Why This Bitcoin Mining Stock Is A Bargain

Out of a dozen Bitcoin mining companies listed on the stock exchange, it can be difficult to determine which mining company is most worthy of your investment, in part because the industry is so new.

In order for miners to maximize their profits, they need to do a few things. First, they need to make sure they mine as much Bitcoin as possible. Just as with normal mining, companies with the most efficient equipment will have the greatest capacity to extract the next block.

To analyze the capacity of Bitcoin miners, the industry uses a statistic known as hash rate. The hash rate represents the mining power a company possesses. You can compare it to the horsepower of a car. Instead of miles per hour, hashrate is measured in what are called exahashes per second (EH/s). The higher the hash rate, the more often they will solve these mathematical problems and earn rewards in the form of new coins – thus increasing their profitability.

Expanding the hashrate is only part of the equation. Because these computers use a significant amount of power, cutting energy costs is where businesses can really gain a competitive advantage. Investors should look for miners that not only maximize profits and minimize costs, but also prioritize innovation and expansion.

Cut from another cloth

In the Bitcoin mining industry, there is one company that continues to lead the way in terms of profitability, cost reduction and new technology. Marathon Digital Holdings (MARA -6.84%) was founded in 2010 just a year after Bitcoin and hasn’t looked back. Since then, the company has become the most valuable Bitcoin mining company on the stock market. With a market capitalization of $1.3 billion, Marathon continues to make strides that could help the stock return to higher prices despite problems in 2022.

The company currently has a hash rate of approximately 3.9 EH/s. One of Marathon’s main competitors, Riot Blockchain, is at 4.4 EH/s. Undoubtedly worrying, but there is hope. Marathon is aggressive scaling. The company has a goal of increasing its hash rate to 13.3 EH/s by 2022 and hopes to reach a hash rate of 23.3 EH/s by 2023.

To achieve this, it builds new facilities and migrates infrastructure to more profitable energy sources. Marathon said in a June press release that it is moving its mining equipment out of a primary facility in Montana to West Texas due to maintenance issues and energy costs. The miners being moved to West Texas will be followed by an additional 19,000 miners that will be operating this summer. To add more mining power and help reach its ambitious target of 23.3 EH/s, Marathon will add another 68,000 miners, all of whom will be online by the end of September. Based on Marathon’s hashrate today, these additional miners would give the company a much-needed boost and nearly triple its hashrate.

Play the long game

When investors look at Marathon’s past performance and future prospects, it’s clear why it stands out from the crowd. As the most valuable Bitcoin mining company, Marathon has stayed at the forefront of this industry for good reason. Even better, the company has set a goal of becoming carbon neutral by 2023 as well.

Like the Bitcoin it mines, the company is in a unique position. The price drop has forced the company to restructure and evaluate operations. Additional problems around maintenance and energy costs have only made matters more complicated.

But investors should be optimistic. A hash rate of 23.3 EH/s will position Marathon to further increase its dominance among Bitcoin miners. More efficient, less expensive energy will ensure profit growth. And if Bitcoin can pull out of the recent break, the company’s 9,941 bitcoins should provide a nice cushion for more profitability.

When you consider Marathon’s past performance and its future vision for the company, the recent share price of around $12 seems like a bargain. If the company can stick to its word and the macro environment shapes up, Marathon has every opportunity to return to its recent highs of $75 per share.