Marathon Digital Holdings (MARA), a cryptocurrency miner, has been volatile as the value of Bitcoin fluctuates significantly. Here's what the statistics and data indicators say about investing in MARA stock right now. Marathon Digital Holdings, Inc. (MARA) stock has been up by 1914.59% in the last 12 months, and Wall Street analysts rate it as a strong buy on average. MARA stock also has a mean price target of $59.00, which suggests that experts anticipate a 25.69% increase in the stock during the next 12 months. However, MARA stock dropped by 27% in November this year after the company disclosed in a report that it had received a summons from the Securities and Exchange Commission (SEC). This announcement reduced the market's excitement for Marathon Digital stock, which had soared more than 1914.59% in the previous year as the company purchased and mined additional Bitcoins. However, could this pullback constitute a once-in-a-lifetime purchasing opportunity for investors willing to put up with the long-term market returns? Despite factors that may throw off investors, Marathon's achievements cannot be overlooked. Despite a crypto-world controversy, MARA stock is up by 264% year to year. So, let's have a look at the short history of the company, SEC investigation, the past and future of MARA stock, the benefits and drawbacks, and the quick facts of this choice when it comes to long-term investments.
A Short History of Marathon
Marathon Digital Holdings, Inc. is a digital asset technology business that mines cryptos in the United States with a focus on the blockchain ecosystem and digital asset development. Marathon Patent Group, based in Las Vegas, Nevada, was founded in 2010 with the goal of gathering encryption-related patents. MARA stock commenced trading in 2013, and in March 2021, Marathon Digital Holdings became the company's new name.
What Services Does Marathon Digital Provide?
We believe that most investors continue to misunderstand bitcoin mining and are so missing out on Marathon Digital's steady evolution into a significant enterprise. The concept is straightforward: Marathon Digital supplies the computational power required for Bitcoin mining. Bitcoin mining is the process of analyzing or validating transactions. The hash rate is the rate at which a cryptocurrency miner processes transactions. The faster a mining company processes transactions, the more money it makes. Over the period of one year, the global bitcoin network awards about 52,560 blocks, resulting in the mining of 328,500 BTC. At a BTC price of $55,000, the annual market opportunity is valued at $18.1 billion, which bitcoin miners like Marathon are aiming to exploit. Marathon Digital gets compensated for mining in Bitcoin. This Bitcoin can then be sold by the company to create income. Marathon Digital's operations are also supported by finance.
SEC Investigation and Convertible Debt Offering
The SEC investigation is connected to Marathon's October agreements with Beowulf Energy and other parties to establish a data center in Hardin, Montana. Marathon's issuing of 6 million restricted Marathon common shares to fund those acquisitions, which notably offered it favorable energy pricing through a partnership deal with Beowulf, is being investigated by the SEC, as well as if it violated any securities laws. Marathon may face difficulties as a result of this probe, as it relies on Beowulf's cheaper energy prices to mine Bitcoin at cost-effective rates. Marathon Digital also announced in November that it plans to raise $500 million in senior convertible debt to purchase additional bitcoin mining machines. Convertible debt offerings are often disliked by investors since they increase an organization's leverage while possibly reducing its stock. But, Marathon's debt-to-equity ratio was near zero at the third quarter-end, and it is anticipated to stay just below 1.0 when the transaction closes. As a result, investors who trust in Marathon's longer-term investment aspirations shouldn’t be too concerned about its convertible debt offering.
MARA Stock Price in the Past
Marathon had only $4.4 million in sales in 2020 and a net loss of $10.4 million. However, its sales rose to $90.2 million throughout the first 9 months of 2021 as its growing network of miners generated more BTC. By the end of October, it had 7,453 BTC, worth approximately $454 million in today's market. The company, however, lost $47.7 million in the first same 9 months of 2021 which it gained $90.2 million. With that gain excluded, Marathon's operating loss of $106.7 million means that it is still expending over $2 for every $1 of Bitcoin income generated. The optimist predicts that Marathon's losses will reduce as its scalability grows and the price of Bitcoin rises. However, the conservatives feel the company's losses could rapidly outstrip its liquidity, its profits are totally inconsistent, and its stock is overvalued.
Marathon Digital Stock Forecast
The remaining Marathon shipments of the last stated mining equipment are scheduled to arrive in January 2022. In comparison to the firm's promotional material, which implies a steady bitcoin blockchain difficulty rate, BOOX research forecasts the worldwide hash rate at 235 Exahashes per second by February 2022, implying that Marathon will mine roughly 40 Bitcoins per day, compared to 55-60 at the present network difficulty. Nonetheless, at a Bitcoin value of $55K, the company could feasibly generate more than $60M in mining profits each month by the same month 2022. Marathon can generate $834.4M in mining profits in 2022 with the 12th month operating margin of mining 1,378 Bitcoins monthly, given a Bitcoin value of $55K and 310 Exahashes per second.
Bitcoin might reach $100K, according to Tom Lee of Fundstrat Global Advisors. If this occurs, Marathon would certainly multiply in value. On the other hand, Cathie Wood believes Bitcoin will be worth $500K in the next 5 years. Similarly, Wood predicted that if investment banks began to buy in BTC and allocated 5% of their assets to it, the price of BTC would climb to about $560K in the next 5 years. Marathon has a track record of outperforming BTC prices. In essence, the higher Bitcoin rises, the higher the MARA stock rises.
Benefits of Investing in MARA Stock
- With the current Bitcoin cash price, shares of Bitcoin mining businesses such as Marathon are now on the market. Starting next year, MARA intends to increase its overall hash rate to 10.3 Exahash/second, making it the world's leading Bitcoin miner. Marathon will be able to generate 55-60 Bitcoins a day by deploying over 100K Application-Specific Integrated Circuit (ASIC) miners. Here are some of the benefits of long-term investment in MARA Stock, which currently has approximately 102.63M outstanding shares
- There is no long-term debt on the financial statements.
- Mining is being done in Montana and North Dakota, naturally cold areas, to maintain low electricity costs.
- MARA has a monopoly on S19 miners - the latest and most powerful miners that help generate Bitcoins faster.
- By the end of 2021, Marathon will have a vast fleet of 100K+ miners operational. MARA is expected to have a 10.3 EH of hash rate.
- Because the company owns its miners fully, miner leasing expenses have no impact on profitability.
- MARA will control about 6% of global BTC output, which is expected to be 50+ BTC every day in 2022.
Drawbacks of the Crypto Mining Company
Marathon Digital Holdings, Inc. now creates bitcoins using complex and costly technology. Marathon also intends to expand into other cryptocurrencies, such as Ethereum. Remember that all cryptocurrencies rely on various forms of complicated blockchain systems, which are distributed digital ledgers capable of safely recording peer-to-peer transactions or payments. The technology has grown crucial, yet Marathon, the crypto mining industry, faces numerous hurdles, notably:
- There is regulatory ambiguity, which might lead to increased expenses and lower profits.
- There are concerns with financial accounting and tax duties for blockchain transactions.
- There is a continual need to purchase hardware. Crypto mining is not cheap. A miner must incur substantial financial costs for the technology, such as the ASIC system. Furthermore, due to heavy usage, the hardware will wear out in a few years, necessitating the purchase of newer equipment.
- Large amounts of electricity must be purchased in order to run the systems. In reality, the fees can easily exceed three-quarters of the BTC mined value.
MARA Stock: Quick Facts
Marathon generated 417.7 BTC in October 2021, a 23% rise over the prior month, bringing the firm's revenue from bitcoin holdings to almost $457M. In a press statement, the crypto mining company stated that it had acquired 42,381 best ASIC miners this year, with yet another 3,285 ASIC miners in progress. Marathon has been rapidly growing. The crypto mining company intends to have over 100,000 operational miners producing about 13.3 Exahashes per second after receiving all remaining purchase requisition for miners early next year and deploying the equipment. According to CoinDesk, in October 2021, Marathon Digital received a $100M loan, which would be used to finance the company's bitcoin mining activities and the acquisition of new hardware. Marathon Digital presently owns approximately 7,453 BTC with 27,280 operational miners that generate roughly 2.96 Exahashes per second (EH/s).
Mara Stock: Other Things to Keep an Eye On
Although Bitcoin prices fell in the past months, they have been steadily rising since then. Simultaneously, the Chinese government cracked down on Bitcoin mining in August 2021. Since then, Marathon Digital Holdings, Inc. has been taking full advantage of the opportunity. More precisely, the corporation is investing heavily in Bitcoin miners, the price of which has decreased as Chinese cryptocurrency miners dump their equipment. Marathon said in August that it would spend $120M to purchase an extra 30K elevated mining equipment. Because the S19 mining machines have a high hash rate, the corporation can generate BTC at a faster rate. Although Marathon has achieved significant success in the Cryptocurrency market in 2021, the tale is a little more convoluted. The value of MARA stock has put investors on edge. Although it hasn't returned to the single cent level is maintained through the first quarter of 2020, there's been a quick rise and fall in the stock. Therefore, whether or not purchase in MARA stock makes perfect sense for your long-term investment is determined by two considerations. Are you comfortable investing in a meme stock, which was a speculative investment just over a year ago? Second, what are your thoughts on cryptocurrencies, specifically Bitcoin? Marathon is probably not for you if each of these considerations makes you nervous. But what if you're okay on both occurrences? The opportunity for MARA stock to experience significant long-term gain is undeniably present.
The Bottom Line: Is MARA Stock a Solid Long Term Investment?
Marathon Digital Holdings, Inc. is one of the most intriguing firms in the market, with a list of benefits that will help it consolidate its position as the largest publicly listed cryptocurrency miner. Its US-based business and competent executive team are implementing an amazing expansion strategy with tremendous upside potential, such as the purchase of new mining equipment mentioned above. In the context of an investment strategy, I consider the company worth a look for crypto investment. Hence, if you're a huge fan of Bitcoin, MARA stock could very well be a solid long-term investment in the crypto's future. The convertible debt offering underpins its long-term overseas markets, and if it meets its growth ambitions in 2022, it may be one of the top largest global crypto miners. MARA stock is not really cheap, and the Securities and Exchange Commission (SEC) investigation could create unanticipated hurdles. However, in the big scheme of things, I anticipate that as long as BTC prices continue rising, MARA stock will follow in the same footsteps. However, before investing, buyers should thoroughly comprehend the pitfalls. The bitcoin market is expected to grow in the coming years, so as BTC prices go up, the MARA stock earnings are also likely to rise. As an investor, you should conduct research on Marathon Digital Holdings, Inc.'s prospective revenues and opportunities before any investments.
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Written by Allen Lee
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