Mara Stock Tumbles, Strategy Pauses, and Bitcoin Faces a Key Test — Barrons.com

By Mackenzie TatananniWhile headlines on artificial intelligence led the stock market on Monday, Bitcoin-linked stocks made news of their own.Shares of Mara Holdings tumbled after J.P. Morgan double-downgraded the crypto miner and aspiring data center operator to Underweight from Overweight.Analyst Richard Choe questioned the company's execution of its pivot, citing "diluted value creation" driven by a capital-light joint venture with private equity firm Starwood Capital Group.Mara and Starwood partnered in February to convert select Bitcoin mining sites into high-performance enterprise and AI data centers. However, Choe noted that some of Mara's existing locations have smaller power capacities, making them less attractive for data center conversion.Only compounding the challenge, acquiring low-cost land is becoming harder due to rising competition "and is unlikely to serve as a durable competitive advantage," Choe said.Mara fell 2.6% to $11.67 on Monday. Heading into the session, Mara had gained 33% this year, handily outpacing the broader market. Choe has assigned the stock a $11 price target, down from $13 previously.Software provider-turned Bitcoin whale Strategy had news of its own on Monday. The company disclosed that it hadn't purchased any Bitcoin in the preceding week, extending a dry spell from the end of August.As of Sept. 13, Strategy held 845,050 Bitcoin purchased for an average price of $75,412 each. That means the company acquired them for a narrow premium to the current price of the crypto, which has risen 1.1% over the past 24 hours to $78,127, according to CoinDesk.Rather than buy or sell Bitcoin, the company repurchased 1,420,467 shares of its common stock for $139.3 million in cash. The company maintains a separate U.S. dollar reserve to service dividends on its preferred stock and pay back debt. The company currently has $5.1 billion remaining in its reserve and $1.3 billion in cash.Strategy stock advanced 1.3% to $132.73 on Monday.The company appears to be executing on a new financial framework unveiled in late June, under which Strategy will opportunistically buy and sell its own shares rather than issuing them continuously. The company has also committed to sell Bitcoin when necessary to pad its dollar reserve.Bitcoin faces a crucial test on Tuesday as the Senate votes on whether to advance the Clarity Act to floor consideration. If passed, the legislation would place Bitcoin and other cryptocurrencies under commodity regulations rather than securities laws. The market has rallied ahead of the decision, with Bitcoin gaining more than 20% over the past month.Write to Mackenzie Tatananni at [email protected] content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.