In a monumental decision, a federal appeals court ruled that the SEC must reconsider Grayscale Bitcoin Trust’s (OTC: GBTC) Bitcoin ETF in a victory for the US crypto industry as it highlights the SEC’s bias towards crypto. As a result of this significant industry-wide catalyst, Bitcoin mining stocks have been running rampant, and one of these stocks that may be poised for a continuation is Marathon Digital Holdings, Inc. (NASDAQ: MARA). With a number of Bitcoin catalysts set to happen in the first half of 2024, MARA stock could be one to hold in anticipation.
MARA Stock News
With growing inflation and interest rate hikes to curb inflation, Bitcoin dropped to multi-year lows – reaching a low of $15 thousand. At the same time, the collapse of the leading crypto exchange – FTX – has not helped with Bitcoin’s drop as uncertainty in the crypto market reached unprecedented levels leading to a major sell-off. As a result of these conditions, Bitcoin mining stocks significantly suffered in 2022 as one of the worst-performing sectors in the market.
Despite this, 2023 has started with a crypto bull run with Bitcoin at the forefront of this rally. Up more than 37% since the beginning of the year, Bitcoin appears to be well-positioned to rebound off its lows this year – driving increased interest in bitcoin mining stocks thanks to their exposure to the cryptocurrency. With this in mind, MARA stock appears to be one to benefit the most from Bitcoin’s rally to start the year thanks to the company’s status as one of the largest Bitcoin miners in North America.
In its latest January Bitcoin production update, MARA reported record production of 687 Bitcoins – representing a 45% MOM increase. This major increase in production is mainly due to MARA addressing the maintenance and technical issues at its King Mountain data center in Texas that hindered the company’s production in Q4 2022. By improving its operational capabilities, MARA has the potential to continue growing its Bitcoin production this year – especially with the company looking to energize more miners this year.
With this in mind, MARA expects to start energizing Applied Digital’s (NASDAQ: APLD) facilities in Garden City, Texas, and Ellendale, North Dakota this quarter. In addition, MARA energized 2100 miners at the Jamestown, North Dakota facility – increasing its operating fleet to nearly 71 thousand Bitcoin servers. Meanwhile, MARA intends to fully energize the 33 megawatts contracted for at the Jamestown facility this quarter which could bring an additional 8900 miners into operation. Through energizing these facilities, MARA is confident it could reach a production capacity of 23 exahashes by mid-2023. In light of this, the MARA stock forecast could be bright for 2023 if Bitcoin continues its rally.
Given the company’s efforts to expand Bitcoin production, MARA’s expenses are set to increase. To mitigate such increases, MARA began an immersion-cooled pilot project in November that involves submerging Bitcoin miners in a dielectric fluid to improve its operating efficiency and performance. Through this new cooling method, MARA was able to increase the hash rate of an S19 J Pro miner by 20% while reducing its power draw by 4%. Moreover, MARA increased the hash rate of an S19 XP miner by 20%.
Based on these results, MARA is confident it could reduce capital expenditure by 10% compared to traditional air-cooled setups and 7% compared to single-phase immersion systems. These reductions could be possible due to eliminating the need for aluminum chassis, heat synchs, and other parts that are not required in dual-phase immersion cooling. At the same time, MARA would be able to reduce its energy costs by 7% compared to single-phase immersion systems since more servers can be racked closely together in dual-phase immersion. In light of these potential cost savings, the MARA stock forecast for the long term appears to be bullish as the company could be on the right track to profitability.
Considering MARA’s increasing and more consistent Bitcoin production, MARA opted to sell 1500 Bitcoin for the second time since its inception to fund its monthly operating costs. As a result of this sale, MARA now holds more than 11.4 thousand Bitcoin – of which more than 8 thousand Bitcoin are unrestricted. MARA also indicated that it may continue selling some of its held Bitcoin in the coming months to support its monthly expenses. As a result, the company would not have to take on debt or issue shares in the future. Meanwhile, MARA ended January with $133.8 million in cash on hand. Through its cash and Bitcoin holdings, MARA appears to be well-positioned for future growth – making it one of the best Bitcoin mining stocks to invest in for the long term.
Meanwhile, MARA is working to expand its operations by agreeing with FS Innovation, LLC to form an Abu Dhabi Global Markets Company. Focused on operating digital assets mining facilities and mining digital assets, this newly formed company will initially consist of 2 mining sites comprising 250 MW in Abu Dhabi. As for its ownership equity, the ADGM company will be 80% owned by FSI and 20% owned by MARA. In this way, the mined digital assets by the ADGM company will be distributed to MARA and FSI twice a month according to both companies’ ownership interests. Since the company would receive extra Bitcoin in addition to its growing mining operations, the MARA stock forecast appears to be bright for 2023 and beyond.
Despite the company’s long-term potential in the Bitcoin mining industry, MARA stock is an attractive investment for several retail investors thanks to its short squeeze potential. With that in mind, MARA is highly shorted with a short interest rate of 45.3% and 58.6% of its float is on loan. Considering the stock’s rising momentum due to Bitcoin’s rally, short sellers covering their positions could trigger a massive short squeeze – making MARA stock one to watch closely this month.
*Updated June 18th, 2023
Interest Rates
Fed officials voted to hold interest rate hikes for the month of June on the 14th. In response, the price of Bitcoin dropped by 4% in the wake of the decision only to gradually climb 8% in the coming days. These price fluctuations perfectly reflect a theory held by many crypto analysts that states that Bitcoin may boom in response to a loss of faith in the US banking system.
The reason behind the Federal Reserve’s decision to temporarily pause its quantitative tightening efforts is due to advanced credit risks accumulated because of interest rate hikes which is extremely alarming and likely the reason behind the initial 4% plunge.
It may very well be that the 4% decline was simply a mass liquidation effort in response to the potentially devastating consequences that may occur due to the aforementioned advanced credit risks. That said, the following climb is likely a representation of the pursuit of banking alternatives such as Bitcoin.
Currently, policymakers predict that the Federal Reserve will increase interest rates two more times this year, which if implemented will result in the banking system carrying a heavier burden as it accumulates more credit risk in response to dwindling demand for loans.
Due to the banking system’s current trajectory, interest in a banking alternative may increase amidst growing uncertainty regarding the stability of traditional banks. As a result, more people may seek out BTC in order to secure the safety of their funds. This translates to a possible surge in Bitcoin’s price, which is great for MARA since Bitcoin’s increased price is likely to be reflected in the stock.
BlackRock Bitcoin ETF
In response to the growing demand for banking alternatives, BlackRock, Inc. (NYSE: BLK) the largest asset manager in the world filed for a bitcoin ETF through its iShares Bitcoin Trust On June 15th. Since iShares Bitcoin Trust will provide a fund that derives its value through Bitcoin, investors will be able to invest in Bitcoin without outright buying it.
BLK’s Bitcoin ETF is likely going to increase Bitcoin’s legitimacy through association and catalyze demand for Bitcoin as a result. As more businesses start seeing Bitcoin as a legitimate banking alternative the price is likely to rise due to mass buying. Due to these factors, the launch of BLK’s ETF may cause Bitcoin’s price to surge, and MARA stock with it.
*Updated June 25th, 2023
Leveraged Bitcoin Futures ETF
Bitcoin’s price rose by as much as 5.5% when the news broke concerning the SEC’s approval of the futures ETF. This notable increase in BTC price is positively correlated with Bitcoin miners, which is why MARA stock might run as a result. With this in mind, the SEC’s approval could simply be the tip of the iceberg as the Bitcoin mining industry may experience another run when The Volatility Shares’ ETF BITX launches on the Chicago Board Options (CBOR) on June 27.
Leveraged Bitcoin futures ETF may seem like a loaded and complex term, but in actuality, it is simple to understand. Leveraged ETFs use financial tools like bonds, contracts, and debt as leverage in order to amplify their returns. In the case of the ETF in question, the financial instrument that is used as leverage is Bitcoin futures, which are contracts to exchange Bitcoin at a predetermined price and on a future date. Basically, a leveraged Bitcoin futures ETF functions like a spot Bitcoin ETF, with the exception that it is backed by Bitcoin futures as opposed to just Bitcoin.
The SEC’s decision will likely cause many positive reverberations in the Bitcoin industry. First and foremost, Bitcoin miners are likely to see an increase in revenue due to the fact that the price of Bitcoin is increasing. That means that earnings may become a major catalyst for many Bitcoin mining stocks such as MARA in the coming quarters.
Additionally, this approval means that other spot Bitcoin ETFs like Black Rock’s ETF are more likely to get approved, in which case, Bitcoin’s price may spike since spot ETFs are backed by Bitcoin. As investors are anticipating the SEC’s decision on a number of spot Bitcoin ETFs, MARA stock could continue its upward momentum over the coming weeks.
*Updated July 27th, 2023
Regulating Crypto
As things stand, the recent crypto regulation bill is a strong catalyst for the crypto industry since it remedies overarching concerns related to the crypto market. Chief among these concerns is security as the crypto market is currently riddled with scams, fraud, and sudden rug pulls. Once renowned institutions like Celcius, FTX, and Terraform have soured the reputation of the crypto market, causing many to question the validity of Crypto as a secure form of investment.
This bill offers the market guardrails in the form of oversight by the SEC and CFTC in order to prevent such incidents from occurring, which is why if the bill is codified, cryptocurrencies may witness an influx of new users resulting in the rejuvenation of the market. Having said that, the fact that the bill is bipartisan makes it very likely to pass a House vote which would be bullish news for the crypto sector. In this way, Bitcoin mining stocks including MARA stock may see substantial runs with more updates regarding the fate of this bill.
Another important aspect of this bill is that it improves the authenticity of cryptocurrencies as a form of investment. Recently, the crypto market has been experiencing multiple wins as more and more institutions are utilizing it as a form of investment as shown by Blackrock’s application for a spot Bitcoin ETF. If the ETF gets approved, it would mark the start of a bullish run in the crypto sector and Bitcoin miners like MARA stock may prove to be a way to gain exposure to the sector.
Shareholders Meeting
Currently, MARA is poised to have its shareholders meeting on July 27 where shareholders will vote on a proposal to raise the company’s authorized shares from 200 million to 500 million which is likely to be approved by shareholders. While the expected dilution may impact the stock price in the short-term, it would allow the company to expand its miners to reach its targeted hash rate which would be pivotal for the company’s growth prospects.
*Updated August 30th, 2023
Bitcoin Rebound
On August 29th, a federal appeals court ruled in Grayscale’s favor in regards to appealing the SEC’s decision to overturn its BTC ETF. On behalf of the Court, Circuit Judge Noemi Rao wrote “The denial of Grayscale’s proposal was arbitrary and capricious because the Commission failed to explain its different treatment of similar products”. This statement underlines preferentialism and bias which is why moving forward the SEC may seek to combat these allegations by exercising due diligence in regards to Bitcoin equities.
In response to this bullish news, Bitcoin-related stocks witnessed substantial runs as Coinbase Global, Inc. (NASDAQ: COIN) ran 15% and Bitcoin futures ran more than 7%. It is worth noting that this industry-wide catalyst could be considered a part of a much larger saga. The obvious conclusion to this saga is a ruling on whether Grayscale’s ETF is approved or not. That said such a conclusion is short-sighted since it neglects the overarching implications of this ruling.
First and foremost circuit courts usually utilize their prior decisions as a “law of the circuit” which means that decisions are seen as binding precedents for that court. This means that this decision could be referenced and utilized in later cases regarding SEC’s decisions concerning Bitcoin ETFs in the D.C. Circuit Court of Appeals. That aside, more institutions are likely to feel incentivized to create Bitcoin ETFs which will likely add more pressure on government institutions like the SEC to more securely regulate BTC, an extremely bullish indication.
Out of all Bitcoin-related equities, MARA stock may potentially witness a continuation of its run in the coming days thanks to its exposure to Bitcoin as it currently has a massive stockpile of the cryptocurrency that amounts to 12.5 thousand. As is, the value of this stockpile is around $344 million, however, its stockpile’s value may further increase due to a couple of Bitcoin catalysts that are set to occur in the first half of 2024.
Firstly, the SEC is set to make a decision regarding ARK’s spot Bitcoin ETF at the start of 2024. If this ETF is approved, Bitcoin may go on a major run since it climbed more than 26% on BlackRock’s spot Bitcoin ETF application last June.
The second, and bigger, catalyst is the Bitcoin halving that is expected to take place on April 26, 2024. While the halving will impact MARA by increasing mining difficulty, it will have a positive impact on Bitcoin prices. Looking at the prior halving in 2012, 2016, and 2021, Bitcoin increased by 1728%, 3201%, and 565% respectively. While it remains difficult to forecast how much Bitcoin’s prices will increase after the next halving, it could be more than enough to significantly boost the company’s digital assets’ value as well as its revenues.
MARA Stock Financials
As things stand MARA’s balance sheet is extremely favorable. According to its Q1 2023 report, MARA’s assets increased QoQ from $1.19 billion to $1.3 billion with its cash and cash equivalents increasing from $103 million to $124 million. On the other hand, its liabilities decreased from $809 million to $758 million.
MARA’s revenues remained relatively stagnant YoY, only fluctuating from $51.7 million in Q1 2022 to $51.1 million in Q1 2023. That said, its operating expenses sharply decreased YoY from $39 million to only $3.8 million. As a result, its net loss decreased from $12.8 million to $7.2 million.
Q2 2023
According to MARA’s Q2 2023 report, its assets increased from $1.1 billion at the beginning of the year to $1.3 billion largely due to a substantial increase in its property and equipment as well as marginal improvements across the board. On the other hand, its liabilities experienced a slight decrease from $783.1 million to $734.6 million thanks to the elimination of term loans worth $49.8 million.
When it comes to revenue the company experienced a YoY increase from $24.9 million to $81.7 million due to block rewards, or proportional earnings from third-party mining operations, which increased from $20.1 million to $71.2 million. Meanwhile, expenses drastically decreased from $181.6 million to $5.5 million. This monumental feat was accomplished thanks to the elimination of losses on digital assets held within investment funds and the conversion of $13.9 million in losses on digital assets loan receivables to a $23.3 million gain on digital assets. Due to these changes, the company’s net loss decreased significantly from $212.6 million to $19.1 million.
Media Sentiment
@ShardiB2 is long MARA stock.
@pop_ey_ch is expecting massive gains from MARA stock
Technical Analysis
MARA stock is in a neutral trend with the stock trading in a sideways channel between $12.26 and $13.21. Looking at the indicators, the stock is currently above the 50 and 21 MAs which is a bullish indication, but still remains under the 200MA which is a bearish indication. Meanwhile, the RSI is overbought at 77 and the MACD is curling bearishly.
As for the fundamentals, MARA stock may witness a continuation given the upcoming Bitcoin catalysts in the first half of 2024 which are the SEC’s decision on ARK’s spot Bitcoin ETF and the halving. With the stock recently breaking through its resistance, investors could wait for it to cool down from its initial run by testing the $13.2 support to go long ahead of Bitcoin’s upcoming catalysts.
MARA Stock Forecast
Since it is considered by many investors as a go-to stock for Bitcoin catalysts, MARA stock may witness a continuation of its recent 28% run over the coming weeks following the DC Circuit Court of Appeals’ recent ruling regarding Grayscale’s Bitcoin ETF given its long-term implications. As is, Bitcoin is set to witness 2 major catalysts in the first half of 2024 in the SEC’s decision on ARK’s spot Bitcoin ETF and the halving next April. Considering these catalysts’ potential to boost Bitcoin’s price, MARA stock is one to hold onto in anticipation of both catalysts.
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