Jefferies Downgrades Bitcoin Miner Marathon Digital on Construction Delays

Funding financial institution Jefferies downgraded its score for bitcoin (BTC) miner Marathon Digital Holdings (MARA) to “maintain” from “purchase” because of development delays.

“Worsened mining economics and a scarcity of transparency across the execution dangers for MARA’s internet hosting companions preserve us on the sidelines for now,” Jonathan Petersen and Amanda Santillo wrote in a word to buyers printed on Sunday. The financial institution additionally lowered its value goal to $4 from $12.5.

Marathon operates an asset-light mannequin; it solely owns the mining machines and depends on counterparties to host them in purpose-built infrastructure. However its counterparties have confronted important development delays, which means Marathon’s funding will not be producing income for some time.

Jefferies expects all of Marathon’s ordered machines, which whole 23 exahash/second (EH/s) of computing energy, to be working on the finish of 2023, as a substitute of the corporate’s projected mid-year.

Shares of Marathon Digital have been up over 3% at $4.23 in pre-market buying and selling, together with the broader crypto market.

Marathon missed its 9 EH/s hashrate goal for the tip of 2022, as a result of 2.1 EH/s of computer systems are awaiting energization at Utilized Digital’s (APLD) Texas internet hosting web site, who’s in flip ready for regulatory approval to activate the machines. The miner had already lowered its goal for the yr from 11.5 EH/s in its third quarter earnings report.

On high of that, Marathon has been negatively impacted by energy curtailment on King Mountain web site in Texas, Jefferies stated.

Final week, Marathon paid off $30 million in a revolving credit score facility from troubled crypto-friendly Silvergate Financial institution (SI).

Learn extra: Bitcoin Miners Acquired Crushed by Crypto Winter. 2023 Might Carry Extra Ache