Marathon Digital (NASDAQ:MARA) stock has a bearish outlook, with the stock actually down on the year. This comes as Bitcoin (BTC-USD) hovers near an all-time high. One might wonder why this is. After all, the MARA stock price is directly tied to the value of Bitcoin.
Investors are factoring in the upcoming Bitcoin halving and its impact on prices. A 50% decrease in revenue is significant for a company like Marathon Digital unless Bitcoin keeps rising. For Bitcoin believers, MARA stock may be a buy.
Strong Financials and MARA Stock
In its recent quarter earnings report, Marathon certainly took a victory lap given its outstanding results.
The company brought in more than $150 in net income alongside revenue of $156 million, with 15,126 Bitcoin held on its balance sheet at the end of the year.
Those Bitcoin alone are worth well over $1 billion at the time of writing, supporting Marathon Digital’s $6 billion valuation.
However, it’s the other $5 billion in the company’s valuation tied to future cash flows that remains uncertain, particularly if the upcoming halving event cut these numbers in half.
Marathon Digital did announce in its earnings report a plan to boost margins and double its has rate by 2025. This strategic plan may require utilizing some of the company’s Bitcoin reserve, but would also mean the company won’t need to dilute shareholders or take on debt.
So, the question around this company’s future financial picture is: where do you see the price of Bitcoin in five years from now?
Bitcoin Mining Firmware Released
As a major Bitcoin miner, Marathon unveiled MARAFW and MARA UCB 2100, advanced firmware and control boards enhancing Bitcoin mining rigs’ performance and efficiency.
After a year of development and testing, Marathon is implementing MARAFW across its 200,000+ mining rigs.
After successful initial rollouts, Marathon extends MARAFW and MARA UCB 2100 to the wider Bitcoin mining community. The firm has sold these to multiple enterprise clients and now offers them to all interested miners.
MARAFW, a customized firmware, optimizes Bitcoin miners’ chip settings for enhanced performance, efficiency, and stability.
It features hash rate optimization, auto-tuning, overclocking, underclocking, and intelligent thermal protection. MARAFW is compatible with most stock control boards and Marathon’s MARA UCB 2100.
These enhancements are certainly worth noting, and there’s a tremendous amount of innovation happening behind the scenes the market doesn’t appear to be factoring in right now.
This Stock Looks Like a Buy
Marathon Digital’s path forward remains murky. There’s plenty of short interest around this stock, with so much uncertainty tied to the company’s future cash flow generation capabilities.
That said, considering the balance of risks, I think MARA stock looks like a buy at current levels, for those who think Bitcoin will continue to push past $100,000 per token by the end of the year.
It’s my view that MARA stock could actually be a better way to play Bitcoin’s potential rise than Bitcoin itself. Its leveraged nature essentially ensures this.
Of course, it’s a risky bet. But those in the crypto sector aren’t scared of risk, especially considering the momentum in this space right now.
On the date of publication, Chris MacDonald 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.
