Marathon Digital Holdings (NASDAQ:Mara) is my favorite bitcoin (BTC-US Dollar) mining stocks, but things are not looking good as crypto mining stocks continue to be destroyed during the current bear market.
It’s hard to believe that MARA stock used to trade at such a high price A little over a year ago it was $80. Things have changed dramatically as the hype and euphoria of cryptocurrencies faded, and with the benefits of quick and easy crypto trading.
MARA’s stock is currently trading at about $4 a share, down nearly 90% over the past 52 weeks.
Considering that I haven’t sold a single share since I first bought MARA shares in 2021, I’m really shocked by how much MARA shares have fallen.
Marathon Digital Business Update
latest in marathon Update November 2022the company produced 472 BTC, increasing its total holdings of Bitcoin to 11,757.
As of December 1st, Marathon Digital has deployed 69,000 active miners generating 7.0 EH/s. This is an amazing feat considering the high number of bankruptcies in the cryptocurrency industry.
Marathon not only retained its Bitcoin stash, but also continued scaling operations with a new 14,000 miner at its Garden City, Texas location.
The company avoided rapid growth, avoided incurring large amounts of debt, and avoided an unfortunate bankruptcy. But that’s exactly what happened to Core Scientific, and they ended up filing for Chapter 11 bankruptcy.
Core Scientific Bankruptcy Makes Marathon Digital the Clear Leader
Core Scientific, one of Marathon Digital’s competitors, Filed for Chapter 11 bankruptcy Because you cannot pay your debts. Core Scientific has become North America’s largest Bitcoin mining company using a dual mining strategy with both self-hosted and third-party miners.
Unfortunately, the company has taken on so many liabilities and liabilities that it has been forced to liquidate its entire Bitcoin fortune to cover its electricity bills and mining costs.
BlackRock bailed out Core Scientific with a $17 million loan But Core Scientific’s unprofitable business model is not fixed. Marathon Digital, on the other hand, is focused on slow and steady growth while keeping his 100% of mined Bitcoin as his BTC reserve.
This shows that Marathon Digital is focused on the long term and understands that Bitcoin’s true value does not depend on the current market price.
While many crypto haters talk about the current bear market, we would like to point out a key inflection point in the crypto market surrounding the Bitcoin halving scheduled for 2024.
Bitcoin May Rebound After Hitting Block #770,000
In one of our previous Bitcoin articles Here At Seeking Alpha, I said that Bitcoin will enter the third phase of the current halving cycle in January 2023.
Bitcoin Halving reduces the amount of minable Bitcoin by half every four years, making it more valuable and scarce.
If history were to repeat itself, Bitcoin’s price should bottom out in January 2023 and start rising throughout the rest of the year.
Cryptocurrency mining stocks such as MARA trade alongside the price of Bitcoin, so it can be a great opportunity to buy MARA stock when no one wants it.
Marathon Digital has plenty of risk factors that could liquidate its bitcoin stash or file for bankruptcy if the crypto winter continues.
My biggest concern is that Bitcoin continues to fall in price as it fails to follow the historic third phase of the current halving cycle. Marathon Digital must continue to use cash for power and mining costs to keep the company alive.
The company had only $61.7 million in cash on hand as of November 31, 2022. Will Marathon Digital need to raise more cash through a diluted public offering or will it need to borrow more cash to continue operations?
Marathon Digital has about $780 in debt and in my opinion the company is completely over-leveraged. It maintains a horrendous debt-to-equity ratio that could cause some future problems for the company. Head for $1.
A prolonged crypto bear market in 2023 could lead to further declines in MARA shares, which will result in many unrealized losses for Marathon Digital shareholders.
What’s Next for MARA Stocks?
I have not sold any shares in MARA yet, but will continue to increase my position when the market becomes unsettled.
MARA shares trade at an attractive P/S ratio of around 2.
From a fundamental standpoint, I think it’s a good time to buy as many stocks as possible while others are afraid. Marathon still has all his BTC he HODL’s and will have to survive the crypto winter to profit as we get closer to the next Bitcoin halving.