Marathon Digital in UAE to use fossil fuel offset and or nuclear to mine Bitcoin

 

In a recent podcast called the Mining Pod, Fred Thiel CEO of Marathon Digital Holdings, a digital asset technology company that focuses on supporting and securing the Bitcoin ecosystem, discussed their launch in the UAE and their operating model which includes utilizing UAE’s fossil offsets and or nuclear energy.

Market capitalization of Marathon Digital Holdings with a market capitalization of $1.19 billion is the world’s 4378^th most valuable company recently announced its foray into the UAE through a joint partnership with a subsidiary of sovereign wealth fund in Abu Dhabi, called FS Innovation.

The new entity in UAE will set up and operate two mining sites comprising 250 MW in Abu Dhabi, with FS Innovation controlling 80% of the project. As the majority shareholder, FS will appoint four directors to the board of the new entity, while Marathon will select one. As per the filing, the two sites are estimated to cost the two companies $406 million.

Thiel discussed the overall strategy of Marathon Digital which is to own and control their entire operation and the first manifestation of that is through the recent UAE deal. As he explained, “We designed the full system, built it and will control how it is operated. We have full end to end control up to the ASICs.”

According to Thiel the pilot in UAE ran in 2022 and ran for 110 days before an engineer had to go and visit the site to fix over clogged XPs. It has become easier to manager remotely because of software technology says Thiel.

The Bitcoin mining site in UAE will be online at the end of 2023. Marathon Digital owns only 20 percent but as per Thiel, the company will use this experience to partner with energy companies and move to design and build more sites. He notes, “We will look at opportunities replicating what we designed for the UAE, in the USA.”

Marathon Digital’s new strategy is to partner, develop, build and operate the sites because as per Thiel its takes a lot of capital to build and operate a site.

One of the reasons Marathon Digital chose to enter the MENA region is because of the low cost of energy. Thiel explains, “In the UAE winters are cool and in the summer it is hot, in the summer the UAE would utilize 4 Gigawatts of energy that goes down to 1 Gigawatt in winter, thus there is a lot of stranded energy. They also need the heat generate from electricity for water desalination so ideally if you can take excess energy consume it and generate revenue or fund water desalination, a sumbiotic relationship emerges.”

Thiel adds that in most instances governments in MENA control energy generation and distribution, and the company which is set up in ADGM an international free trade zone under English law is most suitable for their lawyers. Thiel stated, “We offer the technical expertise and it has been a great experience with the site coming online later this year.”

In terms of energy sources, Thiel notes that the UAE is very intent on utilizing green energy much in line with the strategy of Marathon Digital; as such Marathon digital will utilize the offsets of any fossil fuel sourced or nuclear energy

Early in January 2023 Marathon Digital produced 687 bitcoin, a 45 percent increase from 475 in December 2022. Approximately 66% of the Company’s hash rate is expected to be generated by S19 XPs, which are approximately 30% more energy efficient than the prior generation of mining servers. The Company still expects to have approximately 23 EH/s of capacity installed near the middle of 2023.