- Marathon Digital published strong financial results this week.
- Its revenue and overall profitability improved as Bitcoin rebounded.
- The company is preparing to diversify its financial results ahead of halving.
Marathon Digital (MARA) stock price will be in the spotlight on Thursday as investors reflect on the company’s earnings and the soaring Bitcoin price. The shares dropped by more than 6% on Wednesday’s regular session and then pared back those losses in the extended period. In all, the stock has underperformed BTC by falling by over 57% from its highest level in July.
Marathon Digital earnings download
Marathon Digital, one of the biggest Bitcoin mining companies, published its financial results on Wednesday. These results showed that the firm made progress in a relatively difficult market.
MARA increased its net income to over $64.1 million in the quarter, up from a net loss of $72.5 million in the same quarter in 2022. Its revenue jumped to $97.8 million, higher than the $12.7 million it made in 2022. This revenue growth was because of more mined coins and the relatively higher price.
Marathon Digital’s average daily BTC production has risen by 38 coins per day. On the other hand, the total cost of revenue increased to over $113 million, up from $40 million in the previous quarter. This jump was mostly because of higher depreciation and amortization costs.
Marathon Digital also benefited from higher BTC prices as the value of digital assets soared to $31 million. Adjusted EBITDA jumped to $43.7 million, up from a $6.1 million loss in the same quarter in 2022. Marathon has also boosted its balance sheet, with over $156 million in cash and 13,396 Bitcoin. In a statement, the CEO said:
“We expect our future Bitcoin Holdings will generally increase but will fluctuate depending on operating and market conditions. We intend to add to our Bitcoin Holdings primarily through our production activities and we will also continue to sell Bitcoin as a means of generating cash to fund monthly operating costs.”
MARA stock price outlook
Marathon Digital and other Bitcoin mining companies will experience major headwinds and tailwinds ahead. The biggest tailwind is that Bitcoin price has surged hard in the past few days.
And as I wrote on Thursday, the BTC price moved above the bullish pennant pattern and is nearing the resistance at $40,000. This is huge improvement since Bitcoin was trading at $15,000 in the same period in 2022. Analysts believe that BTC could retest its all-time high in 2024.
The main headwind for mining stocks is the upcoming Bitcoin halving, which reduces block rewards by half. In most cases, this Bitcoin halving makes it difficult for companies like Marathon Digital to make money.
Speaking of this issue, the company’s CEO said that the firm will need to reduce their reliance on block subsidies and increase BTC prices. He believes that the company can operate profitably by consuming wasted energy and monetizing heat offtake.
Looking ahead, the MARA stock price will likely bounce back as Bitcoin price breaks out. I believe that it has the momentum to rise to the next key price at $40,000 followed by the 50% retracement level at $42,300.
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