Following weak second-quarter results, investment bank Cowen reduced its revenue, adjusted EBITDA, and mining margin projections for Marathon Digital Holdings (MARA), a bitcoin (BTC) miner. In addition, it issued a warning over the firm’s high hashrate targets.
Marathon’s second-quarter profits were dissatisfying as most of its mining rigs were inactive due to storms and energization delays. The company has, however, made hosting agreements that will enable it to meet its hash86rate, or computing power, target of 23.3 exahashes per second (EH/s), by the middle of 2023.
However, these deals come with execution risk due to Marathon’s reliance on third-party suppliers and a lack of infrastructure control, said Cowen analysts Stephen Glagola and George Kuhle in a note to clients. They take note that one of those third parties is Applied Blockchain (APLD), a “relative newcomer to the bitcoin mining hosting business with limited operating history.”
What’s Next ?
Reflecting those disappointing quarterly results, the Cowen team lowered its 2022 revenue estimate for Marathon to $150 million from $204 million, now below the consensus forecast for $189 million. Cowen also dropped its expectations for adjusted EBITDA to $39 million from $86 million, and mining profit to $91 million with 61% margin, down from $132 million and a 64.7% margin.
Despite raising its price target from $7 to $9 in response to the stock price nearly tripling in the last seven weeks to its current $14 per share, Cowen maintains its Market Perform rating for Marathon.
Profit decreased from $132 million with a margin of 64.7% to $91 million with a margin of 61%.
At the time of writing, the top currency, Bitcoin, was trading at approx. $21,000 following the recent crypto selloff due to concerns around Fed rate hike. Recently, Marathon Digital is the first North American Bitcoin miner to have more than 10,000 BTC on its balance sheet.
Source: https://www.thecoinrepublic.com/2022/08/26/investment-bank-cowen-lowers-its-revenue-for-btc-miner-marathon-digital-holdings/