Marathon Digital: A Bitcoin Mining Trailblazer

With 2022 up and running, Marathon Digital (MARA) investors will be hoping the stock emulates 2021’s performance; shares of the bitcoin miner climbed by 214%, so there’s a lot to live up to.

That said, while H.C. Wainwright’s Kevin Dede hasn’t set expectations quite so high, the analyst anticipates another strong performance and notes two recent moves made by the company which are “typical of its trendsetting status,” and represent “giant leaps for North American bitcoin mining.”

In December, Marathon made what Dede reckons could be the “largest North American miner purchase order by hash in history.”

The company ordered 78,000 Antminer S19 XP machines for a total of $879 million, with each machine expected to generate around 140 TH/s, adding up to a total of roughly 10-11 EH/s.

For comparison’s sake, this amounts to more hash than two or three average institutional North American bitcoin mining competitors combined. It will also bring Marathon's total hash rate to 23.3 EH/s by early 2023, and boost Marathon’s total mining fleet to approximately 199,000 bitcoin miners.

Such a huge fleet requires some serious energy management, and this is where the other “giant leap” comes in. Expanding on Marathon's power JV with BeoWulf, which for the first time paired crypto mining directly “with large, single-purposed energy supply, behind the grid meter,” is another “even grander step in energy capture and control.”

Marathon, along with an “unnamed green energy supplier in Texas,” and Compute North, the company’s hosting service provider for its machines outside of Hardin (the BeoWulf location), is now part of a three-way joint venture (JV).

Per Dede’s understanding, not counting the 30,000 machines at Hardin, the JV will provide Marathon with enough power to operate its 169,000 machine fleet, while Compute North will supply the physical infrastructure and take care of day-to-day fleet operations.

“Based on the size of Marathon's fleet in place by early 2023, Compute North and the unnamed green energy partner could be responsible for creating and managing as much as 550-600MW in supplying energy to Marathon's machines,” Dede explained, before summing up, “A trailblazer in scale bitcoin mining deployment, Marathon's gutsy commitment to all strategically tied constituents has rewarded shareholders handsomely since implemented in 2020—audentes Fortuna iuvat, or fortune favors the brave.”

To this end, Dede rates MARA a Buy and sees shares rising ~69% over the next 12 months, according to his $50 price target.

Dede’s forecast appears conservative next to his colleagues’ take. The 2 additional Buys not only provide the stock with a Strong Buy consensus rating, but going by the $68.33 average target, shares will rise ~131% over the one-year timeframe.