Marathon Patent (NASDAQ:MARA) was among the most successful patent trolls in the last decade. Patent trolls buy patent rights, then use lawyers to extend their meaning and sue anyone in the space. They are the bane of technology. Back in 2016 MARA stock traded at more than $50.
Eventually, courts stopped looking kindly on such companies. By mid-2020 the company had been shifting into cryptocurrency, but you could still get shares for under $1.
After putting $150 million into the cryptocurrency and changing its name to Marathon Digital early this year, the stock is hot again. Today it trades at around $40 with a $4 billion market cap after recording a loss of $10 million on revenue of $4.5 million for all of 2020.
The New Game and MARA Stock
Today’s Marathon expects to have over 10,000 machines churning out numbers by the end of the month in its Hardin, Mont. facility 46 miles east of Billings.
Hardin is served by a 115.7 megawatt, coal-fired power plant run by Beowulf Energy just outside of town. Beowulf and Marathon almost merged in 2019 but backed off as Bitcoin (CCC:BTC-USD) busted.
Still, Beowulf and Marathon were a perfect match. Beowulf needed a customer for its dirty energy, and Marathon needed a lot of cheap energy. A story on the deal last fall called it “coal’s last stand.”
One thing Bitcoin fans don’t like to mention is that the technology is an energy hog. In a world going green, crypto is most definitely brown. In the Beowulf deal, which included an equity stake, Marathon is getting power at 2.8 cents/kwh, about one-quarter of the average U.S. price.
Bitcoin Bulls and Marathon Bears
For investors who love Bitcoin, MARA stock looks like a deal.
Here at InvestorPlace, David Moadel writes that you can “leverage serious Bitcoin mining hash power for the long term with a position in MARA stock.”
Mark Hake believes that the stock is one of the best ways to play Bitcoin and is worth more than $70.
That’s because, as hot as it was in 2018, Bitcoin is even hotter today. The cryptocurrency, whose quantity will forever be limited to 21 million BTC when all is done was about $54,000 at this writing. Of course, the volatile crypto has traded between $49,000 and $61,000 so far this month.
Analysts at JPMorgan Chase (NYSE:JPM) said in January it could hit $100,000 this year, and it’s well on its way.
Not all InvestorPlace writers are sold on Bitcoin, or on Marathon.
Vince Martin thinks Marathon’s miners are too expensive, and there may be too much competition for Marathon to profit. Will Ashworth suggests that if you want to buy Bitcoin, just buy Bitcoin.
Josh Enomoto even suggests shorting Marathon stock as a hedge against Bitcoin’s next plunge. While Thomas Neil writes that shorting Marathon is a losing proposition as long as Bitcoin stays hot.
The Bottom Line
Before putting the down payment on your house into Marathon stock, I suggest you read its 10-K. See if you want to do business with them.
Then I suggest you read more on Bitcoin. Bitcoin doesn’t just cost energy to mine. It costs energy to use. The Bitcoin network carries the carbon footprint of the city of London. The business has become a great way for Iran to get around Western sanctions. Half the business is in China, where hydropower is cheap.
Unless Bitcoin can get its arms around its energy problem, it will remain just another speculative asset. If you want to waste the planet to solve a math problem, I can’t stop you. Just know what you’re getting into.
At the time of publication, Dana Blankenhorn owned no shares, directly or indirectly, in any companies mentioned in this article.
Dana Blankenhorn has been a financial and technology journalist since 1978. He is the author of Technology’s Big Bang: Yesterday, Today and Tomorrow with Moore’s Law, available at the Amazon Kindle store. Write him at email@example.com, tweet him at @danablankenhorn, or subscribe to his Substack https://danafblankenhorn.substack.com/.