MARA Holdings, Inc. (MARA) Earnings Call Transcript & Summary

Greetings, and welcome to MARA's Second Quarter 2026 Earnings Conference Call. [Operator Instructions] Please note, this conference is being recorded. I will turn the conference over to your host today, Robert Samuels VP of Investor Relations. You may begin.

Thank you, operator. Good afternoon, everyone, and welcome to MARA's Second Quarter Fiscal Year 2026 Earnings Call. Thanks so much for joining us today. With me on today's call are our Chairman and Chief Executive Officer, Fred Thiel; and our Chief Financial Officer, Salman Khan. Today's call includes forward-looking statements, including those about our growth plans, liquidity, and financial performance. These involve risks and uncertainties, and actual results may differ materially. We disclaim any obligation to update these statements, except as required by law. For more details, see the Risk Factors section of our latest 10-K and other SEC filings. We'll also reference non-GAAP financial measures like adjusted EBITDA, which we believe are important indicators of MARA's operating performance because they exclude certain items that we do not believe directly reflect our core operations. Please see our earnings release for reconciliations to the most comparable GAAP measures. We hope you've had the chance to read our shareholder letter and look forward to your feedback. We'll begin with some prepared remarks from Fred and Salman. After their comments, we will open the call to Q&A. I'm going to turn the call over to Fred to get things started. Fred?

Thank you, Rob. Good afternoon, everybody. Thank you for joining us. For much of the past 2 years, the AI conversation has focused on models, chips, and capital, but underneath all of that is a more basic requirement, power. That is becoming the central infrastructure challenge of the AI era. The market has no shortage of ambition or investment. What it lacks is enough energized, permitted capacity in the right places available on a time line customers can use. So the question is no longer who can fund the next wave of compute, it's who has the power. That question goes directly to MARA's strength. We did not arrive at this opportunity by chasing a new trend. We arrived here after more than a decade of solving the same operating problem at global scale, securing power, deploying compute, and running infrastructure efficiently around the clock. Through Bitcoin mining, we built one of the world's largest distributed compute platforms, spanning 19 data centers across 4 continents. Along the way, we accumulated strategic land and power assets, deep technical expertise, and a disciplined framework for deciding where each megawatt can create the most value. Today, MARA is applying that foundation more broadly. We own, develop, and operate digital infrastructure across power, land and compute. Depending on the opportunity, we can convert electricity into higher-value compute ourselves or provide infrastructure to customers who need it. That flexibility matters. Many companies entering this market are still searching for sites, power, and operating capabilities. We have spent years assembling them. Our move into AI infrastructure is therefore, not a break from MARA's history. It is the next use of the platform we created. The second quarter marked another important step in that evolution. We advanced the Long Ridge transaction towards closing. And after quarter end, we announced that we acquired the rights to a strategically located power site in Matagorda County, Texas, with the potential to support approximately 2 gigawatts of future capacity upon ERCOT and interconnection approval. On completion of the pending transactions and required approvals, we expect our power portfolio to reach approximately 4.8 gigawatts, which would more than double our current capacity. We believe that would establish one of the largest powered land portfolios in the industry and create a significant platform for long-term shareholder value. As the opportunities become clearer, so has our focus. MARA operates one integrated digital infrastructure platform built around power, land, and compute. Digital infrastructure is our primary growth focus. That is where we are developing campuses and pursuing long-term customer relationships at scale. Exaion and our technology initiatives add targeted capabilities around that core. They help us address specialized customer needs, improve the utilization of our infrastructure, and extend the value of the assets we own. We manage all of these capabilities as one platform, and we allocate capital across them using the same filters expected returns, customer demand, execution risk, and contribution to long-term shareholder value. Let me spend a few minutes on digital infrastructure, our primary growth focus. The demand picture is straightforward. AI infrastructure investment is accelerating while the supply of power-ready sites is not keeping up. Industry estimates suggest that the 4 largest hyperscalers alone could invest approximately $725 billion in AI infrastructure during 2026 and that annual capital spending could exceed $1 trillion by 2027. The power requirement is rising just as quickly. U.S. data center electricity demand is expected to grow from about 31 gigawatts in 2025 to 41 gigawatts in 2026 and 66 gigawatts in 2027. New generation and transmission are not coming online at the same pace. That imbalance is increasing the value of infrastructure that's already energized or can be delivered with greater certainty. Our strategy is designed for that environment, to own scarce powered assets and create as much long-term value from them as possible. The Matagorda County site is expected to add approximately 2 gigawatts in one of the country's largest power markets. Just as important, it's expected to provide enough wholly owned capacity to support our transition away from hosted mining as existing agreements expire. That should increase our operational control, improve unit economics, and give us greater flexibility in allocating capital. The pending Long Ridge acquisition is equally important. We believe it will transform our existing Hannibal campus by adding adjacent land while contributing positive EBITDA at closing. With more than 70% of Long Ridge's power output contracted under long-term agreements, we expect the transaction to enhance earnings while significantly expanding our AI infrastructure opportunity. Together, these transactions reflect our infrastructure investment model. We acquire scarce powered assets, enhance their strategic value, develop high-quality digital infrastructure, and secure long-term customers. As those assets are developed, they can become durable cash flow generators that remain in our portfolio or can be monetized, allowing us to recycle capital into future opportunities. Speed, certainty, and reliability are principles that define how we invest, how we build, and how we aim to serve customers. Speed matters because customers cannot wait years for power. Our portfolio of energized sites can support earlier in-service dates than many competing developments, giving customers access to capacity when they need it. Certainty matters because infrastructure must be delivered on time, on budget, and to specification. We believe our development strategy, our relationships with utilities and equipment providers, and our partnership with Starwood will give customers greater confidence in execution. The Starwood partnership also gives us the ability to scale with proportional capital support. And reliability matters because mission-critical AI workloads require experienced operators. MARA brings years of experience designing, owning, and operating large-scale compute infrastructure. Starwood adds engineering, procurement, construction, and development capabilities backed by more than 7 gigawatts of delivered infrastructure for many of the world's leading hyperscalers and frontier AI companies. Together, we offer a combination of operating experience, development expertise and capital discipline that we believe few competitors can match. Commercial momentum continues to build. Our goal is a diversified customer base across hyperscalers, AI native cloud providers, silicon vendors, and enterprises with the right balance of credit quality, returns and long-term portfolio value. Working alongside Starwood, we are progressing lease discussions across multiple sites, and we remain confident in our ability to sign at least 2 leases before year-end. The objective is not merely to sign tenants, it is to establish durable customer relationships that maximize the value of our infrastructure over decades. Within that integrated platform, Exaion gives us a targeted capability in sovereign AI infrastructure. The customer need is becoming clearer as AI moves from experimentation into day-to-day operations. Once AI becomes mission-critical, enterprises care much more than raw compute. They also care about where their data sits, which rules govern the infrastructure, how resilient the service is, and how much control they retain. That is the market Exaion was built to serve. As a European company, Exaion can provide private cloud infrastructure governed under European jurisdiction. For enterprises and public sector organizations operating within the EU regulatory framework, that is a meaningful advantage. Customers can deploy advanced AI workloads while keeping control of their infrastructure, data and operations. For critical infrastructure, regulated industries and government adjacent services, that level of sovereignty is moving from a preference to a requirement. The addressable market is also much larger than new AI applications alone. Roughly 80% of enterprise data still sits outside the public cloud. As organizations modernize that data and infrastructure for AI, they will need providers that can meet demanding standards for security, compliance and operational resilience. Exaion already has credibility in those environments. It operates critical infrastructure supporting EDF's nuclear reactor operations where reliability is simply nonnegotiable. And for those who are not aware, EDF is one of the largest operators of nuclear power in the world. Its selection for the AION Consortium, an EU-backed initiative targeting approximately 3 gigawatts of AI-ready data center capacity provides further validation. We are also advancing opportunities outside Europe, which supports our view that sovereign AI infrastructure is becoming a global requirement, not just a regional trend. Our technology initiatives are another targeted capability within our digital infrastructure platform. It takes operating knowledge developed inside MARA and turns it into technology that can improve our assets and serve outside customers. Running a large distributed compute platform has taught us a great deal about power management, infrastructure optimization and digital asset management. Some of the tools we built for ourselves now have clear applications beyond our own fleet. Vertebr.AI is one example. The platform manages power allocation and infrastructure performance in real time. In our mining operations, it has helped us add computing capacity with the same electrical footprint. In other words, more output without needing more power. As power becomes more valuable, that capability should matter well beyond mining. AI data centers, independent power producers, and other energy-intensive businesses face the same need to improve utilization, operate more efficiently and lower costs. The second platform is Hashrate Under Management or HUM, our blockchain financial infrastructure platform. This is the first time we're discussing HUM publicly. We're doing so from a position of demonstrated commercial traction, not simply future potential. Both HUM and Vertebr.AI reflect the same principle. Innovation should increase the value of the infrastructure we own and create value for customers at the same time. That brings me to Bitcoin mining. It remains an important part of MARA, not because it defines the limits of our future, but because it continues to strengthen the broader platform. Mining gave us the foundation, strategic power assets, experience operating large-scale compute and the capital allocation discipline we use today. In that sense, mining was never the final destination. It was a platform we could build from. It still plays 3 important roles. First, it generates cash flow that supports investment across the business, while we continue to operate with one of the industry's lowest cost structures. Second, it gives us flexibility. We can deploy mining equipment quickly at a newly energized site and begin monetizing the power while an AI facility is being designed, permitted, and built. When customer demand is ready, that same site can transition toward AI or high-performance computing without leaving the infrastructure idle in the meantime. Third, mining is still one of our best sources of operating insight. The work of optimizing power use, improving compute efficiency, and managing mission-critical systems at scale directly informs how we approach AI infrastructure. We will keep improving the mining business through disciplined fleet modernization and intelligent power management. As more efficient machines replace older equipment, we can increase compute within the same electrical footprint and improve the economics of the operation. So we do not see Bitcoin mining and AI infrastructure as competing businesses. They are different applications of the same underlying asset, power. The capital allocation question is, therefore, simple. Where can each megawatt create the most value? In one market, the answer may be Bitcoin mining and in another, it may be AI infrastructure, sovereign cloud, or enterprise computing. Our advantage is that we have the assets, expertise, and flexibility to make that decision dynamically as market conditions change. We believe that flexibility is a meaningful competitive strength and an important driver of long-term shareholder value. The first half of 2026 was about expanding and transforming the platform. We grew our portfolio of powered infrastructure, advanced transformational transactions, strengthened the commercial pipeline, and continued investing in the initiatives that can drive MARA's next phase of growth. The second half of the year is about execution. Our focus is clear: convert infrastructure into long-term shareholder value by signing customers, bringing assets online and demonstrating the earnings power of the platform we have spent years assembling. Over the coming months, we expect to complete the Long Ridge acquisition, advance lease discussions across the digital infrastructure portfolio, expand Exaion's international presence and continue commercializing our technology initiatives. Most importantly, we expect the investments we have made over the past decade to become increasingly visible in our financial results. The foundation has been built. Our focus now is monetizing it. Later this year, we look forward to hosting our Investor Day. We plan to provide a deeper look at our strategy, showcase our infrastructure portfolio, and demonstrate how the pieces of our business work together to maximize the value of every megawatt we own. So let me come back to the question I raised at the start. Who can power, build and operate the next wave of compute? MARA has spent more than a decade building an answer. We have assembled one of the industry's largest portfolios of powered digital infrastructure and developed an operating experience to put those assets to work. The opportunity in front of us is to turn that foundation into a broader platform for the next generation of compute and to do it with the same discipline that built the company. Bitcoin mining provided the foundation, digital infrastructure. Exaion and our technology initiatives expand the value we can create from that foundation. Together, they position MARA across multiple layers of the AI infrastructure value chain while maintaining discipline in how we allocate capital. Ultimately, our shareholders should judge us not by our vision, but by our execution. The AI infrastructure market is moving quickly and credibility will be earned by consistently delivering results. Power is becoming the defining resource of the AI infrastructure market. Our objective is to convert the power, assets and expertise we have assembled into durable value and to establish MARA amongst the leaders of that market. Thank you for your continued support and confidence in MARA. With that, I will turn the call over to Salman.

Thank you, Fred. Good afternoon, everyone. Two things defined Q2 for MARA. Bitcoin prices created a challenging revenue environment, and we used the quarter to fundamentally transform our power portfolio and capital structure. That context matters as I walk through the numbers. During Q2, we made meaningful progress in building MARA's digital infrastructure platform, taking actions that we expect will expand our total power portfolio to 4.8 gigawatts, nearly 2.5x its size at the beginning of the year, and secure our position as one of the industry's largest holders of digital infrastructure power capacity. After quarter end, we acquired rights to 1,200 acres at a strategically located powered land site in Matagorda County, Texas, representing up to 2 gigawatts of potential capacity subject to ERCOT and interconnection approvals. Our confidence continues to be reinforced by encouraging interest from prospective tenants. We have also advanced the Long Ridge acquisition by securing approval from holders of Long Ridge's senior secured notes to assume the notes at closing. The transaction will close after FERC approval, which we expect to occur soon as guided previously. Subsequent to quarter end, we further advanced the Long Ridge acquisition by entering into 2 Bitcoin-backed credit facilities with Coinbase and Two Prime at a weighted average cost of debt of 7.56% for incremental borrowings under these facilities of $600 million. In addition, we refinanced our existing $150 million facility with Coinbase and consolidated it into the new Coinbase facility. This borrowing originally due in Q1 of 2027 will now mature in 2 years, along with the incremental $600 million. These financings strategically activate a portion of MARA's Bitcoin reserves as a nondilutive funding source while preserving our exposure to Bitcoin's potential long-term appreciation. The facilities will be used towards funding the cash consideration for the acquisition and together with the assumption of certain of Long Ridge's existing indebtedness, provide funding towards completing the transaction. To be direct, we are funding a $1.5 billion enterprise value acquisition through a Bitcoin-backed debt and assumption of Long Ridge's balance sheet, all nondilutive financings. This is the capital discipline we are committed to. Once completed, the Long Ridge acquisition is expected to contribute approximately $144 million in annualized EBITDA and durable free cash flow with roughly 70% of its output secured under long-term contracts. These contracted cash flows will diversify our revenue base beyond Bitcoin mining, while our capital-light partnership with Starwood will preserve balance sheet flexibility as we develop AI and high-performance computing opportunities across our own power portfolio. Together, these attributes strengthen our financial position and reinforce our disciplined approach to capital allocation. None of this happened overnight. It is the result of deliberate work across the organization, and that work continued to gain momentum this quarter. With that context, I will turn to Q2 financial performance, capital allocation, and balance sheet activity. The Bitcoin price environment remained challenging, reflecting broader pressure across risk assets, driven by macro uncertainty, tighter risk appetite and continued pressure on mining economics. It is important to view this alongside the substantial progress we are making to build a more diversified digital infrastructure platform. Revenues during the second quarter of 2026 were $174.9 million compared to $238.5 million in the prior year period. Bitcoin production contributed a $7.2 million increase year-over-year, though this was offset by a 28% decrease in Bitcoin's average price, which reduced revenue by $65.9 million. Other revenues declined approximately $4.9 million, primarily reflecting lower revenue from other digital assets and elimination of our hosting services compared to the same period. During the quarter, we mined 2,422 Bitcoin or 26.6 Bitcoin per day, approximately 64 more Bitcoin than the prior year period. We won 700 blocks, up 1% year-over-year and up 8% from Q1 of 2026. We held a total of 35,577 Bitcoin at the end of the quarter, valued at approximately $2.1 billion at a $58,524 spot price, down from 49,951 Bitcoins held a year ago. Of the total Bitcoin held, approximately 26% or 9,270 Bitcoin were loaned or pledged as collateral. Of that, 4,742 Bitcoin were loaned under our digital asset management strategy, generating approximately $4.3 million of interest income during the quarter. We delivered an energized hashrate of 70.3 exahash per second, increasing 22% from 57.4 in Q2 of 2025. Sequentially, hashrate was down modestly from 72.2 exahash as we phased out legacy miners. This reflects continued fleet optimization and opportunistically upgrading our infrastructure by phasing out legacy miners to boost our total hashrate. Our share of available mining rewards reached 5.9%, up from 5.5% in Q1 of 2026. Approximately $343 million of our net loss this quarter was driven by unrealized mark-to-market fair value adjustment for digital assets, a direct reflection of the drop in Bitcoin price during the quarter. In total, we reported a net loss of $611.3 million or negative $1.60 per diluted share compared to net income of $808.2 million or $1.84 per diluted share in the second quarter of 2025. As a reminder, every $10,000 change in Bitcoin price results in an approximate $350 million impact on the fair value of digital assets on our income statement, which is an unrealized noncash adjustment. Accordingly, adjusted EBITDA for the quarter was negative $360.9 million, similarly dominated by Bitcoin mark-to-market change compared to $1.2 billion in the prior year period. We use adjusted EBITDA as a supplemental measure of operational performance and a full reconciliation to net loss is included in our shareholder letter and earnings deck. Our daily cost per petahash per day improved 4% year-over-year to $27.7 from $28.7 in Q2 of 2025. And over the past 9 quarters has improved by 27%, which we believe remains among the lowest at scale in our sector. That is the cost structure behind the efficiency Fred referenced earlier, and it is the cost structure we expect to bring to every megawatt we convert to AI infrastructure. Our cost per kilowatt hour was $0.04 for our owned sites in Q2 2026. Purchased energy cost per Bitcoin for our owned mining sites was $38,690, up from $33,735 in Q2 of 2025, primarily due to higher network difficulty driven by growth in global hashrate. Our own efficiency metrics improved. The per Bitcoin cost increase is entirely a function of rising global difficulty, a market dynamic outside our control. Despite the increased difficulty levels, Bitcoin production at our owned mining sites increased 2% over the same period. Looking ahead, our most significant third-party hosting arrangements are set to expire beginning in the third quarter of 2027, with all the arrangements concluding by the first quarter of 2028, at which point in time we expect to eliminate third-party hosting costs and improve our cost per kilowatt hour. General and administrative expenses, excluding stock-based compensation were $69.5 million for the quarter compared to $40.1 million in the prior year period. The increase reflects the scaling of our operations, higher personnel costs associated with headcount growth from the prior year period, and administrative fees in support of our expanded global footprint. Acquisition and integration costs burdened our G&A by $15.4 million, and we also incurred a $10.2 million litigation settlement, representing the amount paid in connection with the final resolution of a patent dispute. Excluding both items, underlying G&A was approximately $43.9 million and more comparable to the prior year. Compared to Q1 of 2026, G&A benefited from lower headcount costs related to the previously announced reduction in force. We expect our quarterly G&A run rate, excluding stock-based compensation and acquisition and integration costs to continue to trend lower as these savings are realized over time. Now let me turn to the balance sheet and liquidity. We ended the quarter with $421.3 million in cash and cash equivalents and approximately $2.5 billion in combined cash and Bitcoin. Our capital allocation strategy remains disciplined and focused on supporting long-term shareholder value. Following the expected close of the Long Ridge acquisition, we anticipate assuming approximately $900 million of Long Ridge's debt. In addition, as I mentioned previously, MARA has recently added $600 million in borrowings, which are secured by our Bitcoin holdings. As a result, 54% of our Bitcoin holdings have been pledged as collateral under our borrowings. These financings strategically activate a portion of MARA's Bitcoin reserves as a nondilutive funding source while preserving our exposure to Bitcoin's potential long-term appreciation. With that, I will turn it back over to the operator. Operator?

[Operator Instructions] The first question comes from Greg Lewis with BTIG.

I did want to touch a little bit on Long Ridge. I guess a couple of things about Long Ridge. Just the first is around the potential timing. Has there been any feedback from the federal, local or state levels about the potential closing? Are there hurdles that need to be done? I guess, that's my first question.

We haven't received any feedback yet, and we don't think there's anything at this stage that's going to block the approval. If you look recently, WULF just got approval for one of their acquisitions, and we expect FERC to respond to us definitely before year-end, but much sooner than that.

Okay. Super helpful. And then just as we think about the opportunity set in Hannibal, like as we -- as you're negotiating with potential HPC customers, is a little bit of chicken and egg where really until the deal goes through and the land that is required to build this out is in place, we're kind of in a holding pattern. Is that kind of a fair way to think about it?

Well, we're in a holding pattern from signing a lease. That being said, we are very actively engaged with prospective tenants in evaluating exactly what they're going to build, how they're going to do it, how the fiber is going to be laid, et cetera. So we're moving along at about the same pace as if the deal was already closed. But if you're familiar with how these lease discussions go, from when you have kind of a letter of intent from a prospective tenant, it can be 60 days, sometimes plus just talking about design and how you're going to permit and all that. There's nothing holding us back now other than closing really the transaction, but things are moving along at a very good pace with the tenant.

The next question comes from Paul Golding with Macquarie.

Congrats on the announcement of the new site in Texas. I wanted to ask with the recent developments around the Texas audit process tacked on to the batch study process. Are you getting any additional interest? Or is there a market repricing on your existing energized sites that are available? And then I have a follow-up.

I mean, there's broad demand across a number of sites with multiple tenants in discussions on multiple sites. The Matagorda site in and of itself is a hugely attractive site for tenants. And everybody assumes that this is going to eventually go through, meaning the Batch 0 and Batch 1 processes that Governor Abbott has delayed. If you look at these requests and the queues for a number of years, it's been pretty prevalent that people have submitted requests and because they haven't had to put down huge deposits. There are a lot of phantom requests in the system. And so by going through the audit process that Governor Abbott has requested to be done, they will flush out a lot of those. We're very pleased that for our particular site, there's no infrastructure improvements that the utilities have to do to bring power to the sites. We already have multiple transmission lines coming into the site. We're very close to the power generating source in one of the biggest power markets in Texas. So we feel very confident that as this audit process progresses, we'll progress through the queue as well. And just a question of things happening in the right way.

And then maybe just a follow-up on the Matagorda County site itself. It seems that the purchase structure is potentially favorably set up in terms of milestone payments relative to approval. Could you just give some more color around how that was struck and some of those details just working off of the presentation with the result?

Yes. I think the way to look at it is this, is that, obviously, -- because when we did the transaction, there wasn't 100% certainty about Batch 0 approval. There are contingencies that drive the deal. And so the idea is that from our perspective, we have the ability to wait until Batch 0, but there is, at some point, a terminal point in time where we either have to close or step away. But it is structured in a way to benefit us.

And just to add to that, as what Fred mentioned, this is attractive for us and our shareholders as it aligns our counterparties' interest together with the development of the project. And as we progress, everyone progresses.

Maybe just -- I'll try to sneak a third one in, sorry. But does this fall within the Starwood partnership if you were to do a deal and have a capital partner through them for development of that site?

Any deal has the opportunity to fall within the partnership, the deals that were already allocated to the partnership are those that were in the portfolio at the time we signed the deal.