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Financial analysts at BTIG upgraded Marathon Digital Holdings, Inc. (NASDAQ:) from Neutral to Buy on Wednesday. They based their decision on the positive impact that the recent approval of Bitcoin exchange-traded funds (ETFs) has on the primary digital currency and companies involved in mining the cryptocurrency.
Bitcoin’s value reached $47,000 earlier this month, before falling back below $43,000 even after the US Securities and Exchange Commission approved 11 bitcoin-based spot ETFs on January 10.
This authorization marks a turning point for the cryptocurrency sector, as it is expected to attract significantly more large-scale investors to the market.
Since their launch, these investment funds have acquired approximately $2 billion in bitcoin. They appear to be redirecting some investment capital to cryptocurrency mining companies, as observed by BTIG analysts.
“Given the recent decline in the value of mining stocks and Marathon Digital’s strategic shift toward infrastructure late last year, we are changing our recommendation from Neutral to Buy.”
BTIG analysts also indicated that Marathon Digital could benefit from the recent increase in transaction fees, particularly in December. Higher transaction fees can significantly improve the profits of companies that mine cryptocurrencies.
“When bitcoin activity is low, fees can drop to a minimal amount. However, the number of daily transactions on the Bitcoin network has increased to around 500,000 (indicating that users are willing to pay more for faster processing of transactions), approximately twice as much as at the start of 2023.”
Therefore, mining companies like Marathon Digital, which contribute 5% of global Bitcoin computing power for transaction verification, could potentially earn around 1,400 bitcoins per month. This mining production is equivalent to $60 million in revenue at the current bitcoin price.
“Nevertheless, this calculation does not include transaction fees (additional revenue for a miner) which, at a rate of approximately 500,000 transactions per day (at an average of $12 per transaction), suggests an additional income of approximately $9 million (or approximately 215 additional bitcoins). This represents approximately 13% of the total monthly income when combining bitcoin earnings and transaction fees,” BTIG analysts said.
On Wednesday, Marathon Digital Holdings, Inc.’s stock price fell more than 3.1%.
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