Marathon Digital’s Neutral Rating by Compass Point

Analysts at investment firm Compass Point reiterated a “neutral” rating for Marathon Digital on Wednesday. They argued that the firm’s focus on preparing for Bitcoin’s next halving relies on unproven strategies that may be hard for investors to immediately assess.

Revenue Growth

On Tuesday, the Miami-based firm disclosed a revenue of $238 million in the second quarter, marking a 64% increase from a year earlier. Net income surged 505% to a record $808 million, partly due to a $1.2 billion gain in the fair value of Marathon’s Bitcoin holdings.

Market Trends and Competition

Compass Point analysts noted that most Bitcoin miners are focusing on high-performance computing (HPC) opportunities, prioritizing this space as a means of revenue diversification while Bitcoin’s rising hashrate impacts miners’ profitability.

Some miners have utilized their existing infrastructure to lease space to energy-intensive companies. However, Marathon’s approach, which involves co-developing AI-specific platforms with certain energy companies, is “inflating [operating and research and development costs] while masking underlying profitability,” the analysts posited.

Stock Performance

Marathon shares rose 3% on Wednesday to $17.11. The company’s stock price is up 2% year-to-date, and Compass analysts have set a price target of $18. The firm operates 15 mining sites across four countries and owns nearly 50,000 Bitcoin valued at $5.9 billion, based on current prices. Although Marathon has potential as a “quasi-BTC treasury company,” the slowing momentum without HPC could pressure the stock.

Strategic Partnerships

In a shareholder letter, Marathon stated it has secured partnerships with TAE Power Solutions and LG-backed PADO AI. These companies specialize in high-efficiency energy systems, which can aid in building “field-deployable” infrastructure for AI. Marathon aims to pursue enterprise-level partnerships for monetizing “underutilized or stranded electrons” as a top priority while expanding revenues in international markets.

Industry Outlook

Analyst Ed Engel from Compass noted, “Everyone else is focused on HPC, and Marathon is kind of in its own world.” In anticipation of Bitcoin’s next halving in 2028, which will reduce the per-block reward to 1.56 BTC from 3.125 BTC, Marathon is aiming to generate more than 50% of its revenue outside the U.S. The company expressed hopes for “structured joint ventures with sovereign power entities.”

Marathon added, “we believe large pockets of underutilized energy around the world, particularly in regions with excess renewable or stranded capacity, present a unique opportunity to scale our operations in a capital-efficient manner.”

Despite U.S. President Trump advocating for more Bitcoin mining within American borders, some conservatives abroad are showing a newfound interest in the industry. For instance, Marine Le Pen in France has supported utilizing surplus electricity from nuclear facilities to mine Bitcoin, according to Le Monde.