Marathon Increases Bitcoin Holdings Again in Wake of Halving, Issues Convertible Notes

Marathon is one of several public mining companies that have started increasing Bitcoin holdings again in the wake of the April software code adjustment

Marathon Digital (NASDAQ:MARA), one of several public mining companies that started increasing their Bitcoin (CRYPTO:BTC) holdings again following the April software code adjustment, known as the ‘halving,’ is now planning to sell convertible notes.

What Happened: The move comes after the Las Vegas, Nevada-based company disclosed in July that it purchased $100 million worth of Bitcoin, bringing its total holdings to 20,818 BTC. Marathon also reported total cash and digital asset holdings of $1.6 billion as of July 31.

The company posted a second-quarter net loss of almost $200 million, largely due to the writedown of the value of the digital assets it holds.

Marathon shares closed down 11.8% at $15.04 on Monday and have declined by 33.7% year-to-date.

The stock, which had a 52-week price range of $12.03 to $32.02, now trades at a price multiple of 0.8 times the consensus 2023 earnings per share.

Marathon shares have underperformed the S&P 500 index, which has gained almost 6% in 2023.

Why It Matters: Marathon is among the major publicly traded Bitcoin miners that have been increasing their coin reserves in 2023.

The company, which was forced to sell some of its BTC holdings in 2022 to stay afloat amid inflated energy prices and a series of meltdowns in the industry, had almost completely sold out of its Bitcoin by the end of last year.

Miners mint the cryptocurrency through a process where they compete to solve computational puzzles to unlock rewards in exchange for processing the transactions on the Bitcoin blockchain.

The ‘hodling’ strategy, as it is known in crypto, can enhance public mining companies’ status as a leveraged proxy on Bitcoin prices in the stock market and boost their share prices, which is one of the main sources of financing for the miners, said Ethan Vera, chief operating officer at Luxor Technology.   

The issuance of convertible notes also raises the likelihood the holdings of existing shareholders can be diluted.