If you expect Bitcoin (BTC-USD) to move higher, there are a number of ways to participate in the rally. You can buy Bitcoin, a Bitcoin exchange traded fund or take your chances with Marathon Digital (NASDAQ:MARA) stock, which earns a “B” grade for offering prime Bitcoin-miner exposure along with a high dose of volatility.
Marathon Digital is one of the most active and ambitious Bitcoin miners in the U.S. Bernstein analysts reportedly envision Bitcoin going to $90,000, and if that happens, Marathon Digital stock would probably zoom higher. Just maks sure you’re be ready for a roller-coaster ride along the way with plenty of thrills and chills.
One Factor That De-Risks MARA Stock
Recently, Bloomberg reported that the daily revenue for Bitcoin miners reached all-time highs. Make no mistake about it: miners like Marathon Digital can make a lot of money when the Bitcoin price rises.
When there’s a “cryptocurrency winter” and the Bitcoin price sinks, miners tend to go out of favor on Wall Street. This helps to explain why MARA stock has been as high as $30 but also as low as $3 and change during the past two years.
However, one factor that de-risks Marathon Digital stock somewhat is the fact that the company is profitable. Impressively, Marathon Digital earned 74 cents per share in 2023’s fourth quarter, easily beating the analysts’ consensus estimate of 4 cents per share.
Marathon Digital’s Massive Mining-Infrastructure Investment
Clearly, Marathon Digital isn’t a fly-by-night venture with no profits. The company is an established cryptocurrency producer with powerful Bitcoin-mining equipment.
Moreover, Marathon Digital is acquiring more Bitcoin-mining infrastructure. In two news releases, the comany said it agreed to purchase a Texas-based Bitcoin mining data center from Applied Digital (NASDAQ:APLD).
There’s risk involved here, since Marathon Digital expects to pay $87.3 million for the data center. Prospective investors should take this into consideration before buying MARA stock.
However, this data center should provide Marathon Digital with a “name plate capacity of 200 megawatts.” Besides, Marathon Digital isn’t a cash-strapped company that can’t afford to purchase mining equipment.
At the end of last year, Marathon Digital had $357.3 million worth of unrestricted cash and cash equivalents on its balance sheet.
On top of that, the company had unrestricted holdings of 15,126 Bitcoin. So, evidently Marathon Digital can afford to acquire the data center from Applied Digital.
Crypto Enthusiasts Should Consider MARA Stock
We won’t declare that Marathon Digital stock is right for every investor. Before hitting the “buy” button, you’ll want to assess your tolerance for risk and magnified share-price moves. Also, this stock probably isn’t appropriate for you unless you’re bullish on Bitcoin.
It’s encouraging to know that Marathon Digital is income-positive and is fairly well capitalized. With all of that in mind, we’re assigning a “B” grade to MARA stock as potential portfolio holding for Bitcoin aficionados.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.