Sunday, November 21, 2021

How Blockchain is Shaping the Future of Finance

With the emergence of Bitcoin and Altcoins into the mainstream during the last bull market, the concept of blockchain has often been confused with cryptocurrencies. While blockchain is the technological layer upon which cryptocurrencies are built, it is worth explaining overall how it lays the foundations to secure financial transactions and create trust between parties. This introductory paper briefly explains what blockchain is in general and what benefits they provide to users. 

What’s a Blockchain?

A blockchain is a digital and decentralized ledger that contains data that is stored as a list of records, called blocks. These blocks link to one another in a chain through the use of cryptographic algorithms. From a simpler viewpoint, the blockchain can be seen as a layer of the internet that allows for secure records to be kept and trusted transactions to occur. 

The blockchain maintains an up-to-date and official copy of the ledger across a peer-to-peer network of distributed computers, which is agreed on by a collective governance protocol that specifies the rules of inter-node communication and block validation. For this reason, the blockchain fully eliminates the need for a centralized institution to act as an intermediary, and instead uses cryptography and collaboration through consensus to create trust.

How Decentralization Amplifies Security  

By design, the blockchain provides several advanced layers of security that strongly outperform more traditional cybersecurity systems. The use of cryptographic algorithms converts any input fed to the blockchain into a unique encrypted output of a fixed length that cannot be reverted to its original state. This public key cryptography method allows for the management of users' identities, while still preserving their anonymity. Put differently, the technology enables people to prove who they are without the need for public disclosure.

Since each block contains a cryptographic footprint or hash of the previous block, any changes made to the original input will then produce a dissimilar output, recognizably breaking its link to the subsequent blocks. Because of this, any attempts of fraud are instantly made visible. To further ensure its sophisticated security measures, the blockchain is a data structure where information can only be supplemented— it cannot be changed, tampered with, or deleted in any way. 

Because the current state of the ledger is determined through a consensus protocol (e.g., derived from the version held by a majority of computers), the distribution of information across nodes prevents security breaches from single computer hacks. While security in traditional environments is primarily boundary-focused, the blockchain protects its data by copying it to as many locations as possible, rendering modifications to all copies reasonably infeasible.

To go even deeper, the generation of new blocks involves the selection of a creator among a pool of candidates through a consensus protocol, making it almost impossible for an attacker to become a legitimate nominee. Additionally, each block structure is defined in advance so that attackers cannot modify it to suit their purposes. The combination of its decentralized ecosystem combined with data encryption makes the blockchain highly hack-resistant, guarantees data integrity and the immutability of the ledger.

Transparency Through Disintermediation

In the blockchain, every user owns their data. This is novel in comparison to traditional third-party transactions, where all transactional operations require a level of trust regarding the institutions’ ability to ensure their security and validity. The intermediary structure also entails that the middlemen possess all corresponding data, at least temporarily, which strengthens their position although they are rarely the most significant actors in the value chain. 

By contrast, the blockchain transfers trust from organizations to a technology layer, which enables people to perform peer-to-peer transactions without going through third parties at all. In this sense, the blockchain functions in a completely transparent manner because the history of the ledger remains immutable and its data integrity is always visible and verifiable by anyone at any time. 

Therefore, every participant on the blockchain is notified when a transaction occurs. They all own an identical copy of the transaction record shared throughout the network. As a result, every piece of information on the blockchain can be traced back to the exact moment it was created. This system greatly facilitates the conduct of audit processes, since all information is not only available to all users but deemed reliable. 

Streamlining with Smart Contract Automatization 

When parties sign contracts, they need to be able to specify conditions. The use of smart contracts makes it so that users can flexibly interact with the blockchain. Smart contracts are self-executed codes that offer the ability to define the procedure or the steps and the outcome of a process when some particular events or conditions occur. 

For instance, a smart contract can make it so that the seller has the tokens and that the buyer has the money to acquire them before the transactions happen. As such, they provide a stable framework to execute automated processes, without the need or intervention of middlemen such as lawyers, brokers, or auditors. 

Removing intermediates greatly improves process efficiency and cuts costs. Shifting from third parties and implementing automation also enhances accuracy by eliminating human mistakes and inconsistencies. Finally, utilizing the blockchain and smart contracts provides a backup solution that ensures the permanent record and traceability of transactions as well as consistency in the services provided, even when their creator is no longer in the business.  

To conclude, the blockchain is a tool that helps shape the future of finance by allowing for greater transparency, safety, efficiency, and the lowering of associated costs of carrying out exchanges— all in all creating more value for the user. For Liti Capital, the blockchain is a means to provide exposure to high-return and bear market-friendly litigation assets to everyone. For more information, click here. 


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    Interest from major exchanges...
    Complete billboard takeover of Miami...
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๐Ÿ“ˆ๐Ÿ“‰ Tokenomics:

CURE Token was initially minted with a supply of 1,000,000,000 (1 billion) tokens. Each transaction has a 12% fee subtracted which powers the cause like this:

  • 3% Charity
  • 3% Marketing
  • 3% Reflections
  • 3% Liquidity

Also, recommended Slippage during making a transaction is from 10% to 12%.

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๐ŸŒŽ Website
๐Ÿ’ฌ Telegram Community
๐Ÿ“ฐ Telegram Announcements
๐Ÿ•Š️ Twitter
๐Ÿ“˜ Facebook
๐Ÿ“ข Medium

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๐Ÿ’ก Useful info:

๐Ÿ‘ฅ Who's The Team?
Founder and Chairman of the Beckley Foundation, Jacob Beckley has managed to raise approximately 1 million dollars in the battle against childhood cancers and beyond, since the foundation launch in 2016.

๐Ÿ“… When did CURE happen?
Well, lets follow the timeline ๐Ÿ‘‡

  • 2016
    ✨ Row4aCure
    ๐ŸŒŽ www.row4acure.com
    Jacob had an idea to row across Lake Michigan solo in a man-powered boat from Michigan to Chicago (65 miles) to help raise the funds necessary to keep a cancer research lab going. It was a spontaneous and eccentric venture that raised $40,000.
  • 2016-2019
    ✨ Martini Party
    Supporting the research of acclaimed Dr. Mary Beth Madonna. This lab, currently located at Rush University Children's Hospital in Chicago was due to be closed, and with help of this campaign it was able to survive. $50,000 was raised at the event.

  • 2019
    ✨ Row4Kids
    ๐ŸŒŽ www.row4kids.com
    Jacob joined forces with former Chicago Bear, Charles Tillman, in fight against pediatric cancer. They rowed non-stop across Lake Michigan in a homemade boat on September 1st, 2019. This went on to raise $280,000 dollars.

  • 2020
    ✨ Roll4aCure
    During the pandemic, in partnership with Arizona Cancer Foundation, casino night event was hosted to co-raise funds in support of the cause. Although the pandemic forced cancellation of the event, these people collectively remain focused on the mission and are continuing their efforts. Over $100,000 was raised.

  • 2021 Sep 11th
    ✨ Martini Party
    Once again in support of the incredible research of Dr. Mary Beth Madonna. This time $60,000 was raised to help support the continuation of their amazing work.

  • 2021
    ✨ CURE Token Launch
    Token went on to reach a current ATH of $10,000,000 (million) market cap, and has already gifted over $150,000 in charitable donations and research support.

​

PS: If you want to make a quick x10 on a project then CURE is not for you. This is a token for people who want to make genuine change in the world, whilst making massive long-term gains. CURE team have Ethereum and Bitcoin in their crosshairs and they seem not to be stopping until CURE is as recognisable to everyone as above mentioned cryptocurrency market leaders. So don’t even invest yet, come visit the telegram and check out website and whitepaper.


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MARA is expanding their mining operations rapidly

*The Original Analysis with graphs and visuals can be found here*

$MARA – Marathon Digital Holdings Inc. Stock Analysis:

MARA has gone through the ringer over the past couple of weeks caused by a series of unfortunate events. Firstly, on November 10th, 2021, MARA reported their Q3 2021 earnings report in which they beat their earnings estimate, but missed on revenue, however with revenue rising 6,000% YoY (for Q3), surely MARA would go up right? Wrong. MARA dipped on this earnings (about 14%) which was objectively the least of investors concerns after the next couple of events to unfold. 5 days after their earnings, MARA announced that they were being investigated by the SEC for securities law violations. This news (combined with the news of a $500M debt offering) caused MARA to drop by 27%, which was by far the largest drop/worry for investors. Lastly, to top it all off, the next day MARA reported that they increased their debt offering to $650M (from $500M), causing the stock to dip another 8% to put the cherry on top of an awful week.

This article seeks to find whether MARA is a good buy after their -28% week, or if they are still overvalued and could continue falling.

MARA Company Overview:

Marathon Digital Holdings is a Bitcoin mining company that was founded in 2010 and headquartered in Las Vegas. As of Q3 2021, MARA had 25,272 Bitcoin miners installed and mining Bitcoin, and 4,000 additional miners being shipped and awaiting installment. Furthermore, MARA has purchase agreements with Bitmain to purchase over 100,000 more miners and install them by January 2022.

MARA Investment Information:

Beta (Volatility Relative to S&P 500 Benchmark):

MARA has a beta value of 4.65, which means that their monthly price movements are 4.65x (365%) more volatile than the price movements of the S&P 500. This high beta can be worrying to longer-term investors and portfolio builders as they may look at this metric, however, when your price action is as tied to Bitcoin as MARA’s is high volatility is a given. This high volatility is definitely something that caters more toward the retail investment community, and why MARA has become a frequently discussed “crypto stock” in the community.

Shares Outstanding Historical Growth:

MARA has increased their shares outstanding by a CAGR of 160% over the last 4 years. This is arguably the highest CAGR in shares outstanding that I have ever seen and is heavily influenced by their share offerings in 2020, which increased the shares outstanding by a factor of 7x within 1 year. However, since the Q1 2021 report, MARA has only increased their shares outstanding by approximately 4%. This desire to maintain their current level of shares outstanding can be exhibited through their recent offering, in which they financed using debt instead of equity (which they have not opted for historically). I think that MARA is going to severely decline their share offerings, and I believe that share dilution is not currently worrisome for MARA investors, however it should be kept in the back of your mind and paid attention to.

$650M Debt Offering:

As previously mentioned, MARA had a $650M debt offering on November 17th 2021, which played a major role in their 28% decline. However, was this reaction warranted? Or was it an overreaction? Let’s find out.

MARA announced that they would be issuing $650M worth of 1% convertible senior notes due December 1st, 2026. MARA was able to secure this funding by offering interest of 1% which is very low for a company that does not have a published S&P Credit Score. However, the big opportunity here lies in the convertibility of these notes. These notes will be convertible as early as June 1st, 2026, in which holders can convert their notes into 13.13 shares for every $1,000 worth of bonds that they hold. The math works out to roughly 1 share for every $76 they invested in notes. This was roughly the price of their stock before it dropped 28%. However, if there are large movements in their stock, MARA has the right (under certain circumstances) to change the conversion rate of these notes.

MARA intends to use the proceeds ofc this offering to acquire bitcoin and/or bitcoin mining machines. Based off of their previous purchases it is safe to assume that MARA will be using part of these proceeds to purchase ASIC Antminer S-19j Bitcoin miners (given that their big orders have been these models of miners historically). Given that the current price for one of these miners is $12,000, given current bitcoin price of $60,000 USD, each of these machines is expected to breakeven in 1 year (after housing and electricity each machine should yield $12,630/year (USD)). However, MARA has historically been able to obtain a 6% discount due to high volume orders, bringing their price per miner to approximately $11,250. In their recent Q3 2021 investor presentation they estimated the return on invested capital is 109% annually, which matches up with the figures I found. Considering this return on invested capital (when purchasing miners), this offering should be beneficial for investors in the long run. Especially if you load up at current prices or after this bull run is over.

ESG:

Bitcoin mining has been heavily criticized by the public, the media, and large public figures like Elon Musk for consuming large amounts of electricity, thereby polluting the environment. This is a problem that few miners have addressed, however, MARA has pledged to becoming 70% carbon neutral by Q1 2022, and 100% carbon neutral by Q1 2023.

They have not laid out a plan on how they intend to do this, and there is not one that I can find online, so time will tell. However, I believe this to be in their best interest to attract more institutional investors, and more ESG conscious retail investors as well.

Institutional Investors:

Marathon Digital has piqued the interest of many institutional investors as of late. Currently they have 10 institutional investors, with the likes of Vanguard, and Blackrock having large stakes (8.8%, and 5.8% respectively). Furthermore, in their Q3 institutional investors disclosure, they reported 8 of their 10 institutional holders increased their position sizes, notably Goldman Sachs increased their position size by over 600%, and Charles Schwab increased their position size by 188%. Furthermore, there were only 2 holders that decreased their position sizes, who were Northern Trust (decreased by 2.3%), and BlackRock (who decreased their position size by 2.1%).

HODL’ing:

Ever since the start of the bull run around January of 2021, MARA has been increasing the % of mined Bitcoin that they are holding. In January of 2021, MARA held 3.5% of the Bitcoins that they mined, however, as of October 2021, MARA is holding 35% of the Bitcoins that they mine. Currently, MARA is holding 7,453 Bitcoin which equates to roughly $450M USD of liquid Bitcoins.

Investors may have one of two reactions to this strategy.

Firstly, people who are long Bitcoin should like this strategy because they believe that the price of Bitcoin will keep increasing over time, and then more MARA holds, the better their ROI. These investors believe that holding Bitcoins will help make their balance sheet better over time, especially during future bull runs. This strategy is riskier.

Alternatively, people who are not as bullish on Bitcoin will probably not like this strategy and opt-out for another mining company if they choose to have exposure to crypto in general. This is due to the fact that selling your mined Bitcoins right after mining them averages the price over time, which is safer for the company and brings them in more realized revenues.

Expansion and Growth Plans:

Between now and mid-2022, MARA plans to have all of their 133,000 ordered miners deployed and running, which should increase their generating capacity by almost 400%. I do not believe that this includes the miners that are going to be purchased as a result of their debt offering, however it is unclear, and I am hoping that they will announce more details on where they spent the proceeds of this debt offering soon. MARA plans to get all of these miners up and running by mid-2022, as they are going to start to charter their own flights to ensure that they can receive these miners in a timely manner. Furthermore, I believe that MARA has already reached an agreement with a facility to enable them to run these additional 100,000 miners for ($0.50/miner per day) $18.25M/year. However, given their current profitability (which factors in the current price of Bitcoin) these miners should drive in $1.26B in revenue/year.­

Investment Valuation:

The only way in which I was able to value MARA was through a comparable companies analysis. This is due to the fact that MARA is not yet profitable, and they do not offer a dividend.

P/B Ratio:

By comparing MARA’s P/B ratio to that of their competitors, I found their fair value to be $45/share, which would imply a price reduction of 18%.

EV/Assets Multiple:

By comparing MARA’s EV/Assets multiple to that of their public competition, I found MARA’s fair value to be $38.50/share, which implies a downside risk of 30%.

D/E Ratio:

Lastly, by comparing MARA’s D/E ratio, I found their fair value to be $820/share, which implies an increase of 1400%.

Final Valuation:

As you can probably tell, MARA’s comparable ratios and multiples are vastly different from each other, which makes it difficult to value them. In order to value MARA, I decided to take a weighted average result of the 3 comparable metrics, giving weights of 45%, 45%, and 5% to the P/B, EV/Assets, and D/E Ratios respectively. By doing this I was able to arrive at a valuation of $80.58/share, which implies a 47.4% upside.

Overall Thoughts:

I think that MARA is overvalued relative to their peers in the industry, as the only reason for their comparable valuation of $80/share is due to the D/E ration implying a 1400% gain. However, personally I am bullish on the short-term prospect of Bitcoin, which MARA will give me exposure to. Furthermore, I would be looking to slowly accumulate more MARA after this bull run is over to get in at a low price and hold for the next 4 years until the next halving and bull run.


What is going on with MARA?

*The Original Analysis with graphs and visuals can be found here*

$MARA – Marathon Digital Holdings Inc. Stock Analysis:

MARA has gone through the ringer over the past couple of weeks caused by a series of unfortunate events. Firstly, on November 10th, 2021, MARA reported their Q3 2021 earnings report in which they beat their earnings estimate, but missed on revenue, however with revenue rising 6,000% YoY (for Q3), surely MARA would go up right? Wrong. MARA dipped on this earnings (about 14%) which was objectively the least of investors concerns after the next couple of events to unfold. 5 days after their earnings, MARA announced that they were being investigated by the SEC for securities law violations. This news (combined with the news of a $500M debt offering) caused MARA to drop by 27%, which was by far the largest drop/worry for investors. Lastly, to top it all off, the next day MARA reported that they increased their debt offering to $650M (from $500M), causing the stock to dip another 8% to put the cherry on top of an awful week.

This article seeks to find whether MARA is a good buy after their -28% week, or if they are still overvalued and could continue falling.

MARA Company Overview:

Marathon Digital Holdings is a Bitcoin mining company that was founded in 2010 and headquartered in Las Vegas. As of Q3 2021, MARA had 25,272 Bitcoin miners installed and mining Bitcoin, and 4,000 additional miners being shipped and awaiting installment. Furthermore, MARA has purchase agreements with Bitmain to purchase over 100,000 more miners and install them by January 2022.

MARA Investment Information:

Beta (Volatility Relative to S&P 500 Benchmark):

MARA has a beta value of 4.65, which means that their monthly price movements are 4.65x (365%) more volatile than the price movements of the S&P 500. This high beta can be worrying to longer-term investors and portfolio builders as they may look at this metric, however, when your price action is as tied to Bitcoin as MARA’s is high volatility is a given. This high volatility is definitely something that caters more toward the retail investment community, and why MARA has become a frequently discussed “crypto stock” in the community.

Shares Outstanding Historical Growth:

MARA has increased their shares outstanding by a CAGR of 160% over the last 4 years. This is arguably the highest CAGR in shares outstanding that I have ever seen and is heavily influenced by their share offerings in 2020, which increased the shares outstanding by a factor of 7x within 1 year. However, since the Q1 2021 report, MARA has only increased their shares outstanding by approximately 4%. This desire to maintain their current level of shares outstanding can be exhibited through their recent offering, in which they financed using debt instead of equity (which they have not opted for historically). I think that MARA is going to severely decline their share offerings, and I believe that share dilution is not currently worrisome for MARA investors, however it should be kept in the back of your mind and paid attention to.

$650M Debt Offering:

As previously mentioned, MARA had a $650M debt offering on November 17th 2021, which played a major role in their 28% decline. However, was this reaction warranted? Or was it an overreaction? Let’s find out.

MARA announced that they would be issuing $650M worth of 1% convertible senior notes due December 1st, 2026. MARA was able to secure this funding by offering interest of 1% which is very low for a company that does not have a published S&P Credit Score. However, the big opportunity here lies in the convertibility of these notes. These notes will be convertible as early as June 1st, 2026, in which holders can convert their notes into 13.13 shares for every $1,000 worth of bonds that they hold. The math works out to roughly 1 share for every $76 they invested in notes. This was roughly the price of their stock before it dropped 28%. However, if there are large movements in their stock, MARA has the right (under certain circumstances) to change the conversion rate of these notes.

MARA intends to use the proceeds ofc this offering to acquire bitcoin and/or bitcoin mining machines. Based off of their previous purchases it is safe to assume that MARA will be using part of these proceeds to purchase ASIC Antminer S-19j Bitcoin miners (given that their big orders have been these models of miners historically). Given that the current price for one of these miners is $12,000, given current bitcoin price of $60,000 USD, each of these machines is expected to breakeven in 1 year (after housing and electricity each machine should yield $12,630/year (USD)). However, MARA has historically been able to obtain a 6% discount due to high volume orders, bringing their price per miner to approximately $11,250. In their recent Q3 2021 investor presentation they estimated the return on invested capital is 109% annually, which matches up with the figures I found. Considering this return on invested capital (when purchasing miners), this offering should be beneficial for investors in the long run. Especially if you load up at current prices or after this bull run is over.

ESG:

Bitcoin mining has been heavily criticized by the public, the media, and large public figures like Elon Musk for consuming large amounts of electricity, thereby polluting the environment. This is a problem that few miners have addressed, however, MARA has pledged to becoming 70% carbon neutral by Q1 2022, and 100% carbon neutral by Q1 2023.

They have not laid out a plan on how they intend to do this, and there is not one that I can find online, so time will tell. However, I believe this to be in their best interest to attract more institutional investors, and more ESG conscious retail investors as well.

Institutional Investors:

Marathon Digital has piqued the interest of many institutional investors as of late. Currently they have 10 institutional investors, with the likes of Vanguard, and Blackrock having large stakes (8.8%, and 5.8% respectively). Furthermore, in their Q3 institutional investors disclosure, they reported 8 of their 10 institutional holders increased their position sizes, notably Goldman Sachs increased their position size by over 600%, and Charles Schwab increased their position size by 188%. Furthermore, there were only 2 holders that decreased their position sizes, who were Northern Trust (decreased by 2.3%), and BlackRock (who decreased their position size by 2.1%).

HODL’ing:

Ever since the start of the bull run around January of 2021, MARA has been increasing the % of mined Bitcoin that they are holding. In January of 2021, MARA held 3.5% of the Bitcoins that they mined, however, as of October 2021, MARA is holding 35% of the Bitcoins that they mine. Currently, MARA is holding 7,453 Bitcoin which equates to roughly $450M USD of liquid Bitcoins.

Investors may have one of two reactions to this strategy.

Firstly, people who are long Bitcoin should like this strategy because they believe that the price of Bitcoin will keep increasing over time, and then more MARA holds, the better their ROI. These investors believe that holding Bitcoins will help make their balance sheet better over time, especially during future bull runs. This strategy is riskier.

Alternatively, people who are not as bullish on Bitcoin will probably not like this strategy and opt-out for another mining company if they choose to have exposure to crypto in general. This is due to the fact that selling your mined Bitcoins right after mining them averages the price over time, which is safer for the company and brings them in more realized revenues.

Expansion and Growth Plans:

Between now and mid-2022, MARA plans to have all of their 133,000 ordered miners deployed and running, which should increase their generating capacity by almost 400%. I do not believe that this includes the miners that are going to be purchased as a result of their debt offering, however it is unclear, and I am hoping that they will announce more details on where they spent the proceeds of this debt offering soon. MARA plans to get all of these miners up and running by mid-2022, as they are going to start to charter their own flights to ensure that they can receive these miners in a timely manner. Furthermore, I believe that MARA has already reached an agreement with a facility to enable them to run these additional 100,000 miners for ($0.50/miner per day) $18.25M/year. However, given their current profitability (which factors in the current price of Bitcoin) these miners should drive in $1.26B in revenue/year.­

Investment Valuation:

The only way in which I was able to value MARA was through a comparable companies analysis. This is due to the fact that MARA is not yet profitable, and they do not offer a dividend.

P/B Ratio:

By comparing MARA’s P/B ratio to that of their competitors, I found their fair value to be $45/share, which would imply a price reduction of 18%.

EV/Assets Multiple:

By comparing MARA’s EV/Assets multiple to that of their public competition, I found MARA’s fair value to be $38.50/share, which implies a downside risk of 30%.

D/E Ratio:

Lastly, by comparing MARA’s D/E ratio, I found their fair value to be $820/share, which implies an increase of 1400%.

Final Valuation:

As you can probably tell, MARA’s comparable ratios and multiples are vastly different from each other, which makes it difficult to value them. In order to value MARA, I decided to take a weighted average result of the 3 comparable metrics, giving weights of 45%, 45%, and 5% to the P/B, EV/Assets, and D/E Ratios respectively. By doing this I was able to arrive at a valuation of $80.58/share, which implies a 47.4% upside.

Overall Thoughts:

I think that MARA is overvalued relative to their peers in the industry, as the only reason for their comparable valuation of $80/share is due to the D/E ration implying a 1400% gain. However, personally I am bullish on the short-term prospect of Bitcoin, which MARA will give me exposure to. Furthermore, I would be looking to slowly accumulate more MARA after this bull run is over to get in at a low price and hold for the next 4 years until the next halving and bull run.


MARA is making moves ($80 PT)

*The Original Analysis with graphs and visuals can be found here*

$MARA – Marathon Digital Holdings Inc. Stock Analysis:

MARA has gone through the ringer over the past couple of weeks caused by a series of unfortunate events. Firstly, on November 10th, 2021, MARA reported their Q3 2021 earnings report in which they beat their earnings estimate, but missed on revenue, however with revenue rising 6,000% YoY (for Q3), surely MARA would go up right? Wrong. MARA dipped on this earnings (about 14%) which was objectively the least of investors concerns after the next couple of events to unfold. 5 days after their earnings, MARA announced that they were being investigated by the SEC for securities law violations. This news (combined with the news of a $500M debt offering) caused MARA to drop by 27%, which was by far the largest drop/worry for investors. Lastly, to top it all off, the next day MARA reported that they increased their debt offering to $650M (from $500M), causing the stock to dip another 8% to put the cherry on top of an awful week.

This article seeks to find whether MARA is a good buy after their -28% week, or if they are still overvalued and could continue falling.

MARA Company Overview:

Marathon Digital Holdings is a Bitcoin mining company that was founded in 2010 and headquartered in Las Vegas. As of Q3 2021, MARA had 25,272 Bitcoin miners installed and mining Bitcoin, and 4,000 additional miners being shipped and awaiting installment. Furthermore, MARA has purchase agreements with Bitmain to purchase over 100,000 more miners and install them by January 2022.

MARA Investment Information:

Beta (Volatility Relative to S&P 500 Benchmark):

MARA has a beta value of 4.65, which means that their monthly price movements are 4.65x (365%) more volatile than the price movements of the S&P 500. This high beta can be worrying to longer-term investors and portfolio builders as they may look at this metric, however, when your price action is as tied to Bitcoin as MARA’s is high volatility is a given. This high volatility is definitely something that caters more toward the retail investment community, and why MARA has become a frequently discussed “crypto stock” in the community.

Shares Outstanding Historical Growth:

MARA has increased their shares outstanding by a CAGR of 160% over the last 4 years. This is arguably the highest CAGR in shares outstanding that I have ever seen and is heavily influenced by their share offerings in 2020, which increased the shares outstanding by a factor of 7x within 1 year. However, since the Q1 2021 report, MARA has only increased their shares outstanding by approximately 4%. This desire to maintain their current level of shares outstanding can be exhibited through their recent offering, in which they financed using debt instead of equity (which they have not opted for historically). I think that MARA is going to severely decline their share offerings, and I believe that share dilution is not currently worrisome for MARA investors, however it should be kept in the back of your mind and paid attention to.

$650M Debt Offering:

As previously mentioned, MARA had a $650M debt offering on November 17th 2021, which played a major role in their 28% decline. However, was this reaction warranted? Or was it an overreaction? Let’s find out.

MARA announced that they would be issuing $650M worth of 1% convertible senior notes due December 1st, 2026. MARA was able to secure this funding by offering interest of 1% which is very low for a company that does not have a published S&P Credit Score. However, the big opportunity here lies in the convertibility of these notes. These notes will be convertible as early as June 1st, 2026, in which holders can convert their notes into 13.13 shares for every $1,000 worth of bonds that they hold. The math works out to roughly 1 share for every $76 they invested in notes. This was roughly the price of their stock before it dropped 28%. However, if there are large movements in their stock, MARA has the right (under certain circumstances) to change the conversion rate of these notes.

MARA intends to use the proceeds ofc this offering to acquire bitcoin and/or bitcoin mining machines. Based off of their previous purchases it is safe to assume that MARA will be using part of these proceeds to purchase ASIC Antminer S-19j Bitcoin miners (given that their big orders have been these models of miners historically). Given that the current price for one of these miners is $12,000, given current bitcoin price of $60,000 USD, each of these machines is expected to breakeven in 1 year (after housing and electricity each machine should yield $12,630/year (USD)). However, MARA has historically been able to obtain a 6% discount due to high volume orders, bringing their price per miner to approximately $11,250. In their recent Q3 2021 investor presentation they estimated the return on invested capital is 109% annually, which matches up with the figures I found. Considering this return on invested capital (when purchasing miners), this offering should be beneficial for investors in the long run. Especially if you load up at current prices or after this bull run is over.

ESG:

Bitcoin mining has been heavily criticized by the public, the media, and large public figures like Elon Musk for consuming large amounts of electricity, thereby polluting the environment. This is a problem that few miners have addressed, however, MARA has pledged to becoming 70% carbon neutral by Q1 2022, and 100% carbon neutral by Q1 2023.

They have not laid out a plan on how they intend to do this, and there is not one that I can find online, so time will tell. However, I believe this to be in their best interest to attract more institutional investors, and more ESG conscious retail investors as well.

Institutional Investors:

Marathon Digital has piqued the interest of many institutional investors as of late. Currently they have 10 institutional investors, with the likes of Vanguard, and Blackrock having large stakes (8.8%, and 5.8% respectively). Furthermore, in their Q3 institutional investors disclosure, they reported 8 of their 10 institutional holders increased their position sizes, notably Goldman Sachs increased their position size by over 600%, and Charles Schwab increased their position size by 188%. Furthermore, there were only 2 holders that decreased their position sizes, who were Northern Trust (decreased by 2.3%), and BlackRock (who decreased their position size by 2.1%).

HODL’ing:

Ever since the start of the bull run around January of 2021, MARA has been increasing the % of mined Bitcoin that they are holding. In January of 2021, MARA held 3.5% of the Bitcoins that they mined, however, as of October 2021, MARA is holding 35% of the Bitcoins that they mine. Currently, MARA is holding 7,453 Bitcoin which equates to roughly $450M USD of liquid Bitcoins.

Investors may have one of two reactions to this strategy.

Firstly, people who are long Bitcoin should like this strategy because they believe that the price of Bitcoin will keep increasing over time, and then more MARA holds, the better their ROI. These investors believe that holding Bitcoins will help make their balance sheet better over time, especially during future bull runs. This strategy is riskier.

Alternatively, people who are not as bullish on Bitcoin will probably not like this strategy and opt-out for another mining company if they choose to have exposure to crypto in general. This is due to the fact that selling your mined Bitcoins right after mining them averages the price over time, which is safer for the company and brings them in more realized revenues.

Expansion and Growth Plans:

Between now and mid-2022, MARA plans to have all of their 133,000 ordered miners deployed and running, which should increase their generating capacity by almost 400%. I do not believe that this includes the miners that are going to be purchased as a result of their debt offering, however it is unclear, and I am hoping that they will announce more details on where they spent the proceeds of this debt offering soon. MARA plans to get all of these miners up and running by mid-2022, as they are going to start to charter their own flights to ensure that they can receive these miners in a timely manner. Furthermore, I believe that MARA has already reached an agreement with a facility to enable them to run these additional 100,000 miners for ($0.50/miner per day) $18.25M/year. However, given their current profitability (which factors in the current price of Bitcoin) these miners should drive in $1.26B in revenue/year.­

Investment Valuation:

The only way in which I was able to value MARA was through a comparable companies analysis. This is due to the fact that MARA is not yet profitable, and they do not offer a dividend.

P/B Ratio:

By comparing MARA’s P/B ratio to that of their competitors, I found their fair value to be $45/share, which would imply a price reduction of 18%.

EV/Assets Multiple:

By comparing MARA’s EV/Assets multiple to that of their public competition, I found MARA’s fair value to be $38.50/share, which implies a downside risk of 30%.

D/E Ratio:

Lastly, by comparing MARA’s D/E ratio, I found their fair value to be $820/share, which implies an increase of 1400%.

Final Valuation:

As you can probably tell, MARA’s comparable ratios and multiples are vastly different from each other, which makes it difficult to value them. In order to value MARA, I decided to take a weighted average result of the 3 comparable metrics, giving weights of 45%, 45%, and 5% to the P/B, EV/Assets, and D/E Ratios respectively. By doing this I was able to arrive at a valuation of $80.58/share, which implies a 47.4% upside.

Overall Thoughts:

I think that MARA is overvalued relative to their peers in the industry, as the only reason for their comparable valuation of $80/share is due to the D/E ration implying a 1400% gain. However, personally I am bullish on the short-term prospect of Bitcoin, which MARA will give me exposure to. Furthermore, I would be looking to slowly accumulate more MARA after this bull run is over to get in at a low price and hold for the next 4 years until the next halving and bull run.


Guidance on moving old BTC from Electrum legacy wallet into new Electrum Native SegWit wallet (same client)? Also, still possible to redeem BCH from BTC held prior to 2017 at the same time?

Been out of the loop for a while and would like some corrections and clarifications my topic query of safely moving all my current BTC from old legacy Electrum into same Electrum client with new wallet/native SegWit send/receive addresses.

Currently, I have one Electrum default wallet on Windows OS that I created several years ago (early 2017) and use it maybe once or twice a year to make payments to some online services that accept BTC.

  • All of my current Electrum wallet send/receive addresses begin with "1".

Prior to each use:

  • I make sure to upgrade/run the latest version of Electrum (current version: 4.1.5) found via the official Electrum/github websites.
  • I have my original 12 word seed safely written down and also password protection enabled to access the Electrum client/default wallet.

The fees have been getting a bit higher and reading that it might be better to use Native SegWit instead (which seems to be the new standard wallet default on newly created wallets within Electrum).

Searching online for some updated guides has been a bit tough and not sure which ones are accurate and up to date.


Here are the steps so far that I'm planning (not sure yet of any other must-do options to enable/disable once completed within Electrum):

  • Create new wallet > Standard Wallet
  • Create a new 12 word seed > confirm 12 word seed
  • Enter new password for new wallet encryption
  • New wallet is now a native SegWit by default by checking addresses tab and noting bc1 at the beginning of the address string?
  • Go to old default legacy wallet >
  • Send all BTC to new wallet bc1xxxxxx receiving address?
  • What BTC fee amount should I be aiming for here?
  • Some comments mentioned utilizing sweep private keys but is that the same as sending my legacy BTC via manually entering the bc1xxxxx receiving address I have listed from the new Electrum wallet?

Also, if it's not much more to ask for... **I never did claim any BCH/Bitcoin Cash during the changes happening many years ago and wondering if I'm able to still redeem them if possible in 2021. I did have BTC in the same Electrum legacy wallet prior to that event in early 2017. From a cursory search, it seems that I would:

  • move all current BTC from electrum to a new wallet (e.g. new native SegWit Electrum as outlined from steps above)?
  • use a community suggested BCH wallet application and enter/restore my original legacy Electrum 12-word seed into that BCH application? (e.g. Electron Cash)?

Thank you for your clarifications and tips to be aware of!