get the economic benefit of the curtailment. And there were some winter events in Q4 that had an impact there. You also had because it's wintertime energy prices may have fluctuated well. I think historically, our energy and all-in cost has been in and around the $0.06 per kilowatt hour basis. As we take more control of our sites, the operations side of it, I think you'll see the cost per kilowatt hour drop somewhere between $0.01 to $0.015 possibly more per kilowatt hour. The other advantage that we have by being an owner-operator is we can now take advantage of economic curtailment. We can now take advantage of power hedges. We can now take advantage of buying and selling power and doing that. And we have already seen the economic benefit of that on a handful of occasions this year already. So I think time will tell, but the goal is that we should be able to operate where the operations cost above the power cost is somewhere between $0.5 to $0.25 a kilowatt hour, take the power cost at about $0.75 to $1.25 and that should be where you could model longer term what the model looks like.
Yes. Just to add to that, the Q4, we had a record production, and it's all about the scale, how much of that cost of that production can you squeeze out of that cost associated with that. There's a fixed component of the cost. And if the transaction fee being at a record high this quarter, that certainly helped us as well from a unit cost perspective. Hopefully, that helps answer your question.
Next question today is coming from Reginald Smith from JPMorgan.
I guess most topics have been covered. But Fred, I wanted to get your opinion. Obviously, a lot of public miners have announced fairly large ATM offerings. I guess competitively, as you look across the landscape to both private companies and public companies, do you have a sense of how much capital is out there, maybe on the private side as well to fund growth. And I'm curious, should we expect or do you expect that the public miners will continue to garner a larger, a larger piece of the network cash rate? And then the final question, the follow-up to that is just what industry CapEx look like on a normalized basis? I know these are all hard questions, but I think you're the best person to line.
Okay. I will do my best to answer your question. So I think that, generally speaking, this industry has 3 choke points, 3 constraints. It's access to capital. As you mentioned, it's access to capacity sites to plug miners in and its access to miners. In different cycles, there have been different constraint points. In the prior cycle, access to machines was the constraint point. You had $85 per terahash pricing on machines. And today, we're still sub-20%. So that's obviously not a constraint today. And based on the machine orders you've seen our peers announced and the numbers we just announced, obviously, the manufacturers seem to have plenty of capacity to supply us all. So that's not a constraint. On the capital side, the public miners that are ASR eligible able to raise money through ATMs have a significant advantage over everybody else. The investment community today is definitely looking for and moving towards a slight of quality, if you will. They're looking for the miners who are able to grow and execute and scale. And the smaller miners are challenged by a couple of things. One is there's a certain fixed cost to operate as a minor, if you would, your SG&A. And if you can scale that over a very large capacity, you can be super-efficient. But if you're a small-scale miner, that's a lot more difficult. The other thing a small-scale miner has the challenge of doing is getting a site, putting deposits down for PPAs and having the capital to buy miners.
The big challenge today is this is a big boy capital game. If you can't raise large amounts of money, you're going to get left behind. And as you know, Bitcoin mining is a zero-sum game. There are only so many Bitcoin available per day. And if you're not -- they're growing your hash rate, you're falling backwards. And the innovation cycles are accelerating. And so if you think about it this way, the S-19 JPro by Bitmain was a machine that started being delivered in late 2020, early 2021, that had an efficiency of about 30 jewels per terahash. The XP started being delivered in early 2022, and that had an energy efficiency of 21 jewels per terahash, almost a 30% decrease in energy use. And so if you are paying for 1 megawatt of power and you had JPro and you replaced those JPro with XPs, then you essentially increased your hash rate by almost 30% overnight without having to pay any additional power or add any additional capacity. In Marathon's case, we came out of the last cycle buying the latest state-of-the-art machines. The vast majority of our fleet today are XPs or better, and we're now currently deploying S21 and other machines like them that are even more efficient than the XPs. So there's this CapEx cycle you just have to keep up with. And there is, unfortunately, nothing called normalized CapEx here because we're entering the phase where maintenance CapEx starts to catch up with miners. The JPro is on the bubble of being profitable, come to have here in just a few weeks. XPs will still be profitable, again, providing you the right power loss.
And obviously, the S21 and that next generation will be profitable for some time yet to come. But the miners who are operating S-17, S-19 Pros, they are going to be in a position where they may have to shut off a lot of those machines come to having. Now Bitcoin has been behaving extremely well. Some of you may remember, I have spoken a number of times over the past 6 months, where my expectation was that Bitcoin's price was going to be in the 40s as we went into the having. And here we are, and we're at $61,000 today. So this is providing an extra gas of breath, if you would, for miners who have these older generations of machines. And it's giving them an opportunity to raise some money right now. And so you're seeing some capital going into the private markets. What you don't have this cycle that you did have in prior cycles is nobody is lending on equipment. You can't go call Nidec or Galaxy and say, "Hey, guess what, I want you to lend me and truck me the money for these miners." And so the only way to do that is to convince somebody like Bitmain and a hardware vendor to do it for you. And then what you're really doing is just operating a hosting site on their behalf and you're getting paid a little bit extra to do that. And so I think this is the cycle where you start to see consolidation where hash rate moves towards the larger miners. That being said, publicly traded miners market share of global hash rate is declining. Why? Because sovereign nations as well as large, very well-funded private companies are getting into this business buying the latest machines without this maintenance CapEx cycle hanging over them and building a lot of capacity.
You're familiar with the Kingdom of Butuan working with [ Didier ] to add 200 megawatts of capacity. You're seeing miners now in Ethiopia, Chinese miners moving to Ethiopia, doing hundreds of megawatts of power. There is lots of power available if you can find it. And if you have the money to do it, the problem is most of the mom-and-pop miners, any miner who has less than 10 exahash in my mind, will be out of business by the end of the cycle. They just can't raise the money. They don't have the critical mass to do it. And that doesn't mean that they're going to get bought up by ourselves and Riot, CleanSpark and people like that. It just means they're going to go out of business. And so meanwhile, global hash is going to continue to grow everywhere else. So this is very much, unfortunately, a business where like in the jungle, Gazelle gets up every morning and has to run faster than the line that's chasing it, and the line has to get up every morning and run faster than Gazelle so it can eat and survive. And that's what just happens here. It's this constant drive to grow, grow, grow. And as Bitcoin now starts developing into this asset class, which institutions hold, you're already starting to see this with the ETFs, record and close in to the ETFs. As of last week, total AUM and ETFs was 40% of the total AUM in gold ETF, which is insane. And as money keeps going into those areas, it's big coin that won't cycle back out into the market.
And so if you look at exchanges today, their lowest volume of Bitcoin available on exchanges historically when you normalize for where we are in the cycle. So I think it's going to be very hard for people in this industry to keep up because Bitcoin's price is going to grow and the volatility is going to start to decrease. It's going to start to normalize. And at that point, margin compression will happen in the business. And if you don't have scale, you'll be out of business. And our goal as being one of the largest miners in the world, is to have the scale, the operational capacity, the optimized cost structure and the revenue streams that are adjacent to and associated with Bitcoin mining, that think of it this way, can subsidize our cost of mind or that because of the revenue streams coming in through heat [ waves ], et cetera, do subsidize the cost of mine, make us the operator who is at the lead of this pack in the bottom quartile cost wise. So we will always be operational. We'll always be able to mine it no matter what the price of Bitcoin, obviously, within recent rate. So hopefully, that answered your question.
That was a great answer. It felt like I just had a master class on Bitcoin mining [indiscernible] tuition as something. I appreciate it.
Our next question is coming from Kevin Dede from H.C. Wainwright.
A little more granular here, Fred. 22 exahash to come out this year and 35% to 37% potentially. Can you give us some insight on how you see adding it to your network?
Sure. If you're thinking where are we going to put it? Well, one of the reasons we...
I apologize, Fred, you made that clear in your prepared remarks. I'm more concerned about the timing. Just so we have a view to how you see Marathon's hash rate increase through the course of the year.
Sure. if we had historically been a de novo site developer, I could give you a whole pipeline with a chart of, okay, these sites will energize on this month, et cetera. That's not been our historical model. Our historical model has been, as you know, Agile grow quickly. And we're now in the business of being more of an owner-operator and vertically integrating. So you can think of sites across 3 buckets. There is the bucket of I'm going to go buy things like Granbury and Kearney, where there's excess capacity with an ability to grow. And as the hosting customers at those sites age out as those contracts age out, we will absorb all that capacity ourselves. So we're looking -- think of it this way. You have a site with 100 megawatts, maybe 80 megawatts is used, okay, we can plug 20 megawatts of miners. And then over the next 2 years, half of those contracts for the 80 megawatts will age out and we'll start deploying more and more miners there. And oh, by the way, that site could potentially add 100 or 200 megawatts more because of the substation and we'll develop that and add that capacity. So not to give everybody our playbook, you can send me an e-mail, happy to send it to you.
But that's how you look at that bucket. If you look at the next bucket, it's sites that somebody may have permitted, somebody has gotten some form of allocation of power. There's a substation available. They may even have transformers on the ground, but they haven't built a site yet because they don't have money. And this is back to Reggie's question. There are people who have sites locked up that they can't raise the money to develop them because investors aren't willing to give you money in today's market for Bitcoin mining data centers because they prefer to give money to people building AI data centers because there's a lot more money to be made there if you believe people who believe that that's the case. We happen to believe Bitcoin mining is the place to be, but we'll let the rest of that be option tension. So think of them as halfway done side, it's like in the real estate development world, it's not raw land. You've actually bought the land, got it entitled, you've laid the sewage and utility lines and now you're going out calling to the homebuilders and saying, "Hey, I've got 16 lots here, you want to build a home. So that's middle bucket. These are sites that could be energized and online in a 6- to 18-month window. Then you have the true greenfield sites where we have folks that are out today scouring opportunities to acquire access to power, access to land, access to transmission interconnects, et cetera, on a global basis, not just in the U.S. And those are 18 to 24, 36-month type projects.
And so we believe that as a global world-class Bitcoin miner, you need to build a stack, if you would, of staggered projects that give you immediate capacity, midterm capacity and long-term capacity. But that all have optionality. So I'll give you an example. Granbury, Texas has about almost 300 megawatts of capacity today. There's an opportunity to expand because the power station has lots of power. So that gives us optionality. We could add more capacity to it if we want to invest the money to it. So you already have a site, you already have a power partner, you already have access to substations, et cetera. It's just a question of when do you want to start developing it and how much money do you want to spend to develop it? And what are you going to use that site for Immersion air [ cover ]. With the longer-term sites, the optionality is it's very inexpensive to tie up an option on long-term power access to a substation, relatively speaking, when you talk on a per megawatt hour basis and lease land. And you can sit there and this is the business that, in the old days, the compute north of the world used to do, which is they would go out and they would tie up a deal with the power company and then go find a miner who would essentially be willing to fund the build-out of the site and then 12, 18 months later, you plug in. The King Mountain site in Texas was done that way. We engaged with compute North back in the day.
They engaged with NextEra Energy, and they got the power, they got to being permits on that, and then they build the site and then we came in. In this case, we're acting as the builder operator of those sites. And so we're working along all 3 of those tranches, if you would, today with partners and directly ourselves. And so our goal is essentially to have -- think of it as a storehouse full of either readily available immediately today, mining capacity, midterm available capacity. There's an option for us. We know that when we need it 12 months out, we just turned the crank and it will be operational, already permitted. We already have all the transmission, et cetera. And then the longer-term sites where we want to build 100 megawatts to 200 megawatts, 500 megawatts at a location where we may have 700 megawatts of potential capacity if we're willing to do the longer-term investment. And especially internationally, those longer term, that last bucket, there is a lot of available opportunity there, Ethiopia, Paraguay, et cetera, et cetera. So the goal here is to build a really resilient business is you build a huge pipeline and lock up potential capacity of sites with optionality to it. And by the way, I'll mention one thing, the Granbury site, for example, the way the PPA works there is it's not like we have to take all the power. We can actually, in the event of really bad pricing in the marketplace, scale it back. So we have ultimate optionality there, which is the best thing.
So you look for creating a portfolio of capacity that is short, medium and long term. You look to have a portfolio and access to technology, which is short, medium and long term, and I'll touch on that bucket right now. Short term is Bitmain [ chip me ] S21. Medium term is MicroBT, Bitmain, Canaan, I want to access to your chips. I'm going to lock up a supply chips. You're going to sit on them for me, and then I'm going to tell you when I want you to build the miners. This is a very different model. This is the model from the PC industry and the technology industry and no small player can do this. You have to be able to write a $50 million, $100 million check to one of these people and say, "I want so many wafers of your chips." And then when I tell you too, I want you to turn it in the miners. And in that way, I can lock up capacity, and I have no worry about getting access to chips. And the last one is what we've done with Auradine, where we actually own a part of the company who's designing the chips. Why is that important? Because we can get miners that have spec specifically suited to our needs and use cases. And when you see the 2-phase immersion technology that we'll be releasing later this year, you will see the benefit of that, where any other traditional miner, whether it's Riot or CleanSpark, if they don't know how to build technology products, they are going to be buying off-the-shelf PCs when we're busy building custom build high-performance systems. And that's the differentiator longer term that we believe is the biggest moat with these guys.
I'm very much looking forward to seeing Auradine's product in action. So thank you for that color. Can we peel the onion back just a little bit more though, Fred, based on the numbers that you offered this afternoon, 22 exahash, you're 24 now. Does that mean you're at 27 by the end of March? Or if you're going to for 35, does it mean you're at 40 by the end of June. How should we think about how that capacity actually comes online through the year?
So we're already at 27. We were at 27% at the end of the year pretty much. So I think the way you have to look at it, Kevin, is I'm not going to lay it up for you. because we are going to play the game here where in 2022, we said we're going to deploy the cash rate. We had these machines. And then I was getting the question, "Hey, are they plugged in yet? Are they plugged in yet? Are they plugged in yet?" So we are just going to talk about stuff when it goes live going forward. So we're giving you an idea as to what our pipeline of equipment is. Unfortunately, I can't help you model the when because you're going to see it will come in very interesting lumps, not smoothly. But when it comes, it's going to come a combination of at a rush and then in box. So I wish I could say more about it.
Our next question is coming from Lucas Pipes from B. Riley Securities.
Fred, my question is around the capital budget for 2024. What is it? And would you be able to break it down between miners and infrastructure?
Let Salman answer that question.
Yes. Lucas, I think we talked about it last time as well. This is what we're looking at from a from a total capital perspective, with the targeted growth that Fred talked about earlier today, we're somewhere around north of $200 million, so somewhere between $200 million to $245 million, somewhere in that range. And that includes our minor purchases and approximately $180 million or so. Just a quick reminder, we have been buying and paying some of these miners so some of those payments may have already happened. I'm just talking about the accounting capital here. In terms of the rest of the stuff, we have other technology businesses and other ancillary businesses that Fred talked about, a small portion of that will be allocated to that. And then on top of that, we also purchased generic assets in Kearney and Nebraska and also Granbury in Texas. And that will be added to the capital, which is some cost at this stage, but that was about approximately $180 million.
And that, of course, is separate and on top of the other numbers you mentioned.
Yes.
And I heard it right. It's $200 million to $45 million for 2024 and about $180 million of that is for miners.
That is correct.
Our next question is coming from Brian Dobson from Chardan Capital Markets.
So you mentioned as we head into the having, it's very likely for smaller miners to be pushed out of business. Do you have a view on the potential magnitude of the decline we could see in global hash? And could that decline potentially be offset by some of the other players you mentioned, like nation states or large private entities?
Great question. So one way to look at this is look at the nonanalysis work that a number of people have done that's been published readily available, where you essentially can see the amount of hash rate coming from what category of machine and in some cases, locations and even energy pricing data if you have the ability to do that analysis. So the industry average efficiency today is somewhere around 30 jewels per terahash. 30, 33 varies depending on how many machines are on in a given time when you look at the numbers. So at 33 jewels per terahash and Bitcoin at 55,000 post having, you'll likely see anywhere from 11% to 18% of the hash rate come off. Now it may not come off all at once. Some people may have a few million dollars in the bank, and they're willing to say, you know what, "I'm not going to shut off because I'm going to let the other sucker shut off I get the benefit of the hash rate dropping and now I'm profitable again. And so I'm willing to take a loss for a month or 2 or 3 or 4 maybe." So I would say, if you have to look at the window having and then the first 6 months post having. That's when you're going to see the people who are hanging on for dear life are going to hang on as long as they can.
Other people are going to say, "No, I'm not. I'm going to shut down and wait for better days wait a bit corn price to go up or not." What you are not going to see based on the announcements of ourselves and our peers is the rest of the world slowdown. And so you may very well have a world where by the end of this year, global hash rate is 20% to 30% higher than it is today. You may have a world work the exact same than it is today. What I will tell you is that, obviously, it's very dependent on the price of Bitcoin. And the fact that -- I'll go back to the thing about the ETFs. With the ETFs sucking up Bitcoin and realize nobody can print Bitcoin. People talk about supply shocker they're having, you go from 900 Bitcoin to 450 a day. So it's every mine 450 Bitcoin a day is I'm going to do anything to the supply in the marketplace. What is doing it, what is creating a problem is the ETFs as they continue to vacuum up Bitcoin. And I don't really see it abating. It may not grow, but I don't see it debating based on the conversations I'm having with institutional investors, certainly, is that the available supply of Bitcoin in the market is going to start drawing up. It already is. It's at record lows on exchanges. What that does is causes huge volatility swings in price. That's where somebody at night when ETFs aren't buying can short Bitcoin drop the price down because there's no real demand.
And then in the morning when demand comes up, the price comes back up, and there are already traders doing this. You may have seen a couple of days last week or the week before, where Quatfunds went in and 10x the volume that a couple of ETFs were doing as a test for this exact strategy. I'm going to go short Bitcoin, the spot Bitcoin outside of the ETF markets drop the price, buy it up and let the ETFs come back, drive it right back up and sell it again. So you were going to see a market that is going to be having a lot of gyrations in it. And when that happens, some miners will say, "Oh my god, Bitcoin price dropped I'm going to shut down. Oh my God, Bitcoin prices going back up, I'm going to turn on." And you're going to see hash rate bouncing up and down. And it's going to make for a crazy role. So I think some miners are going to become sporadic miners if they have the right type of energy pricing contracts. Miners that have PPAs, whether it's take or pay, they have to buy all 50 megawatts of the energy they're contracted to, especially hosted miners. And let me take a minute and say that the third-party hosting business is dead. Nobody who's hosting S19 JPros and paying $0.065, $0.07, $0.08, can be in business anymore opposed to having unless Bitcoin just goes on a real tear because they just won't be able to afford to do it because they're not getting the economic benefit of curtailment, they can't subsidize their mining cost through other means.
And so it's the third-party hosting business, the retail hosters other than people who want to host because they do it for vanity purposes. I really don't see that business. And I get calls very frequently now from people or hosting miners and locations saying, "Hey, do you want to buy my hosting contract? Do you want to buy the miners, I have plugged in here and just take them over for me. And so I foresee that business dying. And so that will be a certain portion of hash rate that temporarily will come off. But by the same token, there's somebody like me saying, "You know what, I'm calling every third-party hosting guys saying, 'Hey, listen, do you want to -- if you have an empty shelf, I may be interested in buying the shelf from you. I'm not going to pay you hosting for you, but I'll buy the shelf from you. I made by you if you're interested in it.'" And so this is where I think you're going to see the consolidation. And this is where balance sheet makes is so important and just availability of cash. And so anyway, we go on for a long time on this.
Yes. No, I think as just a quick follow-up to that. So is that where you see, call it, the lion's share of appealing M&A post having in that third-party hosting segment?
To some extent, again, who can afford to do it. I don't see Riot, CleanSpark ourselves. Yes, but Core was probably not. Core's business model is predicated on a $0.07 cash price. We'll be at $0.04 to having. So I think miners with a lot of debt, miners with balance sheets that are wonky, can't raise capital. aren't going to be able to do much. And in the case of Core, they have a big brother whose name is Bitmain who's able to plug miners in can do a rev share deal that way. But that's not a way to service $700 million of debt. So the large-scale hosters or others in Riot and Core are disappearing and converting to self-lighting and the small-scale hosters, they can't afford to buy their own miners. So I don't know what they're going to do. And if they don't have good power prices, nobody is going to want to buy them.
We reached the end of our question-and-answer session. I'd like to turn the floor back over to Charlie for any further or closing comments.
Thanks, Kevin. Thank you all for your time today. 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. Thank you, and enjoy the rest of the day.
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