• Marathon Digital Starts the Earnings Season for Miners With a Focus on Rig Deployment and Funding

  • On Wednesday, the bitcoin miner will release its first-quarter earnings, which will be followed by its first-ever earnings conference call.

    According to Wall Street analysts, Marathon Digital (MARA), one of the world’s largest publicly traded bitcoin miners, will kick off the first-quarter earnings season for crypto mining companies this week, with a focus on how the company plans to house more than 70,000 new mining rigs and source capital for growth.

    The earnings report is expected to be released on Wednesday, following the close of the stock market. Marathon will also hold its first-ever earnings call on that day at 4:30 p.m. ET.

    Analysts will be looking for information on the approximately 70,000 new miners that will need to be housed and deployed. “MARA has received 70k new Bitmain S19s, but delays in finalizing PPAs (power purchase agreements) with Ercot (Electric Reliability Council of Texas) have resulted in a 45-day delay for Compute North (the hosting provider) to have the facility ready for MARA’s miners,” wrote Jefferies analyst Jonathan Petersen in a research note on Monday. “We’d like to hear an update on the status and timeline for deploying these miners.”

    Marathon is rated buy by Petersen, with a 12-month average price target of $36, down from $51 to reflect the delay in rig deployment and lower bitcoin price estimates for the year. Petersen now predicts that the price of bitcoin will average $49,529 this year, down from his previous estimate of $54,722.

    Compass Point Research & Trading echoed the concerns about Marathon’s housing strategy for new miners. “We will also be looking for commentary on where the company expects to house its 78k S19 XP miner, which will be available later this year, as MARA has not indicated where they will be hosted,” analyst Chase White wrote in a research note on Monday.

    Chase also rates Marathon as a buy, with a 12-month average price target of $50, down from his previous estimate of $66. According to FactSet data, the average price target of the six analysts who cover Marathon is around $51. The stock was last seen trading at $16.23.

    Despite a 45-day delay in deploying mining rigs during the first quarter, Marathon said on April 4 that it is still on track to meet its hashrate guidance of 23.3 exahash per second (EH/s) by early 2023. Hashrate is a metric for computing power.

    Finance and relocation

    Compass Point’s White will also be looking for an explanation of how Marathon intends to raise funds for future expansion. “We will be looking for any commentary on how the company intends to finance its buildout in the future, specifically what sources of capital may be available,” White wrote. “We anticipate MARA will indicate a willingness to begin selling some of its monthly mined BTC in order to fund a portion of its opex (operating expenses) and capex (capital expenditures).”

    For his part, Jefferies’ Petersen wants to know how the company plans to relocate its mining machines from a coal-powered site in Hardin, Mont., to a site with more renewable energy sources.

    “We hope to learn more on the earnings call about whether MARA intends to use Compute North or other hosting providers to house the Hardin miners and any future orders,” Petersen wrote.

    Another topic that could be brought up is recent talk about mergers and acquisitions among miners. With some speculation swirling around Marathon as a potential target, the company said last month that it is not interested in selling the company right now, citing its undervalued stock.

    According to FactSet, analysts expect Marathon to report adjusted earnings per share of 23 cents, sales of $51.5 million, and earnings before interest, taxes, depreciation, and amortization of $38 million.

    Marathon shares have dropped 50% this year, while rivals Core Scientific (CORZ) and Riot Blockchain (RIOT) have dropped 44% and 54%, respectively. Bitcoin has dropped 19% so far this year.

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