It’s more than Donald Trump’s victory, which puts Marathon Digital up 19% today. Here’s what you should know.

Marathon Digital (MARA -0.31%) is one of the most prominent Bitcoin (BTC 2.61%) Miners of the world and certainly one I watch closely. This top crypto miner recovered well today, gaining 19% at market close.

While the general narrative around crypto has certainly changed in the last 24 hours thanks to Donald Trump’s victory in the 2024 presidential election, there’s more to it when it comes to why Marathon Digital shares are soaring today. The fact that a pro-cryptocurrency president is now in power is certainly bullish for this sector as a whole, and Trump’s previous comments about building a strategic Bitcoin reserve (beyond the digital tokens confiscated from miscreants) are supportive of Bitcoin argument (and by extension Marathon Digital).

That said, I’ll touch on two other key factors that I think Marathon Digital investors need to carefully consider right now.

The hype is great, but the fundamentals are better

Unlike many crypto projects that are not valued based on earnings and cash flow, companies like Marathon Digital, which were founded with the express purpose of mining Bitcoin, are actually subject to fundamental valuation by investors and the overall market. Accordingly, the company’s operating metrics, which include Bitcoin mining production, are being closely watched by many in the industry.

After Bitcoin’s halving this year (in which mining rewards were halved), Marathon’s share price and valuation suffered significant declines. However, Marathon Digital’s 19% rise today suggests that some investors are optimistic that rising Bitcoin prices could at least partially offset production declines. Additionally, the fact that the company just reported its highest Bitcoin production since the halving is positive for those expecting both rising Bitcoin prices and higher production.

Marathon Digital’s management team cited a higher hash rate as the main reason the company was able to increase its production last quarter. The company’s hash rate reportedly increased by more than 14% to over 40 exahashes per second, with higher transaction fees also helping the company achieve stronger-than-expected output.

These strong numbers, along with improving Bitcoin price exceptions, appear to be prompting significant upgrades from analysts at Marathon Digital ahead of its upcoming earnings report and third-quarter earnings conference call on November 13th. Assuming the analysts are right with these revisions, or the company can even beat these estimates, any continuation of Bitcoin’s momentum could result in further price increases.

Is this all included in the price?

Today’s move certainly priced in a lot of future potential gains. Whether it’s the company’s upcoming potential earnings surge based on recent record post-halving Bitcoin production or the anticipation of future Bitcoin price increases, today’s move likely prices in much of that positive sentiment.

However, previous crypto rallies have taken on a life of their own. To call this rally overblown or to claim that MARA stock is likely to move lower from today’s closing price due to profit-taking may be premature. There will certainly be a group of investors who want to hold on to this name and increase this momentum even further, or increase it to a point where it looks like a ceiling is being reached. Again, I think it is too early to make a decision on this.

In my opinion, Marathon Digital is one of those volatile stocks that is best viewed as a trading tool for the Bitcoin mining market. The Company’s wild valuation swings, based on a combination of factors the Company can control (such as hash rate and total Bitcoin production) and factors beyond its control (namely Bitcoin prices), can increase over short periods of time lead to large profits or losses. Today’s move is nice, but it’s clearly a stock that requires a good stomach given the volatility.