Bitcoin Miner MARA Shares Rise Despite Earnings Miss as Analysts Welcome Cost Cuts
Shares of bitcoin miner MARA Holdings (MARA) outperformed their rivals on Friday despite its first-quarter results falling short of Wall Street expectations, as analysts see positives in the company's push to cut costs.
Jefferies analysts noted that with the price of bitcoin rising to $102,524.33 in the second quarter of this year and MARA's focus on more sustainable energy sources such as solar panels and gas-fired data centers, energy costs should decline in the coming quarters, helping to boost profitability.
“MARA is developing its infrastructure at a 114 MW wind farm and has fully powered its 25 MW gas-fired micro data center, both of which should reduce its energy costs,” analyst Jonathan Petersen said in a report.
If the miner continues to acquire more of these energy sources, it will help boost profits, Petersen wrote. “Further energy asset purchases are expected to further reduce energy costs, improve margins, and better position the company for the next halving.” Petersen reiterated his “hold” rating on the stock, while raising his price target to $16 from $13.
Bitcoin mining, once a lucrative business, saw profits plummet during the last bear market and have fallen even further since the recent halving, which halved the reward. Moreover, rising mining electricity costs continue to weigh on profits.
This pressure has forced most miners to look for ways to diversify their business, including hosting artificial intelligence (AI) and high-performance computing (HPC) data centers. MARA was among the few miners that did not immediately enter the AI sector, focusing on other ways to diversify, such as earning revenue from transactions, starting a mining pool, buying Bitcoin on the open market, and reducing electricity costs by using green energy.
The last aspect about lower electricity costs seems to have found a response in the market.
HC Wainwright analyst Kevin Dede noted that this is what sets MARA apart from its peers in the mining industry: “Yesterday’s comments made it clear that the company remains focused on advancing technology in its key area of energy conversion… with a particular focus on driving energy costs down to zero.”
“We’re rethinking that here, taking a step back from MARA’s strategy of targeting mining competitors or forcing their business into fast-growing HPC capabilities,” he added.
Dede, who has a “buy” rating and a $28 price target, also seems to agree that MARA can cut costs by focusing on such energy sources.
“At this point, we support MARA's core objective of creating opportunities by using unused energy or improving energy efficiency,” he said.
MARA shares rose 9% on Friday, while the CoinShares Valkyrie Bitcoin Miners ETF (WGMI) fell about 0.3%.
Read more: MARA Holdings cuts price to sell at Compass Point ahead of earnings release, citing cash burn
Source: cryptonews.net
