Investment bank Compass Point downgraded MARA Holdings (MARA) to a sell rating from neutral on Tuesday, citing unsustainable cash burn.

“There’s 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 declining profitability. At current operational levels, Compass Point estimates the company is facing significant cash burn that could lead to shareholder dilution.

The bank also slashed MARA’s price target to $9.50 from $25, suggesting more than 25% downside from the current price near $13.

Marathon’s business relies on bitcoin mining, a process that earns BTC in exchange for computing power. However, as mining rewards shrink and energy costs persist, the economics of the business model have come under pressure. Meanwhile, Compass Point argues that Marathon trades at a premium to the price of bitcoin itself—an unfavorable setup for investors seeking exposure to the asset.

The downgrade also comes amid a broader slump in high-performance computing (HPC) and AI infrastructure plays. Peer companies Core Scientific (CORZ) and TeraWulf (WULF) have also underperformed year-to-date as investor enthusiasm around AI has cooled. Concerns over customer concentration, pricing risks, and slowed capital expenditures from giants like Microsoft have dragged valuations down, with HPC sector multiples dropping from as high as 15x last year to around 5x currently.

Still, Compass Point noted potential tailwinds for the sector in the long run, including rising demand for AI infrastructure and capex commitments from cloud providers. But for now, they argue Marathon’s fundamentals remain too weak to justify its market valuation.

MARA is reporting 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): Updates headlines and adds MARA’s earnings time.

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