MARA Holdings: Buy As The NAV Of Its Bitcoin Holdings And Market Cap Converge

Summary MARA Holdings is a leveraged bet on Bitcoin, with its assets primarily in Bitcoin and Bitcoin mining operations, making it highly correlated with Bitcoin prices. Despite Bitcoin’s 13% rise over the past year, MARA has declined by nearly 40%. The NAV of MARA’s Bitcoin holdings has converged with its market cap. MARA’s mining operations are running at a loss, with total costs per Bitcoin significantly higher than current Bitcoin prices. Despite mining operations running at a loss, the value of these operations has nearly completely eroded. An overreaction in my opinion. Recent plans to sell $2 billion worth of shares aim to buy more Bitcoin and invest in mining, increasing MARA’s exposure to Bitcoin, but also shoring up its balance sheet. MARA Holdings, Inc. ( MARA ) is a well-known bet on Bitcoin. The bulk of its assets are in the form of Bitcoin, while the rest of the company’s value is in its Bitcoin mining operations. The bearish argument on MARA is a macroeconomic one. If the price of Bitcoin declines, so will MARA. That might be true, but if one is bearish on Bitcoin, there are numerous options out there to place a bearish bet on it rather than MARA. From a fundamental perspective, MARA is a buy and if one is worried about the price of Bitcoin, that risk can always be hedged by opening a bearish position on a Bitcoin ETF. MARA and the price of Bitcoin are naturally quite highly correlated. At the start of 2025, MARA began to underperform Bitcoin, while the recent market volatility has accelerated that trend. While Bitcoin is up 13% over the past 52 weeks, MARA has declined by nearly 40%. Data by YCharts This has led to MARA’s market cap declining to $3.8 billion at an $11 stock price. MARA owned 44,893 Bitcoin as of December 31, 2024 . That has since grown to 46,374 Bitcoin as of February 28, 2025 . The 1,481 growth in Bitcoin is primarily attributed to mining, with 750 coins mined in January and 706 mined in February. With a pace of 25 BTC mined per day, I estimate that around another 780 were mined in March and an additional 150 so far for April. Assuming no additional purchases or sales were made during this time, I estimate MARA to have about 47,300 Bitcoin. At a price of $78,000 BTC, the value of this holding would be $3.69 billion. MARA is trading at just $100 million over its NAV, which means the value of its mining operations has declined to this amount. Rewind to the end of 2024. MARA owned 44,893 coins at a price of $93,000, valued at $4.18 billion. The stock price closed 2024 at $16.77, leading to a $5.8 billion market cap. MARA’s mining operations were implied to be worth $1.6 billion. A $15,000 decline in the price of Bitcoin has led to a 94% erosion in the implied value of the mining business. When looking at the income statement of MARA’s annual report , the idea behind the eroding value of the mining business starts to make sense: SEC.gov At a gross margin level, the company lost $159 million, representing a gross margin percent loss of 24%. So even with historically strong prices for Bitcoin, MARA’s mining operations are running at a loss. Bitcoin halved in April 2024, so these margins benefited from a quarter of better economics than they do today. Fellow Seeking Alpha analyst Geneva Investor used financial and mining data from Q4 to come up with per-unit estimates on MARA’s cost of mining. Calculations which I believe to be accurate, so credit should be given to them for doing the work first: Mining costs: ~$52,000 per Bitcoin Depreciation: ~$55,000 per Bitcoin Other opex: ~$33,000 per Bitcoin For a total cost of $140,000 per Bitcoin mined. That would be the price which the mining operation would break even. With a current pace of about 9,200 Bitcoin mined per year, a $15,000 slide in the price of Bitcoin since the start of the year would cost the company about $138 million in revenue and additional net losses. That’s a massive hit to the value of the mining operation, but not to the level where it should have nearly its entire value nuked. The mining business was designed to be a highly leveraged bet on the price of Bitcoin. A timeless call option on it, if you will. That option should have retained a sizeable chunk of its value at $78,000 BTC compared to $93,000 BTC if the “strike price” is $140,000 BTC. One could be worried about impacts to the balance sheet, but keep in mind that depreciation makes up $55,000 per coin mined of the cost, a non-cash expense. Should there be a prolonged bear market in the price of Bitcoin, the company would be able to make the decision to not make further investments to replace obsolete equipment. It would be a difficult decision, but the company has some levers to pull to avoid falling off a cliff. Dilution has added to the downward pressure on the stock, as MARA has recently filed to sell up to $2 billion worth of shares at the market. This represents over 50% dilution at MARA’s current market cap. This money will primarily be used to buy more Bitcoin. However, some of it will likely be used to fund the money-losing mining operation, purchase new equipment, and make other capital investments. Such as securing/generating more internal power supply to decrease mining costs. So the company’s bet on Bitcoin is about to get a lot bigger. Usually, I don’t like dilution of this size, but enabling the company to strengthen its balance sheet to invest in its mining operation and to buy more Bitcoin is a good use of it. If investors don’t like MARA increasing its exposure to Bitcoin in this way, they are free to short Bitcoin ETFs as a partial hedge to the company’s purchase once it occurs. In my opinion, that would be preferable to selling at a price where the mining operation’s value has nearly completely eroded.

Source: Seeking Alpha