Shares of MARA Holdings experienced a sharp decline on Wednesday, falling nearly 8% to $13.54 by midday, as the broader cryptocurrency mining sector faced headwinds from a drop in bitcoin prices and investor concerns over dilution. The sell-off came after shareholders approved a significant increase in the company's equity incentive plan, adding 18 million shares to the pool available for employee and director compensation.
Bitcoin, the world's largest cryptocurrency, slid 4.9% to $59,328, dragging down other crypto miners such as Riot Platforms, which fell 5.5%, and CleanSpark, which dropped 7.1%. The decline in bitcoin prices has a direct impact on mining companies like MARA, as their profitability is closely tied to the value of the digital assets they produce and hold.
The approval of the amendment to MARA's 2018 equity incentive plan, disclosed in a filing with the U.S. Securities and Exchange Commission on June 22, raised the total number of shares reserved under the plan to 81 million. This move has heightened dilution risk for existing shareholders, as the additional shares could be used for stock-based compensation.
Insider selling activity has also weighed on sentiment. SEC filings from June 22 reveal that CEO Fred Thiel sold 27,505 shares at $14.25 each on June 17 through a pre-arranged trading plan. General Counsel Zabi Nowaid and CFO Salman Hassan Khan also sold shares at the same price, offloading 7,000 and 16,000 shares, respectively. Additionally, Director Douglas Mellinger filed a Form 144 indicating his intention to sell 7,000 shares worth approximately $112,000, though this does not confirm the sale has been executed.
Despite the negative price action, Citizens initiated coverage on MARA with a market outperform rating and a $24 price target, according to Benzinga data. The consensus among analysts remains neutral, with an average price target of $17.49. The positive call did little to stem the decline, as the stock continues to trade largely as a proxy for bitcoin.
Management is actively working to shift the narrative away from bitcoin dependency toward power and data infrastructure. In April, MARA announced the acquisition of Long Ridge Energy & Power from FTAI Infrastructure for $1.5 billion, including debt. The deal includes a 505-megawatt gas plant in Ohio and space for developing a data center campus. CEO Fred Thiel described the site as having all the key components for the company's future strategy, emphasizing its potential as an ideal data center campus.
MARA's first-quarter financial results highlight the ongoing impact of bitcoin volatility. Revenue fell 18% year-over-year to $174.6 million, while the net loss widened to $1.3 billion. A significant portion of the loss, $1.0 billion, was attributed to fair value losses on digital assets. As of the end of March, the company held 35,303 bitcoin, produced 2,247 bitcoin during the quarter, and sold 20,880 bitcoin at an average price of $70,137 each.
The risks for MARA remain clear. A further decline in bitcoin prices would directly impact the value of its holdings and could compress mining margins. Additionally, slower-than-expected lease-ups at its AI data centers would keep the stock more closely tied to bitcoin's performance rather than management's infrastructure vision. The newly approved share pool also introduces ongoing dilution risk if stock-based compensation increases.
