The crypto mining industry consolidated a bit on Tuesday, and in response, investors didn’t just bid up Marathon digital holdings (NASDAQ: MARA) – the company carrying out the consolidation – but also other notable stocks in the sector.
Marathon itself saw its stock price rise almost 11% even though it was smaller Cipher mining (NASDAQ: CIFR) made a profit of more than 14%. TerraWulf (NASDAQ:WULF) And SOS Limited (NYSE: SOS) were also winners on the day, up 9% and 10% respectively. For perspective, the broad S&P500 index rose only 0.6%.
Marathon closes deal worth nearly $180 million
Before the market opened, Marathon shook up the crypto miner scene by announcing that it had agreed to acquire a pair Bitcoin (CRYPTO: BTC) mining sites. It bought the pair from subsidiaries of financing company Generate Capital for a price of $178.6 million. This purchase price must be paid in full in cash.
Together, the two locations – one in Texas and the other in Nebraska – have a total capacity of 390 megawatts. That works out to $458,000 per megawatt for the deal.
It’s a historic purchase for Marathon as it will become the pair’s first wholly owned locations. After closing the deal, the company’s capacity will be 910 megawatts. Of this, 45% will consist of wholly owned facilities, with the remainder owned by external business partners.
In its press release about the acquisition, Marathon said it expects to reduce the cost per coin of its Bitcoin mining operations at the new locations by 30%.
It also quoted CEO Fred Thiel as saying the deal will be transformational, turning the company into “a more advanced and mature organization with a diversified portfolio of Bitcoin mining technologies and assets.”
Investors clearly bought into that argument, judging by how eagerly they piled into Marathon stock after the announcement. The deal also sparked speculation about other buyouts (and about generally solid demand for Bitcoin mining facilities), hence the price surge from fellow miners like TerraWulf and SOS.
Bananas go before Bitcoin
Of course, sentiment about Bitcoin miners generally depends on how the market feels about Bitcoin. Although the price of the leading crypto has fallen in recent days, it is still very high from a historical perspective. In fact, it has only breached current levels above $42,000 during two bull runs earlier this decade. And if Bitcoin is a hot commodity, you can be sure that any miner who makes a consolidation move will be rewarded accordingly.
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Eric Volkman has positions in Bitcoin. The Motley Fool holds and recommends positions in Bitcoin. The Motley Fool has a disclosure policy.
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