Summary MARA Holdings, with the second-largest Bitcoin treasury and largest mining operation, mirrors MicroStrategy’s model, offering a potential “revenge trade” for investors who feel they missed MSTR's rally. MARA’s unique approach includes issuing convertible bonds to raise capital for BTC accumulation, aiming to increase BTC yield and shareholder value. Despite its higher debt and risk profile, MARA’s compressed mNAV and operational similarities to MSTR suggest significant upside potential in a Bitcoin bull market. Market is undervaluing or heavily discounting MARA's mining operations. Simple comparison with RIOT demonstrates this. MARA Holdings ( MARA ) is positioning itself as a unique Bitcoin (BTC-USD) focused company, reminiscent of MicroStrategy (MSTR). While MSTR remains the world’s premier Bitcoin treasury company holding 450,000 BTC, MARA brings additional innovations to the table and boasts the second-largest Bitcoin treasury among publicly traded companies at 44,893 BTC. With the MARA share price at pretty low levels—especially compared to MSTR’s valuation and that of other pure-play Bitcoin miners—MARA could offer a “revenge trade” opportunity for investors who feel they missed out on MSTR’s historic rally. I believe MARA is trading in deep value territory at under $18 per share. MARA’s Parallels to MSTR I’ve written about how MSTR is like Bitcoin’s only investment bank . The company issues various kinds of securities (predominantly convertible bonds, but recently also entering preferred stock) to raise capital and funnel that capital into BTC. This structure redistributes BTC’s volatility and returns across different investor classes, effectively letting MSTR package BTC exposure as a variety of financial products. MARA appears to be following a similar model on a smaller scale. By issuing convertible bonds at low or zero interest rates, MARA raises capital efficiently and uses the proceeds to accumulate BTC. Convertible bond offerings benefit from the company’s relatively high implied volatility, making them attractive for those who wish to hedge or speculate via options. Once that debt is converted into shares—typically after the stock price surpasses the conversion price—MARA is left holding more BTC per assumed diluted share than before. This is called “BTC Yield,” a term pioneered by MSTR. Both MSTR and MARA demonstrate a willingness to accept dilution if it translates BTC Yield (i.e. is accretive to shareholders). MSTR’s massive gains over 2024 highlight how powerful this dynamic can be, and MARA appears poised to replicate it—seeing that it is the second-largest BTC treasury and the largest BTC miner. Importantly, MARA’s share price has not enjoyed the same parabolic move that characterized MSTR’s run, suggesting there may be considerable upside if this current Bitcoin bull market accelerates. Why MARA Could Be the Next MSTR “Revenge Trade” I strongly believe that investors who feel like they missed the boat on MSTR might bet on MARA as a bit of a “revenge trade.” MARA has not seen meaningful appreciation. Yet, it resembles MSTR in many extremely important and glaring ways. With 44,893 BTC, MARA’s BTC treasury is far larger than other companies. Only MSTR holds more. The third-place treasury, [[RIOT]], is at 17,722 BTC—much lower than MARA’s total. This wide gap suggests MARA is the logical runner-up if investors want another “pure-play” bet on Bitcoin treasury companies. But there's more to this because MARA offers a few things that MSTR does not. First, MARA is actually the largest Bitcoin miner by hashrate. MARA generates a large portion of revenue in BTC, part of which can be added to BTC Yield. Second, MARA has also been lending out its BTC. It lent 7377 BTC in 2024 . MSTR has neither of these. In short, MARA’s fundamentals and operational decisions strongly parallel MSTR’s playbook. It’s BTC treasury size makes it the clear #2— effectively the next in line for a Bitcoin treasury company pure play bet. And because MARA’s stock has yet to enjoy the sort of growth MSTR saw, it presents a potential opportunity for those who believe that the next MSTR might still have room to grow. I think MARA’s “mini-MSTR” status could help it attract a wave of new investors seeking such exposure. When we look at the numbers of mNAV (multiple of market cap to BTC NAV), we see that MARA has by far the lowest mNAV of all the top Bitcoin treasury companies with US tickers. MARA currently trades at 1.349X the value of its BTC. MSTR trades at 1.926X its BTC. Bitcoin Treasuries ( bitcointreasuries.net ) MARA also owns the world's largest publicly traded mining operation, and it also has products like 2PIC, which I have covered in my previous MARA articles . An adjustment to the same mNAV as some of the other miners (like HUT) would mean a 67% gain from current levels, at least. [[CLSK]]’s mNAV is over twice as high as MARA’s. Even adjusting to the mNAV of MSTR would mean a 40% gain from current levels. At the same time, MARA’s risk profile is higher. It has more debt compared to its equity value. Here is the debt as of their 10-Q from November . There are 2 series of notes. Convertibles (MARA) Then in November, they completed a $1 billion convertible bonds offering . And in December, they completed a $850 million convertible bonds offering . You can see the full lineup of all four notes here in the 19 December 2024 8-K . This table outlines the shares that the notes are convertible too, which is needed for the BTC Yield calculation. Convertibles (MARA) Altogether, MARA has about $2.48 billion of debt. Their market cap is under $6 billion, so they are levered about 2.4X. In contrast, MSTR’s BTC value (which is half of MSTR’s market cap) is about 5X more than MSTR’s outstanding debt (which is also all convertible bonds). So MARA is definitely in a much riskier position. This could justify a lower mNAV. But the main point is that all of these things have made MARA look a lot like a mini MSTR, which has not yet taken off. The compressed mNAV and the fact that it is the largest miner with the largest BTC holdings adds to this view. Also, it isn't wrong to say that because MARA is more leveraged, it should outperform in a true bull market rally of BTC due to a higher equity beta. That said, the price action of the stock and the leverage in the capital structure don't always translate to one another. But in this case, I think the odds are good since the asset being leveraged has a 24/7 market price and is 74% of the market cap. Risks MARA, like MSTR, is highly sensitive to Bitcoin’s price volatility. If BTC endures a prolonged downturn, the burden of repaying debt could force the company to sell its BTC or other assets or dilute. By contrast, a surging BTC price could magnify the company’s upside, particularly if it continues adding to its treasury. Because MARA is so highly leveraged, I think it is possible that it would outperform MSTR in a BTC rally, although this dynamic is quickly changing as MSTR is expected to unload much of the fixed income portion of their 21-21 plan in Q1. MARA has, in my view, another big risk in executing on multiple initiatives at once— large-scale mining across a few continents, 2PIC, Slipstream, Anduro, mining Kaspa, lending BTC, MARAFW, and selling heat from mining. Having all these ventures evidently has not made the market enthusiastic, or you’d expect the BTC treasury to not occupy 74% of the market value. Here’s a good example. The market currently values RIOT’s mining operations as more valuable than MARA’s. RIOT’s market cap minus its BTC NAV is $2.48 billion. MARA’s market cap minus its BTC NAV is $1.52 billion. This is shocking when you see that RIOT has 31.5 EH/s as of December 2024, but MARA has 53.2 EH/s as of December 2024. In other words, RIOT’s 40% smaller mining operation is worth 60% more, according to the market. Based on these numbers, long MARA, short RIOT could be a great pair trade. We must also remember that RIOT doesn't have the auxiliary things that MARA has like 2PIC and BTC lending. But another interpretation is that MARA’s mining operation—and adjacent ventures—appear to be undervalued or even penalized by the market, treating them more like liabilities than assets. I believe MARA should consider divesting parts of its mining operation—reducing expansion CAPEX and redirecting resources to cutting deals to divest machines and sites to other miners like CLSK and RIOT. MARA should take the proceeds from divestitures and purchase BTC, doubling down on becoming a mini MSTR. For now, I don't believe it is possible to conclusively know why the market is assigning such a valuation to MARA. The risk is that this harsh assessment could continue, and the stock can continue lagging BTC and other mining peers. Conclusion MARA mirrors MicroStrategy’s core model—leveraging convertible debt to accumulate BTC—yet reaches beyond that playbook by adding a list of other capabilities. It seems that the market is assigning higher risk to these capabilities, but they can also open the door for larger rewards. With a more moderate valuation and the 2nd largest BTC treasury among publicly traded firms, MARA may be a compelling option for investors seeking “the next MSTR”. This is why I recently opened a small position in OTM MARA calls, expiring in 2027. I think the stock is currently in deep value territory and a revision in sentiment can send it much, much higher.
