Marathon Digital, the biggest Bitcoin mining company by market cap, is working to differentiate itself from its rivals like Riot Platforms, Bitfarms, and Core Scientific.
The company has changed its business model in the past few months. Instead of being just a Bitcoin mining company and taking part in miner capitulation, it has decided to become a hoarder.
Marathon Digital is buying Bitcoin
On Wednesday, the company revealed that it had raised $300 million in an oversubscribed offering of convertible senior notes. It used these funds to purchase 4,144 coins, bringing its total Bitcoins to over 25,000.
This is not the first time that the company has borrowed money to invest in Bitcoin. In July, as Bitcoin prices were falling, the company moved to the market and acquired more coins.
Marathon Digital has now become the second-biggest corporate holder of Bitcoin after MicroStrategy, which has accumulated over 226,000 coins valued at over $13 billion. This is significantly lower than the company’s market cap of over $26 billion, meaning that investors are prepared to pay a premium for the company.
Marathon’s total Bitcoin holdings are now worth over $1.5 billion, lower than its market cap of over $4.7 billion. If Bitcoin retests its all-time high of $73,700, then these coins will be valued at over $1.8 billion.
The company has also experimented other approaches to make money as the Bitcoin mining difficulty has continued rising. For example, it has now diversified its mining operations to start producing Kaspa, a fast-growing proof-of-work cryptocurrency.
At the same time, the company is working to take advantage of the booming artificial intelligence craze by offering its large data centers to artificial intelligence. It has also reorganized its business into three segments like mining, energy harvesting, and technology.
Bitcoin mining difficulty has soared
The company has to do this because mining Bitcoin has become more difficult after the April halving event. In its most recent results, the company said that its Bitcoin production dropped to 2,058 in the second quarter, down by 30% from the same period in 2023.
Its revenue rose by 78% to $199.7 million because Bitcoin prices were much higher this year than they were in 2023. The challenge is that Bitcoin halving happens every four years, meaning that, unless prices continue rising, it will find itself in a bad place in 2028.Analysts have a bullish outlook for the MARA stock price. The average estimate is that it will rise to $22.70, much higher than the current $16.30.
