Net profit surges fivefold but masks decline in core business; crypto mining companies' shift to AI poses hidden risks

According to Woofun AI, Nasdaq-listed mining company Marathon Digital Holdings (MARA.US) showed extremely polarized results in its third-quarter financial report: net profit soared to $632.1 million, while core mining revenue shrank significantly. This divergence stems from strong support from unrealized gains on assets rather than substantial improvement in fundamentals.

Net profit increased by about 413% compared to $123.1 million in the same period last year, with earnings per share at $1.28. According to data compiled by Woofun AI, this surge was mainly attributable to $885.3 million in unrealized book gains rather than cash inflows.

Meanwhile, revenue fell to $164.2 million, down 35% year-on-year, primarily due to a 37% drop in average mining prices. Although 2,247 BTC were mined during the quarter, both volume and price declines meant that revenue could not cover the cost pressures. To ease liquidity, the company sold 13,597 BTC after the end of the quarter (in October), raising about $1.1 billion at an average price of around $81,000. Of this, $750 million was used to repay mortgage loans, releasing the pledge on 17,477 BTC. Since the beginning of the year, the company has reduced debt by a total of $1.4 billion, equivalent to 37% of its year-start debt. As of the end of September, its holdings amounted to 34,012 BTC.

The company is rapidly shifting its strategic focus toward artificial intelligence data centers. Its subsidiary Exaion signed a four-year GPU service contract worth $79 million. On the infrastructure side, the company obtained land development rights in Texas for power demand of up to 2 gigawatts and is advancing the acquisition of the Long Ridge natural gas power plant in Ohio. Chairman and CEO Fred Thiel emphasized increasing per-unit power revenue through power security and computing power services. The board of directors also approved a $500 million stock repurchase program in an attempt to boost market confidence.

This is yet another aggressive transformation following several mining companies' attempts at diversification. However, when profits rely heavily on asset price fluctuations rather than operating cash flow, resilience against risks remains questionable. If BTC prices correct or AI business implementation falls short of expectations, such “on-paper fortunes” may quickly turn into financial pressure.