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Why Shares of Marathon Digital Holdings, Bitfarms, and Canaan Are Up Today

By Bram Berkowitz – Nov 8, 2021 at 1:50PM

Key Points

  • The price of Bitcoin popped 8% over the weekend.
  • As crypto mining companies, Marathon Digital Holdings, Bitfarms, and Canaan tend to benefit from a rising crypto market.
  • Marathon and Bitfarms recently reported improved mining production in October.

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All three seem to be benefiting from the move higher in the broader crypto market.

What happened

Shares of several Bitcoin (BTC 0.55%) mining stocks got a boost today, along with most cryptocurrencies, which also rose Monday. Shares of Marathon Digital Holdings (MARA -2.96%) had risen more than 19% as of 1:20 p.m. EST, while shares of Bitfarms (BITF 0.94%) and Canaan (CAN 2.69%) rose roughly 12% and 18%, respectively.

So what

Stocks that operate in the crypto space tend to be heavily tied to the movement of popular cryptocurrencies like Bitcoin. The price of Bitcoin shot up roughly 8% over the weekend and now trades around $66,000.

The big move could not be immediately attributed to any one particular reason, although CNBC reported that Mikkel Morch of the crypto hedge fund ARK36 said, "Importantly, the uptick doesn't seem to be leverage-driven but rather results from the increased demand on the spot market where there's currently very little sell-side liquidity." Morch added that he thinks the price of Bitcoin could reach $70,000 soon.

While there didn't seem to be any news regarding Marathon, Bitfarm, and Canaan on Monday, there has been some good news recently for each company.

Bitfarms earlier this month reported that the company mined 343 Bitcoin in October, its third-best month of production this year. Through the first 10 months of the year, the company has mined 2,750 Bitcoin.

Servers lining the walls of a hallway.

Image source: Getty Images.

"The increase in month-over-month production in October 2021 represents a further advancement for Bitfarms and shows the initial benefit generated as a result of production from our newly built, larger production facility in Cowansville, Québec," Bitfarms CEO Emiliano Grodzki said in a statement.

Marathon Digital also said in its October update that it mined more than 417 Bitcoins, significantly up from September and the third-largest month of production in 2021. The company now holds more than $457 million worth of Bitcoin.

"As in prior months, our bitcoin production was impacted by maintenance related outages at the power plant in Hardin, MT and increases in the total network hash rate," Marathon CEO Fred Thiel said in a statement. "However, with shipments of our previously purchased miners accelerating over the coming months, we continue to expect our bitcoin production to become more consistent as we scale."

Meanwhile, Canaan, which sells Bitcoin mining machines, recently announced a new purchase order for 6,500 units of its Avalon Bitcoin mining machines.

Now what

The move in these Bitcoin-mining stocks clearly seems correlated with the move of the broader crypto market, so if cryptocurrency prices keep going higher, these stocks are likely to move with them.

Based in China, Canaan is likely the riskiest of the group because it has to deal with regulators that can be more unpredictable. Not too long ago, regulators in China banned crypto mining. While Canaan sells the hardware that makes mining possible, it is still at an increased risk.

Bitfarms is based in Toronto, while Marathon is based in the U.S. Earlier this year, Marathon became the first miner to be in compliance with standards set by U.S. anti-money-laundering laws and the U.S. Department of the Treasury's Office of Foreign Asset Control, so I'd prefer these two over Canaan right now.

Bram Berkowitz owns shares of Bitcoin. The Motley Fool owns shares of and recommends Bitcoin. The Motley Fool has a disclosure policy.

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