Marathon Digital (NASDAQ:MARA) stock continues to rise on positive news from the cryptocurrency miner. MARA stock is up 7% so far today as the prices of Bitcoin (BTC-USD) and other cryptocurrencies stage a recovery.
MARA shares also enjoyed a huge gain of 20% on July 18. Today’s gains follow a positive update on its Marathon Digital’s crypto mining operations and after the company announced it has reached a five-year deal with Applied Blockchain (NASDAQ:APLD), which builds and operates data centers across North America.
At the same time, the price of BTC is back above $22,000 after slumping as low as $19,000 in recent weeks. Other cryptocurrency prices also marched higher earlier today, including Ethereum (ETH-USD), which is trading around $1,537 per digital token.
What Happened With MARA Stock
Marathon Digital announced it has entered into an arrangement whereby Applied Blockchain will provide it with comprehensive hosting services for its Bitcoin miners at Applied Blockchain’s data centers in the U.S. The deal gives Marathon Digital 254 megawatts of new hosting capacity for its Bitcoin mining operations, with an option to increase that to 324 megawatts in coming years.
The hosting and capacity increase will bolster Marathon Digital’s cryptocurrency mining operations and provide the company with a long-term operating horizon. The deal with Applied Blockchain will help Marathon Digital continue growing and scaling its Bitcoin mining operation into the future.
Marathon Digital currently has 36,830 active cryptocurrency miners and holds 9,941 BTC valued at $315 million as of June 1. The company reported it produced 268 new Bitcoin during the month of May this year.
Why It Matters
News of the arrangement with Applied Blockchain comes at a critical time for the cryptocurrency sector. The price of BTC and other digital assets are down 70% or more this year. As a result, the industry is grappling with a washout as multiple firms involved in crypto mining and trading file for bankruptcy protection or cease operations amid a global liquidity crunch.
The five-year deal with Applied Blockchain signals to investors that Marathon Digital is in the crypto mining business for the long haul and is likely to survive the current rout in cryptocurrency companies. “We look forward to working alongside Applied Blockchain to install miners and achieve our growth targets,” said Marathon CEO Fred Thiel in a news release.
What’s Next for MARA Stock
Investors are clearly taking news of the arrangement between Marathon Digital and Applied Blockchain as a positive development, judging by the 26% rally in MARA stock so far this week. Rising cryptocurrency prices are also fueling the rally.
That said, investors should keep in mind that Marathon Digital’s stock has declined 68% year-to-date (YTD), mirroring the decline in BTC. APLD stock is down 94% YTD and trading at $1.50 per share. Also, the entire cryptocurrency sector remains volatile and unpredictable. Investors should proceed with caution.
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On the date of publication, Joel Baglole 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.
