The crypto mining industry consolidated a bit on Tuesday, and in response, investors not only increased their bids. Marathon Digital Funds (NASDAQ: MARA) – the company carrying out the consolidation – but other notable actions in the sector.
Marathon itself saw its stock price rise almost 11%, while the smaller Crypto mining (NASDAQ:CIFR) recorded a gain of more than 14%. TerraWulf (NASDAQ:WULF) And SOS Limited (NYSE:SOS) were also winners of the day, rising 9% and 10% respectively. For perspective, the broad S&P500 the index rose only 0.6%.
Marathon reaches nearly $180 million deal
Before the market opened, Marathon shook up the crypto miner scene by announcing that it had agreed to acquire a pair of Bitcoin (CRYPTO:BTC) mining sites. It purchased the pair from subsidiaries of financial firm Generate Capital for $178.6 million. This purchase price must be paid entirely in cash.
Together, the two sites – one located in Texas, the other in Nebraska – have a total capacity of 390 megawatts. That works out to $458,000 per megawatt for the deal.
This is a historic purchase for Marathon, as both locations will become its first wholly owned locations. Once the transaction is completed, the company’s capacity will rise to 910 megawatts. Of this total, 45% will be wholly-owned facilities, with the remainder owned by third-party business partners.
In its press release on the acquisition, Marathon said it plans to reduce the cost per coin of its Bitcoin mining operations at the new sites by 30%.
He also cited CEO Fred Thiel who said the deal was going to be transformative, transforming the company into « a more sophisticated and mature organization with a diverse portfolio of Bitcoin mining technologies and assets. »
Investors clearly bought into that argument, judging by the eagerness with which they jumped into Marathon shares after the announcement. The deal also led to speculation about other buyouts (and generally solid demand for Bitcoin mining rigs), hence the price appreciation of other miners like TerraWulf and SOS.
Going Banana for Bitcoin
Of course, sentiment towards Bitcoin miners generally depends on market sentiment towards Bitcoin. Even though the price of the leading crypto has fallen in recent days, it remains very high on a historical basis. In fact, it only rose above the current level of over $42,000 during two bull runs earlier this decade. And if Bitcoin is a hot topic, you can bet that any miner making a consolidation move will be rewarded accordingly.
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Eric Volkman has positions in Bitcoin. The Motley Fool posts and recommends Bitcoin. The Motley Fool has a disclosure policy.
Why Marathon Digital and Other Crypto Mining Stocks Surged Today was originally published by The Motley Fool
