Why Marathon Digital (MARA) Is a Better Bet Than MicroStrategy (MSTR)?
Highlights
- Financial firm Cantor Fitzgerald raised its target price for Marathon Digital (MARA) stock to $42.
- Unlike MicroStrategy, which purchases Bitcoin at market prices, MARA mines at a 40% discount to spot price.
- MARA has raised $1 billion to buy 5,771 additional Bitcoins as part of its reserves.
- MicroStrategy (MSTR) faced a 4.87% drop in stock value amid market turbulence.
Bitcoin miner Marathon Digital (NASDAQ: MARA) has been generating significant buzz on Wall Street, posting a 44% gain over the past week. Cantor Fitzgerald raised its price target for the stock to $42, a 60% increase, driven by expectations that it will outperform MicroStrategy (MSTR). On Monday, the MARA stock surged to a six-month high following the revised target.
Why Is Marathon Digital (MARA) A Strong Bet
Cantor Fitzgerald has drawn attention to Marathon Digital Holdings (MARA) as a standout player in the Bitcoin ecosystem, reported Street Insider. The financial giant also emphasized its distinction from MicroStrategy (MSTR) due to its operational focus on Bitcoin mining. As of Monday’s closing, the MARA stock was trading at 26.42, with most of the gains coming over the past week.
MARA is currently the largest public-traded miner by the BTC hashrate, and produces nearly 25 Bitcoins every day. Unlike MSTR, which primarily invests in Bitcoin directly, MARA operates a mining business that generates Bitcoin at a discount to the spot price.
This approach, combined with its “HODL” strategy of retaining mined Bitcoin rather than selling, positions its operations as accretive on a Bitcoin-per-share basis, noted Cantor Fitzgerald.
The analysts at Cantor also said that MARA’s equity value currently trades at a ~152% premium over its Bitcoin holdings. On the other hand, MicroStrategy acquires Bitcoin at the spot market rate, but MARA has the leverage to mine Bitcoin at a ~40% discount to the spot price, which further strengthens its model.
Thus, Cantor Fitzgerald noted that as Marathon Digital reduces its reliance on third-party hosting firms, its cost of mining is likely to decline. This makes the business even more accretive in the long run. The Bitcoin miner purchased 5,771 BTC after raising $1 billion through a stock offering last week.
Our BTC Yield per Share remains robust at 35%. Excited to share @MARAHoldings has so far acquired 5,771 BTC using proceeds from 0% convertible debt at an avg price of $95,554 per BTC. This brings our total owned BTC to ~33,875 BTC, currently valued at $3.4B based on a spot BTC…
— Salman Khan (@theRealSalKhan) November 22, 2024
They further added that the Bitcoin miner’s operational efficiency, coupled with MARA’s strategic alignment, suggests the company could surpass MSTR in profitability metrics. As a result, Cantor Fitzgerald gave a target of $42 for the MARA stock.
What’s Next for MicroStrategy (MSTR)?
The world’s largest corporate Bitcoin holder Microstrategy (NASDAQ: MSTR) purchased additional 55,500 Bitcoins on Monday, for an investment value of a massive $5.4 billion. With this, it has taken its total Bitcoin holdings to 386,700 BTC.
However, amid the macro conditions and Donald Trump’s tariff raise, the MSTR stock closed 4.87% lower at $403 on Monday. Along with the US equity futures, the Bitcoin price crashed over 4% slipping under $94,000.
On the other hand, Bernstein analysts believe that there’s still steam left in the MSTR stock rally. As a result, they have given the MSTR stock price target of $600.
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