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MARA Holdings Cut to Sell at Compass Point Ahead of Earnings, Citing Cash Burn

Compass Point slashed Marathon’s price target to $9.50, warning of dilution and premium bitcoin exposure.

By Helene Braun|Edited by Stephen Alpher
Updated May 6, 2025, 4:28 p.m. Published May 6, 2025, 4:20 p.m.
Marathon Digital CEO Fred Thiel (CoinDesk)

What to know:

  • Compass Point has downgraded Marathon Digital stock to a sell rating and cut its price target to $9.50 from $25.
  • Marathon faces unsustainable cash burn and potential dilution while trading at a premium to bitcoin, said the analyst team.
  • Compass Point also noted broader weakness in the HPC sector as AI infrastructure stocks lose favor with investors.

Investment bank Compass Point downgraded MARA Holdings (MARA) to a sell rating from neutral on Tuesday, citing unsustainable cash burn.

“There's better ways to get BTC beta,” analysts wrote in the research note, pointing to Marathon’s hash price, now below 5.5 cents, as a signal of declining profitability. At current operational levels, Compass Point estimates the company is facing significant cash burn that could lead to shareholder dilution.

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The bank also slashed MARA's price target to $9.50 from $25, suggesting more than 25% downside from the current price near $13.

Marathon’s business relies on bitcoin mining, a process that earns BTC in exchange for computing power. However, as mining rewards shrink and energy costs persist, the economics of the business model have come under pressure. Meanwhile, Compass Point argues that Marathon trades at a premium to the price of bitcoin itself—an unfavorable setup for investors seeking exposure to the asset.

The downgrade also comes amid a broader slump in high-performance computing (HPC) and AI infrastructure plays. Peer companies Core Scientific (CORZ) and TeraWulf (WULF) have also underperformed year-to-date as investor enthusiasm around AI has cooled. Concerns over customer concentration, pricing risks, and slowed capital expenditures from giants like Microsoft have dragged valuations down, with HPC sector multiples dropping from as high as 15x last year to around 5x currently.

Still, Compass Point noted potential tailwinds for the sector in the long run, including rising demand for AI infrastructure and capex commitments from cloud providers. But for now, they argue Marathon’s fundamentals remain too weak to justify its market valuation.

MARA is reporting earnings on May 8, post-market. The stock fell 25% this year, while a bitcoin mining ETF, WGMI, fell 37%.

UPDATE (May 6, 16:27 UTC): Updates headlines and adds MARA's earnings time.

Disclaimer: Parts of this article were generated with the assistance from AI tools and reviewed by our editorial team to ensure accuracy and adherence to our standards. For more information, see CoinDesk’s full AI Policy.

Marathon Digital
Helene Braun

Helene is a New York-based markets reporter at CoinDesk, covering the latest news from Wall Street, the rise of the spot bitcoin exchange-traded funds and updates on crypto markets. She is a graduate of New York University's business and economic reporting program and has appeared on CBS News, YahooFinance and Nasdaq TradeTalks. She holds BTC and ETH.

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Helene Braun

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