Mining stocks are incredibly popular with those that seek a slice of the blockchain pie without direct investment in cryptocurrency themselves. The belief is that by investing in mining stocks, investors aren’t subject to the extreme bouts of volatility – yet this isn’t quite the case. For example, Marathon Digital (NASDAQ: MARA), a mining operation hoping to be the largest in North America, is often subject to losses depending on the fluctuation of Bitcoin.
However, the company is attempting to decrease business risk by formulating contracts that will protect the company from falling BTC prices. Along with plans to keep energy levels low, and a bold growth strategy based on an improved hash rate; Marathon Digital has caught the eye of BTIG, who initiated coverage on the stock this morning with a ‘Buy’ and a price target of $50.
BTIG analyst Gregory Lewis based his target on the miner’s ‘early-mover advantage’, allowing the company to solidify long-term contracts as attractive pricing. Lewis outlines the company as ‘well-positioned for the ongoing BTC mining up-cycle’.
The company’s unique no-infrastructure model allows the company to focus practically all of its available capital towards mining rigs; it does mean however that they are incredibly exposed to increasing hosting costs. Overall, Marathon Digital is well-situated within its respective sector; and Wall Street seems to agree, with the BTIG coverage aligning with the average Wall Street rating of Very Bullish.
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Oliver is a financial writer and analyst specialising in the US stock market, with years of personal experience in understanding micro/macroeconomic structures, market trends and fundamental analysis.