Marathon Digital Stock Is a Buy as Bitcoin Miners Are Poised for Growth
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Bitcoin mining farm
Dreamstine
Shares of
Marathon Digital rose Friday after Jefferies said the crypto mining company was on pace to become the largest public miner in 2022. The analysts said Bitcoin miners were a better bet than the world’s largest cyptocurrency.
Analyst Jonathan Petersen initiated coverage on the stock with a Buy rating and $51 price target. Marathon Digital was rising 8.9% to $21.54 on Friday.
“MARA is on track to be the largest publicly-traded miner by the end of 2022, with deposits paid on more BTC ASIC miners than any of its peers,” Petersen wrote in a research note.
ASICs — or application-specific integrated circuits machines – are specifically designed to mine cryptocurrencies and are more power-intensive than typical GPUs.
“The recent selloff in the [Bitcoin] price moderates the revenue growth outlook, but we still expect ~80% mining margins and a 12-18 month payback period on recent ASIC miner purchases, Petersen said.
He estimated that
Bitcoin
will rise at a 32% compound annual growth rate through 2024, and that Marathon Digital’s revenue and Ebitda will rise at 120% and 95% CAGR, respectively.
“As such, we view the miners as a better investment” than Bitcoin, the analyst said.
Marathon’s fleet of miners is expected to grow to 199,000 by year-end 2022 from more than 30,000 currently, according to Petersen.
Even with the recent selloff in Bitcoin weighing on Marathon’s near-term revenue, Petersen said, it could create long-term opportunities for the company.
“We believe that the BTC miners, including MARA, could use it as an opportunity to significantly improve their position on the assumed eventual snap-back in the BTC price,” he noted.
Bitcoin was has risen 2.1% over the past 24 hours to $37,116, according to CoinDesk. The digital currency has fallen 19.3% year to date. Marathon Digital has declined 34.5% in 2022.
Write to Karishma Vanjani at karishma.vanjani@dowjones.com
