MARA Holdings cuts sales at Compass Point ahead of earnings report, citing cash burn
Author: Helen Brown | Edited by: Stephen Alpher Updated: May 6, 2025, 4:28 PM Published: May 6, 2025, 4:20 PM
Investment bank Compass Point cut its rating on MARA Holdings (MARA) to “sell” from “neutral” in a report on Tuesday, citing unsustainable cash burn.
“There are better ways to get BTC beta,” the analysts wrote in a research note, noting that Marathon’s hash rate is now below 5.5 cents, a sign of declining profitability. Compass Point believes that the company is experiencing significant cash burn at current operating levels, which could lead to shareholder base dilution.
The bank also cut its price target on MARA from $25 to $9.50, implying a potential downside of more than 25% from the current price of around $13.
Marathon’s operations center on Bitcoin mining, a process that generates BTC in exchange for computing power. However, as mining rewards decline and energy costs remain stable, the economics of the business model have come under pressure. At the same time, Compass Point argues that Marathon is trading at a premium to the price of Bitcoin itself — an unfavorable situation for investors seeking exposure to the asset.
The downgrade also comes amid a broader slowdown in high-performance computing (HPC) and AI infrastructure. Rivals Core Scientific (CORZ) and TeraWulf (WULF) have also underperformed year-to-date as investor interest in AI has waned. Concerns about customer concentration, pricing risks, and a slowdown in capital spending from giants like Microsoft have driven valuations down, with HPC sector multiples falling from 15x last year to around 5x now.
However, Compass Point noted potential positives for the sector over the long term, including increasing demand for AI infrastructure and capital expenditure commitments from cloud service providers. However, for now, they argue that Marathon’s fundamentals remain too weak to justify its market valuation.
MARA will report earnings on May 8, after the market closes. The stock has fallen 25% this year, while the Bitcoin mining ETF, WGMI, has fallen 37%.
UPDATE (May 6, 16:27 UTC): Updated headlines and added MARA earnings release times.
Disclaimer: Portions of this article were generated by AI tools and reviewed by our editorial team to ensure accuracy and adhere to our standards. For more information, see CoinDesk’s full AI policy.
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