WWhen a company’s entire net worth is tied to a highly volatile asset, it becomes difficult to analyze inventory. Are you analyzing inventory or asset?
What if the original is eliminated? Does the company have another source of income? digital marathon collectiblesMaraCryptocurrency miners, especially bitcoins. When Bitcoin (BTC) Prices soared rapidly in 2021, and Marathon shares are up, too.
It hit $76 in November 2021. Since then, bitcoin prices have crashed, and Marathon has followed suit. The stock closed at $11.39 on May 13, down about 85%. We are optimistic about the marathon despite the massive fall.
Marathon hasn’t always been a bitcoin miner. From its inception in 2010 until 2021, the company has been a patent holder. It was called Marathon Patent Group, and it holds patents in the field of cryptography. Last year, the company changed its name, replaced its CEO, and got into the bitcoin mining business.
The Marathon business model works this way: miners need technology and computing power to mine bitcoin. Presented by marathon. Its technology helps miners to mine bitcoins faster.
The speed of bitcoin mining is called the hash rate. The better the technology, the faster the hash rate. The more miners there are, the more bitcoins they can mine. Marathon deploys miners and provides them with the technology to mine bitcoin. Marathon then sells the mined bitcoin for a profit.
The company reported earnings for the first quarter of 2022. Revenue increased 465% to $51.7 million compared to the same quarter in 2021. However, it was down $8.6 million, or 14%, compared to the fourth quarter of 2021.
Marathon Bitcoin production increased 556% to 1,259 Bitcoin for the quarter, compared to 192 Bitcoin in the first quarter of 2021. It also increased by 15% from the fourth quarter of 2021. The fact that revenue is down $8.6 million, despite increased production By 15%, it shows how badly the numbers have been hit by a drop in the price of the major cryptocurrency.
The company said the lower revenue compared to the fourth quarter of 2021 was the result of a roughly 25% drop in average revenue per Bitcoin mined. Marathon had a cash balance of $110.8 million at the end of the first quarter.
The total number of miners deployed by the company at the end of the quarter was 36,830. This number will increase significantly in 2022.
“We believe 2022 will be transformative for Marathon as we deploy approximately 200,000 miners and transform our operations to be 100% carbon neutral,” said Fred Thiel, Chairman and CEO of Marathon.
YTD Marathon has generated 1,558 bitcoins, an increase of 340% over Q1 2021. The company owns a total of 9,673 bitcoins, with a fair market value of $365.5 million.
The last time Marathon sold his bitcoin was on October 21, 2022. Marathon has been “walking around” on BTC ever since. In January 2021, he bought Bitcoin at an average price of $31,168 per coin.
Take Wall Street
Marathon has a strong consensus rating on TipRanks, with four purchases assigned over the past three months.
The average target price for Marathon is $42.75, indicating a potential upside of 287.9%.
The company’s first-quarter earnings were good. Yes, the company reported declining revenue on a sequential basis, but this is only due to lower bitcoin prices.
Bitcoin tends to make drastic moves. This is where the company’s HODL strategy comes in. If Marathon continues to stick to his HODL strategy, the stock price will go up after Bitcoin drops and start to go higher.
It sits on a decent sized cash balance. The number of miners it plans to deploy this year indicates that it expects bitcoin prices to remain low for some time, and that it wants to squeeze the edge it has. The money they have should help to survive and mine bitcoins.
If you look at bitcoin prices historically, you will find that they tend to reach tops and immediately follow them through deep bottoms. It is entirely possible that Bitcoin prices will enter another round of correction. Marathon stock price drops in line with bitcoin prices. We feel that marathon is an attractive investment at this point even if bitcoin drops a little more.
However, Marathon has to beware of the double-edged sword of high energy prices and inflation. Both of these factors will make it difficult for Bitcoin to bridge the gap.
Thiel is also open to acquisition. In an interview with Bloomberg in April, he said, “If someone offers us a huge premium to our market cap, I have to take it into account and that might be the right thing to do for investors.”
Thiel says the rationale behind someone buying a marathon is that the power company can sell the electricity to itself at a lower cost. They can be expanded through the acquisition of a large miner, and Marathon is one of the largest miners out there.
If you are a believer in bitcoin, you must own marathon stocks. The only questions left to answer are: Will Bitcoin prices go up? If that happens, how long will it take? Is the HODL Marathon even then?
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