The recent launch of spot bitcoin ETFs has had an impact on bitcoin mining stocks, diverting some fund flows away from them. However, amidst this trend, one company stands out with potential: Marathon Digital Holdings Inc.
Marathon shares (MARA) have experienced a decline for the past six sessions, dropping around 30% since January 8th. Despite this, BTIG analyst Gregory Lewis has upgraded the shares to buy from neutral and sees promising opportunities for the company.
Lewis highlights that Marathon can benefit from the increase in bitcoin prices, thanks to transaction fees. He explains that during periods of lower bitcoin activity, fees can drop to low single digits. However, with approximately 500,000 transactions per day on the blockchain, Marathon, with its share of global hash power, could earn about 1,400 bitcoin each month by validating blocks.
Furthermore, Lewis emphasizes a recent operational shift at Marathon. The company has acquired two bitcoin mining sites, providing them with a operational capacity of 390 megawatts. This acquisition increases their mining portfolio to approximately 910 megawatts of capacity, with 45% of it tied to directly owned sites. Lewis believes that this shift from asset-light to an infrastructure owner-operator will allow Marathon to better control its power costs over time.
With this positive outlook, Lewis sets a $27 price target on Marathon shares, implying a potential upside of about 50% from the current levels of $17.90.
Marathon Digital Holdings Inc. presents an exciting opportunity for investors as it navigates the evolving landscape of bitcoin mining and transaction fees. The strategic operational shift and the potential for increased bitcoin adoption make this company one to watch in the crypto space.
