Jefferies Cuts Target Price for Marathon Digital
Investment bank Jefferies recently reduced its price target for Marathon Digital Holdings, the largest Bitcoin miner on Wall Street, from $22 to $17. This decision reflects concerns over the declining profitability of Bitcoin mining, particularly in July.
Bitcoin Mining Profitability Declines
Bitcoin mining profitability took a hit in July, according to Jefferies' analysis. The main factor cited was a more than 6% drop in Bitcoin's value, which squeezed mining margins despite a stable network hashrate—a metric indicating the computational power used for mining.
Increased Production Among Publicly Traded Miners
Publicly listed mining companies like Marathon Digital expanded their market share, accounting for 21.1% of total Bitcoin production in July, up from 20.7% in June. This rise was due to these firms bringing new capacity online more rapidly than the overall network growth.
Marathon Digital's Production Gains
Marathon Digital reported mining 692 Bitcoins in July, a 17% increase from June. Despite the price target cut, the company leads in installed hashrate capacity, a key industry metric.
Riot Platforms and Argo Blockchain
Riot Platforms saw a 45% increase in production, mining 370 Bitcoins last month, whereas Argo Blockchain produced only 48 tokens, a significant 63% decrease.
Future Challenges for Miners
Looking ahead, Jefferies expects more difficult conditions in August. With Bitcoin's price dropping another 5% at the start of the month and network hashrate growing, miners may face tighter margins.
Marathon's Strategy Amid Price Volatility
In response to these challenges, Marathon Digital aims to capitalize on lower Bitcoin prices, purchasing $249 million worth of BTC. Fred Thiel, CEO, noted their strategy to increase the percentage of owned and operated sites, aiming for cost savings.
Industry Resilience Post-Halving
Despite challenges, some miners demonstrated resilience post-halving. HIVE Digital Technologies reported a 37% revenue increase, while TeraWulf saw a 130% rise, indicating adaptability to market fluctuations.
The Bitcoin mining landscape highlights the industry's sensitivity to price changes and network dynamics. Miners must continuously balance operational costs with market volatility.
