Investment Bank Compass Point downgraded Mara Holdings (Mara) to a sales rating from Neutral on Tuesday with reference to unsustainable cash burning.

“There are better ways to get BTC beta,” analysts wrote in the research note, pointing to Marathon’s hash price, now below 5.5 cents, as a signal of falling profitability. At present operational levels, Compass Point estimates that the company is facing a significant cash burning that can lead to the dilution of the shareholder.

The bank also cut Mara’s price targets to $ 9.50 from $ 25, suggesting more than 25% disadvantage of the current price near $ 13.

Marathon’s business depends on Bitcoin mining, a process that serves BTC in exchange for computing power. As the mining reward shrinks and energy costs persist, the economy of the business model has come under pressure. Meanwhile, Compass Point claims Marathon is trading at a prize for the price of Bitcoin itself – an unfavorable setup for investors seeking exposure to the asset.

The downgrade also comes in the midst of a wider decline in high performance computing (HPC) and AI-Infrastructure playbacks. Peer Companies Core Scientific (Corz) and Terawulf (WULF) have also underpinned years to date, as investor enthusiasm around AI has cooled. Concerns for customer concentration, price risks and slowed down capital costs from giants like Microsoft has drawn valuation, with HPC sector multiples that dropped from as high as 15x last year to approx. 5x at the moment.

Still, Compass Point noticed potential headwinds for the sector in the long run, including rising demand for AI infrastructure and CAPEX obligations from sky providers. But so far, they claim that Marathon’s basic elements remain too weak to justify its market assessment.

Mara reports earnings on May 8, Post-Market. The stock fell 25% this year, while a Bitcoin Mining Etf, WGMI, fell 37%.

Update (May 6, 16:27 UTC): Update headings and add Mara’s earnings time.

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