Marathon Digital Holdings

BlackRock’s newest ETF invests in 35 blockchain-related companies

“We believe digital assets and blockchain technologies are going to become increasingly relevant for our clients,” said BlackRock ETF product strategist Omar Moufti.

BlackRock, the world’s largest asset manager, has just launched a new exchange-traded fund (ETF) to provide European customers with exposure to the blockchain industry, while reports indicate a Metaverse-focused ETF may be on the way. 

The new blockchain ETF launched on Sept. 27 is called the iShares Blockchain Technology UCITS ETF.

BlackRock said 75% of its holdings consist of blockchain companies such as miners and exchanges, while the other 25% are companies that support the blockchain ecosystem.

The fund includes 35 global companies out of a total of 50 holdings, which also includes fiat cash and derivatives, but does not directly invest in cryptocurrencies.

BLKC marks the latest of a series of moves into the digital assets space for BlackRock, with the most recent being the launch of a private spot Bitcoin trust on Aug. 11.

In a Sept. 29 report from Finextra, product strategist for thematic and sector ETFs at BlackRock Omar Moufti said the ETF will “allow our clients the opportunity to engage with global companies leading the development of the emerging blockchain ecosystem,” adding: 

“We believe digital assets and blockchain technologies are going to become increasingly relevant for our clients as use cases develop in scope, scale and complexity.”

The top five holdings in the fund are Coinbase (13.20%), USD cash (13.00%), fintech firm Block (11.40%), crypto mining firms Marathon Digital Holdings (11.13%) and Riot Blockchain (10.50%).

Other holdings include 23 IT companies, six financial companies, one industrials company and one communications company, with 50 holdings in total as of Sept. 28.

However, a Bloomberg report on Sept. 29 suggests that BlackRock may be working on another ETF — focused on the Metaverse, called the iShares Future Metaverse Tech and Communications ETF. 

Related: Wealth managers and VCs are helping drive institutional crypto adoption — Wave Financial execs

The report said that the fund’s fees and ticker are not yet listed but might include “firms that have products or services tied to virtual platforms, social media, gaming, digital assets, augmented reality and more.”

The Metaverse ETF follows insights published on Feb. 14 from BlackRock Technology Opportunities Fund co-portfolio manager Reid Menge, who labeled the Metaverse a “revolution in the making.”

‘Metaverse’ mentions in company transcripts. Source: BlackRock Market Minute citing Morgan Stanley, 2021.

On Aug. 4, Coinbase announced that it had entered into a partnership with BlackRock and appeared to be reaping the rewards of the partnership with its high weighting in BLKC.

The partnership gives institutional investors the ability to access crypto through its Coinbase Prime service.

Marathon inks new arrangements to achieve 2023 hash rate target

The Bitcoin mining firm is looking beyond its current troubles into next year to secure the energy it needs to make up a more significant portion of the network’s hash rate.

Bitcoin (BTC) miner Marathon Digital Holdings has secured a deal that provides electricity to generate enough power to contribute 23.3 exahashes per second (EH/s) to the Bitcoin network.

Marathon revealed in a Monday announcement that data center operator Applied Blockchain would host 254 megawatts of power, with an option to add 70 megawatts from various other providers, including Compute North. Marathon expects this hosting deal will help it achieve its goal of 23.3 EH/s in computer power by 2023.

Exahashes per second (EH/s) refers to the amount of hashing power a miner contributes to secure the Bitcoin network.

Applied Blockchain will supply 90 megawatts to Marathon’s Texas facility and 110 to 180 megawatts to a North Dakota facility. Combined, they will contribute about 9.2 EH/s.

Compute North has obtained the regulatory approval required to supply 42 megawatts of hosting capacity to Marathon at its Granbury, Texas facility. That location will house 26,000 mining devices that will contribute about 3.6 EH/s by the end of 2022, according to Marathon.

Marathon also stated that various unnamed providers would provide up to 12 megawatts of hosting capacity worth about 0.8 EH/s, bringing the total new capacity to 324 megawatts.

Marathon CEO Fred Thiel stated in the announcement that the deals should provide adequate hosting capacity to help his company contribute 23.3 EH/s by 2023. He expects hosting to begin in August and continue into the following year:

“The first miners to be hosted under these new arrangements are scheduled to be installed in August, with installations ramping at other locations in the fourth quarter of this year and continuing into 2023.”

Delays with Compute North’s regulatory compliance may have partly contributed to Marathon’s disappointing 43.8% drop in productivity in Q2. Hosting was expected to begin in June, but the firm did not obtain the necessary permissions.

Related: Could Bitcoin miners’ troubles trigger a ‘death spiral’ for BTC price?

Marathon’s reduced productivity can also be attributed partly to its Hardin, Montana, mining facility, which was shut down following a severe storm on June 11. That facility represented 75% of the company’s mining power and still appears to be down as the MARA mining pool has not mined any blocks since the storm.

The new power deals come as United States Senator Elizabeth Warren claimed that miners are driving up energy costs for other consumers. She and a coalition of five other lawmakers asked the Environmental Protection Agency (EPA) and the Energy Department (DOE) to share their findings on the energy consumption trends of Bitcoin miners last week. 

Marathon Q2 Bitcoin production down 44% as fleet remains crippled

Marathon had a particularly rough production month in June after 75% of its fleet went down. It’s still uncertain when its mining facilities will be able to come back online.

Bitcoin (BTC) mining company Marathon Digital Holdings experienced a steep 43.8% decline in Bitcoin production over the second quarter of 2022, with June registering as the company’s least productive month in over a year following the fall of its Montana facility. 

In its latest mining operation update released on Thursday, Marathon reported that it produced 707.1 Bitcoin in Q2 2022, down 43.8% from 1258.6 Bitcoin mined in Q1 2022. 

Marathon’s Bitcoin productivity has been on the decline through Q2 2022.

The company’s Bitcoin production took a particular hit in June after Marathon’s Hardin, Montana facility was hit by a massive storm on June 11, which knocked out the power station that fed 75% of its active fleet. 

The outage made June the company’s least productive month since March 2021, and threatens to continue into July. To date, the Montana facility is yet to return online, and no new blocks have been mined from the MARA mining pool since June 12. 

Marathon CEO Fred Thiel acknowledged that the storm in June had a major impact on productivity, but also cast some of the blame for the lack of hashing power on Marathon’s new Texas mining facilities, which have not yet switched on.

Thiel said the company has installed 29,640 miners “representing approximately 2.9 exahashes per second” in Texas already, though the energization of its facilities expected in June has not yet come to pass.

Thiel said that Compute North, the company hosting mining facilities for Marathon’s devices, can’t be powered until its energy provider gains “federal agency confirmation of its exempt status for tax purposes.”

Marathon’s vice president of corporate communications Charlie Schumacher told Cointelegraph earlier this month that it may be looking to diversify its mining operations across more states in the future.

Schumacher said that in addition to the existing facilities in Texas, the company was exploring options in the Dakota’s, Oklahoma and Georgia:

“We have already been expanding in Texas at different facilities to reduce the reliance on a single major facility. Getting geographic diversity will help protect us in the future.”

Concerns have arisen that more Bitcoin miners will sell coins in order to stay afloat amid rising energy costs and falling mining equipment and crypto prices. Cointelegraph reported on Wednesday that miner revenues are down over 70% from last November’s high.

Related: Bitcoin miners sell their hodlings, and ASIC prices keep dropping — What’s next for the industry?

So far, major miners such as Argo, Bitfarms, Core Scientific and Riot Blockchain have all reported selling coins to pay bills. Schumacher added that Marathon has not sold any coins yet and has no current plans to, but did not rule it out as an option:

“When looking at financing the business, we are looking to do it most advantageously.”

75% of Marathon’s mining fleet still offline two weeks after huge storm

Marathon’s CEO Fred Thiel said that it will take time to get the facility back to full strength, but that the company could decide to speed up its move out of Hardin.

Bitcoin (BTC) mining company Marathon Digital Holdings has revealed that 75% of its mining capability has been out of commission since a severe storm hit Montana on June 11. 

Marathon finally issued a statement on its website on Tuesday explaining that the storm struck across the town of Hardin, Montana on June 11, damaging the power generating facility that supplies Marathon’s local mining operations. According to the company, “initial electrical tests have found that the majority of the Company’s miners were not materially damaged by the storm.”

The company noted that 30,000 devices, or 75% of the company’s fleet, have been out of action since the storm. Bitcoin blockchain explorers indicate that the miners have been down for two and a half weeks:

“With these miners offline, Marathon’s Bitcoin production is expected to be significantly reduced until repairs to the power generating facility in Montana can be completed or until the miners can be relocated to new facilities.”

Marathon noted that the facility will remain without power until the damaged power facility from BeoWulf Energy can be repaired.

Marathon’s CEO Fred Thiel stated that the facility could begin mining again at a reduced capacity as early as the first week of July if certain repairs are made in time.

It has directed its remaining hashing power to contribute to external mining pools while repairs are being made on the damaged facility:

“Marathon has pointed its remaining active miners, representing approximately 0.6 EH/s, away from the Company’s mining pool, MaraPool, and towards a third-party mining pool in order to increase the probability of earning Bitcoin.”

Exahash per second (EH/s) refers to the amount of hashpower a miner contributes to secure the Bitcoin network.

Marathon contributed about 3.9 EH/s from 36,830 active miners through May and held 9,941 BTC worth about $201.4 million, according to CoinGecko.

Mining difficulty is at its lowest level since April, according to Bitcoin network tracker CoinWarz.

Related: Bitcoin mining revenue mirrors 2021 lows, right before BTC breached $69K

The company stated that 19,000 miners representing 1.9 EH/s had been installed in Texas-based facilities and were awaiting the energy needed to switch them on.

In light of the functional outages caused by the storm in Hardin, the company said that it is “currently evaluating the possibility of expediting the move of its miners from Montana to new hosting locations,” which could include faster deployment to its new Texas facilities in order to prevent this issue in Hardin from happening again.