- Marathon Digital reveals a diversification plan by adding Fidelity Digital Asset as its second bitcoin custodian.
- The decision is influenced by recent cyberattacks on custodians, emphasizing the need for distributed asset security.
Marathon Digital Broadens its Bitcoin Safekeeping Strategy
Marathon Digital (MARA), a renowned Bitcoin (BTC) mining entity, has announced its strategic partnership with Fidelity Digital Asset. This alliance aims to diversify Marathon’s bitcoin custody, mitigating the potential risks associated with a singular custodial reliance.
Traditionally, Marathon has placed its trust in a solitary bitcoin custody provider. However, with the rapidly evolving landscape of blockchain and its associated vulnerabilities, the firm deems it vital to recalibrate its treasury management strategy. This involves integrating another enterprise-grade custodian – and Fidelity Digital Asset now fits the bill.
Per a subsequent disclosure, Marathon has intimated its intention to inaugurate one or more custodial asset accounts with Fidelity. This move is not merely limited to augmenting asset security but also broadening Marathon’s storage horizons.
Rationale Behind the Strategic Shift
Marathon’s diversification drive stems from the sheer volume of its bitcoin assets. As of September 30, Marathon’s bitcoin cache stood at 13,726, and with a monthly acquisition rate of over 1,000 bitcoins, the company perceives an exigent need to scatter its bitcoin custody across various custodians. The company’s Chief Financial Officer, Salman Khan, accentuates this perspective, emphasizing the timeliness of such a decision.
The world of crypto custody is instrumental to the broader digital asset ecosystem. Entities, hesitant or unequipped to self-store their digital treasures like Bitcoin, can opt for third-party custodians. The rationale is clear: in the unfortunate event of one custodian facing disruptions or breaches, not all assets are imperiled.
This prudential mindset is grounded in recent events. Multiple custodians, notably Fortress Trust, have fallen prey to cyber intrusions, leading to sizable digital asset losses. The ramifications of such security breaches are far-reaching, as evidenced by Fortress Trust’s failed acquisition endeavor with blockchain pioneer, Ripple.
In the financial realm, post this announcement, Marathon’s stock witnessed a 1.3% uptick during post-market trades. This trend is emblematic of the company’s impressive performance, boasting a 116% surge this year, juxtaposed with Bitcoin‘s 71% ascent.