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Jefferies analyst Jonathan Peterson initiates cryptocurrency miner Marathon Digital (NASDAQ:MARA) with a Buy rating as its data center hosting strategy leaves more room for revenue growth.
- Shares of MARA edge lower by 1.2% in pre-market trading, while bitcoin (BTC-USD) breaks even at $36.8K per token.
Note that the company uses data center hosting providers to benefit from faster deployment and a higher allocation of capital to revenue-generating ASIC miners, Peterson writes in a note to clients. This is different from vertically integrated bitcoin (BTC-USD) miners like Riot Blockchain (NASDAQ:RIOT), which builds out its own data centers to reduce operating costs in the long term.
Moreover, Marathon Digital's (MARA) hosted data center will likely generate a higher internal rate of return due to its ability to deploy miners more quickly, as well as a higher capital allocation to ASICs, the analyst highlights.
Peterson estimates that bitcoin (BTC-USD) will rise at a +32% compounded annual growth rate through 2024, whereas MARA's EBITDA will rise at a +95% CAGR. The company's EBITDA growth on a trailing twelve-month basis substantially underperforms that of its rivals. Furthermore, MARA's operating loss deepened in the third quarter as its cost of revenues skyrocketed.
Previously, (Jan. 18, 2021) Marathon Digital got a Buy rating at BTIG.