MARA Stock Analysis: Buy Marathon Digital Before Bitcoin’s Next Halving Event?

The forecast for Marathon Digital Holdings (NASDAQ:MARA) has turned brighter, as the company regained lost momentum. Demand for Bitcoin (BTC-USD) has clearly grown after the SEC approved spot Bitcoin ETFs, pushing the price of Bitcoin well over $50,000 per token. Thus, MARA stock has seen a boost, given the boosted value of Marathon Digital’s Bitcoin holdings. This MARA stock analysis will reveal what investors should do next.

However, rising Bitcoin prices also signal some key fundamental changes to how Bitcoin is mined. An upcoming halving event in April will slash mining rewards in half (these take place every four years). Accordingly, the question for Marathon Digital investors is whether Bitcoin’s price can rise enough to offset these immediate short-term volume losses.

Let’s dive into whether MARA stock remains a buy in this environment.

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Link Between Bitcoin and MARA Stock

Bitcoin’s market capitalization has recently surged to more than $1 trillion, with the largest cryptocurrency in the world now trading at more than $52,000 per token at the time of writing. This move marks a significant increase since November 2021 and has led to outsized interest in Bitcoin miners such as Marathon Digital. Indeed, MARA stock has seen a 58% increase in its recent mining results, contributing to the company’s massive move seen in recent weeks.

The company’s surging valuation has come in large thanks to the surge in Bitcoin’s valuation and successful mining operations. Marathon Digital, which had 15,741 Bitcoin in its hands in January, has not been a net seller of late because of bullish February trends. In fact, the company acquired 183.5 Bitcoins at an average price of $39,738, sensing strong Q4 earnings in the future. This is a key part of this MARA stock analysis.

The company witnessed a 7% increase in hash rate to 26.4 EH. However, the company’s operational hash rate fell to 19.3 EH upon going face-to-face with disruptions. Mining decreased by 42% from December and expanded geographically, with Texas and Nebraska mining facilities added for $178.6 million.

Earnings Outlook

Marathon Digital will report its Q4 and full-year 2023 financials on February 28.  A conference call is already pinned on the calendar for the same day. Through a Q&A platform, shareholders can engage to their hearts’ content from February 20 to 27.

During the earnings call, Marathon will discuss and shed light on their performance in 2023, fleet expansion, bitcoin mining, and long-term goals. Future topics will spotlight infrastructure, business strategy, and hash rate growth. The company will also likely admit revenue instability because of changes in bitcoin prices and network fluctuations. SEC filings also include a list of risk considerations.

Accordingly, it will be key for investors to focus on both the company’s growth prospects as well as its key risks. For now, the stock is flying – but that can change. Much will hinge on the company’s upcoming results, in terms of whether now is a good time to invest or not.

Marathon Digital Remains a Speculative Bet

Despite a $687 million loss in the fiscal year, Marathon Digital’s trailing 12-month loss declined to $349 million, with breakeven on the horizon. Accordingly, for those bullish on the price of Bitcoin over the near term, MARA stock may indeed represent a decent way to play this space for the time being.

That said, with the upcoming halving set to take place in a couple of months, caution is warranted. We still don’t know if Marathon Digital can maintain profitability when mining rewards get cut in half. Accordingly, this is a stock I’m remaining on the sidelines with right now. This concludes my MARA stock analysis.

On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.

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