Marathon Digital (MARA) Earnings Call Transcript

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Date

Thursday, Feb. 26, 2026, at 5 p.m. ET

Call participants

• Chief Executive Officer — Fred Thiel
• Chief Financial Officer — Salman H. Khan
• Investor Relations — Robert Samuels

Takeaways

• Strategic joint venture -- Announced partnership with Starwood Digital Ventures for the joint development, financing, and operation of digital infrastructure with initial 1 GW near-term IT capacity and a pathway to over 2.5 GW.
• AI & HPC expansion -- The Starwood JV and Exion acquisition mark a pivot from pure Bitcoin mining to energy-dominant digital infrastructure for enterprise, hyperscale, and AI customers.
• Exion acquisition -- Completed a 64% stake acquisition in Exion, providing enterprise-grade infrastructure-as-a-service and edge inference capabilities, positioned for private, enterprise, and sovereign cloud deployments.
• Revenue -- Reported Q4 revenue of $202.3 million, down from $214.4 million in 2024; full-year 2025 revenue increased 38% to $907.1 million from $656.4 million in 2024.
• Bitcoin holdings -- Increased to 53,822 as of year-end, up by 8,929 Bitcoin over the prior year; of these, 15,315 were loaned, actively managed, or used as collateral.
• Net loss -- Q4 net loss of $1.7 billion (negative $4.52 per diluted share) compared to net income of $528.3 million ($1.24 per diluted share) in 2024, primarily impacted by a $1.5 billion non-cash digital asset fair value loss.
• Hash rate -- Energized hash rate rose 25% between Q4 2024 and 2025, from 53.2 exahash to 66.4 exahash.
• Bitcoin production -- Mined 2,011 Bitcoin in Q4 and purchased an additional 1,670; daily Q4 mining averaged 21.9 Bitcoin versus 27.1 Bitcoin in Q4 2024, leading to 481 fewer Bitcoin mined year over year.
• Cost structure -- Cost per kilowatt hour at owned sites was $0.04; purchased energy cost per Bitcoin was $48,611, higher than $31,608 in 2024; daily cost per petahash per day improved 4% to $30.5.
• Non-cash impairment -- Recorded a non-cash goodwill impairment charge of $82.8 million during the quarter.
• Debt profile -- $925 million and $1 billion zero-coupon notes due 2030 have put rights exercisable in 2027, representing possible substantial cash obligations; company reports Bitcoin holdings equate to around double these obligations at current prices.
• Operational efficiency -- Several core mining sites operated at or near 100% uptime during Q4; enhanced Nebraska operations with a 42 MW data center acquisition, expanding campus by about 40%.
• Digital asset management -- Approximately 28% of Bitcoin holdings were loaned, managed, or pledged as collateral at year-end, with $32.1 million interest income generated from lending 9,377 Bitcoin.
• NGL gas-to-power expansion -- Doubled NGL operations from 25 MW to 50 MW, converting flared gas into low-cost mining power.
• Capital allocation shift -- Stated capital allocation will focus on highest-value near-term projects due to Bitcoin price volatility and anticipated Starwood JV impact.
• ATM suspension -- Company suspended its at-the-market (ATM) equity program at the end of Q3, funding operations through Bitcoin sales for the first quarter since 2022.

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Risks

• Net loss of $1.7 billion in Q4, driven by a $1.5 billion decrease in the fair value of digital assets, explicitly attributed to Bitcoin price declines.
• Salman H. Khan referenced the $925 million and $1 billion notes as a meaningful cash obligation that could come due in 2027.
• Average Bitcoin mined per day in Q4 decreased 19% compared to the prior year, primarily due to increased network difficulty and lower production volumes.
• Energy cost per Bitcoin rose 54% year over year to $48,611, indicating sector pressure on operating margins.

Summary

The call introduced a strategic transformation for Marathon Digital Holdings (NASDAQ:MARA) with the Starwood Digital Ventures joint venture and the Exion acquisition, shifting the business beyond Bitcoin mining toward AI and digital infrastructure. Management signaled a transition to longer-term, less volatile cash flows by leveraging existing power assets for enterprise, hyperscale, and sovereign workloads. The full-year revenue grew 38%, but pronounced Bitcoin price volatility erased gains and resulted in a $1.7 billion net loss for the quarter, driven by a non-cash digital asset revaluation. Liquidity planning is now guided by the need to address $1.9 billion in notes with 2027 put rights, supported by Bitcoin reserves and anticipated contracted infrastructure cash flows. Management confirmed an opportunistic Bitcoin monetization strategy, a focus on near-term capital deployment, and an ongoing pause in ATM issuance.

• Management stated, “We have the option to retain up to 50% ownership in the joint venture,” providing both upside potential from project cash flows and flexibility regarding capital commitment.
• Permits have been submitted already for some sites, and commercial leasing discussions are ongoing, with accelerated delivery timelines highlighted as a competitive advantage of the Starwood partnership.
• The Exion platform is expected to enable secure, private, and sovereign cloud infrastructure, targeting customers that require strict data locality and operational control.
• New international initiatives are underway, including advanced conversations with French energy majors and projects in the UAE, Oman, Brazil, and Saudi Arabia.
• Management reported that 9,377 Bitcoin on loan generated approximately $32.1 million in interest income in 2025, demonstrating a material contribution from digital asset management activities.
• The company emphasized that while historically holding Bitcoin, it now expects to monetize as needed to provide liquidity or to fund capital projects and other initiatives that it believes enhance long-term shareholder value.

Industry glossary

• Hash rate: The total computational power used by Marathon Digital Holdings for Bitcoin mining, measured in exahash per second (EH/s).
• NOI: Net Operating Income, defined as operating income before non-cash and exceptional items such as impairment charges.
• ATM: At-the-Market equity offering program, allowing the company to sell shares into the public market to raise capital.
• HPC: High-Performance Computing, which refers to advanced computing operations used in large-scale enterprise and AI workloads.

Full Conference Call Transcript

Fred Thiel: Good afternoon, everyone, and thank you for joining us. Before we get into the results for the quarter, we are excited to discuss our just announced strategic partnership with Starwood Digital Ventures, the data center development platform of Starwood Capital Group, one of the premier data center developers and operators in the world. This joint venture accelerates Marathon Digital Holdings, Inc.’s expansion into AI and high-performance compute, and represents a meaningful step forward in the evolution of our platform from a pure play Bitcoin miner into an energy and digital infrastructure company.

Alongside other actions we have taken, including closing our investment in Exion, we are strategically positioning our platform to support a broad range of AI deployment requirements, from large-scale cloud environments to private enterprise and sovereign deployments where AI inference operates closer to its contextual data with reduced latency constraints and enhanced operational control. Through our partnership, Marathon Digital Holdings, Inc. and Starwood will jointly develop, finance, and operate next-generation digital infrastructure capable of meeting growing demand from enterprise, hyperscale, and AI customers across Marathon Digital Holdings, Inc.’s existing power-rich portfolio.

Marathon Digital Holdings, Inc. will contribute dedicated energy, advanced data center sites, while Starwood Digital Ventures will lead design, development, tenant sourcing, construction, and facility operation, with Starwood providing investment expertise to support enhanced project-level economics. We have the option to retain up to 50% ownership in the joint venture, positioning us to participate in future cash flows while capturing long-term value creation. The joint platform is expected to deliver more than 1 gigawatt of near-term IT capacity with a pathway to more than 2.5 gigawatts. This JV structure accomplishes several things at once. It accelerates speed to market and introduces institutional-grade development and tenant relationships.

Importantly, it also allows us to leverage the wealth of power capacity embedded in our existing energy sites in the near term. These assets were built around power, and hyperscale cloud remains the fastest path to monetize that power at scale today. At the same time, the structure allows us to continue mining through a lease arrangement while accessing excess power at preferred prices during lower hyperscale utilization. That flexibility improves economics and smooths load across the site.

Now let me address directly why we chose to partner with Starwood. Enterprise, hyperscale, and AI customers are inherently risk averse when selecting infrastructure partners. They require certainty of execution, deep development expertise, balance sheet credibility, and a proven track record of delivering mission-critical facilities, on time and on specification. While Marathon Digital Holdings, Inc. brings the power, the sites, and the operational expertise, hyperscalers typically do not award large-scale AI workloads to first-time developers without institutional backing. Partnering with Starwood ensures that we are not asking customers to take that risk.

Starwood has decades of experience as a real estate asset investor and developer, established long-term relationships with hyperscalers and enterprise customers, and a proven ability to finance and deliver complex data center projects globally. By aligning with an experienced tenant-first developer, we expect to increase execution certainty and accelerate our ability to secure institutional-grade tenancy. This is about optimizing probability of success and compressing timelines, not simply proving we can build stuff alone. Demand signals are already strong. Marathon Digital Holdings, Inc. and Starwood have been engaged in active discussions with hyperscalers and leading HPC tenants, reflecting meaningful early interest in power-advantaged, AI-ready capacity across our sites.

In parallel, design, permitting, and commercial leasing processes are well underway with applications submitted in select markets to support accelerated delivery timelines. In other words, while we are formally announcing this partnership today, we are already well down the path towards securing a tenant.

We also announced that we closed our investments in Exion, acquiring a 64% stake and expanding our enterprise-grade AI and HPC capabilities. Through Exion, we can deliver infrastructure-as-a-service and edge inference solutions for large energy and industrial customers, particularly in environments where requirements around data locality, latency, and operational control shape how compute is deployed. Importantly, Exion fits in a broader international strategy. Building on our proven success in the UAE and the recent launch of our pilot site in Oman, we are accelerating conversations with energy majors in France regarding global opportunities, including in Brazil, as well as domestic energy producers in Saudi Arabia.

These initiatives are all part of a deliberate strategy to expand our global footprint across energy-rich regions where access to reliable, scalable power supports long-term infrastructure development. Starwood and Exion are complementary elements of the same strategy. Where the Starwood partnership accelerates our ability to serve hyperscale cloud customers, Exion strengthens our ability to deploy private, enterprise, and sovereign cloud environments. This is especially important in international markets where Exion already operates data center infrastructure and provides a foundation for sovereign-grade AI and high-performance compute deployments. Together, Starwood and Exion give Marathon Digital Holdings, Inc. multiple proven pathways to deploy the same assets—power, sites, and infrastructure—in ways that maximize long-term value as demand evolves.

Now I would like to take a step back and put this strategy in context. Jensen Huang said something on NVIDIA’s earnings call last night that captures exactly what we are building towards. He said simply, compute equals revenues. His point was that in this new AI economy, the ability to generate tokens to run inference is the direct input to revenue growth for every enterprise and hyperscale customer in the world. That compute requires power. Power is the scarce input, and that is precisely what Marathon Digital Holdings, Inc. controls. Our sites were originally developed to mine Bitcoin efficiently, but they were built around power.

As we continue this transition and as demand for AI and HPC at our sites accelerates, the economics of our sites will increasingly reflect long-term infrastructure characteristics. When a site supports contracted AI or HPC workloads, the underlying drivers of value shift. Cash flows become longer duration and more predictable. Execution risk is reduced, and the operating profile increasingly resembles infrastructure rather than pure compute. We believe the same underlying assets can support different economic outcomes depending on how they are deployed. That is why optionality matters. Bitcoin mining allows us to monetize power immediately and flexibly, while AI and HPC workloads can, when demand supports them, monetize that same power through longer-term contracts and higher-value use cases.

Our responsibility is to allocate capital where the return profile justifies conversion and to manage our sites in a way that maximizes long-term value across market cycles.

This quarter, we have also advanced our strategy in other important ways. We increased our Nebraska footprint through the recent acquisition of a 42-megawatt data center adjacent to an existing site, expanding the campus by approximately 40%. With below-market power rates, this lowers our average cost to mine while strengthening operational efficiency. That same site also provides option value for AI and HPC workloads over time. Lastly, we doubled our NGL gas-to-power operations from 25 megawatts to 50 megawatts, converting previously flared gas into some of our lowest-cost mining power.

Given the recent decline in Bitcoin price and considering the potentially accretive impact of the Starwood JV, we are adopting a capital allocation priority to focus on the highest-value near-term opportunities. While we are continuing to advance discussions with MPLX regarding development of integrated power and data campuses in West Texas, this is a longer-term project with significant capital expenses. The scope under consideration has evolved from the initial letter of intent, and we remain engaged in evaluating a transaction structure that aligns with our capital allocation priorities. All of this is designed to expand margins and be accretive to NOI over time.

Now Bitcoin remains a core pillar of our strategy. Despite a pronounced sell-off and continued volatility, we increased energized hash rate from 53.2 exahash to 66.4 exahash during 2025. We deliberately chose not to pursue projects that failed to meet our return thresholds; capital discipline remains central. Historically, we retained the majority of the Bitcoin we mined as a long-term strategic asset. Beginning in 2025, we began selectively monetizing to support operations. Given recent weakness and volatility in Bitcoin price that have impacted both sector sentiment and elements of our trading performance, we believe maintaining financial flexibility is particularly important. Looking ahead, we expect to continue taking an opportunistic approach, using Bitcoin to enhance financial flexibility where appropriate.

As always, these decisions will be guided by market conditions and our capital allocation priorities, with a clear focus on strengthening the balance sheet and enhancing long-term shareholder value. While the timing of a recovery in Bitcoin prices is difficult to predict, our long-term conviction in the asset class remains unchanged.

Let me close with this. Marathon Digital Holdings, Inc. is no longer simply a Bitcoin miner. We are already well down the path of building an energy-dominant digital infrastructure platform. Starwood accelerates hyperscale development, Exion strengthens our enterprise AI layer, digital infrastructure and Bitcoin mining provide the economic engine, and power ownership provides the strategic advantage. Every decision we make is guided by one principle: maximize the long-term value of every megawatt we control. We believe this strategy positions Marathon Digital Holdings, Inc. to deliver durable, compounding shareholder returns. I will now turn it over to Salman to discuss Q4 financials.

Salman H. Khan: Thank you, Fred. I would like to begin by highlighting the strategic and financial significance of our partnership with Starwood Digital Ventures, a global leader in data center development and operations, as Fred mentioned earlier. From a financial perspective, we expect this joint venture to generate meaningful operating income, or NOI, and free cash flow over time while reducing earnings volatility relative to a pure Bitcoin mining model. Importantly, partnering with Starwood enhances our access to institutional, investment-grade capital as we jointly develop and finance utility-scale AI and HPC infrastructure across our power-advantaged portfolio.

With a pathway to more than 2.5 gigawatts of potential capacity that could be allocated to AI/HPC over time, we believe this partnership will materially improve Marathon Digital Holdings, Inc.’s long-term NOI profile, cash flow visibility, and overall valuation framework for our business. We are also pleased to have completed our acquisition of a majority stake in Exion, which we expect will further diversify revenue as it expands its sovereign cloud and enterprise AI compute offerings. Together, these initiatives reflect this strategy focused on expanding free cash flow generation and driving long-term shareholder returns.

During the quarter, Bitcoin price volatility was the defining market force. Bitcoin began the period at roughly $111,000 and reached a new all-time high near $125,000 in early October. However, an overnight liquidation event compounded by broader negative market sentiment drove a sharp reversal, with prices falling to roughly $87,000 by quarter end. This nearly $40,000 swing created one of the most challenging macro environments we have faced in recent periods and served as a significant headwind to our financial performance. Against this backdrop of falling Bitcoin price, global hash rate increased modestly as miners remained disciplined and cautious in deploying additional capacity amid the volatility.

Now let me give an overview of our key financial results and operational highlights, which are still quite sensitive to fluctuations in the price of Bitcoin as well as the total network hash rate, which affects the total amount of Bitcoin we mine. For example, every $10,000 change in the price of Bitcoin results in approximately a $538,000,000 change in the value of our Bitcoin holdings. Revenues in the fourth quarter were $202,300,000 compared to $214,400,000 in 2024. For 2025, revenues grew 38% to $907,100,000 from $656,400,000 in 2024. Although Bitcoin's average price increased 15% year over year, contributing $24,800,000 to our 2025 results, production volumes were lower throughout the year.

We mined an average of 21.9 Bitcoin a day in Q4 compared to 27.1 Bitcoin in Q4 2024, resulting in approximately 481 less Bitcoin mined this quarter. Q4 marked exceptional operational performance across our core owned mining sites, with several operating at or near 100% uptime. The decline in production, however, was primarily driven by higher network difficulty level due to rising total network hash rate. While we had the opportunity to deploy additional exahash more aggressively, we chose to remain disciplined and measured in our expansion given broader market uncertainty. Despite the increasingly competitive operating environment, we continue to grow both our compute capacity and Bitcoin holdings.

Between Q4 2024 and 2025, our Bitcoin holdings increased by over 20%, going from approximately 44,000 Bitcoin to nearly 54,000. Over the same period, our energized hash rate increased 25% from 53.2 exahash to 66.4 exahash.

We reported a net loss of $1,700,000,000, or negative $4.52 per diluted share, last quarter compared to net income of $528,300,000, or $1.24 per diluted share, in 2024. It is important to note, of this net loss for the fourth quarter 2025, that due to the decline in the price of Bitcoin, we booked a $1,500,000,000 loss, which was due to a change in fair value of digital assets, including Bitcoin receivable. For the full year, we recorded a net loss of $1,300,000,000 compared to net income of $541,000,000 in the prior-year period. During the quarter, we also recorded a non-cash goodwill impairment charge of $82,800,000 following our annual impairment review.

This change is entirely non-cash and had no impact on liquidity, operating performance, or cash flows.

On the cost side, our cost per kilowatt hour for our owned sites was $0.04 in 2025. Our purchased energy cost per Bitcoin for the quarter was $48,611 compared to $31,608 in 2024. Importantly, our daily cost per petahash per day improved 4% year over year to $30.5 from $31.7 in the fourth quarter last year and, over the past eleven quarters, has improved by 36%. We believe this remains among the lowest at scale in the sector. Marathon Digital Holdings, Inc. is one of the largest corporate public holders of Bitcoin, and we actively generate returns on our holdings.

The Bitcoin on our balance sheet strengthens our debt profile, reinforces resilience, and provides flexibility to pursue disciplined growth opportunities when they arise. I would like to remind everyone that we are not a digital asset treasury company. Marathon Digital Holdings, Inc. is an operating company, not a passive Bitcoin balance sheet vehicle.

During the quarter, we mined 2,011 Bitcoin and purchased an additional 1,670 as part of our trading strategy. As part of our digital asset management strategy, we aim to deploy Bitcoin holdings through risk-optimized trading initiatives, lending arrangements, and collateralized borrowings under credit facilities. As of 12/31/2025, we held a total of 53,822 Bitcoin, an increase of 8,929 over the previous year. Of the total, 15,315 Bitcoin were loaned, actively managed, or pledged as collateral. 9,377 Bitcoin were loaned, generating approximately $32,100,000 of interest income during the year. We also pledged 5,938 Bitcoin to access financing, supporting liquidity while minimizing dilution.

In total, approximately 28% of our total holdings were activated through our digital asset management strategy as of year end.

Now let us turn to our balance sheet. I want to address our debt maturity profile. Our $925,000,000 notes due 2030 and $1,000,000,000 notes due 2030 have a put right exercisable on 06/04/2027 and 12/01/2027, respectively. These represent a meaningful cash obligation that could come due in 2027, and we are proactively planning for that scenario today. I want to be clear about how we think about managing these obligations. First, our Bitcoin holdings at current market price represent approximately two times these puts. Second, the zero-coupon structure on the vast majority of our notes means we have no material ongoing cash interest burden related to these notes eroding our liquidity between now and those put dates.

Third, we have a history of prudent balance sheet management with our previous converts. The path we are building through the Starwood JV and our infrastructure transition is specifically designed to generate contracted cash flows that diversify our liquidity sources beyond Bitcoin alone. We are not managing this balance sheet reactively. We are managing it with full visibility into every obligation on the horizon.

Now historically, we held the Bitcoin we produced as a long-term investment. In 2025, we began selling to fund operations. In 2026, we expect to continue to monetize Bitcoin opportunistically to enhance our financial flexibility, including to provide liquidity or to fund capital projects and other initiatives that we believe enhance long-term shareholder value, subject to market conditions and our capital allocation priorities. In response to the more volatile pricing environment, we elected to suspend use of our ATM at the end of the third quarter of last year and instead funded operations through the sale of a portion of our mined Bitcoin. Notably, Q4 marked the first quarter since 2022 that we did not utilize our ATM program.

By shifting to operational funding through Bitcoin sales from production, we strengthened near-term cash flow while maintaining a disciplined and flexible balance sheet strategy. With that, I will turn it over to the operator to open it up for questions. Operator? Thank you.

Operator: We will now begin our question-and-answer session. If you would like to ask a question, please press 1 on your telephone keypad. A confirmation tone will indicate your line is in the queue. You may press 2 if you would like to remove your question from the queue before pressing the star key. One moment, please, while we poll for questions.

Salman H. Khan: Thank you.

Operator: The first question comes from the line of Paul Golding with Macquarie Capital. Please proceed.

Paul Golding: Thanks so much for taking my question, and congrats on the partnership announcement. I wanted to ask, Fred, you noted that the partnership gives you the opportunity to retain a 50% stake in these projects. Could you give some more color around the financing dynamics around this 50%, whether there is an opportunity to contribute the powered sites in exchange for other forms of consideration outside of the JV or what you meant by that comment in a bit more detail? And then as a follow-up, you also made a comment around it seems like load balancing across mining and HPC at certain sites that are part of this partnership going forward.

Could you speak to the technical requirements of that and how we can think about mining versus HPC as you progress with this partnership? Thanks so much. Sure.

Fred Thiel: So thank you for your question. When you look at the JV structure, essentially, our initial contribution to the JV for each specific site would be the asset itself. And then, additionally, we would capitalize our share of the—we would provide capital for our share of the development costs. We could retain up to 50% of the JV, and, hopefully, that clarifies that part of it.

There are mechanisms within the agreement that allow us to essentially decide not to fund our portion, and there are methods within the agreement that allow us to essentially be liquidated, if you would, at an attractive price or option, or if we do not fulfill our obligations and we decide to opt out, if you would. And I think we can provide more detail on that later. The key thing regarding load balancing is a combination of technologies that we have developed by leveraging special battery technology.

We have announced previously a partnership with TAE Batteries, which is a very advanced battery technology that can switch at sub-millisecond rates, such that we are able to essentially balance load within data centers. If you think about the data center development project, our ability to be able to retain Bitcoin mining at the site while the project is being developed and then even retain a portion of the power, at the option of the tenant, allows us to act as a load balancer.

Depending on the type of compute load that is executed at the site, there may be, for example, in the case of inference loads, a variation in that load over the course of a 24-hour period or even over a period of a week, where the inference demands on that site may decrease at night, for example, or over weekends. And having Bitcoin mining at the site allows us to, again, based on the arrangement with the tenant, mine whenever power is available that is not being used at preferential prices. Hopefully, that answers your question.

Paul Golding: It does. Thanks so much. And maybe just as a quick follow-up, at those sites, would the partnership then benefit from any revenue generated from the Bitcoin mining that happens when the load balancing is occurring, or is that something that would be retained entirely by Marathon Digital Holdings, Inc.? Thank you.

Fred Thiel: It is primarily Marathon Digital Holdings, Inc.

Paul Golding: Great. Thanks so much.

Salman H. Khan: Thank you.

Operator: Our next question comes from the line of Reginald Smith with JPMorgan. Please proceed.

Reginald Smith: Congrats on the announcement as well. I guess you guys are the last major Bitcoin miner to make the switch, and so I guess welcome to the party. My question, you mentioned Starwood and the fact that having a partner you are not going at it alone. And, you know, obviously, we have seen other Bitcoin miners sign deals. And so my question is, should we expect the time to sign a deal to be shorter because you have Starwood along with you? Does that alleviate some of the risk and maybe collapse the timeline? And then I have one follow-up.

Fred Thiel: Yeah. I think as I said in my opening remarks, this is not a relationship that just starts with the signing of this agreement. It has been developing for quite some time, and we have been very actively working with prospective tenants. As I mentioned, permits have been submitted already for some sites. And we are actively engaged with tenants. And the idea with working with Starwood was, again, manyfold. On the one hand, having a partner who has relationships with the tenants and that the tenants already trust. If you think about Starwood, they have built and operated sites for, I believe, three of the four tier-one hyperscalers.

And having those relationships and the trust that exist because of those relationships dramatically reduces, let us just say, the courtship period that a newcomer to the market like ourselves would have to do. And so because of that trust, it is easy for Starwood and prospective tenants to have a very accelerated timeline on the process of evaluating a site, submitting permits, getting things going, such that we can work towards getting leases done in a more accelerated fashion than if we had done it ourselves. Additionally, Starwood's captive EPC capabilities again dramatically facilitate the ability to build and execute these things in a very efficient and timely manner.

The single biggest challenge today for hyperscalers is the ability to have certainty about power availability, and Bitcoin miners provide a lot of certainty because of the fact that we are currently consuming the power. One of the advantages with some of what we have done also is that we have been already operating inference on one of our sites in a containerized fashion. And if a tenant were to be interested in a modular approach versus a traditional box approach, if you would, of building a large building, especially for inference applications.

And just as a reminder, Jensen Huang in his comments said inference is where the revenue is in AI, and inference is becoming the most important part of AI deployments today. And we believe that we are going to see a lot of advancement in the side of how these sites are designed, how these sites are constructed, which will align very well with the experience that we have previously developed in this area.

Reginald Smith: That makes sense. We have historically told clients and investors to think nine to twelve months, a deal to sign, but it sounds like you guys are on an accelerated timeline. Second question, it sounds like you are putting the MPLX deal on the back burner for now. My question is, are you still in the market for sites that are already powered or have been approved? Is that something that would also be more of a longer-term investment, or how do you view those types of opportunities?

So, you know, a site in, you know, some other city in Texas, like, would that be something that you may pursue now, or is that also something that would be viewed as less immediate and probably on the back burner?

Fred Thiel: No. So you have to look at what the market needs are today. If we are talking about power that will be available after 2030, there is not an aggressive demand for that capacity. The hyperscalers themselves have many efforts around developing sites, building their own energy generation for that time period. That is four-plus years out from now. What they desperately need now is power that is available today; they can quickly get a site permitted, build, and deploy, and be turned on in as short time as possible. So we are prioritizing the ability to deploy capital where we can most readily convert it into those types of opportunities.

So, yes, we are still pursuing sites both domestically and internationally. As we mentioned in our prepared remarks, we have spent a lot of time working with large French energy majors who are global leaders in energy, especially in the US, Latin America, and the Middle East, and we are actively engaged to develop sites over time with those partners in regions of the world where we believe it will be very attractive to develop sites that have the ability to be used maybe initially for Bitcoin mining and then converted over time into HPC, AI, or other enterprise workloads.

Reginald Smith: Okay. Sounds great. Congrats, guys.

Salman H. Khan: Thank you. Thank you.

Operator: Our next question comes from the line of Greg Lewis with BTIG. Please proceed.

Greg Lewis: Hi, thank you, and good afternoon, and thanks for taking my questions. Fred, I did want to touch a little on—you have been kind of alluding to the fact that this has been ongoing and you have been kind of building towards this for a while. I can appreciate it. You know, that being said, there is definitely probably still some work to do to get the pen to the paper. But as we kind of look across your own portfolio, you know, obviously, you have the nice presence in Texas. We are in Ohio, Nebraska. I mean, you have a nice presence across the mid part of the United States.

Are there any areas that are kind of gaining more interest as you and Starwood continue to look to onboard that first customer?

Fred Thiel: I think, typically, what tenants are looking for is, as I said earlier, the power is turned on, it is easy and fast to build, and there is access to Internet and, if there is need for water, water at the site. And a number of our sites fit that profile, obviously. If you look at other locations across the country, it is a question of really triangulating high-speed Internet, always-on power, and access to water. And all of our peers, ourselves, the neo-cloud providers, and many others are all chasing opportunities around the country.

And, obviously, our focus is to initially monetize the sites that we have because the power is already on, if you would, and we do not have to do any building to any greater extent to convert those sites. There may be upgrades to substations, things like that, that have to happen before somebody comes in and starts converting the site and building buildings or doing whatever they are going to for their specific needs. But the goal is the fact of the matter is that the power is the important thing. Right?

Greg Lewis: Okay. Super helpful. And then just realizing I am probably not as familiar with Starwood Digital Ventures as I am probably going to be, but kind of curious, you know, clearly they have a presence already in Europe with data centers. You know, you mentioned some of the things you are looking to do. As we think about this relationship going forward, could this be an opportunity for kind of, you know, clearly where Marathon Digital Holdings, Inc. already has owned infrastructure, that is an easy lift for getting Marathon Digital Holdings, Inc. involved in some of these projects.

But, you know, as we think about the next—I do not know, maybe not the next twelve months, but the next three, four, five years—do you see an opportunity for Marathon Digital Holdings, Inc. to build with Starwood beyond just what you have as your own infrastructure?

Fred Thiel: If you mean by our existing—absolutely.

Greg Lewis: Okay. Great. Helpful. Thank you for taking my questions.

Fred Thiel: Thank you.

Salman H. Khan: Thank you.

Operator: Our next question comes from the line of Christopher Charles Brendler with Rosenblatt. Please proceed.

Christopher Charles Brendler: Hey. Good afternoon, folks. Good to talk you. I hope everything is well, and congrats on the progress here. I would like to ask on your—short follow-up to Trey’s question—on the portfolio of data centers today and locations, and I noticed there was a comment in the deck that you have a gig of critical IT available today. That seems to include some of the sites that you are currently in hosting mode. So I was wondering if you think you can potentially either acquire or run AI data center loads at these other sites that you are currently in hosting arrangements, or am I reading that wrong? Thanks.

Fred Thiel: Good question, Chris. I think you have to also not look at those sites, the hosted sites, so much as while we operate a certain amount of load at existing sites, there is additional capacity available for expansion readily at hand. With some of these sites, the substations, for example, are ready for expansion. Additional load can be made available. And the nameplate capacity of the sites in a number of cases is greater than that which we operate today.

Christopher Charles Brendler: Makes sense. Follow-up question would be, just, you know, there was not a lot of numbers in this relationship presentation, and obviously, it is a huge pivot and exciting development. Just wondering, like, what kind of size projects are you thinking of in this—you know, sort of—I do not think we are thinking about 200-, 300-, 400-megawatt sites like some of your competitors have. It sounds like it is going to be smaller and, you know, there have already been some questions to the timeline.

But just thinking about, you know, sort of a numbers impact, how much do you expect—I guess it depends on your ownership—but how much would you expect in the short back-of-the-envelope, the economics on this joint venture compared to current Bitcoin mining operations at today’s prices? Thanks.

Fred Thiel: Well, I am not going to go into the economics today. I think more information about that will become more evident as we actually start speaking more about the specific sites and specific tenants because, obviously, who the tenant is and the economics will vary because of that. But to your question on size and scaling, you could look at a site, for example, like one we have in Texas, which currently operates over 200 megawatts of capacity, and that site could be converted directly to a hyperscaler site. So, are we looking at doing 40- and 50-megawatt sites? No. We are looking at doing much bigger things.

Christopher Charles Brendler: Okay. Great. And I guess you said that you would have more detail as you make progress. Is that going to be—do we have to wait for contracts to be signed? Are you planning on disclosing and presenting more information even before then?

Fred Thiel: So think of it this way. You have to look at this almost like a real estate development project. It all depends on who the tenant is, what has to get built, what the economics of the development costs are going to be, what percentage of the JV we are going to have with that specific project. Again, we will retain up to 50% of projects or ownership in projects. So—and then you have to look at, at the end of the day, what the lease rate is going to be. So every project will be different. So it is a little hard today to say, well, here is the number.

Christopher Charles Brendler: Great. Thanks so much.

Operator: Thank you. Our next question comes from the line of Kevin Dede with H.C. Wainwright. Please proceed.

Kevin Dede: Hi, Fred. Could you offer a little color, or deeper color maybe, on timelines—on these project enhancements with Starwood—when, I mean, when do you think, you know, shovels start hitting the ground and when do you think they might actually start running for customers?

Fred Thiel: So you do not turn a spade until you have a tenant typically signed because that tenant has a specific use for the site. So it is not building on spec here. Right? We are not doing what some of our peers have done: we are going to build a powered shell, and we are going to, you know, either fill it with somebody’s compute or just build a powered shell and see who comes. You know, Starwood’s expertise is that they have worked with the top-tier hyperscalers and they understand what they want. And, you know, a tenant looks at a site and looks at what can I do to that site to have what I want.

They work with Starwood to design, get it permitted, and built. As opposed to building and hoping somebody will come like some of our peers have done. We are very focused on rapid execution, with a lot of certainty. And one of the key reasons we chose Starwood is dramatically increasing certainty of execution and by partnering with somebody who has all the relationships that are required on the hyperscaler side, has EPC capability in-house, and has the ability to have a very good credit profile to be able to ensure these projects get funded and built. And I think you will look at, a key signal will be we have signed a lease for the tenant.

And at that point, there is a clock that starts ticking to ensure that, you know, permits have been approved, and then spades can start digging in the ground. But as I said in my prepared remarks, we have had fairly advanced conversations with tenants. Permits have already been applied for at sites. And our expectation is that this will be an accelerated process and that we will see, you know, updates regarding leases in a time period that I think most people will think is pretty accelerated.

Kevin Dede: Thanks, Fred. Would you mind taking a minute or two to sort through Exion? It is not absolutely clear exactly how Marathon Digital Holdings, Inc. intends to lever that. I did a little digging. I understand it operates under Marathon Digital Holdings, Inc. of France. And I think you have three board seats of the eight. And I am kind of scratching my head on how you intend to leverage that deal.

Fred Thiel: Okay. So Exion was developed within EDF, which is a French state-owned energy company that operates one of the largest fleets of nuclear reactors in the world, as well as huge renewables. I believe they are one of the largest electrical energy producers in the world, certainly the greenest with about 70% plus of their energy generation being green between hydroelectric capacity, other renewables, and nuclear. France, especially EDF, has huge needs for AI.

They have very large needs around private cloud because if you are operating nuclear reactors and you have the plethora of data that is coming off them, and you are running AI models to ensure that they are operating not just safely, but you are optimizing how they are running, they did not want that as an outsourced service to a third-party provider. And so they built that competency in-house. There came a point, though, where they believed it was better to take in external capital to advance the funding of that team and take what that team had built. And Exion is, I think today, about 90 people.

They have built infrastructure, tech stack, and systems and services to be able to operate the data centers on behalf of EDF. They also operate a quantum computer in their Montreal facility, for example. And they are a team that has built systems specifically for private, sovereign cloud-type operations of data centers where you are running inference loads where data security is the absolute top priority. And they today operate four data centers including tier four data center capacity, with a mix of AI loads, traditional CPU load, storage.

They also have built infrastructure around blockchain, and, for example, they provide a major French bank the underlying infrastructure that manages stablecoin issuance for another French entity, also real-world tokenization of financial assets. So they have very advanced technologies. This is a group that is primarily engineers and technicians, operators, if you would. And our investment in Exion—we will own 64%; we now own 64% of Exion—is really focused on being able to leverage the infrastructure-as-a-service technology, the platforms-as-a-service technologies that they have developed, and deploy that in data centers around the world. One thing you have to realize is, geopolitically, we live today in a multipolar world.

Gone are the days where US companies could dominate the data center operations around the world. Countries do not necessarily want US hyperscalers subject to the CLOUD Act to operate in their countries where their sensitive data may be subject to US government control. And this is especially true in Europe.

Kevin Dede: What does that mean?

Fred Thiel: It means that Europe is erecting walls where potentially it will be harder for US hyperscalers to provide the types of services that they provide to enterprises in the US to key strategic enterprises within Europe. Our investment in Exion is specifically targeted at two things. One, getting the technology platforms so that we can deploy highly sophisticated private cloud with full security and data integrity globally in data centers for enterprise customers. As well as, within France and across Europe, provide private cloud infrastructure and services to leading enterprises where they would prefer not to make that data available to hyperscalers who are subject to the US CLOUD Act.

In a way, it is almost a market where there is an advantage to being outside of the US. And we are very bullish on the opportunities that Exion is going to provide us. They know how to service energy majors very well. And we believe that our relationships with the other French energy majors will be an advantage there as well as in other countries around the world. And one use for our smaller data centers is specifically as private cloud operations. The vast majority of corporate data today resides not in the public cloud, but in private cloud or behind the firewall of the corporations.

Financial services companies, health care companies, drug research companies, defense industries, and other strategic industries do not put their data in the public cloud. People will put email, they will put other general-purpose data, but they will not put their core operating data into the public cloud. And if you want to run AI, it means you need to run it in the private cloud. We have spent a lot of time leveraging one of our key board members, Janet George, who today runs a large part of the AI efforts at Mastercard and previously did so at Intel and at Oracle.

And we have spent a lot of time to really understand the needs of enterprise customers, not just in the US, but internationally, and understand where their key pain points are. When you look at the hyperscalers today, and Jensen Huang said this in his earnings call yesterday, the majority of the inference that is being done by the hyperscalers is in improving their own search products, their own product selection and recommendation engines, and the tools and services they are already using for selling to customers and improving their advertising bases, Google, for example.

What you are starting to see now is corporations wanting to start deploying vertical AI solutions, for example, production optimization, fraud detection, things like that, all of which they are going to run behind their firewalls or in full private cloud. And companies that want to run that are going to need infrastructure. And the infrastructure they are going to need has to have the ability to be fully secure, be fully private cloud, and ensure that the owner of the data has full control over the data, regardless of who operates the data center.

And these are the core technologies that Exion brings us, and we are super excited about this because it really allows us to totally differentiate ourselves from people who are just offering basic services to neo-clouds or even neo-clouds themselves. Because it is a much more sophisticated infrastructure that we believe will generate much more value per megawatt, which, again, is our core metric, and is much stickier.

Kevin Dede: You will be allowed to take that technology to geographies outside of Europe.

Fred Thiel: Yes. So we own—we have majority control of Exion. You know, you asked the question about the board seats. There are eight members of the board, three from EDF. One seat is the CEO of Exion. We have three seats. And then a French technology entrepreneur, Xavier Niel, has one seat.

Kevin Dede: And—

Fred Thiel: We are very excited to have him on board. Because of his background, you guys can do your own research on who he is. He invested personally in Marathon Digital Holdings, Inc. France, which is our holding company through which Exion is owned.

Kevin Dede: Perfect, Fred. Thank you so much for all the color.

Salman H. Khan: Thank you.

Operator: There are no further questions at this time. I would like to pass the call back over to Robert for any closing remarks.

Robert Samuels: Thanks, operator, and thank you, everyone, for joining us today. If you do have any questions that were not answered during today's call, please feel free to contact our Investor Relations team at ir.mara.com. Thanks very much, and enjoy the rest of the day.

Operator: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

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