During the Q1 2024 Earnings Call, Joe Craft, the Chief Executive Officer, and Cary Marshall, the Chief Financial Officer, of Alliance Resource Partners (ARLP), addressed questions regarding the company’s involvement in Bitcoin mining. ARLP, which is the largest coal mining company in Eastern America, has recently shown interest in mining cryptocurrencies, reflecting a growing trend among traditional companies to explore digital assets.
The company initially ventured into Bitcoin mining in the second half of 2020, as Marshall revealed during the call. This decision was driven by the desire to monetize their surplus electricity load at their River View mine, which had been paid for but underutilized. Since then, the pilot project has expanded significantly, with the company’s book balance (including property, plant, and equipment) reaching $7.3 million by the end of Q1 2024.
Marshall also disclosed that ARLP had mined and acquired approximately $30 million worth of Bitcoin, equivalent to 425 Bitcoins. However, he emphasized that the company had no intention of purchasing cryptocurrencies and only sold them to cover certain expenses. Additionally, ARLP rented out excess capacity to other Bitcoin miners.
In addition to Bitcoin mining, ARLP has diversified its portfolio by generating royalty income from mineral interests owned in coal and oil and gas-producing regions throughout the country.
The CFO addressed the impact of the Bitcoin Halving event, which occurs approximately every four years and halves the amount of newly generated Bitcoin awarded to miners. Marshall stated that in the first quarter of 2024, prior to the halving, ARLP mined 69 Bitcoins and sold 18 to cover expenses. However, he expressed optimism post-halving, as the company’s costs of Bitcoin generation were lower, indicating the potential for increased accumulation in the coming months. Marshall projected that ARLP would mine between 175 and 190 Bitcoins in 2024, selling some to cover expenses, with a net projection of around 60% by year-end.
When asked about the threat posed by renewable energy to their coal mining activities, Craft and Marshall downplayed the concern. They highlighted the crucial role of their company in providing affordable electricity, which renewable sources are unable to meet due to growing demand. Craft expressed optimism regarding the increasing rate of data centers driven by Artificial Intelligence and industrial load led by electric vehicles and battery manufacturing. These areas present opportunities for ARLP to have a first-mover advantage in the United States. The executives also asserted that President Biden’s focus on renewable energy did not alter the fundamental realities of electricity supply and demand nationwide.
Alliance Resource Partners is a master limited partnership, with common units traded on the NASDAQ Global Select Market under the ticker symbol “ARLP.”
