Marathon Kicks Off Bitcoin Miners’ Earnings With Focus on Rig Deployment, Funding

Marathon Digital (MARA), one of the largest publicly traded bitcoin miners, will kick off the Q1 earnings season this week, with a focus on how the company is going to house more than 70,000 new mining rigs and source capital for growth, according to Wall Street analysts.

The earnings report is slated to be released after the market on Wednesday. This quarter, Marathon will also be hosting its first-ever earnings call with the analyst and investor community at 4:30 p.m. ET.

Analysts will be looking for commentaries on updates on its roughly 70,000 new miners that will need to be housed and deployed. “MARA has taken delivery of ~70k new Bitmain S19s, but delays in finalizing PPAs [power purchase agreements] with Ercot have resulted in ~45 days’ delay for Compute North (the hosting provider) to have the facility ready for MARA’s miners,” Jefferies analyst Jonathan Petersen wrote in a research note on Monday. “We are interested to hear an update about the status of and timeline for deploying these miners.”

Petersen has a buy rating on Marathon and a 12-month average price target of $36, which was lowered from $51 to reflect the delay in rig deployment and lower bitcoin price estimates for the year. Petersen expects bitcoin to average a price of $49,529 this year, down from a previous estimate of $54,722.

Another Wall Street investment bank, Compass Point, echoed the questions around Marathon’s strategy for housing its new miners. “We will also be looking for commentary around where the company expects to house its 78k S19 XP miner coming later this year, as MARA has not indicated where they will be hosted,” wrote analyst Chase White in a research on Monday.

Chase also has a buy rating on Marathon, and his 12-month average price target is $50, down from previous estimate of $66. The average price target of the six analysts for Marathon’s stock is about $51, according to FactSet data.

Marathon said on April 4 that it is still on track to meet its hashrate guidance of 23.3 exahash per second (EH/s) by early 2023, despite a 45-day delay in deploying its mining rigs during the first quarter.

Compass Point’s White will also look for a discussion of how Marathon plans to raise funds for future growth. “We will be looking for any commentary around how the company plans to finance its buildout going forward, and specifically what sources of capital might be available,” White wrote. “We expect MARA will likely indicate a willingness to start selling some of its monthly mined BTC to fund a portion of its opex and capex.”

Read more: Battered Bitcoin Miners Increasingly Turn to Debt Financing

For its part, Jefferies’ Petersen is looking for updates on how the company plans to relocate its mining machines away from a site in Hardin, Mont. that is powered by coal, to a site with more renewable energy sources. “On the earnings call, we hope to learn more about whether MARA intends to use Compute North or is considering other hosting providers to house the Hardin miners and any future orders,” wrote Petersen.

Another topic that could be a point of discussion is recent chatter about M&A among the miners. Recently, with some speculation swirling around Marathon as a possible target, the company told CoinDesk that it’s not interested in selling the company right now, citing what it considers to be its undervalued stock.

The consensus estimates for the first quarter for Marathon are 23 cents in adjusted earnings per share, $51.5 million in sales and earnings before interest, taxes, depreciation and amortization (EBITDA) of $38 million, according to FactSet.

Marathon shares have fallen 50% this year, while those of rivals Core Scientific (CORZ) and Riot Blockchain (RIOT) have dropped 44% and 54%, respectively, year to date. That compares to the price of bitcoin, which has fallen 19% this year.