MARA

What is Marathon Digital Holdings (MARA)?

Marathon believes the crypto race is not a sprint. This digital asset company specialises in the mining, accumulation and holding of cryptocurrencies, in particular bitcoin (BTC), from the blockchain ecosystem. It intends to hold BTC as a long-term investment. 

Marathon Digital Holdings, Inc. is of the belief that BTC is “a store of value, supported by a robust and public open source architecture, that is not linked to any country’s monetary policy and can therefore serve as a hedge against inflation.” 

Founded in 2010 as Verve Ventures, Inc, the company has had a history as a uranium and vanadium minerals developer, real estate investor and IP licence operator. 

The company turned its attention to crypto mining in 2017 and changed its name in February 2021 to Marathon Digital Holdings, Inc.

How does Marathon Digital earn revenue?

Marathon does not earn revenue in the traditional sense. It uses custom hardware and software to mine BTC and potentially other cryptocurrencies instead. The mined crypto is what Marathon regards as its revenue.

Rather than constructing or maintaining BTC mining infrastructures, Marathon invests in mining hardware via third-party hosting and power facilities. The company calls this their “asset light” model.

As of the end of FY2021, Marathon holds close to 8,115 bitcoins, including 4,794 bitcoins inside an investment fund. In January 2021, Marathon also purchased 4,812.66 bitcoins and placed them into an investment fund at an average price of US$31.17k each.

How does crypto mining work?

Crypto miners are effectively auditors of transactions made on the blockchain, a decentralised, public ledger operating across a network of hundreds of thousands of computers.

As crypto mining is complex, computational work, miners are usually machines. Owners of these machines get paid in crypto without needing to use cash. In the case of Marathon, it uses Bitmain mining machines to earn BTC.

From August 2020 to the start of 2022, Marathon has purchased 208,500 mining machines at an average cost of US$6,054 per machine.

Is Marathon Digital profitable?

No, the company is not profitable. Marathon Digital’s net income has always been negative and highly inconsistent.

Its free cash flow has also sunk dramatically from negative US$3m in FY2019 to US$8m in FY2020 to US$727m in FY2021.

Is MARA a good stock to buy?

In November 2021, Marathon announced a $650 million convertible senior notes offering to fund the purchase of more Bitcoin miners. It also disclosed a Securities and Exchange Commission (SEC) subpoena requesting documents related to the company’s data centre contracts.

As a result, the MARA stock price took a nosedive from its November 2021 high of US$83.45 down to between US$20 and US$30 in March 2022. A fall of over 60%.

At this stage, some investors deem MARA a risky investment due to its connection with Bitcoin. 

Others see MARA set for a strong rebound from its current lows due to a new Executive Order by U.S. President Biden: “The United States must maintain technological leadership in this rapidly growing space, supporting innovation while mitigating the risks for consumers, businesses, the broader financial system, and the climate.”

Who owns MARA stock?

Marathon’s biggest shareholders include Vanguard Group (8.98%), BlackRock (6.52%), Susquehanna International Group (2.71%) and State Street Global Advisors, Inc. (2.01%).

Merrick Okamoto, former Executive Chairman of Marathon Digital, also holds 5.32%.

The general public own 52.1% of Marathon.