Bitcoin Powerhouse Marathon Digital Surges 18% on S&P SmallCap 600 Entry

Marathon Digital, the leading Bitcoin (BTC) miner by market cap, experienced an 18% surge in its shares following confirmation that it would be included in the S&P SmallCap 600 index.

The S&P Dow Jones Indices announced on Friday, May 3, that Marathon would take the place of the heating and ventilation manufacturer Aaon in the index starting May 8.

The S&P SmallCap 600 is designed to track 600 U.S. companies with market capitalizations ranging from $1 billion to $6.7 billion, all of which have reported profits in the most recent quarter as well as over the past four quarters.

By Monday, May 6, shares of Marathon Digital (MARA) had soared nearly 18% to a price of $20.67, as per Google Finance data.

Since the Bitcoin halving on April 20, which reduced the block rewards for miners from 6.25 BTC to 3.125 BTC—currently valued at about $198,000—Marathon’s stock price has increased by 25.2%. Despite these gains, Marathon’s shares are down 9.86% year-to-date, having peaked at $31.03 on February 28, 2024.

Given its $5.6 billion market cap, Marathon is likely to be one of the heavier-weighted stocks in the S&P SmallCap 600, which uses a float-adjusted market cap weighting method.

The inclusion of Marathon in the index precedes its first-quarter earnings report scheduled for May 9. Investment research firm Zacks anticipates that Marathon will report a 280% year-over-year increase in revenue to $193.9 million and earnings per share of $0.02, marking a 166.7% jump from the previous year.

On the same day, shares of Marathon’s competitors in the Bitcoin mining industry, such as CleanSpark (CLSK) and TeraWulf (WULF), also saw significant gains, nearly 8% and 10.7% respectively.

The overall increase in Bitcoin mining stocks occurs in a context where miner revenues have been impacted by the halving. Initially, transaction fees were consistently above 3.125 BTC for the first few hundred blocks post-halving, effectively compensating for the reduction in block subsidy. However, transaction fees have since dropped, currently fluctuating between 0.2 BTC and 1 BTC at block 842,350, according to data from mempool.space.