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Marathon: Ramping Up the Bitcoin Mining Power for Future Gains

·3 min read

Stocks of companies operating within the Bitcoin ecosystem have profited from the leading cryptocurrency’s continuous rise. Case in point: shares of Marathon Digital Holdings (MARA) have skyrocketed by 377% year-to-date. That’s peanuts, however, compared to its trailing twelve-month gains - all 11,234% of them. No, that’s not a typo.

The thing is, Marathon isn’t even generating any revenue from Bitcoin right now. That’s because it is hoarding all it can accumulate, i.e., it expects Bitcoin’s price to further increase.

The company released a business update last week, detailing its 1Q21 production statistics. The company mined 196 BTC in Q1, of which 102.3 were mined in March. All in all, as of March 31, Marathon held 5,134.2 Bitcoin on the books, including the 4,812.7 BTC purchased in January. At the current price of roughly $60,000 per Bitcoin, this equates to $308 million.

As the March mining figures indicate, Marathon’s ability to mine Bitcoin is only improving. And on this front, its capabilities will only get better.

Among the bulls is H.C. Wainwright analyst Kevin Dede, who says Marathon has “its paws on the top performing mining machines available in mass production, with claims on all to be manufactured through the March quarter 2022— a full year away.”

The 5-star analyst also notes the company’s strong cash position: “In combination with $212M of cash, Marathon sits well on top of the estimated $160-170M owed on the collection of Bitmain Antminer purchase contracts leading to the company's 103,000 miner fleet that should be up and running by the end of the March quarter next year, the largest in the publicly traded realm of bitcoin miners with which we are familiar."

Dede is impressed by Marathon’s “sharp operating tactics.” The company has been “savvy” with its purchase agreements, averaging a price of roughly $2,300 per machine, far lower than the range between $7,999 and $18,500 some S19 Pro units have been selling for recently.

Dede also notes Marathon's contract with Beowulf and Two Point One for power costs, which in an all-in arrangement comes in at 3.4 cents per kWh, as further evidence of its deal making prowess.

All in all, Dede keeps a Buy rating on MARA shares. However, due to the constant share gains, Dede’s $50 price target now suggests a limited upside. It will be interesting to see whether the analyst downgrades his rating or raises the price target over the coming months. (To watch Dede’s track record, click here)

Bitcoin miners have yet to attract many reviews from Wall Street’s experts, and Dede remains the sole analyst currently covering Marathon. (See MARA stock analysis on TipRanks)

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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.