Author: Joey Wu, Wu Says

This article will analyze and compare the profitability, hash rate, power, and number of mining machines of Bitdeer, Marathon Digital Holdings, and Riot Blockchain to present their competitive positions in the market.

Profitability

Bitdeer achieved a net profit of $113.8 million for the six months ended June 30, 2021, and a net profit of $82.6 million for the year ended December 31, 2021. However, for the six months ended June 30, 2022, the company reported a net loss of $25.2 million, with a full-year loss of $60.4 million (mainly due to pre-IPO option expenses, etc.). As of December 31, 2022, the revenue breakdown was as follows: self-mining accounted for 18.7%, cloud computing power accounted for 36.4%, cloud hosting accounted for 3.8%, general hosting accounted for 29.8%, membership hosting accounted for 7.8%, and mining machine sales accounted for 0.2%.

In contrast, Marathon reported a net loss of $37.1 million in 2021 and a net loss of $686.7 million in 2022. Among these, impairments related to mining equipment and supplier prepayments amounted to $332.9 million, and the book value of digital assets decreased by $317.6 million.

Riot, on the other hand, reported a net loss of $509.6 million for the same year, a significant increase from the net loss of $15.4 million in 2021. Bitcoin mining revenue was $156.9 million, down from $184.4 million in 2021; data center hosting revenue was $36.9 million, up from $24.5 million in 2021. The losses were mainly due to impairments, including a goodwill impairment of $335.6 million and a mining machine impairment of $55.5 million, which had a significant impact on the reported net loss.

Hash Rate

Riot has the highest self-mining hash rate capacity among the three companies, with a hash rate capacity growth of 213% in 2022, reaching 9.7 EH/s, a significant increase from 3.1 EH/s in 2021, accounting for approximately 4.2% of the total Bitcoin network hash rate. Additionally, due to severe winter storms in Texas causing delays, Riot expects to reach a self-mining hash rate capacity target of 12.5 EH/s in the second half of 2023.

As for Bitdeer, as of June 30, 2022, its self-mining hash rate capacity was 4.2 EH/s, plus 6.3 EH/s of hosted hash rate generated by mining machines in its data centers, totaling 10.5 EH/s of managed hash rate. By December 31, 2022, the company's total hash rate increased to 14 EH/s, accounting for approximately 6.1% of the total Bitcoin network hash rate.

On the other hand, Marathon had a self-mining hash rate of 7.0 EH/s and a total hosted hash rate of 9.1 EH/s in 2022.

Power

In terms of total power, Bitdeer leads. As of June 30, 2022, the company's power capacity was 522 MW, increasing to 775 MW by the end of 2022. Bitdeer successfully reduced the average power cost of its mining data centers to $40 per MWh in 2021, below the estimated global average of $49 per MWh. Currently, Bitdeer owns five self-operated mining data centers and plans to expand to six globally.

Riot excels in production efficiency, as the company received $27.3 million in power subsidies in 2022, equivalent to about 1,815 Bitcoins. The cost of mining Bitcoin for Riot was $11,225 per Bitcoin, down 6% from $11,939 in 2021. Riot terminated its hosting agreement at Coinmint LLC's Massena NY facility and migrated all mining machines to its Rockdale facility, reducing power costs and eliminating third-party hosting fees. Based on known data, Riot has the lowest power cost ratio, maximizing production efficiency.

Marathon's power usage lacks comprehensive information.

Bitcoin Production

In terms of Bitcoin production, Riot showed the most significant growth among the three companies, producing 5,554 Bitcoins in 2022, a 46% increase from 3,812 Bitcoins in 2021.

Marathon produced 4,144 Bitcoins in the 2022 fiscal year, a 30% increase from the previous year. In the fourth quarter of 2022, it produced 1,562 Bitcoins, averaging 17 Bitcoins per day, a 42% increase compared to the fourth quarter of 2021.

Bitdeer did not disclose its annual Bitcoin production, but its financial report indicated that Bitcoin mining revenue for the entire year of 2021 was $185 million, and $39 million for the first half of 2022.

Conclusion

In summary, the three companies rank by total hash rate as follows: Riot, Bitdeer, and Marathon. However, in terms of self-mining hash rate, Riot and Marathon are significantly higher than Bitdeer. The higher the proportion of self-mining hash rate, the greater the impact of Bitcoin prices on net profits, which is why these two companies suffered significant losses in 2022.

Bitdeer, with a higher proportion of hosting business, thus faces lower risks, and its net profit is less affected by price fluctuations. Additionally, Bitdeer has advantages in controlling power costs, resulting in a financial situation that is clearly better than the other two. As of 2022, the company had $321.8 million in working capital, of which $231.4 million was cash and cash equivalents.

It is worth mentioning that all three companies had self-mining revenue of around $200 million in 2021, but entering 2022, Riot and Marathon's self-mining ratios remained roughly unchanged, while Bitdeer's plummeted to $60 million. This indicates that Bitdeer significantly reduced its self-mining operations before the bear market began, demonstrating the rich experience of the veteran miner team from the original Bitmain in navigating the cycles of the crypto market. However, on the other hand, Bitdeer's current market value is only about one-third of the aforementioned two North American listed giants, which raises questions and shows that the U.S. capital market seems temporarily unresponsive to Bitdeer for various reasons.