Marathon Digital & Riot Platforms: Crypto Stocks' Downturn Raises Bargain Questions

As the crypto buzz continues with a significant 50% rally in Bitcoin this year, the performance disparity among crypto investments is stark. Intriguingly, shares of two high-profile crypto mining companies - Marathon Digital and Riot Platforms - have seen their valuations shrink by over 15% since the start of 2024, despite the overall sector enthusiasm.

Marathon Digital's Roadblock

In the previous year, Marathon Digital, a major North American Bitcoin miner, enjoyed a staggering 587% increase in share price spurred by the cryptocurrency's soaring value. Its decline of around 18% this year stands in contrast, even amidst expansions in mining operations and increased capacity that could promise future revenue boosts.

Marathon Digital's 2023 revenue leapt 229%, hitting $388 million, with its production of 12,852 bitcoins far outpacing the 4,144 generated the previous year. However, investors must weigh this performance against a net loss of $694 million in 2022, indicating potential risks ahead despite the current trailing earnings multiple of 18 times.

Riot Platforms' Stumble

Riot Platforms finds itself in a tougher spot, with shares down roughly 25%. Despite last year's surge of 356%, its growth prospects are less robust than Marathon's with a comparatively modest revenue increase to $280.7 million in 2023, up by 8% year-on-year. Though it raised bitcoin production to 6,626 units, investor optimism is tempered by the company's struggle for profitability and the looming Bitcoin halving event that could further pressure earnings.

The absence of profit against the backdrop of high Bitcoin valuations and the impending halving presents a worrying picture that calls into question the stock's attractiveness as a value investment.

In summary, while Marathon Digital and Riot Platforms face a challenging environment, they potentially offer intriguing opportunities for risk-tolerant investors keen on crypto exposure. Still, the inherent volatility and earnings unpredictability warrant a cautious approach towards these investments.

Crypto, Investment, Risk