Key points:
- Marathon Digital issued with a Buy rating at Jefferies, with a price target of $51
- Analyst Jonathan Peterson estimates the company could be 2022's largest public bitcoin miner
- MARA stock is often aligned with volatility in crypto assets, investors should act with care
Marathon Digital (NASDAQ: MARA) stock dropped around 1% in Friday premarket trading, following on from a nearly 8% loss yesterday. The Bitcoin mining specialist hasn’t released any negative company news, yet investors will be aware that mining stocks often fall victim to volatility in digital assets. So although they offer a slice of the crypto-pie without surmounted risk, mining stocks still tend to move in lineation with the price of digital assets. In Marathon Digital’s case, Bitcoin volatility can negatively affect the stock price, and the opposite of course.
However, as Bitcoin continues to creep up, and blockchain technology starts to find its footing in our economy, analysts are looking towards miners who are rapidly expanding capabilities and swooping in on available market share. Today, Jefferies analyst Jonathan Petersen initiated coverage of Marathon Digital, issuing a Buy rating and a $51 price target. The company, according to Peterson, has the potential to become the largest Bitcoin miner on an EH/s basis in 2022. The company’s existing fleet of 30,000 miners is expected to grow to just under 200,000 miners by the end of 2022.
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What does this mean for the bitcoin market? Marathon Digital already possesses roughly 1.9% of the total Bitcoin market, but should the company grow to 200,000 miners; this would mean a generation of 23 EH by the end of the year – which Peterson estimates will exceed 5% of the total market share.
The looming problem with mining stocks is the lineation with asset volatility; a recent wide sell-off in Bitcoin has weighed on the price of Marathon and similar miners. However, if investors are willing to weather tougher pullbacks, there is plenty of value of offer on the thesis that Bitcoin price is expected to keep breaching new highs at the years move on. Peterson expects the average price of Bitcoin this year to be around $53,400; almost double the current price. Should Marathon Digital exceed 5% market share, the upside is looking incredibly promising.