Bitcoin Miner Marathon Strikes Power Deal; Electric car maker Faraday clears when short clamps end

The US stock market is heating up with the dog days of summer. The S&P 500 is up 2.5% this week and 4.7% for the whole of July after sinking into a bear market in the first half of the year. Small-cap stocks did particularly well during the recent rally: The Russell 2000 index rose 3.6% this week.

Some of that outperformance was thanks to the Las Vegas-based bitcoin miner Marathon Digital Holdings (MARA). Marathon announced on Monday a deal with powerhouses Applied Blockchain, Compute North and other service providers to increase computing capacity, sending its stock up 55% this week.

Marathon expects the deal to enable the company to reach its goal of generating 23.3 exahashes per second of bitcoin mining power, up from 2.1 exahashes at the end of last year and 0.2 in January 2021. This increase will giving it a significant share of the entire bitcoin mining market, which now generates a total of 193 exahashes per second, according to Blockchain.com.

Applied Blockchain (APLD), Marathon’s largest partner in the deal, will provide Marathon with 90 megawatts of hosting capacity at the Texas mining facility and at least 110 megawatts at a facility in North Dakota. Dallas-based Applied Blockchain also has an IPO, and it doubled this week to reach a market capitalization of $211 million.

Since Marathon generates revenue via the bitcoin it mines, the stock is correlated with the cryptocurrency and is still down 63% this year. The company’s 2021 revenue was $150 million, up from just $4.4 million in 2020, and it brought in $51.7 million in the first quarter of this year.

Other big winners this week include the Bloomington, Indiana-based chipmaker SkyWater Technology (SKYT)which announced a partnership with Indiana and Purdue University to build a $1.8 billion factory and rose 67%, and a drug testing company Inotiv (NOTV)which settled with the U.S. Department of Justice and the Department of Agriculture to end an animal welfare investigation into a facility in Cumberland, Virginia, where one of its subsidiaries bred dogs for laboratory testing.

These are the 10 U.S. publicly traded stocks with market capitalizations between $300 million and $2 billion that rose the most this week, according to Factset data.

One of the week’s biggest small-cap losers was the Los Angeles-based electric car maker Faraday Future (FFIE), which nearly tripled in a brief squeeze in the first two weeks of July, but gave back all those gains with a 65% loss this week, falling at least 10% each day. Faraday Future was founded in 2014 as an early competitor to Tesla, but has had a turbulent road to market and still hasn’t sold a single car.

When Faraday Future ran out of cash in November 2017, heavily leveraged Chinese property developer Evergrande bailed it out with a pledge of $2 billion, including $800 million upfront, for a 45% preferred stake in the company. Evergrande sued out of the rest of the mortgage in 2018 in a settlement that reduced its stake to 32%.

Faraday Future went public in a special buyout deal in January 2021 – Evergrande still owns 27.9%, according to Factset. It was targeted by short-seller J Capital Research in October, prompting the board to create a committee to investigate allegations of inaccurate disclosures. The investigation found that although Faraday Future told investors leading up to the SPAC transaction that it had 14,000 reservations for its FF 91 car, only several hundred of those were paid, with the rest merely indications of interest, the company disclosed in an SEC filing in February. The stock is down 74% since the IPO.

Faraday expects to finally launch production of the FF 91 sometime this quarter. It hasn’t released pricing, but Barron’s reported last year that it plans to sell the car for as much as $180,000.

These are the companies with market values ​​between 300 million and 2 billion dollars that fared worst this week, according to Factset.