Bitcoin is in the news again, but not because it is soaring. The largest cryptocurrency by market cap has been steadily declining over the last two months, as more speculative investors are shaken out and abandon their positions. Meanwhile, prominent crypto miners have been doubling down on their operations, most notably Marathon Digital Holdings, Inc. (MARA). The company recently announced a nearly $900 million purchase of additional mining equipment, and is again being noticed by analysts.
One of those is Kevin Dede of H.C. Wainwright & Co., who wrote that the move “may be the largest North American miner purchase order by hash in history,” and that “the company has set the North American bitcoin hash build-up bar since its December 2020 purchase.”
Dede rated the stock a Buy, and maintained his price target of $50. This target currently indicates a potential 12-month upside of 72.83%.
The four-star analyst went on to delineate his confidence in the bitcoin mining company, arguing that the bold choices made have thus far generously rewarded shareholders. However, the road ahead is not as rosy as it may appear at first glance.
By early 2024, the next round of bitcoin reward halving is expected to occur. These events occur about every four years, and are typically accompanied by volatility in daily price action for BTC. Moreover, it may cause some lesser-established miners to see difficulties if their revenue streams are cut in half.
As BTC rewards decline from 6.25 to 3.125 per block, the halving could being to “cull the industrial bitcoin mining herd that has evolved so rapidly over the past 12-18 months.” While MARA has seen, and may continue to experience, some significant stock volatility, Dede does not foresee the “trailblazer in scale bitcoin mining deployment” succumbing to the same fate as smaller miners.
On TipRanks, MARA has an analyst rating consensus of Strong Buy, based on 3 Buy ratings. The average Marathon Digital price target of $69 indicates a possible 12-month upside of 138.51%. MARA closed trading Monday at a price of $28.93 per share.
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