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Bitcoin has been charging ahead again recently, and as is customary, positive BTC price action tends to resonate well with companies dependent on its success. This is especially true for bitcoin miners, who obviously stand to gain from the leading cryptocurrency’s elevated price. To wit, shares of Marathon Digital (MARA) have been putting in a strong performance as of late, and are up by 32% over the past month.
Those are some nice returns, but B. Riley analyst Lucas Pipes thinks shares still have a way to go. Quite a bit, as it happens. The analyst reiterated a Buy rating and $87 price target, suggesting shares will more than double over the next 12 months. (To watch Pipes’ track record, click here)
Pipes’ latest MARA endorsement follows on from the company’s announcement of a new $100 million revolving credit line with Silvergate Bank. This has been secured by the cash on its balance sheet and Marathon’s portfolio of digital assets.
The revolver is intended for general corporate purposes but could also be used to purchase more bitcoin mining equipment. Although the revolver is available for just one year currently, there is also the option for the contract to be renewed on an annual basis.
“Overall,” said Pipes, “We see the announcement as a major positive for both Marathon and the digital asset mining space in general.” While up to now, to fund internal growth plans most digital asset mining companies made use of equity raises, the announcement, says the 5-star analyst, amounts to “another precedent that could further open the door for the industry to tap into lower-cost debt markets.”
At the same time as disclosing the revolver, the company announced preliminary 3Q21 production figures. In the quarter, Marathon mined 1,252 bitcoins, “below” Pipes’ previous estimates. The disparity, says the analyst, was “mostly driven by lower average miners and higher implied network hash rate for the quarter which tends to be back-weighted when the company is rapidly scaling miners.”
Marathon said its present installed miner fleet numbers 25,272 miners, boasting a hash rate of 2.7 EH/s. The company expects to scale this to its “growth target” of 13.3 EH/s by the middle of next year, which is earlier than Pipes’ end of 2022 “assumption.”
Turning now to the rest of the Street, where there are currently two other Marathon reviews on record, and both are also positive, making for a Strong Buy consensus rating. The forecast calls for one-year gains of 43%, given the current average price target comes in at $61.67. (See MARA stock analysis)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.