What Led To Increase In Marathon Digital’s Stock Prices By 18%?

Marathon Digital Holdings Inc. (NASDAQ: MARA), a crypto mining company, has grown approximately 17% in a day as it gets included in the S&P SmallCap 600 index.

Marathon Digital Holdings, Inc. established itself as a digital asset technology company that mines digital assets with a primary focus on the bitcoin ecosystem in the United States. 

In February 2021, the company renamed it from Marathon Patent Group, Inc to Marathon Digital Holdings, Inc. The company was founded in 2010 and headquartered in Fort Lauderdale, Florida.

It has also announced a performance-based executive bonus plan. However, the company’s profitability depends on the long-term growth of Bitcoin.

On Monday, May 6, share prices of MARA grew to $20.67, leading to a percentage growth of 17.98%. However, after this, in a pre-market session, it had a decline of approximately 1.5%. 

Source: Investing.com

The above chart depicts that the prices have crossed its monthly highs and led to an increase in buy volume after a month.

Factors Supporting The Growth In MARA prices

There are multiple reasons supporting the growth in the stock prices and the most probable ones include becoming a part of S&P Smallcap 600 index, increase in bitcoin production despite bitcoin halving, and executive Bonus plans that completely aligns interests with shareholders.

Inclusion in S&P Smallcap Boosts Trading Activities

The inclusion in the S & P Smallcap 600 index is a significant milestone for Marathon Digital Holdings, Inc. This inclusion increased the trust of investors in the company and the Bitcoin mining industry as a whole. 

This inclusion attracts investors who largely base their investment decisions on index holdings. The inclusion validates the company as a leading player in the bitcoin mining industry. It will further attract a new group of investors who are seeking trust worthy companies in the Bitcoin mining space.

Increase In The Production Of Bitcoin

On May 3, the company shared its April operational report where it revealed that it had produced 850 Bitcoins in a month, reporting an increase of 21% in the production on the YOY metrics. However, it was expected to fall due to the bitcoin halving event that occurred on April 20 which reduced the mining reward from 6.25 BTC to 3.125 BTC.

The probable reason for the substantial increase is 15% boost in its operational hashrate, which now stands at 21.1 exahash.

However, the improvement in Marathon’s hashrate allowed it to capitalize the transaction fees inspired by the Runes Protocol. In April, transaction fees contributed to the approximate 16% to the Bitcoin earnings.

Executive Bonus Plan

This bonus plan perfectly aligns with the interests of shareholders and adding to the positive trend, MARA announced a bonus plan that is directly linked to the performance of the company’s stocks. 

This strategy primarily aligns with the objectives of its board, which includes CEO Fred Thiel, CFO Salman Khan, General Counsel Zabi Nowaid and other major stakeholders.

The plan involves the distribution of over $30 million if the stock performs well on the listed exchanges. It will incentivize executives to take the decision, which will add to shareholder value. 

The bonus plan also confirms the management’s confidence and positive outlook for the growth and future of the company. It ensures that the management is focused on building and working on strategies that will improve the shareholders’ returns in the long run.

Rob Samuels IR,Is The New VP Of Investor Relations

Amid the bull run for the stock, on May 7, the Marathon team announced the joining of Rob Samuels IR as the company’s new Vice President of Investor Relations. He has a strong background in investor relations in various global tech and finance industries.

Future Outlook For The MARA Stock

The above mentioned factors are believed to support the long-term stock prices of the company, as all the factors are sustainable. An increase in trust and availability will further attract investors and increase prices.

Nevertheless, the bitcoin halving had a marginal impact on the April production as the event occurred in the later part of the month but its impact is expected to be observed in the coming months.

Adarsh ​​Singh

Adarsh Singh is a true connoisseur of Defi and Blockchain technologies, who left his job at a “Big 4” multinational finance firm to pursue crypto and NFT trading full-time. He has a strong background in finance, with MBA from a prestigious B-school. He delves deep into these innovative fields, unraveling their intricacies. Uncovering hidden gems, be it coins, tokens or NFTs, is his expertise. NFTs drive deep interest for him, and his creative analysis of NFTs opens up engaging narratives. He strives to bring decentralized digital assets accessible to the masses.