The cryptocurrency market experienced a bloodbath in May and June, losing $1 trillion in value in weeks. The crypto market has been hard-hit by the challenging macroeconomic environment. InMay, Bitcoin fell below the $26,000 mark for the first time in 16 months, dragging other cryptocurrencies with it. The crash has also increased the chances of regulation.
Bitcoin has been trading between $20,000 to just over $24,000 since mid-June after the crash wiped off 50% of its value this year.
The latest 75 basis point interest rate hike by the Fed is raising expectations of a risky asset like crypto to remain bearish in the near term. As crypto is a relatively new and speculative investment without a long history to base predictions, other conventional assets might be better investments in this volatile economic backdrop.
Marathon Digital Holdings, Inc. (MARA)
MARA is a digital asset company that mines cryptocurrencies focused on the blockchain ecosystem and the generation of digital assets. The company holds bitcoins in an investment fund.
On July 18, MARA announced that the company had secured approximately 254 megawatts of new hosting arrangements for its Bitcoin mining operations. The first miners to be hosted under these new arrangements are expected to be installed in August, with installations at other locations continuing into 2023.
For the fiscal first quarter ended March 31, MARA’s total revenue increased 465% year-over-year to $51.72 million. However, its adjusted net income decreased 171.1% from the prior-year quarter to a negative $1.82 million. Adjusted net income per share declined 166.7% from the same period the prior year to a negative $0.02.
Analysts expect MARA’s EPS to come in at a negative $0.33 for the fiscal year 2022.
The stock has declined 54.4% over the past year and 62.5% year-to-date to close its last trading session at $12.32.
MARA’s POWR Ratings reflect this dark outlook. The stock has an overall F rating, equating to a Strong Sell in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
MARA has a Stability, Sentiment, and Quality grade of F and a Value grade of D. In the 108-stock Financial Services (Enterprise) industry, it is ranked #105. The industry is rated D.
Click here to see the additional POWR Ratings for MARA (Growth and Momentum).
Riot Blockchain, Inc. (RIOT)
RIOT operates in the bitcoin mining business in North America. The company functions through the broad segments of Bitcoin Mining; Data Center Hosting; and Electrical Products and Engineering.
On April 27, RIOT announced its initiation of a large-scale 1-gigawatt development to expand its Bitcoin mining and hosting capabilities in Navarro County, Texas. However, immersion-cooled mining and hosting operations are not expected to commence before July 2023.
RIOT’s total revenue increased 244% year-over-year to $79.79 million in the fiscal first quarter ended March 31. However, net cash used in operating activities rose 656.7% from the prior-year period to $45.32 million. The company’s cash and cash equivalents balance came in at $113.58 million, down 52.9% from the same period last year.
The consensus EPS estimate of $0.04 for the fiscal quarter ended June 2022 indicates an 81.8% year-over-year decrease.
Over the past year, the stock has declined 77.4% to close its last trading session at $7.15. It has declined 68% year-to-date.
It’s no surprise that RIOT has an overall D rating, which translates to Sell in our POWR Rating system.
RIOT has an F grade for Stability and Quality and a D for Sentiment. It is ranked #74 out of the 80 stocks in the Technology-Services industries.
In addition to the POWR Rating grades we’ve stated above, one can see RIOT ratings for Growth, Value, and Momentum here.
MARA shares were trading at $12.64 per share on Thursday morning, up $0.32 (+2.60%). Year-to-date, MARA has declined -61.53%, versus a -14.86% rise in the benchmark S&P 500 index during the same period.
About the Author: Anushka Dutta
Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research. More…
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