Financial Select Sector

Russell 2000

The Cash Burner

Comparable Companies - MARA

The report covers 35 insider sales totaling $11,528,121.31 with no purchases. Institutional ownership is led by Blackrock, Inc. at 12.22%. Short interest as of 2025-12-15 is 103,841,544 shares, representing 27.9% of the float.

CHIEF EXECUTIVE OFFICER

CHIEF FINANCIAL OFFICER

DIRECTOR

GENERAL COUNSEL

The securities were acquired and are held in the ordinary course of business and were not acquired and are not held for the purpose of or with the effect of changing or influencing the control of the issuer.

Frederick G. Thiel

Salman H. Khan

Zabi Nowaid

Douglas Mellinger

Georges Antoun

Janet George

Barbara Humpton

Jay Leupp

Vicki Mealer-Burke

Frederick G. Thiel's career demonstrates a consistent focus on technology leadership and strategic growth, particularly within emerging digital asset markets. His tenure at Marathon Digital Holdings has been marked by significant expansion of the company's Bitcoin mining capacity and holdings, positioning it as a dominant player in the industry. Thiel's strategic acumen is evident in his approach to capital allocation, including debt offerings for Bitcoin acquisition and the acquisition of key mining infrastructure, all aimed at strengthening the company's market position and liquidity. His public persona is that of a visionary leader, often compared to other prominent figures in the Bitcoin space, highlighting his influence and strategic direction in the rapidly evolving cryptocurrency landscape.

Acquisition of Bitcoin Mining Data Center

Chairman and Chief Executive Officer

Salman H. Khan brings a robust financial and accounting background to Marathon Digital Holdings, with extensive experience across diverse industries including traditional finance, energy, and technology. His prior roles at major accounting firms and large corporations like Occidental Petroleum and Verb Technology Company Inc. demonstrate a strong foundation in financial strategy, corporate development, and operational oversight. At Marathon, he is responsible for the company's financial health and strategic growth initiatives, including investor relations and legal functions. His experience in selling core business units and managing financial reporting suggests a capability for navigating complex financial landscapes and driving value.

Chief Financial Officer

Zabi Nowaid serves as General Counsel and Corporate Secretary for Marathon Digital Holdings, bringing legal expertise in corporate development and securities law. His prior experience as Vice President at Netlist, Inc., and as an attorney at Wilson Sonsini Goodrich & Rosati, provides a strong foundation for managing the company's legal and governance affairs. In his current role, he is instrumental in ensuring compliance and overseeing corporate secretarial duties, contributing to the company's overall operational integrity.

General Counsel and Corporate Secretary

Douglas Mellinger is a seasoned entrepreneur and investor with a strong track record in building and leading technology and financial companies. His experience as Managing Director at Clarion Capital Partners and founder of enherent Corp, a recognized Inc. 500 company, highlights his ability to drive growth and value creation. As Lead Independent Director at Marathon Digital Holdings, he contributes to enhancing the company's governance and strategic oversight. Mellinger's diverse board experience across various organizations underscores his broad understanding of corporate leadership and strategic management.

Lead Independent Director

Georges Antoun possesses a deep and extensive background in the technology sector, spanning over three decades and encompassing leadership roles in engineering, sales, operations, and venture capital. His experience at major technology firms like Cisco Systems, Ericsson, and First Solar, coupled with his venture capital experience at TCV, provides him with a comprehensive understanding of technology development, market dynamics, and strategic investments. As a director at Marathon Digital Holdings, Antoun's technical and operational expertise is valuable in overseeing the company's technology strategy and growth initiatives.

Director

Janet George brings a wealth of experience in artificial intelligence, cloud infrastructure, and scaling technology businesses to Marathon Digital Holdings. Her tenure at Intel Corporation, where she led a multi-billion dollar business unit focused on AI/ML SaaS growth, and her previous roles at tech giants like Oracle and Apple, highlight her ability to drive revenue growth and implement innovative technology solutions. As Chair of the Technology & Strategy Committee, George is well-positioned to guide Marathon's technological advancements and strategic growth in the rapidly evolving digital asset space.

Barbara Humpton's extensive experience as President and CEO of Siemens USA, leading a significant portfolio in technology and infrastructure, provides valuable insights into large-scale operations and market strategy. Her public-private leadership experience, including service on presidential advisory boards, demonstrates a capacity for navigating complex regulatory and policy environments. At Marathon Digital Holdings, her leadership and strategic perspective are assets in guiding the company's growth and operational direction.

Jay Leupp is a seasoned financial professional with a deep background in asset management and investment banking. As Managing Partner of Terra Firma Asset Management and with prior roles at Lazard Asset Management and RBC Capital Markets, he possesses extensive experience in portfolio management and financial markets. His expertise in audit and finance, coupled with his CPA designation, makes him a valuable asset to Marathon Digital Holdings' board, particularly in overseeing financial strategy and risk management.

Vicki Mealer-Burke brings a wealth of experience in executive leadership, human resources, and diversity and inclusion from her 26-year tenure at Qualcomm. Her contributions to Qualcomm's significant growth and her role as its first Chief Diversity Officer highlight her ability to foster inclusive cultures and drive organizational development. As a director at Marathon Digital Holdings, she serves on the Compensation and Nominating and Corporate Governance Committees, leveraging her expertise to guide the company's human capital strategies and governance practices.

Riot operates as a vertically integrated Bitcoin mining and data center development company, leveraging its owned power infrastructure and engineering capabilities to maximize operational efficiency and pivot into high-performance computing (HPC) and AI data center services.

Large-scale mining operations utilizing owned and operated power infrastructure.

Development of data center campuses for HPC and AI workloads, leveraging existing power assets.

CleanSpark is a data center developer and Bitcoin miner focused on owning and operating a large portfolio of data centers and power assets, with a strategy to leverage its infrastructure for both Bitcoin mining and HPC/AI workloads.

Primary revenue-generating segment focused on mining Bitcoin with a highly efficient fleet.

Bit Digital is a global platform for high-performance computing (HPC) infrastructure and digital asset production, operating a diversified business model that includes HPC data centers, cloud services, and Ethereum staking.

Provides HPC data centers and cloud-based GPU services for AI and ML developers under the WhiteFiber brand.

Mines Bitcoin and stakes Ethereum to generate digital assets.

Bitfarms is a data center developer, historically focused on Bitcoin mining, that is now expanding into HPC and AI data center services by leveraging its power assets and infrastructure expertise.

Historically principal revenue-generating segment, now being evaluated for conversion to HPC/AI.

Emerging segment focused on developing and leasing data center capacity for AI and HPC workloads.

The company's property and equipment is primarily composed of digital asset mining rigs. As of December 31, 2024, the company operated approximately 16 data centers across North America, the Middle East, Europe, and Latin America, with a total energy portfolio capacity of approximately 1.7 gigawatts. The company has transitioned to owning and operating a majority of its capacity, with approximately 70% of its mining sites being owned as of year-end 2024.

MARA's management team is executing a high-risk, capital-intensive strategy appropriate for the Cyclical Operator archetype. CEO Frederick Thiel has demonstrated a strong ability to scale operations and navigate the Bitcoin cycle, successfully positioning Marathon as a market leader. However, this growth has come at the expense of extreme shareholder dilution and negative cash flow, funded by continuous equity and debt issuance. While the board has the right expertise for the current strategy, and incentives are operationally focused, the capital allocation track record is pro-cyclical and value-destructive on a per-share basis. The team is skilled at asset accumulation but has yet to prove it can generate sustainable free cash flow or protect shareholder value through the cycle.

The company faces risks from environmental laws and regulations, which could impose higher energy costs, require additional capital investments, or mandate environmental monitoring. Bitcoin miners in Texas are required to disclose energy usage to the U.S. Energy Information Administration, which could lead to negative public perception. The SEC's climate disclosure rule, currently stayed, would require the company to establish additional internal controls and incur costs if it becomes effective. Physical risks of climate change could impact the availability and cost of energy and materials, and increase insurance costs. The company also notes the risk of negative publicity regarding the environmental impact of bitcoin mining.

As of December 31, 2024, the company had approximately 152 full-time employees. The company maintains an equity incentive plan for all eligible employees and compares salary and wages against quantitative benchmarks to ensure competitiveness.

Not Discussed. The company's business is focused on mining digital assets, and the 10-K does not contain specific disclosures regarding product safety, quality management, or responsible marketing. Disclosures regarding data privacy are limited to cybersecurity risk management.

The company has a program to loan bitcoin to generate additional returns. The company engages in community initiatives, specifically deploying pilot projects in Finland to recycle heat from its operations, providing heat to communities with a total population of approximately 80,000 residents. The company also notes risks related to supplier concentration and related party transactions, such as investments in Auradine.

The narrative is built upon a backdrop of aggressive capital deployment, with CapEx rising to $247.3 million in FY 2024 and TTM Free Cash Flow deeply negative at -$924.3 million, necessitating continuous external funding.

The P14 Innovation Dossier states CapEx is primarily for 'Capacity Expansion,' specifically acquiring data centers and mining sites to increase hashrate and owned capacity. The Q3 2025 transcript details a joint initiative with MPLX to develop integrated power generation and data centers in West Texas, targeting 400 MW initially.

The 10-K discloses a $332.9 million impairment charge on mining equipment recorded in FY 2022, and the auditor identified valuation of assets acquired in business combinations as a Critical Audit Matter. The Q3 2025 transcript notes the acquisition of Exaion and the MPLX partnership add significant physical assets.

Management argues that reinvestment into owned infrastructure yields high gross returns (citing >30% Gross ROCE) by lowering energy costs. The P14 dossier notes the strategy is to 'expand the moat' through vertical integration.

Price / Tangible Book Value

EV / Normalized EBITDA

Chairman and CEO of MARA. Over 35 years’ experience in the Technology Sector. Leads the premier Bitcoin mining company.

Managing Director of Clarion Capital Partners. Extensive experience building and leading public and private companies in the technology and financial industries. Extensive finance experience.

Chief Commercial Officer of First Solar. Senior Leadership at Cisco Systems. Held several key executive roles including Vice President of Worldwide Systems Engineering.

Former Chief Diversity Officer of QUALCOMM. Led inclusive leadership and cultural transformation. Extensive experience in human capital management.

President and CEO of Siemens USA. Leads a $19 billion portfolio. Public-private leadership experience serving on advisory boards for both the Trump and Biden administrations.

Managing Partner and Senior Portfolio Manager of Terra Firma Asset Management, LLC. Extensive audit and financial expertise. Member of American Institute of Certified Public Accountants.

Former Chief Diversity Officer of QUALCOMM. 26 years of global executive leadership experience at QUALCOMM.

Fred Thiel

Salman Khan

All Executive Officers and Directors as a Group (9 Persons)

BlackRock, Inc.

The Vanguard Group, Inc.

Salman Hassan Khan

Douglas K. Mellinger

Adam Swick

James G. Crawford

John Ellis

Narenderkumar Dharamveer Manoj Madnani

Nir Rikovitch

Robert Samuels

William Beam

MARA Holdings, Inc. is a global leader in leveraging digital asset compute to support the energy transformation. The company secures the Bitcoin blockchain ledger and converts clean, stranded, or otherwise underutilized energy into economic value. Historically focused on being the largest and most efficient Bitcoin miner, the company is undergoing a strategic transformation into a vertically integrated energy and digital infrastructure company. As of December 31, 2024, the company operated approximately 400,000 Bitcoin mining ASICs, with a deployed capacity of 53.2 EH/s and an efficiency of 19.2 joules per terahash. The company also offers advanced technology solutions to optimize data center operations, including next-generation liquid immersion cooling and firmware for Bitcoin miners.

Held WACC (15.0%) and Terminal Growth (2.0%) constant. Solved for the required Year 5 Operating Margin to justify the current Enterprise Value of $6.54B.

Balance Sheet - Supplemental

Balance Sheet

Cash Flow Statement - Supplemental

Cash Flow Statement

Income Statement - Supplemental

Income Statement

Ratios

Valuation

Historical Ratios & Multiples - MARA

The industry is currently experiencing a Golden Age tailwind driven by the secular AI boom, which has created a massive shortage of power-connected data center capacity. While this provides a favorable environment for infrastructure owners, the industry is also in an overheating phase of the capital cycle, with peers like Riot and CleanSpark surging CapEx to over 70% of revenue. This aggressive capacity expansion historically precedes a period of structural oversupply and margin compression.

Marathon is relevant for analysis now because it has just completed a $1 billion convertible note offering and entered a $2 billion ATM agreement, marking a peak in its capital-raising cycle that historically precedes a significant share price correction.

Failure of AI/HPC Revenue Inflection Marathon has promised a pivot to AI inference to diversify its revenue. If the upcoming quarterly reports fail to show material, high-margin revenue from the Exaion acquisition or the MPLX partnership, the market will likely stop valuing the company as a digital infrastructure leader and re-rate it as a distressed miner.

Sustained Bitcoin Price Correction Because Marathon does not sell its mined Bitcoin to cover expenses, a sustained price correction would force the company to either abandon its HODL strategy or issue even more dilutive equity to fund its $891.4 million annual operating cash burn.

Lower-for-Longer Bitcoin Cycle A prolonged downturn in Bitcoin prices would impair the company's $7 billion liquid asset base and make its $2.47 billion debt load unsustainable, as the company currently generates no organic cash flow to service interest.

Execution Risk in AI Infrastructure The pivot to AI/HPC requires specialized expertise and faces competition from hyperscalers with significantly lower costs of capital and established customer bases.

The current asset base for Marathon Digital Holdings, Inc. (MARA) as of December 31, 2024, comprises a substantial digital infrastructure, including 16 data centers deployed across North America, the Middle East, Europe, and Latin America, with a total energy portfolio of approximately 1.7 gigawatts (GW) of capacity. The company operates approximately 400,000 Bitcoin mining Application-Specific Integrated Circuits (ASICs), capable of producing 53.2 Exahashes per second (EH/s). Key physical assets include the Bitcoin mining rigs, data center containers, general equipment, buildings, land improvements, and land. Recent acquisitions in 2024, as detailed in the company's filings, include five operational data centers totaling 812 MW of nameplate capacity in Granbury and Garden City, Texas, Kearney, Nebraska, and Hannibal and Hopedale, Ohio. A wind farm in Hansford County, Texas, with 240 MW of interconnection capacity and 114 MW of nameplate wind capacity, was acquired in February 2025, subsequent to the December 31, 2024 balance sheet date, and is included in the scope of the overall infrastructure capacity.

Marathon Digital Holdings, Inc. acquired two operational data centers in Ohio and commenced development of a third greenfield site, adding a combined 372 MW of owned and operated capacity. This acquisition was noted at approximately $0.27 million per megawatt, which management identified as one of the lowest multiples among publicly traded peers.

Cash & Equivalents

Accounts Receivable

Marathon Digital Holdings, Inc. operates without traditional tangible inventory. The company's core business revolves around digital asset mining and infrastructure, with its primary 'product' being Bitcoin, which is classified as a digital asset rather than inventory on its balance sheet. Therefore, for the purpose of tangible inventory valuation in a liquidation scenario, the value is zero. This approach is consistent with the company's financial reporting, which shows no inventory, and reflects a conservative and realistic stance for a liquidation analysis of tangible corporate assets.

Inventory

Short-Term Inv.

Other Current Assets

**Primary Transaction Comps:**
- Marathon Digital Holdings, Inc. acquired two operational data centers in Ohio and commenced development of a third greenfield site, adding a combined 372 MW of owned and operated capacity. This acquisition was noted at approximately $0.27 million per megawatt, which management identified as one of the lowest multiples among publicly traded peers. ($0.27M/MW)

**Replacement/Scrap Data:**
New data center construction costs (shell and core) averaged $10.7 million per MW globally in 2025 and are projected to reach $11.3 million per MW in 2026. Total development costs for a greenfield data center typically range from $7 million to $12 million per megawatt of commissioned IT load, with an average of $11.7 million per MW across various markets. These figures generally exclude land acquisition and active IT equipment. For Bitcoin mining rigs, new, efficient ASIC miners like the Bitmain Antminer S21+ Hyd are priced around $5,370 for 358 Terahashes per second (TH/s), which translates to approximately $15 per TH/s or $15,000 per EH/s. Older generation S19 variants still constitute a significant portion of the global mining fleet and would command lower values.

Net PP&E

Intangibles

Long-Term Inv.

Other Non-Current

Accounts Payable

Current Debt

Tax Liabilities

Other Current Liabilities

Non-Current Debt

Other Non-Current Liabilities

<headerData>

Q3'25 Shareholder Letter

EXHIBIT 99.1

Exhibit 99.1

UNITED

UNITED STATES

Exhibit

Compass Point Downgrades Marathon Digital Holdings (MARA) to Neutral

240.13d-102 Schedule 13G - Information to be included in statements filed

us5657881067_060724.txt

Marathon Digital Holdings Enters Definitive Agreement To Acquire 200-Megawatt Bitcoin Mining Data Center Adjacent To A Wind Farm

marathondigitalholdingsinc

SECURITIES AND EXCHANGE COMMISSION

us5657881067_012524.txt

Marathon Digital Holdings Adds Anchorage Digital Bank As A Bitcoin Custodian

Marathon Digital Holdings Announces Energization Of Its First Bitcoin Mining Pilot Project Powered By Renewable, Off-Grid Energy From A Landfill

Earnings Report: EPS Surprise -70.0%, Revenue Surprise +3.8%

Earnings Report: EPS Surprise -26.3%, Revenue Surprise -18.7%

DA Davidson Maintains Buy on Marathon Digital Holdings, Lowers Price Target to $12

Jefferies Maintains Buy on Marathon Digital Holdings, Lowers Price Target to $24

BTIG Maintains Buy on Marathon Digital Holdings, Lowers Price Target to $16

HC Wainwright & Co. Maintains Buy on Marathon Digital Holdings, Lowers Price Target to $35

Earnings Report: EPS Surprise -118.2%, Revenue Surprise +0.5%

EXHIBIT

Marathon Digital (MARA) Stock: Why The Price Increased

us5657881067_020422.txt

Marathon Digital Holdings Announces Executive Chairman'S Retirement And Succession Plan

Earnings Report: EPS Surprise +77.1%, Revenue Surprise +17.5%

Earnings Report: EPS Surprise +200.0%, Revenue Surprise +0.0%

Correction: Marathon Digital Holdings To Launch The First North American-Based Bitcoin Mining Pool, Fully Compliant With U. S. Regulations

MARATHON DIGITAL HOLDINGS TO LAUNCH THE FIRST NORTH AMERICAN-BASED BITCOIN MINING POOL, FULLY COMPLIANT WITH U.S. REGULATIONS

Mara Holdings initiated with an Underweight at Morgan Stanley

Mara Holdings price target lowered to $16 from $26 at Piper Sandler

Mara Holdings upgraded to Buy from Neutral at Compass Point

Marathon Digital is a Peak Earnings Trap where record GAAP net income masks a business burning nearly $900 million in annual operating cash. While the market treats the equity as a leveraged Bitcoin proxy, our analysis suggests the aggressive 37.7% annual share count growth and a capital-intensive pivot into unproven AI infrastructure will lead to a permanent impairment of per-share value as the current capital cycle turns.

Executive Summary

The primary driver of our bearish outlook is the company's persistent negative cash flow, with TTM Net Cash from Operations standing at -$891.4 million, which necessitates continuous and massive equity dilution. We expect the unproven pivot into AI/HPC infrastructure to fail to offset this burn, leading to a significant re-rating toward our $0.81 fair value target as the market realizes the HODL strategy is unsustainable without organic cash generation.<ul><li>Driver: Extreme Per-Share Dilution and Cash Burn</li><li>Catalyst: Failure of the AI/HPC infrastructure pivot to generate positive free cash flow</li><li>Protection: Net Liquidation Value of $2.71 per share</li></ul>Our variant perception is that the market is incorrectly pricing Marathon as a pure-play Bitcoin treasury, extrapolating peak digital asset gains into perpetuity while ignoring the structural decay of per-share value. In contrast, our analysis of the company's capital cycle suggests that the current surge in industry CapEx, where peers are spending over 70% of revenue on capacity, is a classic signal of an imminent cyclical peak that will leave dilutive operators like Marathon with stranded, high-cost assets.This is a mid-term, cyclical trade designed to capture the downside from a peak valuation trap to a distressed normalization, as the company's cash burn exceeds its ability to raise capital without destroying the remaining equity value.

Core Investment Rationale

Marathon Digital has executed a radical metamorphosis from an asset-light Bitcoin miner into a capital-intensive, vertically integrated digital infrastructure operator. The company's strategy centers on a full HODL posture, where it retains all mined Bitcoin (currently 52,850 BTC) while funding operations through massive equity and debt issuance. Management is currently pivoting toward AI and High-Performance Computing (HPC) infrastructure, targeting inference at the edge using modular data centers. This strategy is intended to lower energy costs, which stood at $0.04 per kWh for owned facilities in FY 2024, but it has resulted in a cumulative -$924.3 million in Free Cash Flow over the last two years.The company's core assets include a mining fleet of approximately 400,000 ASICs with a deployed capacity of 53.2 EH/s and an efficiency of 19.2 J/TH. Beyond mining hardware, Marathon is building a portfolio of owned energy infrastructure, including a 200-megawatt data center in Garden City, Texas, and a pending acquisition of Exaion which adds four data centers in France and Canada. These assets are characterized by high operational leverage, where their scale and cost position are intended to provide a structural advantage through the Bitcoin cycle, though they currently require $424.2 million in TTM capital expenditures to maintain and expand.The competitive landscape is moderately concentrated and currently in a rational phase, focused on securing power assets for the AI boom rather than price wars. Marathon is the largest player by market cap ($3.76B), followed by Riot Platforms ($5.18B) and CleanSpark ($2.91B). However, the industry is in a peak capital cycle, with peers aggressively deploying capital into HPC/AI data centers. Marathon's competitive position is weakened by its lack of a proven durable moat; during the 2022 downturn, its operating margin fell to -563.8%, significantly underperforming peers like Riot.The most important historical story for Marathon is its transition through the last full business cycle, where it navigated extreme volatility by shifting from a patent-holding entity to a massive miner. During the 2021 peak, the company leveraged its high valuation to raise billions, but as the cycle troughed in 2022, it faced a $332.9 million impairment on mining equipment. Capital allocation changed through this cycle from an asset-light model to an aggressive owner-operator model, with debt jumping from $326.1 million in FY 2023 to $2.47 billion in FY 2024. This history reveals a management team that consistently prioritizes asset accumulation over balance sheet stability, leading to a 357% increase in share count since 2020.

Business & Situation

<ul><li>Bull Case: The bull case rests on Marathon's industry-leading scale of 60.4 EH/s and its massive 52,850 BTC treasury, which provides significant leverage to a rising Bitcoin price. Proponents argue that vertical integration will eventually drive energy costs to near-zero, making the company the lowest-cost producer in both mining and AI inference.</li><li>Bear Case: The bear case is defined by terminal dilution and unsustainable cash burn, with a 37.7% annual increase in share count eroding any gains from Bitcoin appreciation. Furthermore, the pivot to AI infrastructure is unproven and capital-intensive, likely requiring further debt and equity raises that will permanently impair per-share value.</li></ul>The prevailing market narrative treats Marathon as a high-beta call option on Bitcoin, valuing the company based on its total hashrate and treasury holdings. Investors currently give the company credit for its aggressive expansion and vertical integration, assuming that the scale of its 1.7 GW power portfolio will eventually translate into dominant market share in the emerging AI data center sector. This narrative is supported by the company's record GAAP net income of $541.3 million in FY 2024, which creates an illusion of profitability that masks the underlying operational cash drain.The industry is currently experiencing a Golden Age tailwind driven by the secular AI boom, which has created a massive shortage of power-connected data center capacity. While this provides a favorable environment for infrastructure owners, the industry is also in an overheating phase of the capital cycle, with peers like Riot and CleanSpark surging CapEx to over 70% of revenue. This aggressive capacity expansion historically precedes a period of structural oversupply and margin compression.Our differentiated view is that the market is extrapolating peak conditions indefinitely, while we see signs of a cyclical inflection that will expose Marathon's broken capital allocation model. While management claims to be building long-term value, their actions reveal a different story: insiders have sold $11.5 million in stock over the last 12 months with zero purchases, and the company recently entered a $2 billion ATM offering agreement. This suggests that even management views the current valuation as an opportunity to liquidate equity rather than a floor to defend. Furthermore, our analysis of the capital cycle shows that Marathon's reinvestment rate is negative at -58.4%, meaning its massive CapEx is not being funded by organic returns but by shareholder dilution.The debate between Bitcoin leverage and operational reality is reaching a breaking point. We conclude that the company's reliance on external capital markets to fund a -$891.4 million TTM operating cash burn makes the equity a value-destructive vehicle. As the capital cycle turns and the AI pivot requires even more funding, the current $9.94 price will be seen as a peak earnings trap, leading to a collapse toward our fair value estimate.Our analytical edge is a more granular analysis of the company's cash conversion and dilution profile, which reveals that the profit effects on EPS are being almost entirely wiped out by a -$8.89 per share dilution effect. While the market focuses on headline hashrate, we are tracking the per-share destruction that makes the current valuation unsustainable.

Core Thesis

CEO Frederick Thiel has a 35-year career in technology leadership, having overseen Marathon's growth from a sub-$30 million market cap to over $5 billion. While he has successfully scaled the company's hashrate to 60 EH/s, his external career includes roles at Local Corporation and GameSpy where verifiable performance metrics are scarce, suggesting his primary skill is aggressive scaling rather than disciplined value creation.Capital allocation skill is weak, as evidenced by a pro-cyclical strategy of issuing $3.8 billion in stock and $4.1 billion in debt to fund asset purchases at high prices. A specific example of poor timing is the 2021 share repurchase program, which resulted in a -68.7% ROI, while the current 37.7% share count CAGR continues to destroy per-share value.Management's credibility is strained by a significant gap between their HODL narrative and their personal actions. In recent transcripts, management emphasizes building long-term value, yet Frederick Thiel has consistently sold 27,505 shares monthly throughout 2025, signaling a lack of confidence in the very strategy he communicates to the market.<ul><li>Board Independence: 85.7% (6 of 7 directors)</li><li>Chairman/CEO Roles: Combined</li><li>Chairman Tenure: 7 Years</li><li>Insider Ownership: 6.02%</li><li>Shareholder Rights: Classified Board, Plurality Voting</li></ul>The stewardship verdict is net negative. While the board has been bolstered with relevant AI and energy expertise, the combined Chair/CEO role and the aggressive pattern of insider selling ($11.5M in 12 months) suggest a lack of alignment with minority shareholders. The governance structure has failed to curb the massive dilution that is the primary threat to the investment thesis.

Leadership & Governance

The valuation floor is derived from the historical trough Price-to-Tangible-Book multiple of 0.4x applied to the current tangible book value per share of $10.79.Our base case assumes revenue growth decelerates to a 4% normalized rate as the Bitcoin cycle matures and the AI pivot faces intense competition. We project operating margins will normalize to a mid-cycle average of 10%, resulting in a fair value of $0.00 for the equity after accounting for the $2.78 billion net debt load.The bull case assumes the AI/HPC pivot generates high-margin revenue and Bitcoin prices sustain a super-cycle, allowing margins to expand to 25%. Blue-Sky Potential: $0.20 per share.In a severe operational decline where Bitcoin prices collapse and the AI pivot fails, the company would face a liquidity crisis. Given the $2.47 billion in debt and negative interest coverage in a trough, the equity value is $0.00 as solvency would be threatened without massive, highly dilutive emergency funding.

Valuation Context

<ul><li>Failure of AI/HPC Revenue Inflection Marathon has promised a pivot to AI inference to diversify its revenue. If the upcoming quarterly reports fail to show material, high-margin revenue from the Exaion acquisition or the MPLX partnership, the market will likely stop valuing the company as a digital infrastructure leader and re-rate it as a distressed miner.</li><li>Sustained Bitcoin Price Correction Because Marathon does not sell its mined Bitcoin to cover expenses, a sustained price correction would force the company to either abandon its HODL strategy or issue even more dilutive equity to fund its $891.4 million annual operating cash burn.</li></ul>Marathon is relevant for analysis now because it has just completed a $1 billion convertible note offering and entered a $2 billion ATM agreement, marking a peak in its capital-raising cycle that historically precedes a significant share price correction.

Catalyst Path & Context

<ul><li>Lower-for-Longer Bitcoin Cycle A prolonged downturn in Bitcoin prices would impair the company's $7 billion liquid asset base and make its $2.47 billion debt load unsustainable, as the company currently generates no organic cash flow to service interest. The company's TTM interest coverage is 27.9x, but this is based on non-cash digital asset gains; on a cash basis, the company cannot cover its interest obligations.</li><li>Execution Risk in AI Infrastructure The pivot to AI/HPC requires specialized expertise and faces competition from hyperscalers with significantly lower costs of capital and established customer bases. Marathon has already exited its investment in 2-phase immersion cooling (2PIC) R&D, suggesting challenges in developing proprietary technology for this new sector.</li></ul>

Primary Risks

<ul><li>Entry Target: N/A</li><li>Stop Loss: N/A</li><li>Position Size: Sizing reflects a 'None' posture as the current valuation represents a peak earnings trap with an expected return of -91.8%. The final size is constrained by the extreme structural risks inherent to the Cyclical Operator model, specifically the terminal dilution risk.</li><li>Time Horizon: N/A</li></ul><ul><li>Quarterly Share Count Growth</li><li>Net Cash from Operations (excluding digital asset gains)</li><li>AI/HPC Segment Revenue Contribution</li></ul>The single event that would invalidate our bearish thesis is a sustained Bitcoin 'Super-Cycle' where prices rise fast enough to allow the company to reach cash-flow breakeven before the current $2 billion ATM facility is fully exhausted.

Actionable Parameters & Monitoring

Marathon Digital is a structurally flawed business model that relies on perpetual shareholder dilution to fund an unproven pivot into AI infrastructure. With a fair value floor of $2.71 based on liquidation value and an operational fair value of $0.81, the current $9.94 price offers no margin of safety. We recommend a Sell rating with a valuation target of $0.81, as the inevitable turn in the capital cycle will expose the company's inability to generate organic cash flow.

Final Conclusion

Driver

Failure of the AI/HPC infrastructure pivot to generate positive free cash flow

Catalyst

Protection

The bull case rests on Marathon's industry-leading scale of 60.4 EH/s and its massive 52,850 BTC treasury, which provides significant leverage to a rising Bitcoin price. Proponents argue that vertical integration will eventually drive energy costs to near-zero, making the company the lowest-cost producer in both mining and AI inference.

Bull Case

The bear case is defined by terminal dilution and unsustainable cash burn, with a 37.7% annual increase in share count eroding any gains from Bitcoin appreciation. Furthermore, the pivot to AI infrastructure is unproven and capital-intensive, likely requiring further debt and equity raises that will permanently impair per-share value.

Bear Case

Marathon Digital is a Peak Earnings Trap where record GAAP net income masks a business burning nearly $900 million in annual operating cash. While the market treats the equity as a leveraged Bitcoin proxy, our analysis suggests the aggressive 37.7% annual share count growth and a capital-intensive pivot into unproven AI infrastructure will lead to a permanent impairment of per-share value as the current capital cycle turns.

From pure-play Bitcoin miner to vertically integrated digital infrastructure company with AI and HPC ambitions

Method	Implied Value	Weight	Weighted Value
DCF	$0.05	47%	$0.02
Comps	$0.65	32%	$0.21
NLV	$2.71	21%	$0.57
Total Weighted			$0.80

MARA

Company Overview

Price History