Summary We initiate coverage on MARA Holdings with a Strong Buy and $44 price target, citing unmatched operational leverage to Bitcoin’s next cycle and cost leadership. Our thesis is built on above-consensus revenue forecasts, driven by a 60 EH/s hash-rate ramp, low $0.04/kWh energy costs, and robust treasury BTC optionality. Valuation is compelling: MARA trades at a deep discount to historical and peer multiples, with 180% upside justified by macro tailwinds and post-halving expansion. Key risks include Bitcoin price volatility, regulatory headwinds, and potential dilution, but we see the risk/reward as highly favorable at current levels. Levered to the Next Crypto Cycle We initiate with a Strong Buy/$44 PT. MARA Holdings, Inc. (NASDAQ: MARA ) operates one of the world’s most advanced vertically integrated Bitcoin mining platforms, leveraging proprietary technology and low-cost energy infrastructure to deliver digital assets at scale via the US. Beneath the volatile exterior, MARA occupies a sweet spot of structural and cyclical drivers for a step-change in miner economics. More than 100k BTC cleared in the second quarter of 2025 began to reset base-case assumptions, yet consensus underwrites sub-80k BTC and underestimates the length and magnitude of post-halving multiple expansion. We see $1.36 billion in FY 2025E revenue (up 107% y/y, 43% above the Street) as energized Ohio/Texas wind assets, along with forthcoming flare-gas sites, deliver 60 EH/s of hash rate to keep network share elevated despite global difficulty hikes. Embedded in our base case is a self-inflicted above-consensus BTC price path of $105 k/$130 k FY 2025E/FY 2026E annual averages, already realized in spot markets and amplified by MARA’s ops edge: $0.04/kWh energy costs and superior fee per transaction capture, driving 12% outperformance in BTC-denominated revenue. Our valuation embeds a blended FY 2026E P/S of 10.5x, balancing against downside the visibility of its treasury assets and factoring in the concentrated potency of macro tailwinds: (i) a window to imminent Fed easing, (ii) record spot ETF inflows and (iii) the historic miner inflection 12–18 months post-halving. Regulatory overhang and bouts of network hash growth present headline risk to our thesis, but cost structures and balance sheet optionality leave more than enough margin for error. At 180% upside to our PT and trading up short of its historical median multiple, we see R/R as simply too skewed. Maximizing Miner Economics Marathon Digital Holdings exemplifies scale-driven cost leadership in BTC mining. Energized hash rate grew 95% y/y to 54.3 EH/s, capturing over 2x network share, driven by vertical integration and diversified energy inputs with 139 MW of self-generated wind, flare-gas, and data center power. Electric cost per BTC is now $35,728, and Marathon has delivered record 4 quarter-over-quarter hash-cost improvements. The blend of BtM wind and off-grid gas should lower all-in power costs to $10/MW for key ARPs, a breakpoint few peers can reach. This configuration supports an IRR of 30–40% under muted hash-price assumptions. As investors toggle between exahash headlines and transient efficiency gains, Marathon’s scale-plus-cost flywheel stands out as a sustainable platform—combining energized capacity, asset flexibility, power origination optionality, and proprietary ASIC integration—to preserve sector-leading share through mining-cycle volatility. Q1 Earnings Presentation Treasury Arbitrage Strategy embedded optionality. Fundamentally, we think the market has mispriced the strategic merit of MARA’s BTC on balance sheet, both in current balance sheet positioning and in embedded optionality. The 49,375 BTC on treasury ($5.42bn equivalent) offers investors direct participation in digital asset appreciation while buying an operating platform that can generate $852mn of annualized BTC back into the treasury at current network economics. Such a magnitude of treasury represents a uniquely powerful downside hedge versus global mining peers, allowing valuation capital preservation through deep crypto drawdowns and giving management optionality to monetize at cycle highs or deploy collateral opportunistically. Trading at $16.52, implied per-share BTC value stands at $15.41/share, providing the operating business just above $1/share after adjusting for net cash and PP&E. The disconnect continues to widen as MARA’s proven BTC accumulation cadence (950 BTC in a single month, or $104.5mn at $110,000 spot) captures robust upside and offers a meaningful premium to direct mining costs on the books. We believe consensus underappreciates the downside compounding and the asymmetry of MARA’s treasury, which ultimately provides shareholders a volatility buffer and an asymmetric payoff should direct adoption and institutional allocation run further. Case scenarios illustrate that the BTC is over-collateralizing the equity to such a degree that it meaningfully caps downside. We view MARA trading as a rare hybrid asset in which meaningful core value effectively underwrites investor participation in the next mining-led BTC upcycle. Q1 Earnings Presentation Materially Above-Consensus Revenue Outlook We model MARA’s FY 2025E and FY 2026E crypto revenues at $1.36bn (107% y/y) and $1.44bn, respectively, vs. the Street consensus of $948mn, placing us 43% and 32% above the Street based on structural tailwinds we believe the Street underappreciates: 1) Ambitious hash rate ramp to 60 EH/s as Ohio, TX wind and other flare-gas sites fully energize, positioning MARA for sustained 5% network share as difficulty resumes a persistent upward trend; 2) Explicit BTC pricing assumptions of $105k in FY 2025E and $130k in FY 2026E vs. consensus sub-$80k, already clearing $100k in the second quarter of 2025; 3) Proportional transaction-fee capture via MARA pool’s >10% outperformance vs. network average and 100% fee retention, translating to 12% higher BTC-denominated revenues. Source: FMP FY 2025 FY 2026 Estimate # Analysts Estimate # Analysts Revenue $948.02M 9 $1.09B 13 EBITDA $13.85M 9 $15.87M 13 Net Income $-656.60M 9 $-358.66M 13 EPS $-2.11 2 $-0.96 6 SG&A Expenses $535.42M 9 $613.52M 13 Most importantly, we annualize a first quarter 2025 run rate already partially baked in by the Street and layer on unfolding AI/2PIC monetization missing from the Street models. We acknowledge risk of sharp network hash rate acceleration beyond guidance or, less likely, regulatory change, but with visibility into energized capacity, a unique cost profile via $10/MWh ARP sites, and institutional BTC demand, we see the Street as significantly too conservative. Valuation Our $44 PT for MARA is based on a FY 2026E P/S multiple of 10.5x applied to our above-consensus revenue forecast of $1.44bn, yielding an implied 180% upside. The premium multiple is fully justified by outsized revenue growth acceleration powered by a ramped-up 60 EH/s hash-rate and a low $0.04/kWh power edge, plus Bitcoin treasury visibility that effectively limits downside. Company Data, FMP, Moretus Research Our 10.5x multiple aligns with the company’s historical median and stands to benefit from macro tailwinds of Federal Reserve easing and surging institutional ETF flows, which could prime post-halving multiple expansion. MARA trades at 7.7x P/S, below its historical norm (27th percentile) and below peer multiples (5.8x P/S; 17th percentile), despite margin resiliency and a market-leading +5.9% year-over-year revenue growth into FY 2026E. We believe Street assumptions on Bitcoin price and network share are overly conservative, and MARA warrants re-rating for its operational leverage. Risks to Our Strong Buy Thesis Our bullish thesis on Marathon Digital Holdings, Inc. ( MARA ) is supported by favorable capacity growth, low-cost operations, and a structurally higher post-halving Bitcoin price deck. Key risks include MARA’s operational and valuation leverage to Bitcoin’s price: a sustained pullback below $90,000 or an acceleration in network-wide difficulty could compress margins and force operational retrenchment, given energy costs could rise to $70K per Bitcoin if difficulty increases or electricity prices exceed model assumptions. Regulatory uncertainty poses another risk: state and federal energy restrictions, new environmental mandates, or regional off-grid mining clampdowns could raise compliance costs or force site curtailments, threatening hash-rate growth and undermining our above-consensus FY 2025E–FY 2026E estimates. Finally, MARA’s strategic use of ATM equity issuance could result in dilution and dampen our anticipated multiple re-rating if the Bitcoin market softens or policy risks intensify. Investors should monitor Bitcoin network hash-rate, MARA’s realized electricity costs, and state and federal regulatory developments as potential downside triggers. Conclusion We reiterate our Strong Buy on Marathon Digital Holdings, Inc. based on MARA's peer-best operational leverage to BTC's next cycle and differentiated cost structure leading to best-in-class risk-adjusted return in the public minter space. Consensus fundamentally underestimates the scale of MARA's hash-rate ramp and true macro tailwinds (institution ETF flows and post-halving multiple expansion) offering a clear path for outsized revenue / multiple re-rating, in our view. Investors should look through the short-term FOMO cycle and simply focus on execution against energized capacity, accumulating now as multiples are structurally depressed despite structural catalysts remaining fully intact.
