Marathon Digital Loses 1.7 Billion but Shares Rise 15%: Analyzing the Mining Industry Shift with Starwood Capital's AI Transformation

On February 26, 2026, U.S.-listed Bitcoin miner MARA Holdings released a confusing earnings report: Bitcoin prices declined about 30% within the quarter, leading the company to record a $1.5 billion impairment, with a net loss of up to $1.7 billion. However, alongside the earnings release, a joint AI data center project announcement caused the stock to surge over 15% after hours. Why is the market buying this story? As a crypto market indicator, Bitcoin (BTC) recent movements also attract attention. According to Gate Market Data, as of February 27, 2026, BTC is priced at $67,435, with a 24-hour trading volume of $1.16 billion, a market cap of $1.31 trillion, and a market share of 55.37%. In this macro context, MARA’s strategic shift may be pointing the way for the entire mining industry’s survival.

$1.7 Billion Loss and 15% Rise: The Ice and Fire of MARA’s Earnings

On February 26, Eastern Time, MARA Holdings announced its Q4 2025 earnings. The data shows quarterly revenue of $202.3 million, down 6% year-over-year. Net loss reached $1.7 billion, compared to a net profit of $528.3 million in the same period last year. The core reason for the loss was fair value changes in digital assets: Bitcoin prices fell about 30% in Q4, leading MARA to record a $1.5 billion impairment.

Simultaneously, the company announced a strategic partnership. MARA revealed a joint venture with Starwood Digital Ventures, a digital infrastructure development platform under Starwood Capital. The plan is to retrofit and expand some of the company’s Bitcoin mining facilities in the U.S. into next-generation data centers targeting enterprise clients, large-scale cloud providers, and AI customers. The platform is expected to initially support about 1 GW of IT capacity, with potential to expand beyond 2.5 GW.

Despite poor financial results, the capital markets responded positively to this transformation plan. After the earnings release, MARA’s stock surged over 16% in after-hours trading, ultimately closing up more than 15%.

From Miner to AI Newcomer: MARA’s Transformation Timeline

• August 2025: MARA maintains steady mining output, mining 208 Bitcoin blocks that month, with hash rate increasing to 59.4 EH/s, choosing to hold rather than sell Bitcoin. The company’s core strategy remains expanding Bitcoin holdings.
• Q4 2025: Despite a 25% YoY increase in energized hashrate to 66.4 EH/s, mining output declined. Only 2,011 Bitcoin were mined this quarter, below Q3’s 2,144; total blocks found dropped 15% YoY to 595. This reflects that as Bitcoin network difficulty outpaces the company’s hash rate growth, mining efficiency is decreasing.
• End of 2025: Bitcoin prices fell roughly 30% in the quarter, significantly reducing the value of MARA’s digital assets. The company held 53,822 BTC, worth about $4.7 billion at quarter-end prices, with approximately 28% (15,315 BTC) lent out or used as collateral, generating $32.1 million in interest income in 2025.
• February 26, 2026: MARA announced Q4 earnings and officially revealed the joint AI data center project with Starwood Capital. CEO Fred Thiel called 2026 a “turning point” for the company in a letter to shareholders.

Why Is Hash Rate Growth Not Preventing Losses? Data Breakdown of MARA’s Financial Puzzle

Facts:

• Hash rate vs. output divergence: In Q4, MARA’s hash rate grew 25% YoY, but Bitcoin mined declined. Unit mining costs soared, with energy purchase costs jumping from $31,608 per BTC last year to $48,611.
• Asset structure changes: By year-end, over a quarter of MARA’s Bitcoin holdings had been financialized (lending or staking), indicating the company is trying to generate cash flow from its digital assets rather than just holding their book value.
• Financing strategy shift: Q4 was MARA’s first quarter since 2022 without using the “at-the-market” (ATM) offering plan; some operational funds were raised by selling Bitcoin. This suggests the company aims to avoid dilution during a low market valuation.

Analysis:

Market analysts believe traditional miners face a “scissors dilemma”: rising costs due to halving-induced block reward reductions and increasing network difficulty, versus high Bitcoin price volatility causing asset impairments. JPMorgan analysts previously noted 2025 would be a key year for strategic adjustments, favoring miners with low costs and diversified revenue streams.

Speculation:

Structural data suggests MARA’s AI pivot isn’t impulsive but built on existing resources—power capacity, site locations, energy management experience. When marginal returns from mining decline, leasing out underlying energy and infrastructure assets to higher-paying AI compute demand makes business sense.

Why Is the Market Buying It? Multiple Perspectives on MARA’s AI Narrative

Mainstream View 1: Transformation as a Necessity in a Competitive Mining Industry

Supporters argue Bitcoin halving continues to squeeze miner margins, making reliance on mining alone unsustainable for high valuations. MARA’s abundant, power-rich sites are valuable to AI and cloud companies needing to expand compute capacity. Partnering with Starwood Capital’s capital and operations, MARA can upgrade low-margin mining to high-value AI compute leasing, improving long-term profitability.

Mainstream View 2: The Market Is Betting on Future AI Compute Growth

The stock price surge indicates investors aren’t scared off by the $1.7 billion loss but see it as a “one-time accounting adjustment.” The focus is on the future potential of the joint venture’s over 2.5 GW of IT capacity. If realized, MARA’s valuation could shift from “Bitcoin price beta” to “AI infrastructure alpha.”

Controversy: Is This Just Conceptual Hype?

Cautious voices point out that transitioning from Bitcoin mining farms to commercial AI data centers involves significant technological, operational, and customer acquisition hurdles. While Starwood has extensive real estate experience, it’s new to AI compute leasing. Whether the joint venture can attract major tech tenants remains uncertain.

Is the AI Shift Real Strength or a New Gimmick? Examining MARA’s Underlying Logic

Facts: The $1.7 billion loss mainly stems from a $1.5 billion fair value adjustment of digital assets—an non-cash impairment that doesn’t impact cash flow or operations. The joint venture with Starwood is signed, with initial 1 GW capacity planned; it’s not just “PPT talk.”

Analysis: Management redefines the company as an “energy and digital infrastructure firm,” emphasizing Bitcoin mining as “flexible base load.” This narrative aims to convince markets that mining is no longer the sole core, but a tool to ensure stable cash flow and balance energy consumption. Future growth is expected from higher-value AI computing.

Risks & Outlook: The biggest question is whether MARA can cross industry barriers. Bitcoin mining seeks low-cost power and rapid deployment, while AI data centers demand low latency, efficient cooling, and customer-specific solutions. Transitioning from “mine operator” to “IDC provider” involves a significant skills gap. While Starwood’s capital and development experience are assets, the ultimate success depends on time and execution.

MARA as a Case Study: Rebuilding the Valuation Logic of Crypto Mining

MARA’s move could trigger a new wave of differentiation in crypto mining:

• Valuation Model Rebuilding: If MARA’s transformation succeeds, the market may no longer value miners solely based on Bitcoin holdings and hash rate. Power capacity, location, and AI synergy will become key valuation factors.

• Capital Flows Shift: Reliance on Bitcoin price appreciation and equity financing may weaken. More miners might follow MARA’s example, spinning off resources to traditional infrastructure funds or tech investors, developing diversified compute businesses.

• Energy Asset Revaluation: Previously criticized for “wasting electricity,” surplus power assets could become scarce high-performance computing nodes near urban centers, especially those with grid connection and quick retrofit capabilities, increasing their underlying value.

Possible Paths for MARA in the Next Three Years

Scenario 1: Successful Transformation (30%)

Within 12-24 months, MARA and Starwood successfully onboard 1-2 large cloud or AI tenants, with initial AI data centers operational and generating steady revenue. The market views it as an “AI + energy infrastructure” play, shifting valuation models, raising the stock’s long-term median, and prompting other resource-rich miners to follow suit.

Scenario 2: Dual Track (50%)

AI data center projects progress slower than expected, facing customer acquisition challenges, but Bitcoin enters a new bull market. Rising Bitcoin prices offset short-term pains from transformation. MARA maintains mining operations while slowly developing AI business, with stock mainly following Bitcoin price movements.

Scenario 3: Transformation Fails (20%)

AI data centers face technical bottlenecks, cost overruns, or tenant recruitment issues, while Bitcoin remains weak, hurting cash flow. MARA’s strategy becomes fragmented, resources are spread thin, and both businesses underperform. High capital expenditure and debt may force dilutive financing, pressuring the stock.

Conclusion

MARA’s $1.7 billion loss but stock surge essentially resets the narrative for traditional “Bitcoin concept stocks.” Under the dual pressures of halving and price volatility, relying solely on Bitcoin appreciation for profits is challenged. Partnering with Starwood Capital, MARA aims to demonstrate that miners hold not only digital assets but also “electricity tickets” to the future AI compute world.

Currently, the company is still in loss, but the market is optimistic about its transformation logic. The next two years’ execution will be critical. For crypto ecosystem investors, MARA’s evolution may serve as a prime example of how the industry shifts from “labor-intensive” to “capital and technology-intensive.” Bitcoin’s future price will continue to influence the pace and depth of this transformation. Investors can track the latest Bitcoin and crypto market developments via Gate Market Data to seize every key moment.