Marathon Digital Holdings Inc (MARA) Stock Prediction: Should Investors Invest $1,000?

Key Points：

• The skyrocketing price of bitcoin has caused Marathon’s shares to flame out.
• It is consolidating the mining market and growing its operations at a quick pace.
• Although its stock isn’t inexpensive, if the price of Bitcoin continues to rise, it may have a bright future.
• Ten stocks that outperform Marathon Digital

The Bitcoin miner’s results during the last year have been absolutely phenomenal.

The share price of Marathon Digital (MARA -16.43%) has increased by over 640% in the last year. After a precipitous fall in 2022, Bitcoin’s price leveled out and recovered, prompting bulls to rush back to the cryptocurrency miner (CRYPTO: BTC). Is it too late to purchase Marathon stock following that enormous surge?

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How did Marathon transition to Bitcoin mining for pure play?

In the past, Marathon was a relatively small patent holding firm. However, in 2020, it changed its name to a Bitcoin mining company and ordered thousands of top-tier ASIC miners.

At first, many financiers were dubious about the strategy, seeing it as a dubious means to capitalize on the market’s unprecedented fascination in Bitcoin. Despite this, Marathon maintained steady growth over the subsequent three years, eventually becoming the biggest Bitcoin mining company in the world as of December 1st, with a fleet of about 184,400 operational miners. Riot Platforms, its main rival, had 112,944 miners in operation at the end of November.

In November, Marathon increased its daily production by 144%, averaging 38.4 BTC. With only a 6% increase from last year, Riot managed to create 18.4 BTC daily.

Compared to Riot, Marathon is expanding its business far more quickly. Two more plants were opened last year, a new joint venture was created in Abu Dhabi, and in mid-December, it agreed to buy multiple Bitcoin mining sites for $179 million. Its lead over Riot will undoubtedly grow as a result of these daring initiatives, which will consolidate a substantial piece of the market.

How quickly is Marathon expanding?

Bitcoin mining is the main source of income for Marathon. In order to increase its financial reserves, it also sells the Bitcoin it mines from time to time. Its cash and cryptocurrency holdings were $101 million and $287 million, respectively, at the end of the third quarter of 2023. When its cash and Bitcoin holdings surpassed its entire debt, it was a first.

With the launch of its first miners in 2021, Marathon saw a meteoric rise in revenue, going from $4 million in 2020 to $150 million in 2021. However, due to falling Bitcoin prices, increasing interest rates, and other macroeconomic factors, its revenue fell to $118 million in 2022.

As the price of Bitcoin improves and Marathon dramatically expands its mining operations, analysts predict that the company’s income will more than treble to $359 million this year. We should treat these projections with skepticism since they are highly dependent on the wildly fluctuating price of Bitcoin; furthermore, they anticipate a 47% increase in 2024 and a 42% increase in 2025.

What are the main flaws in Marathon?

Marathon is expanding its mining activities with a large amount of debt, and although its revenues are growing, it isn’t consistently profitable according to generally accepted accounting rules (GAAP). Its debt-to-equity ratio was 0.3 at the end of the most recent quarter, which is manageable; nevertheless, as it brings online more miners and plants, its leverage could continue to rise.

Following its year-long surge, Marathon has also become somewhat overextended. Enterprise value is $6.1 billion, which translates to around 12 times sales for next year. Trading at only 8 times next year’s sales, Riot is expanding at a slower pace than Marathon.

An other impending difficulty is the Bitcoin “halving,” which occurs every four years and halves the profits for mining BTC. We can expect the next Bitcoin halving to take place in the first half of 2024, following the previous one in 2020. The market price of Bitcoin is expected to rise as a result of that event, but Marathon will need to send out more miners to produce the same quantity of Bitcoin.

It is possible that the conclusion of the “crypto winter” and the half of Bitcoin’s supply will set the price of BTC ablaze once more. If that occurs, the increased cash worth of its Bitcoin holdings would skyrocket, and the greater mining expenses will be more than compensated for by the soaring price of Bitcoin. However, mining expenses will skyrocket and losses will grow if the price of Bitcoin does not take off.

If you’re a BTC bull, it’s not too late to invest in Marathon

Marathon Digital is still a highly speculative investment, but if you believe Bitcoin’s price will reach new highs in the next years, it may still have room to run. Personally, I’d rather buy Bitcoin on the open market than invest in Marathon’s capital-intensive industry, but this mining stock may beat BTC in the long run as it ramps up its operations.

Is Marathon Digital a good investment for $1,000 right now?

Take this into account before investing in Marathon Digital:

Marathon Digital was not included on the list of the top 10 stocks for investors to buy right now that was just released by the BTCC research team. In the years to come, the ten equities that were selected have the potential to generate enormous profits.

Think about when Nvidia put this list together—April 15, 2005——if you had invested $1,000 when we suggested it, you’d have $303,410!*