Joe Craft, the CEO, and Cary Marshall, the CFO of Alliance Resource Partners (ARLP), recently addressed inquiries regarding the company’s involvement in Bitcoin mining during their Q1 2024 Earnings Call.
ARLP, the leading coal mining company in Eastern America, has demonstrated a keen interest in engaging with digital assets, reflecting a broader trend among conventional businesses.
During the call, Marshall disclosed that the company initiated a Bitcoin mining project in the latter half of 2020. The decision was prompted by a desire to capitalize on their underutilized electricity load at the River View mine.
Since its inception, the pilot project has experienced substantial growth. As of Q1 2024, the company’s book balance for property, plant, and equipment amounted to $7.3 million.
Marshall further revealed that ARLP had successfully mined and acquired Bitcoin valued at around $30 million, equivalent to 425 Bitcoins. It is important to note that the company’s primary objective does not involve purchasing cryptocurrencies. Instead, they only sell them to cover certain expenses. Additionally, ARLP has leased surplus capacity to other Bitcoin miners.
In addition to Bitcoin mining, ARLP has diversified its portfolio by generating royalty income from mineral interests in coal and oil and gas-producing regions throughout the country.
The CFO also discussed the impact of the Bitcoin Halving event, which occurs approximately every four years and reduces the amount of new Bitcoin awarded to miners. Pre-halving, in Q1 2024, ARLP mined 69 Bitcoin and sold 18 to cover expenses. However, they remain optimistic about their profitability post-halving due to lower costs associated with Bitcoin production. They anticipate mining between 175 and 190 Bitcoin in 2024 and selling some to cover expenses, with a net projection of around 60% by year-end.
When questioned about the potential threat of renewable energy on their coal mining operations, Craft and Marshall dismissed concerns. They emphasized the critical role ARLP plays in providing affordable electricity, asserting that renewable sources cannot meet the growing demand.
Craft highlighted the opportunities they see in the expanding data center industry driven by Artificial Intelligence, as well as the industrial load fueled by electric vehicles and battery manufacturing—a field in which the US aims to establish a first-mover advantage.
The executives also stated that President Biden’s push for renewable energy does not alter the fundamental realities of electricity supply and demand across the country.
As a master limited partnership, ARLP’s common units are traded on the NASDAQ Global Select Market under the ticker symbol “ARLP.”