Bitcoin Miners Leveraging Their Balance Sheet: Another Look At Marathon

Bitcoin Miners Report, October 2024

Bitcoin is still struggling to gain momentum. As a result, miners aren't producing exceptional results either.

This is expected as we have shown in last month issue focused on the Bitcoin miners.

So there is not much new to talk about the miners in general. That being said some miners are taking a page out of the MicroStrategy playbook. And that's an interesting twist.

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Bitcoin Miners Leveraging Their Balance Sheet: Another Look At Marathon

The Bitcoin miners thesis is simple. 

The profitability of the Bitcoin mining companies strongly depends on Bitcoin's price. That make the Bitcoin miners stocks closely tied to BTC and thus good proxies for getting exposure to the Bitcoin market. 

At the same time those miners stocks are small. Much smaller than Bitcoin. So capital inflows in the miners market tend to create outsized returns.

The investment thesis is that in the coming bull market, the institutional money will want to own Bitcoin miners stocks in order to get exposure to BTC. The buying pressure coming from that demand will make it so that the Bitcoin miners stocks will deliver returns that are several times larger than Bitcoin itself over the same period.

This is the bet we are tracking in our monthly miners report.

The Takeaway

Marathon Digital Holdings is adopting a hybrid strategy. They're combining Bitcoin mining with significant Bitcoin holdings. This approach mirrors MicroStrategy's successful playbook.

Marathon's Bitcoin holdings have doubled in the past year. But their stock remains undervalued relative to Bitcoin. That means Marathon could actually represent a good buying opportunity right now with a multi-year time horizon.

A New Opportunity