Different ways to trade are appearing in the world of cryptocurrencies. MicroStrategy, the company owned by Michael Saylor, is known for borrowing money to buy a lot of Bitcoin. A big Bitcoin miner called Marathon Digital is also going in the same way. This change shows how hard things are in the mining business right now.
The Risky Move by Marathon Digital
Marathon Digital just sold convertible notes worth $300 million. The business bought 4,144 Bitcoins with this money instead of more mining equipment. This choice is similar to MicroStrategy’s and shows how bad things are in the mining industry right now. As the “hash price” (a measure of how profitable mining is) has gone down, it has become more appealing to buy Bitcoin directly.
Putting it next to MicroStrategy
When Bitcoin prices dropped in 2022 and MicroStrategy’s investment lost value, the company was criticized. The business’s plan is now working, though. MicroStrategy has billions more in Bitcoin now than it did when it first bought it. Marathon Digital’s choice to buy Bitcoin instead of increasing the number of computers it mines shows that it has the same long-term faith in the cryptocurrency.
How the Stock Market Reacted
Because Saylor bought so much Bitcoin in 2020, the prices of MicroStrategy and Marathon Digital stocks went up and down with the price of Bitcoin. This year, though, their paths did not cross. Bitcoin’s price changes have caused MicroStrategy’s stock to rise by 90%. At the same time, 40% of Marathon Digital’s stock has been lost. This drop is because the mining business is getting harder, especially since the Bitcoin halving event in April, which cut mining payouts.
In conclusion
It’s risky for Marathon Digital to buy Bitcoin with loan money. Since things are getting harder in the mining industry, this strategy might give owners a better return. Marathon Digital is betting on the long-term value of Bitcoin, just like MicroStrategy did.
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