Why Marathon Digital Stock Is Worth Buying Ahead of the Bitcoin Halving


  • Marathon Digital (MARA) stock continues to stumble, down on a year-to-date basis.
  • This move comes ahead of the Bitcoin having, which could have mixed effects for the miner.
  • As the company ramps up its Bitcoin production capacity, and prices rise, it’s possible the market could have this stock all wrong.
MARA stock - Why Marathon Digital Stock Is Worth Buying Ahead of the Bitcoin Halving

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Investors seeking amplified exposure to Bitcoin (BTC-USD) often consider holding Marathon Digital Holdings (NASDAQ:MARA) stock alongside direct Bitcoin ownership or spot Bitcoin ETFs. MARA stock, priced under $25 per share, offers high-beta exposure to Bitcoin. Bitcoin may be a better choice for those with lower risk tolerance. 

That said, for Bitcoin bulls seeking amplified exposure to ride this bull market rally higher, one can argue that MARA stock appears attractive at the moment. Let’s dive into why this stock could be worth considering on this recent decline.

Strong Production Numbers

Despite operational challenges cited by CEO Fred Thiel, Marathon Digital remained one of the most active Bitcoin producers in the market. In March, the company produced 894 Bitcoin, up 8% year over year, and increased its installed hash rate by 81%. 

The key headwind facing all Bitcoin miners is the upcoming halving, which will slash miner rewards in half overnight. This will make mining Bitcoin much more difficult, and favor companies that have been investing in their mining capacity. In this regard, Marathon Digital stands out as a key winner in this race.

With 17,381 Bitcoins and combined cash and tokens worth $1.6 billion, Marathon Digital’s financial position improved notably from a net loss in 2022 to net income in 2023.

Marathon Digital reduced its debt by 56%, from $748 million in 2022 to $331 million in the previous year. CEO Thiel aims to almost double Marathon Digital’s hash rate by 2025. The company acquired a 200-megawatt mining data center to enhance operational capacity and reduce costs per coin. 

However, despite these positive developments, the stock price declined from $22 to $18 per share in early April, coinciding with Bitcoin’s pullback from $72,500.

Expansion After Bitcoin Halving

Marathon Digital is strategizing around how the company aims to leverage the impending Bitcoin halving for growth. Looking at previous halvings, like the one in 2028, may provide investors with some insight. That halving allowed the company to shift its focus to growth, aiming to utilize resources for acquisition and expansion.

Marathon’s Chief of Growth Adam Swick emphasized the company’s readiness to pursue additional opportunities after the halving event. These may include adding additional balance sheet leverage for acquisitions.

With $324 million in cash and 17,381 in Bitcoin holdings as of March 31, Marathon capitalized on lowering operational costs through site acquisitions. Recent purchases include mining facilities in Texas and Nebraska, reinforcing its growth strategy.

Buy MARA Stock

For investors looking for a long-term way to play Bitcoin price appreciation, there’s always the option of keeping it simple and buying Bitcoin. But for those who think Bitcoin’s spike will be impressive, buying Bitcoin miners may provide outsized upside, given the leverage these companies provide to the price of Bitcoin.

I think MARA stock is one that investors should think about trading rather than owning over the very long-term, as competitive advantages eventually are eroded and miners become price takers. But in the near-term, this is a company with strong competitive positioning I think is worth owning here.

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.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.

Article printed from InvestorPlace Media, https://investorplace.com/2024/04/why-marathon-digital-stock-is-worth-buying-ahead-of-the-bitcoin-halving/.

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