- Marathon (MARA) stock has not been selling any Bitcoin since October of last year
- Management expects a hash rate of 23.3 EH/s by early 2023
- The company even purchased an additional 4813 BTC in January
With Oil, Gold, and other commodities being the major focus of most investors, I believe that now is a crucial moment for Bitcoin (CCC:BTC-USD). In order to reach $100,000 per coin, the cryptocurrency should prove itself as a viable alternative to fiat currency.
It’s in this backdrop that investors should pay close attention to Bitcoin miners such as Marathon Digital (NASDAQ:MARA). As one of the largest miners, MARA stock should be highly leveraged to the price of Bitcoin. However, MARA stock had only gained 15% from its most recent low — despite Bitcoin being up 23%.
This could present an interesting opportunity for investors.
Marathon’s Operations are Going Strong
Marathon recently released an update on its mining operations. Going over the results I believe that the company is well underway in executing its plans. It mined 360.3 Bitcoin during February 2022 compared to the 43.4 mined the previous year. This represented an increase of 729% year-over-year.
Bitcoin mined in February was lower than the 462.1 mined in January. While the decrease initially seems concerning, from what I gather this should only be temporary. February’s production was negatively impacted by power fluctuations in its Montana operations as well as a voluntary curtailment of activity in Texas to support the grid during a storm.
Marathon expects monthly production volatility to level off as it expands to new locations. By diversifying its mining operations geographically, the company’s overall production numbers won’t be so dependent on local issues.
Currently, Marathon’s mining fleet consists of 35,510 active miners with a hash rate of 3.8 EH/s. This hash rate increased by 8% in February as the company deployed 2,800 new mining rigs. The plan is to continue expanding and deploying new miners to further increase the hash rate.
Marathon is Holding on to its Crypto
Marathon is expecting to reach a hash rate of 13.3 EH/s by mid-2022 and 23.3 EH/s by early 2023. The orders for these new miners are already in place and the company is just waiting for delivery and deployment. In February alone, Marathon received approximately 7,600 top-tier ASIC miners from BITMAIN.
This will allow the company to accelerate the mining of Bitcoin and continue to build its stockpile. The company has not been selling any Bitcoin since October of last year. In fact, management even purchased an additional 4,813 BTC in January for an average price of $31,168. By opting to hold for value, Marathon is reducing the impact of selling BTC at the low.
This may be a strategy that works out well for Marathon given that the price of Bitcoin is slowly recovering. There are many fundamental reasons that make Bitcoin a good store of value. The Ukraine – Russia conflict has shown the dangers of relying on fiat currency.
Marathon currently holds 8,956 BTC with a market value of roughly $415.6 million. This value of course will fluctuate depending on the price of BTC. Assuming BTC can hit $100,000 in the future, this holding can be worth close to $1 billion. Many experts believe that Bitcoin crossing the $100,000 isn’t really a question of if but when.
If this happens, then MARA stock could 3x – 5x from here. Despite the execution risk, I think MARA stock should be considered by aggressive investors. The company has basically gone “all-in” on Bitcoin. If you believe in the future of Bitcoin vis-à-vis fiat currencies, then MARA stock is an interesting choice.
On the date of publication, Joseph Nograles 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.