Kaspa mining strategy still not giving good results for Marathon

Marathon Digital Holdings (MARA), the largest Bitcoin mining company in the world, has not yet managed to see fruits in its foray into mining kaspa (KAS), a cryptocurrency that promised high profit margins, but has so far not has generated the expected results.

In June, Marathon Digital Holdings surprised the market by announcing its foray into kaspa mining. The company estimated that margins could reach up to 95% under favorable conditions, given the low network difficulty and KAS’s competitive pricing.

To carry out this plan, Marathon acquired 60 ASIC miners, betting on boosting its operations with this growing cryptocurrency.

However, The situation has not been as profitable as projected. Mike Fay, market analyst, holds that any competitive advantage Marathon had at the time of its announcement has vanished.

Today, mining Kaspa is three times more difficult than in June, while its price has fallen 25% since then.

Kaspa is the 28th largest crypto asset on the market, with a capitalization of $3 billion, but its maximum price of $0.20 in July has been overshadowed by a sideways trend in recent months, as seen in the graph provided by TradingView.

Fay’s vision is clear: if Marathon intended to promote a new profitable line of business with Kaspa, the results “do not seem to have lasted long.”

Furthermore, he sees in this strategy a tacit recognition that Bitcoin mining may not be as sustainable in the long term as previously thoughtor at least that the company is exploring more viable alternatives.

“Although slightly ahead of the August and September lows, Bitcoin’s dollar-denominated hashprice has been below $50 per PH/s for most of the last 5 months. “Bitcoin mining profitability is still very close to the lowest levels in the history of the network.”

Mike Fay, market analyst.

Below you can see a Hashrate Index chart which shows the levels in Bitcoin hashprice so far this year.

Bitcoin mining “is a very difficult business in the long term.” In this sense, Fay believes that MARA already knows that the same applies to Kaspa mining todaywhich has mined 87% of its total supply.

A model inspired by MicroStrategy

Fay suggests that with little mining revenue left, the key appears to be bitcoin accumulation. Since June, the company has increased its position in bitcoin from 18,536 to 26,842 BTCas seen in the following graph.

The company has mined 2,070 BTC since the end of June, but has increased its treasury by more than 8,300 BTC during that time period.

This 45% increase in three months is mainly due to Marathon taking out loans to buy bitcoin. The company bought $100 million in BTC in July and $249 million in BTC in August.

For the August purchase, Marathon Digital issued $300 million in senior convertible bonds maturing in 2031, following a model implemented by MicroStrategy, as reported by CriptoNoticias.

This suggests that Marathon is betting that the price of bitcoin will rise in the future, allowing it to make long-term profits.

Uncertain future for Marathon

For Fay, the long-term investment thesis for MARA stock “is getting a little more challenging.” The company’s mining operation needs higher BTC prices to be profitable. “I think the Kaspa mining experiment is no longer a winner,” says the analyst.

Marathon Stock have fallen 37% since June, reflecting market uncertaintyas can be seen in the following graph of TradingView.

While not ruling it out as a viable investment option, Fay notes that MARA shares will serve as “little more than instruments for short-term trading rather than a solid, long-term investment.”

Despite this, in any case Fay has rated MARA shares as ‘hold’which means that it recommends continuing to keep them in the portfolio.

According to the analyst, BTC could be close to breaking a key technical resistance, which could boost both the price of the crypto asset and that of stocks of Marathon. In other words, the positive valuation of MARA is closely linked to the behavior of the bitcoin price.

However, it indicates that the market appears to favor miners that have diversified into high-performance computing (HPC) services, posing a challenge for companies such as Marathon that have opted for a model based on the accumulation of bitcoin through debt.

Marathon’s foray into Kaspa mining has not been the success that the company expected, and its long-term bet seems to focus on the future appreciation of bitcoin rather than diversifying into other services. As the market continues to reward miners who adopt new business models, Marathon appears to be following in MicroStrategy’s footsteps, accumulating bitcoin in the hope that its value will rise.