Marathon Digital (NASDAQ:MARA) announced today that it was acquiring a blockchain mining campus located in Garden City, Texas. The campus was previously owned by Applied Digital (NASDAQ:APLD). MARA stock has been choppy this morning but is currently up 1.5% in early trading as Bitcoin (BTC-USD) prices sink. MARA focuses on mining the latter cryptocurrency.
Including all the fees that Marathon will pay, it had to fork over $97.3 million for the campus.
More About the Deal
Applied Digital reported that it would obtain net proceeds of $87.3 million from selling the 200-megawatt campus. However, in the wake of the transaction, it will be able to access $12 million of previously restricted cash. The deal is slated to close next quarter.
Applied noted that the “campus provides hosting agreements for blockchain mining clients,” including Marathon. Applied added that it “exclusively focuses on infrastructure and support services and does not currently own any equipment placed in the facility.”
The firm noted that it would focus on high-performance computing data centers going forward.
Marathon and Other Bitcoin Miners Have Slumped Recently
Although Bitcoin is slumping today, the cryptocurrency has soared 62% so far in 2024. One catalyst behind the rally has been the crypto’s “halving” which is slated to occur in April. As a result of that event, the amount of rewards that miners will receive from creating each unit of Bitcoin will drop by 50%.
However, the largest Bitcoin miners, including Marathon, can respond by mining more Bitcoin, preventing their revenue from sinking by 50%. It’s likely that Marathon decided to acquire Applied Digital’s campus in order to accomplish the latter goal.
The Price Action of MARA Stock
In the five days heading into today, the shares had dropped by 22%, while they had slumped 32% in the previous three months. But in the last 12 months, MARA stock had advanced 123%.
On the date of publication, Larry Ramer did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines
