CIB

The Saga of the MARA Crash

Date: 11/21/2021

Author: Kent Moors, Ph.D.


Crypto currencies had a volatile ride last week. After exceeding $68,700 in mid-session pricing on November 10, Bitcoin USD (BTC-USD) then proceeded to lose more than 17 percent of its value over the next week. Similar declines were recorded in the other two main crypto markers I track – Ethereum USD (ETH-USD) and the broader CMC Crypto 200 Index (^CM200).

In this rapid decline, which seems to have leveled off late in the week, something else of some interest was underway.  This has all the earmarks of the Reddit-hyped push into GameStop, AMC, and other stocks.

By that I mean the emergence of an artificial contrivance on the buy side reflecting neither what the market is telling us or what the underlying indicators convey. With the Reddit crowd it was supposed to be an attack on unwarranted short plays. Actually, it was (and is) a thinly disguised pyramid scheme to herd novice retail investors using mobile apps into a win for the guys that thought it up.

One of the almost immediate results of such Reddit machinations was a move by the targeted companies to benefit from a massive uptick in share prices by issuing new shares. That effectively diluted wins that most small investors had realized (since the majority of them came in toward the tail end of frenzy buying once the primary profits had been creamed by the initial movers).

Well, in the midst of the current crypto contraction, a similar effect was witnessed. This time, however, while the result was a manufactured near-term decline, the play plot was the same.

Enter Marathon Digital Holdings (MARA). MARA is a $5.6 billion market cap Las Vegas-based intermediary in the crypto space. It both consolidates miners of crypto coins on one end with a blockchain approach to developing digital assets and holding strategies on the other.

Marathon has been a position held on several occasions in my Sigma Trader service. It returned a 430.23 percent on July 13, 2020 in my testing phase for Sigma Trader. Subscribers enjoyed a 102.8 percent win on November 20, 2020. However, the last call option expired worthless on September 17, 2021.

 


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Currently, Sigma members are holding a straight MARA stock play that was cruising to another triple digit gain until November 10. That is when a crypto sector correction combined with a surprise massive MARA convertible senior note offering. That offering was subsequently expanded and now stands at $650 million.

The notes issuance parallel post-Reddit new stock offerings from companies that had benefitted from a substantial spike in valuation following massive retail crowd investment moves. However, with MARA the situation was a bit different.

In this case, a combination of internal share sales and shorts pushed the stock value down in rapid moves. In parallel to the notes sales (where a large percentage were then repurchased by these same insiders involved in share sales), MARA lost 33.04 percent of its value through November 17 before stabilizing and rising over the final two trading days last week.

By that point, inside owners had increased positions in the company prior to the stock value  moving up. The intent was to use the note proceeds to assemble a larger war chest before intended takeover moves of additional crypto miners, as an across-the-board wave of coin declines ushered in another round of weakness among smaller sector players.      

Meanwhile, the situation was further compounded by an SEC subpoena issued to Marathon over the holding share structure of its Hardin data center in northern Montana. That subpoena was revealed on November 15.

Last October, the company entered into a series of agreements with a number of private parties to design and build an up to 100-megawatt data center, issuing 6 million restricted MARA shares.

Later in that same month, the company announced a joint venture with private Beowulf Energy LLC to obtain low-cost energy from the Beowulf generating plant, also located in Hardin. Beowulf likewise became an equity shareholder in Marathon as a result of this agreement.

The SEC is investigating whether Marathon was in violation of federal securities law in the Hardin activities.

Information received from private market sources points to questions over the persons involved in crossholdings among the two Hardin initiatives and Marathon insiders.

The SEC action combining with the collapse in the MARA share price following the convertible note offering has resulted in more than a dozen law firm suits being filed last week over individual shareholder losses.

Hardin on paper should provide Marathon with discounted energy, resulting in a major advantage over mining competitors as well as facilitating the company’s ability to expand via new sector acquisitions. The $650 million acquired from the note offering should materially improve that strategy.

But all of this has left what looks like an impending scarred earth battlefield in its wake.

It has likewise resulted in a dent in what remains a profitable holding for Sigma Trader subscribers. The market value of MARA should now be rising again.

 


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This may result in an example of my recommending to subscribers that they hold their noses while moving profits to the bank.

Dr. Kent Moors


This is an installment of Classified Intelligence Brief, your guide to what’s really happening behind the headlines… and how to profit from it. Dr. Kent Moors served the United States for 30 years as one of the most highly decorated intelligence operatives alive today (including THREE Presidential commendations).

After moving through the inner circles of royalty, oligarchs, billionaires, and the uber-rich, he discovered some of the most important secrets regarding finance, geo-politics, and business. As a result, he built one of the most impressive rolodexes in the world. His insights and network of contacts took him from a Vietnam veteran to becoming one of the globe’s most sought after consultants, with clients including six of the largest energy companies and the United States government.

Now, Dr. Moors is sharing his proprietary research every week…knowledge filtered through his decades as an internationally recognized professor and scholar, intelligence operative, business consultant, investor, and geo-political “troubleshooter.” This publication is designed to give you an insider’s view of what is really happening on the geo-political stage.

You can sign up for FREE to Classified Intelligence Brief and begin receiving insights from Dr. Moors and his team immediately.

Just click here – https://classifiedintelligencebrief.com/

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