Will Bitcoin (BTC-USD) and other cryptocurrencies recover from their steep slump? That’s a question digital asset traders are facing, and Bitcoin’s decline has brought down crypto-centered assets like Marathon Digital Holdings (NASDAQ: MARA) stock. Yet, I’m bullish on Marathon Digital Holdings stock as a turn in the crypto tide could precipitate a swift comeback.
Don't Miss our Black Friday Offers:
- Discover the latest stocks recommended by top Wall Street analysts, all in one place with Analyst Top Stocks
- Make smarter investments with weekly expert stock picks from the Smart Investor Newsletter
Based in Las Vegas, Marathon Digital Holdings is primarily known as a Bitcoin miner. As we’ll discover, Marathon isn’t a profitable business, and it’s understandable if this is a deal-breaker for some traders.
On the other hand, Marathon has a vast cryptocurrency mining fleet and is quickly ramping up its Bitcoin mining pace. Besides, the recent decline in MARA stock seems to have less to do with anything company-specific and more to do with investors’ concerns about an unrelated crypto-focused business.
Other Comapanies’ Problems are Causing Problems for Crypto Stocks
Why has Marathon Digital Holdings stock been falling? Quite simply, it’s because Bitcoin and other popular cryptocurrencies are declining. That sell-off, in turn, is due to the recent developments concerning the cryptocurrency trading platform Coinbase Global (NASDAQ: COIN) as well as crypto exchange FTX.
So, if you plan to HODL (hold on for dear life) MARA stock, it’s nice to know that Marathon didn’t do anything terrible. External factors are causing the share-price rout, but it’s still important to understand the problems that are occurring in the world of digital assets.
Here’s the scoop: Rumors circulated that Coinbase was preparing to strike a deal with rival cryptocurrency exchange FTX, which is currently in a bad situation. Meanwhile, the Wall Street Journal reported that FTX was “in talks to be acquired by Binance,” another crypto exchange (this deal didn’t end up happening). However, Coinbase co-founder and CEO Brian Armstrong burst the rumor bubble when he tweeted that his company “doesn’t have any material exposure to FTX.”
Adding another wrinkle to this soap opera, gossip circulated that Coinbase doesn’t have enough assets to cover customers’ withdrawals. A tweet from Armstrong, however, assured that “We hold all asset dollar for dollar, and users can withdraw their money at any time.”
There you have it: plenty of drama and none of it relates directly to Marathon Digital Holdings. If the drama passes and/or the dollar corrects to the downside, MARA stock could rip higher.
Marathon Takes Bitcoin Mining Very Seriously
If you expect Coinbase’s problems to be temporary, you can hold Bitcoin – or alternatively, you can HODL Marathon Digital Holdings shares as the company is a highly-ambitious Bitcoin miner.
You could practically use MARA stock as a proxy for Bitcoin since the stock often follows Bitcoin’s price moves. Besides, not every investment account allows people to buy cryptocurrency directly, so Marathon shares could serve as a pretty good substitute.
Before you consider HODLing some MARA shares, though, you’ll want to take a peek at Marathon’s most recently released quarterly financial and operational report. You’ll probably like the operational results much more than the financial results, which weren’t ideal.
First, I’ll give you the bad news. During 2022’s third quarter, Marathon Digital Holdings sustained a net loss of $75.4 million, which is significantly worse than the $22.2 million net loss from the year-earlier quarter.
That’s a hard pill to swallow for financially-minded investors, no doubt. The good news is that Marathon has increased its cryptocurrency mining activity and is a serious threat to miners everywhere.
If you can believe it, Marathon Digital Holdings had around 69,000 active cryptocurrency miners as of December 1. Can you imagine those miners humming and calculating all at once? It’s mind-boggling when you think about it.
Finally, we can’t ignore the company’s announcement that year-to-date through October 31, 2022, Marathon Digital Holdings produced a whopping 3,197 Bitcoin. Moreover, this represents a 27% increase versus the same time period in 2021.
Is MARA a Good Stock to Buy, According to Analysts?
Turning to Wall Street, MARA is a Moderate Buy based on four Buys and three Hold ratings. The average Marathon Digital Holdings price target is $17.33, implying 73.65% upside potential.
Conclusion: Should You Consider MARA Stock?
If you insist on only owning stocks representing currently profitable businesses, then MARA stock isn’t for you. However, open-minded investors who believe that Bitcoin will recover from its bear market ought to take a serious look at Marathon Digital Holdings.
Sure, there’s drama going on right now with other crypto-related companies. In time, though, these problems may subside, and if that happens, MARA stock has a lot of room to potentially run higher.
