The Compass Point Investment Bank reduced Mara Holdings (Mara) to a neutral sales rating on Tuesday, citing unsustainable cash burns.
“There are better ways to obtain BTC Beta,” analysts wrote in the research note, pointing out the price of marathon hash, now below 5.5 cents, as a sign of decreased profitability. At current operating levels, Compass Point estimates that the company faces a significant cash burning that could lead to the dilution of shareholders.
The bank also cut Mara’s target price at $ 9.50 from $ 25, which suggests more than 25% downward about $ 13.
Marathon’s business is based on Bitcoin Mining, a process that BTC wins in exchange for computer energy. However, as mining rewards and energy costs persist, the economy of the business model has been pressed. Meanwhile, Compass Point argues that the marathon is quoted with a premium at the price of Bitcoin, an unfavorable configuration for investors looking for exposure to the asset.
The reduction also occurs in the middle of a broader fall in high performance computing (HPC) and AI infrastructure plays. Core Scientific (Corz) and Terawulf (Wulf) pairs companies have also had a lower performance of the year to date, since investors’ enthusiasm has cooled. Concerns about customer concentration, price risks and re -giant capital expenses such as Microsoft have dragged the valuations, with multiples of the HPC sector that fall from up to 15 times last year to about 5 times currently.
Even so, Compass Point observed potential winds for the long -term sector, including the growing demand for AI infrastructure and Capex commitments of cloud suppliers. But for now, they argue that marathon foundations are still too weak to justify their market assessment.
Mara informs profits on May 8, after the market. The action fell 25% this year, while a Bitcoin Mining ETF, WGMI, fell 37%.
Update (May 6, 16:27 UTC): Update the headlines and add Mara’s profit time.
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