Marathon Digital (NASDAQ:MARA) stock rose 13% overnight as Bitcoin (BTC-USD) prices approached $52,000. This brought the value of the leading cryptocurrency to over $1 trillion. That’s over 52% of the total cryptocurrency market.
Marathon is a Bitcoin miner whose computers produced 1,084 Bitcoins in January, up 58% from a year earlier.
MARA stock opened this morning at $29.03 per share, a market capitalization of over $6 billion.
Bitcoin Is Back, Baby!
Bitcoin prices are rising as investors look toward a “halving” that will cut the number of new coins entering circulation. It’s part of the Bitcoin protocol and happens every four years. Analysts say Bitcoin prices are also rising as short positions are liquidated.
Halving raises prices by crimping supply. Solving the Bitcoin cryptographic puzzle using powerful computers was worth 12.5 Bitcoins in 2020. It will soon be worth only 3.125. There can be no more than 21 million answers to Bitcoin’s cryptographic puzzle, a limit designed to keep its value rising indefinitely.
Marathon is due to report its fourth-quarter results on March 23. Investors are expecting a profit of 4 cents/share on revenue of $143 million.
However, the income statement is not the point of buying MARA stock. That lies in Marathon’s balance sheet and the 15,741 Bitcoin it has on its books.
InvestorPlace contributor David Moadel recently wrote favorably about Marathon. He believes it offers more capital gains than buying a Bitcoin exchange-traded fund (ETF) like the iShares Bitcoin Trust (NASDAQ:IBIT) run by Blackrock (NYSE:BLK).
Moadel notes that Marathon is expanding operations into Paraguay and the United Arab Emirates. It needs an immense amount of cheap electricity to run its server farms, which act as Bitcoin mines. The company is also looking at Africa for expansion. Moadel calls Bitcoin “a perfect portfolio diversifier.”
MARA Stock: What Happens Next?
In addition to its other charms, Bitcoin serves as a good measure of market sentiment. Prices rise and fall with speculative fervor, and right now, that’s rising.
As of this writing, Dana Blankenhorn did not hold (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.
