Bitcoin mining stocks remain volatile in 2024, as their share prices are closely tied to Bitcoin (BTCUSD) prices. In the last month, crypto investors have been worried about a range of macro issues, from geopolitical tensions to sluggish consumer spending and the possibility of an upcoming recession in the U.S.
Moreover, the Bitcoin halving event in April has cut the mining rewards in half, significantly impacting the financials of Bitcoin mining companies such as Marathon Digital (MARA).
Valued at $4.8 billion by market cap, Marathon Digital is among the largest BTC mining companies globally. After touching multi-year highs amid the last crypto bull market, which ended in late 2021, MARA stock has tumbled nearly 80% over the last three years.
Despite rising Bitcoin prices in 2024, Marathon Digital stock has fallen 32.7% year-to-date, including a roughly 8% drop on today's convertible note offering, which it plans to use to buy Bitcoin and for other corporate purposes.
How Did Marathon Digital Perform In Q2 of 2024?
In the June quarter, Marathon Digital increased sales by 78% year over year to $145.1 million, up from $81.8 million in the year-ago period. The increase in sales was driven by a $78.6 million increase in the average price of BTC mined, offset by a $23.9 million decrease in BTC production. It also earned $8.7 million in sales generated from providing hosting services due to the acquisition of GC Data Center Equity Holdings.
The average price of BTC mined in Q2 was 136% higher year over year, while the average daily BTC production was 22.9 BTC, compared to 32.2 BTC last year. The company mined 868 less BTC in Q2 due to the halving event in April 2024 and the increased global hash rate. Moreover, Marathon Digital sold 51% of the BTC it produced in Q2 to fund operating costs.
Marathon Digital explained that its net loss widened to $199.7 million, or $0.72 per share, in Q2, from $9 million, or $0.07 per share, last year, due to an unfavorable fair value of digital assets as it adopted a new accounting rule. Unfavorable fair value adjustments meant that Marathon’s EBITDA (earnings before interest, tax, depreciation, and amortization) loss stood at $85.1 million in Q2, compared to an EBITDA of $35.8 million last year.
A Focus on Operational Improvement
Marathon Digital’s focus on operational improvements has allowed it to double the average operational hash rate year over year in June to 26.3 exahash per second. In July, Marathon’s proprietary mining pool captured 158 blocks, an increase of 10% year over year. While its production fell by 40% to 590 BTC in July, transaction fees accounted for 7% of the total.
Management emphasized that technology advantage allowed it to generate 0.85 BTC, compared to 0.15 BTC. Further, the company continues to optimize its recently acquired mining facilities with immersion cooling technology and robust hardware infrastructure, allowing it to end 2025 with 50 exhashes per second.
Marathon’s international business launched a 2-megawatt pilot project in Finland to provide energy with recycled heat to 11,000 residents. The integration of digital asset compute with district heating can reduce carbon emissions, lower costs, and minimize waste heat.
What is the Target Price for MARA Stock?
Out of the nine analysts covering Marathon stock, three recommend “strong buy,” five recommend “hold,” and one recommends “strong sell,” for a “moderate buy” consensus.
The average target price for MARA stock is $20.91, indicating an upside potential of over 34.3%.
On the date of publication, Aditya Raghunath did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
