With the Bitcoin price crash today ($48K USD), shares of the Bitcoin mining companies Marathon Patent Group (MARA) and RIOT Blockchain are on sale right now.
While MARA is trading below $40 USD (down 15% at one point), RIOT is down 5% as well.
Starting next year, MARA is planning to expand its total hasrate to 10.3 Exahash/second which will make them the #1 Bitcoin miner in the world.
By installing these many ASIC miners (100K+), MARA will be able to produce around 55-60 Bitcoins per day.
Moreover, MARA just bought 4500+ Bitcoins (spending 150M by offering its shares) in the open market for an average price of around 31K USD. This move alone is worth more than 200M in profits thus far.
MARA currently has around 95M outstanding shares.
When you compare the number of outstanding shares between MARA to RIOT, RIOT has around 67M outstanding shares and is making close to $350,000 USD per day in profits while MARA currently makes around $50,000 per day in profits (260 pHs right now which is extremely).
Then why buy MARA, you can as well go with the RIOT Blockchain stock correct? This is where things get really interesting and the future valuations come into play.
If you consider today’s valuations alone, MARA is the lowest in terms of the hash rate at 260 Ph/s, when compared to the other US and Canadian crypto miners in the space – RIOT, BTBT, Bitfarms, Hut 8, Hive Blockchain, Argo Blockchain.
Let’s get started.
Here’s Why You Should Buy The MARA Stock Today
1. MARA will control close to 6% of the global BTC production by 2021’s end (projected to produce 50+ BTC EVERY DAY in 2022) (caveat: a fast and significant increase in competitors’ hash rate reduces the amount of BTC MARA produces)
2. MARA currently produces one BTC at a cost of $4541 USD (includes electricity + operational costs), which equates to a 90%+ gross margin with BTC at $56K
3. No long term debt on the balance sheet
4. 4,813 BTC in holdings bought at an average price of $31K USD
5. CEO has already committed that the company will HODL all the BTC it mines
6. Incredibly cheap electricity and data center hosting costs ($0.034/kWh total); $0.09/kWh is the average for the US home
7. Naturally cold locations for mining (Montana and North Dakota) to keep electricity costs low
8. MARA cornered the market on S19 miners (latest and most powerful miners)
9. Marathon Patent Group (MARA) will have a massive fleet of 103,060 miners operating by end of 2021; MARA is projected to have 10.3 EH of mining power!
10. The company owns its miners outright, so miner leasing costs do not cut into profits.
Future Hash Rate Growth
MARA is looking at a pretty good March with 4,000 newly installed Antminer S-19 Pro ASIC miners. Their hashrate will go from 248 PH/s to 688 PH/s which is a 256% increase in hashrate.
The company expects these miners to be deployed by the end of February.
An additional 6,300 miners will be delivered in March, and 4,800 miners will be delivered in April.
You can verify this information on the company’s website in the Feb 1, 2021 press release.
Each S-19 Pro miner produces 0.11 PH/s which means:
Feb (current) hashrate: 248 PH/s or 0.244 EH/s (2560 miners)
March hashrate 688 PH/s or 0.688 EH/s (2560 + 4000 miners)
April hashrate 1381 PH/s or 1.381 EH/s (2560 + 4000 + 6,300 miners)
May hashrate 1909 PH/s or 1.909 EHs (2560 + 4000 + 6300 + 4800 miners)
When all miners are in operation 3560 PH/s or 3.56 EH/s.
This means that MARA will surpass RIOT’s hashrate by April/May.
MARA’s Bitcoin(BTC) Production Based On Available Data
Feb (current): Daily 3.968 BTC – (Annualized 1,448.32 BTC)
March: Daily 11.008 BTC – (Annualized 4,017.92 BTC)
April: Daily 22.096 BTC – (Annualized 8,065.04 BTC)
May: Daily 30.544 BTC – (Annualized 11,148.56 BTC)
When all miners are in operation: Daily 56.96 BTC – (Annualized 20,790.40 BTC)
Gross annual revenue of BTC mined with BTC price at $56,000
Current: $222,208 per day, $81,105,920 per year (annualized)
March: $616,448 per day, $225,003,520 per year (annualized)
April : $1,237,376 per day, $451,642,240 per year (annualized)
May: $1,710,464 per day, $624,319,360 per year (annualized)
When all miners are in operation: $3,189,760 per day, $1,164,262,400 per year (annualized)
BTC prices are obviously projected to rise in the coming months/years so with higher BTC prices these earnings will also increase!
As an investor, you need to do your research on the company’s future earnings and potential and get in BEFORE the rest of the market and investors see the same value in the company.
Once you’re in, sit back and enjoy the ride for the next 1-2 years. More importantly, ignore the haters and shorts. It will be a bumpy ride with amazing up runs and also pullbacks. But stay the course.
This is how you 3x, or 5x, or 10x your investment as an early investor.
Marathon Patent Group (MARA) Future Valuation And Growth Projections
In less than 5 months, $MARA will have about 40,000 miners operational.
This means they will be mining about 25 BTC/day.
At $53K/BTC, if you annualize this, it is $483M. Subtract the cost to mine those BTC which equals $41M, Gross profit of $442M
Now, divide by 93M shares = 4.75 EPS.
Then factor by your favourite multiplier, let’s use 20x and you get about $90-$95.00 share price by July 2021.
By the end of 2021, when all the miner machines are received and operational MARA will be at 57.5 BTC/day.
Annualized, this is almost 21,000 Bitcoins…. at today’s BTC price of $53K, About $1.112B annual revenue. Minus the cost to mine the 21,000 Bitcoins is $4,500.00 times 21,000 = $94.5M.
Gross profit is then $1,112M – $93M = $1,017.5M. Divide by 93M shares = 10.94 EPS times an average factor of 20x = $218.00 per share.
This is what the shorts and Matt McCall’s don’t want you to know! Bitcoin is projected to be $100K by then, if true, that says MARA should be around $350.00 – $400.00 per share.
Now let’s say the mining difficulty factor increases by 2x… that means MARA is still around a $200.00 share price.
Why MARA Is Better Than RIOT Blockchain
Here are 2 reasons Why MARA is a better deal than RIOT (especially right now)
1. MARA made a deal to receive 70k miners from Bitmain which will result in MARA having 100k miners by December 2021 and a total hashrate of ~ 10EH/s. By that time RIOT with having a hashrate close to 4EH/s
2. Mara made a 150m investment in bitcoin 3 weeks ago when the price of bitcoin was around 30k-33k which means MARA made close to a 50% return in their investment.
So it doesn’t matter what MARA does compare to RIOT right now because MARA is technically still a baby compared to the giant it’s growing to.
Right now MARA’s hashrate isn’t even 1EH/s and they are heading to 10.
Plus you should be glad that RIOT got to over 80/share because it just shows how much potential mining stocks have and with what MARA and bitcoin are going to, MARA will clearly be way above 100$/share by the end of this year.
Thanks for reading. Please let me know your thoughts and comments below.
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Sagar Sridhar is a personal finance blogger from Canada. His genuine passion for personal finance coupled with his unique style of writing is what stands out. Professionally, he is a computer engineer, agile certified and has a master’s degree in Project Management. His writing has been featured or quoted in the leading Canadian publications such as Credit Canada and many other personal finance publications. While he is juggling between his day job and blogging, he is the main author on this blog and has miles to go before making the final pit stop.