U.S.-based Marathon Patent Group, Inc. (NASDAQ: MARA) announced that it had successfully completed its previously announced $200 million shelf offering by utilizing its at-the-market (ATM) facility. Marathon ended the 2020 fiscal year with $217.6 million in cash and 74,656,549 shares outstanding because of the raise.
The company plans to use the proceeds from this recent capital raise to pay for the ASIC miners it ordered from Bitmain Technologies Inc. So far, Marathon has committed to purchase 103,060 blockchain miners, which one fully deployed will produce approximately 10.36 EH/s.
Merrick Okamoto, Marathon’s Chairman& CEO, stated, “Completing this capital raise was a milestone for our business as it provided us with an efficient means of procuring the necessary funds to pay for the miners we have purchased from Bitmain.”
After paying an initial deposit, Marathon’s still owed a remaining balance of $163.0 million to Bitmain. The company’s current cash position is more than enough to cover the cost of all ASIC miners ordered as of December 31, 2020.
Marathon and Bitmain worked out a delivery schedule that will see 15,200 units shipped in the first quarter of 2021. The company plans to install 4,000 units in February, 6,300 in March, and 4,800 in April.
“The unique relationship we have built with Bitmain allowed us to secure a record number of miners, which because of the substantial increase in Bitcoin’s price and subsequent increase in demand for mining rigs, are now being sold in secondary markets at multiples of our purchase price,” Okamoto said.
To justify the spending spree, Okamoto is banking on the price of BTC staying near or above historical record levels, not reached until this past three-month period. The release mentions that if all the miners were online today, and BTC’s price was still above $28,000/BTC, Marathon would produce approximately $618 million in revenue annually and approximately $523 million in gross profits.
The digital currency price market is fine until it’s not fine—that’s when financial literacy takes money from those who gambled too much and put organization which overextended themselves on the path to bankruptcy.
If Marathon wants to solidify its future and stabilize earning around a repeatable growth strategy, it only has to look at the business model being employed by TAAL Distributed Information Technologies Inc. (CSE:TAAL | FWB:9SQ1 | OTC: TAALF), which was smart enough to realize it should build a multi-billion dollar business around enterprise organization instead of price speculators and market manipulators.