Marathon Digital Holdings, Inc. (MARA) in Las Vegas, Nev., operates as a digital asset technology company that mines cryptocurrencies, emphasizing the blockchain ecosystem and the generation of digital assets. HIVE Blockchain Technologies Ltd. Vancouver, Canada-based (HIVE), in comparison, functions as a cryptocurrency mining company in Canada, Sweden, and Iceland.
Recently, investors have retreated from cryptocurrencies on concerns over the Federal Reserve’s interest rate increases to control soaring inflation, and a weakening economic outlook. Last month, Bitcoin fell below $26,000 for the first time in 16 months, amid a broader sell-off that erased more than $200 billion from the crypto market in a single day.
However, after accounting for all the negative factors that fueled the volatility, the market recently staged a recovery from its low. And on the heels of cryptocurrencies' rising popularity and acceptability, President Biden's signing of an executive order to address the risks and capitalize on the positives of the cryptocurrency market bodes well for crypto-related stocks. The global cryptocurrency market is projected to grow at a 12.2% CAGR, earning revenues of around $2.8 billion by the end of 2028.
MARA’s stock has slumped 47.6% in price over the past month, while HIVE declined 43.8%. However, HIVE is the clear winner with 68.9% returns versus MARA’s 63% negative returns in terms of the past year’s performance.
But which stock is a better buy now? Let us find out.
Latest Developments
In April, MARA announced its intent to transition its bitcoin miners from the facility in Hardin, MT, to new locations with more sustainable and non-carbon emitting sources of power. In 2021, MARA announced that the company’s mining operations would be 100% carbon neutral by the end of 2022. To attain that objective and build upon its current strategy, MARA plans to transition its bitcoin miners from its facility in Montana, which currently gets its power from a coal-fired power plant to new locations with more sustainable sources of power. The transition is scheduled to occur in stages to reduce downtime and is expected to be completed during the third quarter of 2022.
In February, HIVE announced a supply agreement with Intel Corporation (INTC) to acquire new performing ASIC chips incorporated into state-of-the-art mining equipment custom-developed for HIVE. HIVE has entered a supply agreement with Intel, the leading semiconductor manufacturer, for its forthcoming blockchain accelerator. The company has also entered a manufacturing agreement with an ODM (original design manufacturer) that has expertise in electronics manufacturing. The ODM will combine Intel's blockchain accelerators into an air-cooled Bitcoin mining system.
Also, in February, the company announced that it had agreed with Compute North LLC to host 100 megawatts of mining capacity in one of its new Texas renewable energy data center facilities. This facility would be its first mining operation in the United States.
Recent Financial Results
For the first quarter ending March 31, 2022, MARA’s revenue declined 465% year-over-year to $51.72 million. Its operating loss amounted to $9.13 million, while its net loss came in at $12.96 million compared to $ 83.36 million in net income in the first quarter of 2021. The company’s loss per share stood at $0.13 compared to $0.87 in EPS in the prior-year period.
HIVE’s revenue from digital currency increased 397.4% year-over-year to $68.13 million for the third quarter, ending Dec. 31, 2021. Its net income grew 273.3% from its year-ago value to $64.25 million, while its EPS rose 220% from its prior-year quarter to $0.16. For the three months ended Dec. 31, 2021, its cash improved 58% from its previous period to $63.65 million.
Past and Expected Financial Performance
MARA's revenue has grown a 399.1% CAGR over the past three years. Analysts expect MARA's revenue to increase 157.5% in the current quarter. The company's EPS is expected to grow 119.3% in the current quarter, 377.8% in the current year, and 132% next year.
In comparison, HIVE’s revenue has grown at a 75.8% CAGR over the past three years. Analysts expect HIVE’s revenue to increase 189.5% in the current year and 2.8% next year.
Profitability
HIVE is more profitable, with an 86.4% gross profit margin, versus MARA’s 6.8%. Also, HIVE’s 79.2% net income margin compares to MARA's net income margin of negative 68.6%.
Furthermore, HIVE’s 62.5%, 37.6% and 39.5% respective ROE, ROA and ROTC compare with MARA’s negative returns 18.2%, 2.6% and 2.6%.
Thus, HIVE is more profitable.
Valuation
In terms of forward EV/Sales, MARA is currently trading at 3.76x, which is 147.4% higher than HIVE, which is currently trading at 1.52x. Furthermore, MARA’s 5.47x forward EV/EBITDA ratio is 274.7% higher than HIVE's 1.46x.
POWR Ratings
MARA has an overall F rating, which equates to a Strong Sell in our proprietary POWR Ratings system. In contrast, HIVE has an overall B rating, which translates to Buy. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
HIVE has a grade of B for Value, which is in sync with the company's discounted valuation. In comparison, MARA has a D for Value, which is justified considering its premium valuation.
Among the 107 stocks in the D-rated Financial Services (Enterprise) industry, MARA is ranked #102. In contrast, HIVE is ranked #25 of 80 stocks in the C-rated Technology – Services industry.
Beyond what we've stated above, we have also rated both the stocks for Growth, Momentum, Quality, Momentum, and Sentiment. Click here to view MARA’s ratings. Get all HIVE ratings here.
The Winner
Rapid Technological advancements should drive the cryptocurrency market’s growth. In addition, the rising popularity of cryptocurrencies has made them easier to liquify, which is one of the primary factors driving their growth. While both MARA and HIVE are expected to gain, HIVE’s relatively lower valuation and higher profitability we think make it a better bet now.
Our research shows that odds of success increase when one invests in stocks with an Overall Rating of Strong Buy or Buy. View all the top-rated stocks in the Technology – Services industry here. Also, click here to access all the top-rated stocks in the Financial Services (Enterprise) industry.
MARA shares were trading at $8.92 per share on Monday afternoon, up $0.12 (+1.36%). Year-to-date, MARA has declined -72.85%, versus a -13.04% rise in the benchmark S&P 500 index during the same period.
About the Author: Spandan Khandelwal
Spandan's is a financial journalist and investment analyst focused on the stock market. With her ability to interpret financial data, she aims to help investors evaluate the fundamentals of a company before investing.
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