Mining veteran Marathon Digital Holdings closed the fourth quarter of 2021 with gains, despite its stock MARA declining alongside Bitcoin.
Business services company MicroStrategy (MSTR), aslo heavily dependent on BTC, was not considered a prime investment candidate by Nasdaq.
YEREVAN (CoinChapter.com) – Bitcoin mining company Marathon Digital Holdings (MARA) and business intelligence firm MicroStrategy (MSTR) take leading positions in the Technology Stocks sector through their affiliation with cryptocurrencies. Thus, traders could consider their stocks attractive investment opportunities for day trading and long-term investors.
However, there are several important factors to consider before a possible purchase.
Marathon Digital Holdings and Bitcoin volatility
Marathon Digital was launched in 2010. However, its stock MARA began trading in 2013 and has been susceptible to Bitcoin volatility ever since. In short, Marathon provides computing power for miners, and, in return, they pay the company in Bitcoin, which the company can choose to sell for revenue.
The MARA daily chart below (black graph) illustrates its correlation with the alpha crypto (blue graph). Moreover, Marathon stock traded at $25.50 on March 10, after the severe volatility threw MARA off its all-time high of nearly 83.50 in November 2021.
However, statistics show that stocks of mining pioneers such as Marathon Digital can outperform Bitcoin. While BTC gained roughly 345% in value since Feb. 2020, MARA scored an advance north of 2,300%. Moreover, the number of Bitcoin mined in February soared approximately 700% year-over-year, with an 8% higher hash rate.
Marathon’s Q4 2021 report also reflected substantial gains. The company’s revenue soared 2,180%, going from $2.6 million in Q4 2020 to $60.3 million a year later. Moreover, Marathon Digital boosted the self-mined Bitcoin number to 360.3, a 729% year-over-year gain.
What to expect from Marathon’s MARA?
The quarter report also contained cash runway statistics to help potential investors make an informed decision. In short, a cash runway is a period it would take a company to run out of money if the spending continues at its current rate of cash burn.
In September 2021, Marathon Digital reported $242 million in cash and no debt. Notably, with a cash burn of $338 million over the trailing twelve months, it would take the company nine months to go bankrupt. However, analysts predict that the mining veteran will break even before the cash runway is out.
Moreover, Marathon raised over $747 million in a convertible note offering, with a coupon rate of 1%, and scored another $100 million from Silvergate Bank, backed by Bitcoin and cash holdings.
Meanwhile MicroStrategy…
…is not directly involved in the cryptocurrency sector. Instead, the company provides business intelligence, mobile software, and cloud-based services. However, MicroStrategy CEO Michael Saylor is an outspoken crypto proponent and has a history of purchasing Bitcoin while it’s bottoming out.
The company has been investing in the flagship cryptocurrency since Aug. 2020. As of Feb. 1, 2022, its BTC treasury held north of 125,000 coins, acquired for approximately $3.8 billion. Furthermore, Mr. Saylor commented last month that he plans on obtaining more BTC, despite the market decline and a call by U.S. securities regulators to revise its disclosure in future filings.
However, the BTC purchasing pace in Q4 didn’t favor the company’s stock, as MicroStrategy reported a net loss of $90 million or $8.43 a share in the fourth quarter, missing consensus estimates for a profit of 89 cents a share.
On March 10, the MSTR stock traded nearly $437 for a share, after a 50% decline since Bitcoin’s all-time high in November 2021.
Moreover, Nasdaq called MSTR the “bear of the day,” citing minor improvement expectations for the year ahead. Fears of bankruptcy in case of another Bitcoin price avalanche fuelled the bearish outlook.
In detail, the company reported $83.5 million in cash on hand. Thus, it cannot afford to “eat the losses,” considering that half of its market cap comprises the Bitcoin holdings. Should the crypto market crash further in 2022, MicroStrategy could follow suit, taking its investors along for the fall.
Furthermore, in Aug. 2021 found that MicroStrategy used only $500 million of its funds and $1.7 billion of debt financing.
Lilit is a Yerevan-based Markets writer, skilled in 3 languages, and interested in writing about the tech world, trading, art, and science. She also has a background in psychology and marketing, which helps deliver the right message to the target audience.
Enabled by technology and access to some of the world's cheapest data, retail investors now account for over 45%...
Our Partners
We use cookies on our website to give you the most relevant experience by remembering your preferences and repeat visits. By clicking “Accept”, you consent to the use of ALL the cookies.
This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary cookies are absolutely essential for the website to function properly. These cookies ensure basic functionalities and security features of the website, anonymously.
Cookie
Duration
Description
cookielawinfo-checbox-analytics
11 months
This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Analytics".
cookielawinfo-checbox-functional
11 months
The cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Functional".
cookielawinfo-checbox-others
11 months
This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Other.
cookielawinfo-checkbox-necessary
11 months
This cookie is set by GDPR Cookie Consent plugin. The cookies is used to store the user consent for the cookies in the category "Necessary".
cookielawinfo-checkbox-performance
11 months
This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Performance".
viewed_cookie_policy
11 months
The cookie is set by the GDPR Cookie Consent plugin and is used to store whether or not user has consented to the use of cookies. It does not store any personal data.
Functional cookies help to perform certain functionalities like sharing the content of the website on social media platforms, collect feedbacks, and other third-party features.
Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors.
Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics the number of visitors, bounce rate, traffic source, etc.
Advertisement cookies are used to provide visitors with relevant ads and marketing campaigns. These cookies track visitors across websites and collect information to provide customized ads.