Marathon Digital Achieves Record-High Revenue in Q4, but Analysts Remain Unswayed

This week's edition of Public Keys centers on Bitcoin miner Marathon's significant achievement in Q4, and why this success hasn't swayed analysts to boost their ratings.

Public Keys: Marathon hits record revenue amid lagging analyst interest

Hello, readers. Welcome back for another edition of Public Keys, Decrypt's weekly coverage of the major publicly traded cryptocurrency companies. This term encompasses a wide scope, including crypto exchange Coinbase, Michael Saylor's Bitcoin-accumulating strategy, Jack Dorsey's crypto payments platform Block, Inc., and various publicly listed crypto mining firms.

This week, we'll be highlighting a significant achievement by Bitcoin miner Marathon, which achieved a peak in Q4, and examining why analysts haven't responded by boosting their ratings.

Moreover, we'll be covering the dismissal of the SEC lawsuit against Coinbase, the upcoming announcement of full-year earnings by miner Hut 8 on Monday, and approval for Bitfarms to proceed with its merger with Stronghold.

MARA hits record revenue

Marathon Digital, the largest publicly traded cryptocurrency mining company with a market cap of $4.7 billion, announced a record-high Q4 quarterly revenue of $214 million on Wednesday.

It's worth noting that the company recently changed its name to MARA, but we'll continue to refer to it as Marathon to avoid any confusion with its stock ticker.

This figure represents a 37% increase over its Q4 2023 performance, exceeding analysts' expectations. The gain is particularly significant considering that last year's Bitcoin halving dramatically reduced the rewards received by miners. This mechanism, designed to control Bitcoin's inflation rate and embedded in its code, becomes a talking point every four years as miners and traders adjust to the new conditions.

However, one might expect that analysts following Marathon, trading on the Nasdaq under the MARA ticker, would be praising the company's performance. But that hasn't been the case.

It has become increasingly challenging to maintain low costs for each Bitcoin mined. As the current block reward is now 3.125 Bitcoin, miners are striving to gain an advantage by deploying additional mining rigs and reducing energy expenses.

Marathon has addressed this issue by aiming to evolve into a "vertically integrated energy and technology solutions provider." According to CEO Fred Thiel, the company successfully tripled its energy capacity in 2024 from 0.5 to 1.7 gigawatts by harnessing excess natural gas and wind farms.

But like many of its peers, Marathon's profitability is heavily influenced by Bitcoin prices—something analyst Stephen Ayers describes as "inherently unpredictable."

For instance, Marathon saw an increase in the value of its BTC treasury by $443 million in Q4. But this can fluctuate; the market recently saw Bitcoin dip below $80,000.

The research firm Bernstein has previously praised Bitcoin miners, yet it has expressed more favorable comments about smaller competitors like Cleanspark and Riot Platforms compared to the Florida-based company.

Coinbase SEC lawsuit dismissed

Last week, the Securities and Exchange Commission agreed in principle to dismiss its lawsuit against crypto exchange Coinbase. Consequently, Coinbase, traded on the Nasdaq under the COIN ticker, finished the week above $235.

By the time the SEC officially confirmed the dismissal this week, the positive impact on the company's share price had diminished, closing at approximately $208.37 yesterday.

Observers have noted that the company and its executives have invested tens of millions in political donations, including $70 million to Fairshake, a super PAC supportive of crypto.

Meanwhile, the recent market downturn has significantly increased trading volumes on the exchange. In just one day, Coinbase reported a 65% spike in volume, according to data from CoinGecko.

Ones to watch: Hut 8 earnings and Bitfarms merger

Hut 8, which trades on the Nasdaq under the HUT ticker, will announce its full-year 2024 results on Monday, March 3. Although the presentation will cover the previous year, analysts will likely focus on updates regarding its Vega Project.

In a performance update from January, Hut 8 CEO Asher Genoot hinted that the project—which features a “~15 EH/s colocation agreement with BITMAIN”—is expected to be ready for “energization” in Q2 of this year. The company has also been directing investments toward AI data center development.

Bitmain, a privately owned Chinese manufacturer of crypto mining equipment, specifically ASICs (application-specific integrated circuits), currently holds approximately 80% of the global market for Bitcoin mining hardware, according to Bitstamp, a Luxembourg-based crypto exchange.

Additionally, Bitfarms, trading on Nasdaq under the BITF ticker, has received approval from shareholders to proceed with its merger with Stronghold. This is the same Bitcoin mining company that successfully resisted a hostile takeover attempt from Riot Platforms a few months back.