Alliance Resource Partners (ARLP), a Tulsa-headquartered coal miner, revealed in its first quarter 2024 earnings call that it has turned to Bitcoin (BTC) mining in the past three years and now holds a sizeable amount of the world's first decentralized cryptocurrency.
"In the second half of 2020, we started mining Bitcoin as a pilot project to monetize already paid for yet underutilized electricity load at our River View mine. Since then, we have mined and now own Bitcoin valued at approximately $30 million at the end of the 2024 quarter," said Cary Marshall, ARLP's senior vice president, as per a transcript of the call. He went on to reveal that the project came about "due to the fact that we've got excess power at our mining operations," and Bitcoin mining became an "opportunity." He reiterated that while the company holds 425 BTC, it doesn't buy Bitcoin.
Joe Craft, chairman, president, and CEO of Alliance Resource, said the company does sell when necessary "to cover our expenses," so exposure to the Bitcoin market is "limited" at this point.
Asked about the costs associated with its mining activities, Marshall said ARLP mined 69 BTC and sold around 25% of its stash, then retained 51 Bitcoin. Alliance Resource still has to monitor how Bitcoin prices go after the halving to determine production costs moving forward, he noted.
Yves Siegel of Siegel Asset Management asked how much Bitcoin the coal mining firm is expecting to obtain throughout the year, to which Marshall responded that it could be "around 60%" of anywhere between 175 and 190 BTC, since it would still need to sell some for its operating expenses.
ARLP posted total revenues of $651.7 million, beating analyst estimates of $625 million by 3.4%.
The cryptocurrency community on X (formerly Twitter) has since picked up the news and weighed in on the publicly listed firm's move to jump into the BTC mining space.
"They are not a core $BTC player so this is notable," one user said, adding that more companies may follow in Alliance Resource's footsteps. Another user said it was a "pretty smart" move to use excess energy for BTC mining. "When life gives you coal, make Bitcoin," another user said.
Not insignificant that this coal miner $ARLP put #Bitcoin on the balance sheet. They are not a core $BTC player so this is notable. There will be many companies to come doing the same thing... Demand is only beginning to increase - wait until large cap companies do it!
— corp_liberation (@corp_liberation) April 30, 2024
That's pretty smart using excess energy for Bitcoin mining.
— RichQuack (@RichQuack) April 30, 2024
Many other users lauded the company for putting its excess power to good and profitable use.
This can be seen as effective energy capacity utilization with asymmetric risk return. The firm is also able to add #Bitcoin on its balance sheet as a hedge against FX volatility.
— AfriBull (@Afri_bull) April 30, 2024
It's interesting to see companies like Alliance Resource Partners leveraging excess energy for Bitcoin mining. This showcases innovative ways of utilizing resources while tapping into the cryptocurrency market.
— BaseGPT (@gpt_base) April 30, 2024
