Summary MARA Holdings' profitability hinges on efficient Bitcoin mining, BTC price appreciation, and the availability of unmined Bitcoins, with significant exposure to energy and regulatory risks. The 2024 Bitcoin halving event drastically increased MARA's total cost per BTC, highlighting the inherent volatility and challenges in the Bitcoin mining industry. Despite MARA's efforts in efficiency and vertical integration, the company remains heavily reliant on BTC's exponential price rise and favorable external conditions. Given the structural risks in Bitcoin mining, including rising costs and regulatory uncertainties, I recommend a "sell" rating for MARA. MARA Holdings ( MARA ) specializes in cryptocurrency mining, with a focus on Bitcoin (BTC-USD). The company generates revenue primarily through mining Bitcoin. This is accomplished by MARA’s “mining rigs” (computers) that are designed to solve the mathematical puzzles required for Bitcoin mining. The company houses the mining rigs in “data centers” in locations such as Ohio and Texas. These centers provide the power and cooling systems necessary to keep equipment running efficiently. Mining Bitcoin is expensive and energy-intensive , which is why MARA is also focused on vertically integrating into renewable energy (e.g., excess natural gas and wind farms ). To break it down, MARA is predominately dependent on 1) its ability to efficiently mint Bitcoins, 2) the value of Bitcoin, and 3) the availability of unmined Bitcoins. Let’s address each point more in detail below. 1) Ability to Efficiently Mint Bitcoins Data compiled from MARA press releases (Author) MARA’s profitability is dependent on how efficiently it can mine Bitcoin. This involves minimizing the costs associated with electricity, equipment, and operations. MARA aims to maximize (increase) its “hash rate,” or computational power. During January 2025 , MARA mined 750 Bitcoins, averaging 24.2 BTC per day, with a hash rate at 53.2 EH/second. Notably, this represented a 13% M/M decline in BTC production, lending to MARA’s stock declining by nearly 8% following the update. The company attributed the decline to “fluctuations in network difficulty and intermittent curtailment.” In Q3 , MARA mined 2,070 Bitcoins, or 22.5 per day (down 2% Q/Q). Their cost of revenues for “mining and hosting” were $97.527 million the same quarter. This implies that it cost MARA $47,114 per BTC (total, including “direct energy”). In Q2 , MARA mined 2,058 Bitcoins ( $45,620 per BTC ). In Q1 , MARA mined 2,811 Bitcoins ( $32,092 per BTC ). The drastic change between Q1 and Q2 in total cost per BTC was primarily the result of the Bitcoin halving event that occurred in April 2024. This event reduced block rewards from 6.25 to 3.125 BTC. This results in miners receiving fewer Bitcoins for the same amount of computational work. The halving event is a fundamental design of Bitcoin. It aims to combat inflation and control supply. Halving events occur every 4 years until the total supply of Bitcoin (~21 million) is reached. The market responded to the 2024 halving event by "one-thirding" MARA’s stock. It recovered soon thereafter, but has since fallen below April lows. Seeking Alpha In Q4 , MARA mined 2,492 Bitcoins ( $52,335 per BTC ). MARA highlights the “direct energy cost per Bitcoin” as a key performance indicator. For Q4, this figure was $28,801, which is below industry average, but not the best. However, I am more interested in "total cost per Bitcoin" as energy costs alone do not capture the full picture (e.g., mining, hosting, infrastructure, and maintenance, security, etc.). 2) Exposure to Bitcoin’s Market Value Thanks to BTC increase in value from October 1 ($60,858) to December 31 ($93,460), MARA reported an operating income of $341.027 million in Q4 ($442.918 million “change in fair value of digital assets”). MARA YTD, however, BTC has declined 10% and, yesterday, “ crossed below its 200-day EMA .” Seeking Alpha So, it goes without saying that MARA’s financial performance is highly levered to the price to BTC, which is inherently unpredictable. What is Bitcoin? It’s important to define it as objectively as possible. To put it simply, Bitcoin is a decentralized digital currency that enables global peer-to-peer transactions. It operates on a public ledger (“blockchain”). Where is Bitcoin’s price heading in the future? Well, no one knows. Many speculate that increased institutional adoption and favorable regulatory developments could boost its value. There are also some risks. For instance, in 2021, China banned all cryptocurrency transactions due to its “ ties to fraud, money laundering, and excessive energy use. ” Bitcoin’s value fell 8% immediately following the ban. Bitcoin remains banned in China to this day, among other countries. In the past, we have seen security breaches in major cryptocurrency exchanges (e.g., FTX). Macroeconomic uncertainties (e.g., inflation, tariffs, geopolitical tension) also steer investors away from volatile assets like Bitcoin. Just last week, a Dubai-based cryptocurrency exchange, Bybit, revealed it was the victim of a hack that stole $1.5 billion worth of digital currency. In the U.S., President Donald Trump, who was a very vocal supporter of Bitcoin during his campaign trail (e.g., “Bitcoin Strategic Reserve”), has since become quiet . Recently, some have speculated that quantum computing , while still in nascent stages, could serve as a threat to Bitcoin if the digital currency fails to evolve from its “ traditional cryptographic methods ,” leaving "trillions" of dollars at risk in the event of a successful "quantum hack." To summarize, Bitcoin is still a fragile currency that relies on good macroeconomic conditions to thrive. At the end of 2023, MARA held just over 15,000 BTC. As of the last update, its BTC holdings (including loaned and collateralized) increased to 44,893. In addition to mining, MARA also buys Bitcoin. In Q4, MARA purchased 15,574 BTC. For the full year, MARA acquired “22,065 Bitcoin at an average price of $87,205.” This implies minimal hedging of Bitcoin price risk. This is quite risky. MARA has sold BTC in the past to fund its operations (e.g., 2023 ), but prefers to hold and is intentionally “long BTC.” So, MARA’s exposure to Bitcoin has two major implications. For starters, its mining revenues fluctuate with the BTC price. Second, its large balance sheet holdings (using "fair value accounting") amplify net income volatility. 3) Availability of Unmined Bitcoins Recall that Bitcoin has a hard cap of 21 million coins. Most coins have already been mined , with just ~1.1 million BTC remaining. The remaining 5% will be gradually mined, by many players, over the next 100+ years due to halving events. It’s a double-edged sword. Bitcoin’s built-in scarcity is expected to increase its value over time. However, this also means that there is a declining flow of new Bitcoins to earn for mining companies like MARA. It also means that it is an imperative for BTC to rise. It must rise, bigly and continuously, to be worth mining. In addition to all of this, Bitcoin’s network difficulty (a measure of how hard it is to mine a block) is always increasing . Mining companies must outpace the network to increase its share of newly mined BTC. So far, MARA has done a solid job outpacing the network and increasing its share. MARA Financial Health As of December 31, MARA had a combined unrestricted cash, cash equivalents, and BTC of $4.575 billion. The vast majority of this is investment in Bitcoin. At the time of writing, MARA has not yet provided much detail on their balance sheet. Going off their 10-Q for the quarter ending September 30, MARA had only $59.789 million in total current liabilities. They owed $618.683 million in long-term “notes payable.” Total stockholders’ equity was $2.856 billion. MARA's financial health is well, and their balance sheet can weather short-term hardships should they arise. MARA Stock: Balanced Take & Investment Recommendation Author I am cautious on MARA (“ sell ” and “market underperform”) because for it to achieve long-term success in Bitcoin mining, several external factors, entirely outside of their control , must align perfectly. Due to halving events every four years, BTC must appreciate significantly to compensate for the 50% drops in mining rewards. And I’m not talking about “stabilizing” or narrowly outperforming the S&P 500. We are talking massive and consistent price appreciation. Second, global energy prices must stay low. Electricity is MARA’s largest cost. If global energy prices rise (e.g., due to wars, trade wars, inflation, supply chain disruptions, etc.), mining costs could outpace BTC price gains. Third, the regulatory environment must be favorable (e.g., no major taxes, bans, energy restrictions). This, too, is a double-edged sword. The more Bitcoin is adopted by the mainstream, the more pressure there will be to regulate it. In fact, it has been argued that some degree of regulation is required for Bitcoin to become mainstream. Fourth, institutional adoption needs to steadily increase to improve liquidity and demand. This will help keep BTC prices appreciating. In addition to these external factors, MARA needs to execute perfectly by investing in advanced mining hardware, optimizing energy consumption, and outpacing the network and its competitors. In summation, bitcoin mining is a tough, high-cost business with diminishing returns due to halving events and rising competition. MARA is heavily leveraged on BTC’s price rising exponentially. Even if stagnates, or increases only marginally, over the next four years, the company could face long-term unprofitability. Finally, regulatory and energy risks are very real, and, in my view, MARA lacks a diversified revenue base to protect them from prolonged bear markets. Critically, MARA’s tiny $13.8 million R&D investment in 2024 implies a heavy reliance on existing mining technology rather than developing proprietary advancements. It signals short-term thinking in an industry that demands continuous innovation to stay profitable post-halving events. Recall that BTC was Risks to Thesis There are several risks to my “sell” recommendation. Although Bitcoin’s mining difficulty climbs at a relentless pace, MARA was able to scale its own hash rate by 100%+ in 12 months to maintain, and even grow, share. Although Bitcoin mining is energy-intensive, MARA has been focused on efficiency and vertical integration to control its energy costs. Its direct energy cost of $28.8k per Bitcoin is on the low end of industry production costs. Although MARA is dependent on regulatory developments, the regulatory landscape, at least in the U.S., appears to be improving and the Trump administration, at least in words, is crypto-friendly. Institutions are increasing their exposure to Bitcoin. Continued adoption is likely to increase Bitcoin’s price and liquidity. While MARA’s R&D investments appear low, they are still innovating (e.g., Anduro , Slipstream ). Final Words I will end the article by acknowledging that MARA is doing a great job executing in the Bitcoin mining industry. So, my caution is not so much with MARA, but the nature of Bitcoin mining as a business model. In other words, the structural risks of the industry, like rising costs, halving-driven revenue cuts, energy dependence, and Bitcoin price volatility, in my opinion, makes Bitcoin mining inherently fragile and unsustainable in the long term, regardless of execution.
