Marathon Digital's financial instability and debt-reliant Bitcoin acquisition strategies raise concerns

From Nasdaq / August 12, 2024 1:37:11 pm:

Traders eye Marathon Digital Holdings (MARA) for Bitcoin exposure, but risky borrowing to fund cryptocurrency hoarding raises concerns. Marathon Digital, like Microstrategy (MSTR), mines and holds Bitcoin. However, borrowing for speculative assets like Bitcoin is deemed risky for conservative investors. Marathon Digital reported a significant revenue increase in Q2 2024 due to Bitcoin’s price surge to $60,000, but its adjusted EBITDA and net loss worsened, raising red flags for investors. The company’s net loss widened to $199.7 million, showing a deviation from analyst estimates. Marathon Digital attributes its increasing losses to new fair value accounting rules for digital assets. Despite mining 692 Bitcoins in July and a planned $250 million convertible senior notes offering to buy more Bitcoin, analysts rate MARA as a Hold with a price target of $21.17. Marathon Digital’s financial instability and debt-reliant Bitcoin acquisition strategies make it a cautious pick for investors, who have other less risky options for Bitcoin exposure. As a result, it’s recommended to stay on the sidelines and avoid buying MARA stock for now.

Read more at Nasdaq: Marathon Digital (NASDAQ:MARA): Not a Worry-Free Bitcoin Stock