Bitcoin Miner Marathon Digital Targets Trimmed by Cowen

Investment bank Cowen lowered its revenue, adjusted EBITDA and mining margin expectations for bitcoin miner Marathon Digital Holdings (MARA) following sluggish second quarter results, and warned about the company’s ambitious hashrate goals.

While Marathon delivered disappointing results in the second quarter as several thousand of its mining rigs were sitting idly due to storms and energization delays, the firm has announced hosting deals that would help it reach its hashrate goal of 23.3 exahash per second (EH/s) by mid-2023.

However, these deals come with execution risk due to Marathon’s reliance on third-party suppliers and a lack of infrastructure control, said Cowen analysts Stephen Glagola and George Kuhle in a note to clients. They take note that one of those third parties is Applied Blockchain (APLD), a “relative newcomer to the bitcoin mining hosting business with limited operating history.”

Reflecting those disappointing Q2 results, the Cowen team lowered its 2022 revenue estimate for Marathon to $150 million from $204 million, now below consensus forecasts for $189 million. Cowen also dropped its expectations for adjusted EBITDA to $39 million from $86 million, and mining profit to $91 million with 61% margin, down from $132 million and a 64.7% margin.

Cowen continues to rate Marathon at Market Perform, but lifts its price target to $9 from $7 following a near-tripling in the stock price over the last 7 weeks to the current $14 per share.

Read more: Bitcoin Miner Marathon to Start Energizing Texas Rigs at Compute North Facility