MARA Stock Soars Despite Earnings Disappointment, Analysts Praise Cost-Reduction Efforts in Bitcoin Mining

Bitcoin miner MARA Holdings (MARA) saw its shares perform better than its industry counterparts on Friday, despite the company’s first quarter results falling short of analysts’ expectations. This performance is attributed to the firm’s intentional efforts to reduce operational costs, which have garnered favorable reactions from financial analysts.

According to Jefferies analysts, as the bitcoin price improves in the second quarter and MARA intensifies its commitment to renewable energy resources like solar power and flared gas, the company is set to benefit from lower energy expenses in the future, enhancing profit margins.

Analyst Jonathan Petersen noted that MARA is making significant progress at its 114 MW wind farm and has activated its 25 MW micro flared gas data center, both of which are expected to decrease energy expenditure.

Should the mining company continue acquiring more sustainable energy sources, it would bolster its financial performance, Petersen explained. He emphasized that ongoing investment in power assets would likely lead to reduced energy expenses and improved margins, making the firm better prepared for the forthcoming halving event. Petersen maintained a hold rating on the stock while upping the price target from $13 to $16.

The profitability of bitcoin mining has been severely impacted during the latest bear market and further diminished by the recent halving, which halved the rewards for miners. Compounding these challenges, rising energy costs have further strained profit margins.

This environment has led many miners to seek additional revenue streams, such as offering data center hosting for artificial intelligence (AI) and high-performance computing (HPC). While MARA initially stayed clear of jumping into the AI sector, it has instead diversified through services like transaction revenue, operating mining pools, purchasing bitcoin directly from the market, and focusing on sustainable energy solutions to lower power costs.

The effort to minimize energy expenses has resonated well with investors.

Kevin Dede, an analyst at H.C. Wainwright, pointed out that this focus distinguishes MARA from its mining peers: “Recent commentary highlighted the company’s commitment to technological advancements in power conversion while keeping an eye on reducing energy costs.”

Dede remarked that this strategy sets MARA apart from competitors currently shifting their operations to capitalize on the fast-growing HPC market.

Dede, holding a buy rating with a target price of $28, echoed the belief that MARA can achieve cost reductions by prioritizing these types of energy sources.

MARA’s stock climbed by as much as 9% on Friday, contrasting with a slight 0.3% decrease in the CoinShares Valkyrie Bitcoin Miners ETF (WGMI).