Cryptocurrency miner Marathon Digital Holdings (MARA) has been volatile as the price of Bitcoin fluctuates wildly. Here is what the fundamentals and technical analysis say about buying MARA stock now. Marathon is a digital asset technology company that mines cryptocurrencies, focusing on the blockchain ecosystem and the generation of digital assets.
The company started out in 2010 as Marathon Patent Group when it began collecting patents related to encryption. MARA stock began trading in 2013. On March 1, the company changed its name to Marathon Digital Holdings. On April 26, Fred Thiel replaced Merrick Okamoto as CEO.
Marathon Digital provides the computing power needed to mine Bitcoins. Bitcoin mining consists of processing or validating transactions. The speed at which a digital currency miner processes transactions is called the hash rate. The faster a miner can process transactions, the more revenue it generates.
Marathon Digital is paid in Bitcoin for mining. The company can then sell this Bitcoin to generate revenue. Marathon Digital also funds its operations through financing.
Meanwhile, on October 15, the Securities and Exchange Commission approved bitcoin futures ETFs — a first for the industry, Coindesk.com reported. ProShares, which filed for its Bitcoin Strategy ETF this past summer, is set to begin trading on October 19.
The SEC also approved on October 5 the Volt Crypto Industry Revolution and Tech ETF, in which MARA stock is expected to be among the holdings.
Marathon Digital’s Mining Power Grows
On September 2, the company reported that it had produced 469.6 new-minted bitcoins during August 2021, increasing total bitcoin holdings to approximately 6,695 with a fair market value of around $316.4 million. Cash on hand was $70.9 million, and total liquidity, defined as cash and bitcoin holdings, was about $387.3 million.
Marathon received 21,584 top-tier ASIC miners from Bitmain year to date, with an additional 5,916 in transit. The existing mining fleet consists of 22,412 active miners producing approximately 2.3 EH/s.
Rival Riot Blockchain (RIOT) produced 491 BTC in the first quarter. However, Riot is one of the most profitable mining companies in the sector, with a 67.6% gross margin, while Marathon Digital posted negative gross profit margin of -498.9% in Q1.
Growing Installation Base
Marathon Digital plans to increase machine installations over the next several months. It anticipates delivery of 75,000 miners by the end of this year, with an additional 15,200 in January 2022. Marathon Digital expects to have a total of 103,120 miners by Q1 2022. With this mining capacity, it expects to produce 55-60 Bitcoin per day.
Dede wrote in an April 12 report that Marathon’s average cost per mining machine is $2,300, which is considerably lower than the $7,999-$18,500 he’s seen others pay.
On May 24, Marathon Digital inked a deal with Compute North to host about 73,000 of its Bitcoin miners as part of a new 300-megawatt data center in Texas. Marathon will provide Compute North with an 18-month bridge loan of up to $67 million to build the facility. The project is expected to begin in October 2021.
MARA Stock Technical Analysis
Marathon Digital was forming a bearish head-and-shoulders pattern in early April. But the stock went south from there, and no new pattern has formed. However, MARA stock has found support at its 200-day line, which is a positive sign.
MARA shares are closely tied to Bitcoin prices, so they have been on a wild ride. At the beginning of the year, MARA stock was trading around 10. As Bitcoin surged, the stock reached a high of 57.75 on April 6.
Shares popped 15% on July 26 as the price of Bitcoin climbed back over $39,000, but gave back most of those gains on July 27. MARA stock is trading just above its 50-day line, according to MarketSmith chart analysis.
Shares fell as much as 5.5% on June 21 as Bitcoin’s value dropped to below $33,000 amid an intensifying Chinese crackdown on Bitcoin mining. On September 24, China banned all cryptocurrency transactions. The move sent the value of Bitcoin down $2,000.
Meanwhile, the Biden administration on July 15 said it formed a task force to crack down on the use of cryptocurrency in ransomware attacks. Its effort will focus on tracing proceeds paid to hackers.
But renewed interest in non-fungible tokens and growing use of intelligent contracts fueled a 5% surge in Bitcoin on September 2, pushing the digital currency back above $50,000.
The stock’s relative strength line is trending up and at highs not seen since April. Marathon Digital has a top-notch RS Rating of 99 and a Composite Rating of 80.
An Accumulation/Distribution grade of A indicates heavy buying by institutional investors.