Marathon Digital: Buy This Cryptocurrency Stock Before Bitcoin … – Seeking Alpha


NiseriNMarathon Digital Holdings (NASDAQ:MARA) is my favorite Bitcoin (BTC-USD) mining fund, but things aren’t looking good as cryptocurrency stocks continue to be decimated during the current bear market. It’s hard to believe that MARA stock traded as high as $80 a year ago. Things have changed drastically as the cryptocurrency hype and euphoria has faded away along with quick and easy cryptocurrency trading profits. MARA stock is currently trading around $4 per share, down nearly 90% over the past 52 weeks. YCharts data shows that considering I haven’t sold a single share since I first bought MARA stock in 2021, I’m absolutely shocked at how low MARA stock has fallen. Marathon Digital Business Update In Marathon’s last update for November 2022, the company generated 472 BTC and increased its total Bitcoin reserves to 11,757. As of December 1st, Marathon Digital has deployed 69,000 active miners producing 7.0 EH/s. This is a remarkable feat considering the number of bankruptcies surrounding the cryptocurrency industry. Not only did Marathon maintain its Bitcoin reserves, it also installed a brand new 14,000 miners in Garden City, Texas to continue scaling operations. The company was able to avoid growing too fast and taking on too much debt to avoid an unfortunate bankruptcy situation. However, this is exactly what happened to Core Scientific and caused them to file for Chapter 11 bankruptcy. Core Scientific Bankruptcy Makes Marathon Digital Clear One of Marathon Digital’s competitors, Core Scientific, has filed for Chapter 11 bankruptcy after failing to pay its debts. Core Scientific used a dual mining strategy of both self-operated and third-party miners to become the largest Bitcoin mining company in North America. Unfortunately, the company took on too much debt and liability and was forced to liquidate all of its Bitcoin reserves to cover electricity and mining costs. BlackRock has provided Core Scientific with a $17 million loan, but will not be able to fix Core Scientific’s unprofitable business model. Marathon Digital, on the other hand, focuses on slow and steady growth, holding 100% of mined Bitcoin as BTC reserves. This shows that Marathon Digital is focused on the long term and understands that the true value of Bitcoin does not depend on current market prices. While many crypto haters are talking about the current bear market, I want to point out a major inflection point in the crypto markets regarding the upcoming bitcoin halving in 2024. Bitcoin may rise again after reaching Block #770,000. Alpha, I noted that Bitcoin will enter phase 3 of its current halving sometime in January 2023. At that time, Bitcoin hit a historical bottom and began to rise until the next halving. Bitcoin Halving Cycle (Cointelegraph.com) The Bitcoin Halving Cycle halves the amount of Bitcoin that can be mined every 4 years to make it more valuable and scarce. If history repeats itself, the price of bitcoin should bottom out in January 2023 and start moving upwards for the rest of the year. Cryptocurrency stocks like MARA trade alongside Bitcoin prices, so when no one else wants it, it might be a good time to buy MARA stock. Risk Factors Marathon Digital has a ton of risk factors that could force the company to liquidate its Bitcoin stock or declare bankruptcy if the crypto winter continues in the future. My biggest fear is that Bitcoin does not follow the historical phase 3 of its current halving cycle and continues to fall. Marathon Digital must continue to spend money on electricity and mining costs to keep the company afloat. The company had just $61.7 million in cash as of November 31, 2022, and I wonder if Marathon Digital will need to raise more money through a diluted stock offering or borrow more cash to stay in business. Marathon Digital has about $780 in debt and in my opinion the company is completely overburdened. It maintains an alarming debt to equity ratio that could spell future trouble for the company. If Marathon Digital starts selling its bitcoins, then MARA shares will likely approach $1 in no time. A prolonged crypto market in 2023 could push MARA stock even lower, which could indeed create a lot of unrealized losses for Marathon Digital shareholders. What’s next for MARA Stock? I have not sold any shares of MARA and will continue to increase my position when the markets get scared. MARA stock trades at an attractive P/S ratio of around 2, which is well below the Price-to-Sales ratio since the cryptocurrency’s last run. Data from YCharts From a fundamental perspective, I think it’s a good time to buy as many stocks as possible while others are scared. Marathon is still HODLing all BTC and should survive the crypto winter to benefit as we approach the next Bitcoin halving.



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