Bitcoin Miner Marathon’s Shares Outperform Peers Ahead of Possible ‘Strong’ Earnings Report

• Marathon Digital is likely to see strong fourth-quarter sales due to higher bitcoin prices and transaction fees, a Jefferies analyst said.

• The analyst will also be looking for the miner’s potential plan to shift away from third-party hosted mining to self-mining.

Bitcoin (BTC) miner Marathon Digital’s (MARA) shares outpaced mining peers on Wednesday, ahead of an earnings report that Jefferies expects to be strong mainly due to a rally in BTC prices during the fourth quarter.

The shares rose more than 6% in early trading, while other mining stocks are mostly muted even as bitcoin blasted past $60,000 for the first time since November 2021.

The Fort Lauderdale, Florida-based miner is slated to report fourth-quarter earnings after the bell on Wednesday and is likely to see a significant boost from bitcoin’s recent rally and higher transaction fees, Jefferies analyst Jonathan Petersen said in a note.

“We expect the company will report a strong acceleration in Q/Q revenue growth due to a nearly 50% increase in avg BTC price from 3Q23. Additionally, transaction fees have been markedly higher in 4Q23, making up about 11% of miner rewards, from just 2% in 3Q23,” Petersen said.

The transaction fees, which supplement miners’ reward of Bitcoin blocks, have been a boon for the miners. Last quarter, due to the popularity of Ordinals, transaction fees saw some significant spikes, helping lift miners’ profitability.

Wall Street analysts expect Marathon to report fourth-quarter sales of $148.8 million, about 52% higher than third quarter, according to FactSet data. However, the miner is estimated to post earnings per share of $0.04 in the fourth-quarter versus $0.35 in the previous quarter.

Peterson will also look for Marathon’s plans to move its business toward self-hosted mining and buy up more bitcoin mining computers. Marathon mostly uses third-party data centers to store its mining rigs, which has resulted in some hiccups for the miners. However, Peterson says Marathon has been shifting from that business model, which should help improve profitability.

Most recently, Marathon took over full ownership of two mining sites where rival Hut 8 was hosting the company’s machines. The miner said that by removing Hut 8 as the third-party operator, it will be able to lower its operating cost and improve operational efficiency.

Marathon has risen nearly 20% this year but, alongside other mining companies, has underperformed bitcoin’s staggering 44% rally heading into April’s bitcoin halving event.