Mara Holdings stock price surged by over 16% in the pre-market after the Bitcoin mining company expanded its business into the booming data center industry. It jumped to a high of $9.84, much higher than the year-to-date low of $6.70. Still, this rally could become short-lived as the AI collocation business gets saturated.
Mara Holdings Moves Into AI Data Center Industry
Some Bitcoin mining stocks like IREN, TeraWulf, and Bitfarms have soared in the past few months even as the crypto winter has escalated because of their expansion to the AI data center industry.
Maraa Holdings, on the other hand, has remained in a bear market after falling by nearly 60% from its highest level in October and by nearly 70% from its highest level in 2024.
The company is now playing catch up after announcing weak financial results. In an announcement, the company said that it had launched a new partnership with Starwood Capital Group.
This deal will see it convert the existing Mara sites into next-generation digital infrastructure capable of meeting rising demand for enterprise, hyperscale, and AI customers. In a statement, Barry Sternlicht, the billionaire founder of Starwood said:
“Data centers are the infrastructure responsible for driving the modern economy, and our partnership with MARA expands our opportunities to continue investing in this sector.”
The announcement came on the same day that Mara Holdings published weak financial results, with its revenue falling by 6% to $202 million, and its net loss moving to over $1.7 billion. It mined 2,011 Bitcoin and purchased 1,670.
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The performance was mostly because of the ongoing Bitcoin price crash that has pushed it from $126,300 in October last year to the current $68,000.
Mara Holdings expansion to the AI data center mirrors what other companies have done in the past few years. CoreWeave has seen its valuation surge to over $50 billion after exiting Bitcoin mining and focusing on the AI data center business in the past few months.
Other companies like IREN, TeraWulf, and Bitfarms have also done the same and secured billions of dollars in orders.
MARA Stock Price Faces Risks Ahead
However, there is a likelihood that Mara Holdings will face more challenges because the industry is now highly saturated and the amount of orders from hyperscalers has dropped.
For example, IREN reached a deal with Microsoft last year and has not landed a new one. Similarly, large companies in the industry, including Nebius and CoreWeave have not landed new orders recently.
The other risk is that the company will need to raise billions of dollars to fund this growth. This is happening at a time when the memory shortage has pushed prices much higher. Also, GPU companies like NVIDIA and AMD are struggling to make more chips available.
Therefore, the company will likely need to raise more money to fund its growth trajectory in the coming years, a move that may dilute its investors. The rising costs explains why the CoreWeave stock price dived by 12% after publishing its financial results. Also, most companies in the industry have slumped in the past few days.
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