The price decline of bitcoin affects not only those holding the digital currency but practically all those operating in the ecosystem – and of course bitcoin miners are impacted too.
But price decline aside, miner Marathon Digital (MARA) has recently encountered more company-specific problems.
Earlier this month, the company disclosed its May operations update, during which it said the BTC production in the month reached 268. This amounted to a 10% drop from April’s production and 39% below March’s figures.
Continued maintenance issues at Marathon’s Hardin, MT facility alongside delays to miners kicking into action at the company’s Texas facilities – which Compute North hosts – were cited as the reasons behind the drop.
The company said that 19,000 miners have already been installed in the Texas facilities and are awaiting the delivery of power. On account of the delays, since March, the nameplate capacity of 3.9 EH/s has stayed the same. The firm also said that the delays in Texas were caused by the energy supplier for Compute North, still waiting for confirmation of its tax-exempt status from government agencies.
Further raising concern, on top of the soft May production numbers, to date, in June, block rewards to the MARA pool have been at an even further depressed level.
B. Riley analyst Lucas Pipes reckons that the company produces only 169 coins in June, a 60% drop from Q1 averages and a 36% year-over-year decline.
As such, given all the above, Pipes has downgraded Marathon’s rating from Buy to Neutral, whilst also slashing the price target from $34 to $9. Still, the new figure suggests shares will still climb 23% higher over the coming months. (To watch Pipes’ track record, click here)
What will it take for Pipes to get bullish again? The 5-star analyst explained: “Should the company demonstrate a rapid energization in Texas, we would likely revisit our rating outlook but, in the interim, we believe that Marathon is a show-me story that the capital-light model works under the constraints of a high power price and difficult digital mining environment.”
The rest of the Street remains more upbeat; Pipes is the lone skeptic and with 4 additional Buys, the consensus view is that the stock remains a Strong Buy. The forecast calls for one-year gains of ~214%, considering the average price target clocks in at $23. (See MARA stock forecast on TipRanks)
To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.
Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
