Marathon Digital (NASDAQ: MARA) stock is up 12%. MARA stock reacts well to changes in Bitcoin (BTC) pricing and so it should as well. Like all miners of everything the stock price is leveraged to the output price. This should be obvious - production prices don’t change just because sales prices do, they move independently of each other. That means changes in sales price feed through directly to the bottom line. We’ve pointed this out before about Marathon Digital: “Marathon Digital (NASDAQ: MARA) stock is up 23%. This should not surprise given that Bitcoin (BTC) is up 12% over roughly the same period. Note that this isn’t exactly the same timespan as BTC trades 24/7 and stocks don’t. But still, we see that move in the underlying we should expect that move in the miner. The basic economics of the situation insist that this is what will happen.”
This also works the other way around of course, as we’ve seen with falls in MARA stock: “Marathon Digital (NASDAQ: MARA) stock is down 15% or so. MARA stock is down because Bitcoin, BTC, is down. That’s just how mining works, the miner is geared to the price of what is being mined. This is true of physical mining just as it is of crypto mining. The price of lithium, or BTC, Litecoin, is whatever it is.”
OK, so Bitcoin is up over the past couple of days, Marathon Digital is up, is that all there is here?
Marathon Digital Holdings stock price from Google Finance
But there are also expansion plans to match the approaching bitcoin halving. “Marathon's proactive strategy aims to position the company advantageously within this competitive landscape. However, there are concerns about the company's cost structure which remains higher than many of its peers. This could risk profit margins should Bitcoin prices dip below the $30,000 mark following the halving event.” Which could work either way if we’re honest about it. There’s also this about Paraguay: “However, the company has signalled a strategic shift toward global joint ventures and diversification, unveiling plans for new mining sites in Abu Dhabi and Paraguay. This strategic move indicates a deliberate departure from dependence on U.S.-based mining facilities, which have grappled with issues such as exorbitant costs and operational delays.”
At which point, well, is Marathon simply a play on Bitcoin or is there something specific to the company in the stock price performance? What we’d like is a check on this and fortunately we’ve got one in Riot Platforms (NASDAQ: RIOT). Also a listed bitcoin miner and following slightly different internal strategies. RIOT stock is also up 10% or so on the day.
A useful conclusion therefore - not a conclusive one, but intermediate and useful for all that - is that Marathon’s price is being driven by the Bitcoin price, not the corporate strategy. Who knows, maybe that will become the influence in the medium term?