Investors have been increasingly viewing cryptocurrency-related stocks as an attractive investment theme. While cryptocurrencies are decentralized, investing in crypto stocks is a centralized way of exposure to the crypto space. The long-term outlook seems attractive for cryptocurrency stocks, and one player in particular that deserves a mention is Marathon Digital (MARA). At the beginning of the year, MARA stock was trading at $10.40. As Bitcoin surged, the stock touched a high of $56.60. Since then, profit booking and some correction in Bitcoin has taken the stock lower to current levels of around $23. As such, it seems that Marathon Digital stock is undervalued. It is important to understand that as a Bitcoin miner, the company’s prospects depend on the price trend for the cryptocurrency. Amid intermediate corrections, it seems probable that Bitcoin will remain in an uptrend. Reasons for this include the wider adoption of the cryptocurrency and the limited supply of 21 million Bitcoins. For Q1 2021, Coinbase reported $215 billion in trading volume and $122 billion in assets on platform from over 8,000 institutional customers. Its retail trade volume in the period was 120 billion. This is an indication of the broad-based adoption of the cryptocurrency from retail as well as institutional investors. That bodes well for Marathon Digital, and thus, the company is well positioned to benefit if Bitcoin prices surge. (See Marathon Digital stock analysis on TipRanks) Heralding Strong Growth in Revenue Over the next two years, Marathon Digital is positioned for strong revenue and cash flow growth. Putting things into perspective, the company had 6,800 active miners as of Q1 2021. For the same period, the company minted 192 new Bitcoins. If the company’s expansion plan remains on track, Marathon Digital expects to have 103,120 miners by Q1 2022. With this mining capacity, the company expects to produce 55 to 60 Bitcoins per day. Further, at a Bitcoin price of $55,000, the company will deliver $94.4 million in monthly revenue, which would imply an annual revenue potential of $1.1 billion. Marathon Digital stock currently has a market capitalization of $1.9 billion. Therefore, the stock is trading at less than two times FY2022 revenue potential, indicative of an undervaluation. It’s also worth noting that the company reported cash and equivalents of $204.4 million as of Q1 2021. In addition, if Bitcoin holdings are included, the company has a total liquidity buffer of $503.2 million. This gives ample financial flexibility for growth. Another point to note is that Marathon Digital expects to mine Bitcoin at an average price of $4,541/BTC. Once 103,120 miners are active, the company is positioned to deliver strong EBITDA and cash flows. Considering the current cash buffer and the future cash flow potential, it seems very likely that Marathon will diversify beyond just Bitcoin mining. Within the cryptocurrency space, there are ample growth opportunities. For example, billionaire Mark Cuban believes that the growth of DeFi (decentralized finance) can be compared to the early days of the internet. It’s not long ago that the company was re-branded as Marathon Digital Holdings. The idea was to reflect its position as a leading digital asset technology company. The re-branding seems like a first step towards creating a diversified organization in the next few years. Wall Street’s Take According to TipRanks’ analyst rating consensus, MARA stock comes in as a Moderate Buy, with 1 Buy assigned in the last three months. As for price targets, the average analyst price target is $50 per share, implying around 116.64% upside potential from current levels. Concluding Views Marathon already has a partnership with Beowulf for access to low-cost electricity. That makes headwinds to the current expansion plans over the next few quarters unlikely. Further, Bitcoin can potentially remain above $50,000 in the next few quarters. Inflation has been accelerating in the United States and the cryptocurrency is also being viewed as a good inflation hedge. Additionally, the stock is likely to trend higher once revenue growth is associated with an improvement in EBITDA margin and cash flows. All of these factors add up to a promising future for Bitcoin. Disclosure: On the date of publication, Faisal Humayun did not have, either directly or indirectly, any positions in the securities mentioned in this article. Disclaimer: The information contained herein is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities.