# EDGAR Filing Document

**Accession Number:** 0001507605
**File Stem:** 0000000000-23-001767
**Filing Date:** 2023-2
**Character Count:** 20237
**Document Hash:** dafba3bf43964d20e90009ccd353a96e
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0000000000-23-001767.hdr.sgml**: 20240716

**ACCESSION NUMBER**: 0000000000-23-001767

**CONFORMED SUBMISSION TYPE**: UPLOAD

**PUBLIC DOCUMENT COUNT**: 2

**FILED AS OF DATE**: 20230222

**FILED FOR**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** MARATHON DIGITAL HOLDINGS, INC.
- **CENTRAL INDEX KEY:** 0001507605
- **STANDARD INDUSTRIAL CLASSIFICATION:** FINANCE SERVICES [6199]
- **ORGANIZATION NAME:** 09 Crypto Assets
- **IRS NUMBER:** 010949984
- **STATE OF INCORPORATION:** NV
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** UPLOAD
- **SEC FILE NUMBER:** 001-36555

**BUSINESS ADDRESS:**
- **STREET 1:** 1180 N. TOWN CENTER DRIVE
- **STREET 2:** SUITE 100
- **CITY:** LAS VEGAS
- **STATE:** NV
- **ZIP:** 89144
- **BUSINESS PHONE:** (800) 804-1690

**MAIL ADDRESS:**
- **STREET 1:** 1180 N. TOWN CENTER DRIVE
- **STREET 2:** SUITE 100
- **CITY:** LAS VEGAS
- **STATE:** NV
- **ZIP:** 89144

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** Marathon Patent Group, Inc.
- **DATE OF NAME CHANGE:** 20130222

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** American Strategic Minerals Corp
- **DATE OF NAME CHANGE:** 20111213

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** VERVE VENTURES INC
- **DATE OF NAME CHANGE:** 20101210
**PUBLIC REFERENCE ACCESSION NUMBER**: 0001493152-22-006446

## Text-Extract

```

United States securities and exchange commission logo

                             February 22, 2023

       Hugh Gallagher
       Chief Financial Officer
       Marathon Digital Holdings, Inc.
       1180 North Town Center Drive, Suite 100
       Las Vegas, NV 89144

                                                        Re: Marathon Digital
Holdings, Inc.
                                                            Form 10-K for the
Fiscal Year Ended December 31, 2021
                                                            Form 10-Q for the
Quarterly Period Ended September 30, 2022
                                                            File No. 001-36555

       Dear Hugh Gallagher:

              We have reviewed your December 2, 2022 response to our comment
letter and have the
       following comments. In some of our comments, we may ask you to provide
us with information
       so we may better understand your disclosure.

              Please respond to these comments within ten business days by
providing the requested
       information or advise us as soon as possible when you will respond. If
you do not believe our
       comments apply to your facts and circumstances, please tell us why in
your response.

             After reviewing your response to these comments, we may have
additional
       comments. Unless we note otherwise, our references to prior comments are
to comments in our
       October 11, 2022 letter.

       Form 10-Q for the quarterly period ended September 30, 2022

       Notes to Consolidated Condensed Financial Statements
       Note 1 - Organization and Description of Business
       Reclassifications, page 7

   1.                                                   We note your disclosure
that realized gain on sale of digital currencies have now been
                                                        reclassified as other
non-operating income. Please revise such classification, consistent
                                                        with your response to
prior comment 1 in your letter dated August 1, 2022 indicating you
                                                        would present realized
gain on the sale of digital currencies as a component of income or
                                                        loss from operations on
a prospective basis with prior comparative periods reclassified.
 Hugh Gallagher
FirstName LastNameHugh
Marathon Digital Holdings,Gallagher
                          Inc.
Comapany22,
February  NameMarathon
            2023          Digital Holdings, Inc.
February
Page 2 22, 2023 Page 2
FirstName LastName
Digital Currencies, Digital currencies, restricted and Digital currencies
loaned, page 8

2.       We note your response to prior comment 4. We note that impairment
exists whenever
         carrying value exceeds fair value. Given the significant intraday
volatility that has
         occurred in historical periods, it does not appear that your
accounting convention complies
         with the ASC 350-30-35-19 requirement to recognize impairment whenever
carrying
         value exceeds fair value. Please revise.
Digital Currencies Held in Fund, page 9

3.       We continue to consider your response to prior comments 6, 11, 12, and
13 and may have
         further comment.
Investments, page 9

4.       We note your expanded disclosure in response to prior comment 8.
Revise to also address
         how you account for your $35.5 million investment in Auradine, Inc.
preferred stock,
         including the basis for the classification and the initial and
subsequent measurement.
Note 3 - Revenues from Contracts with Customers, page 11

5.       As we continue to evaluate your accounting policy disclosure for your
Participant, Private
         Pool Participant, and Operator revenue streams, please further revise
your revenue
         recognition policy disclosure to ensure the following items are
succinctly articulated:

                How you determine when a contract exists, including what
consideration was given
              to whether the contracts are terminable by either party at any
time without
              compensation;

                The nature of your performance obligations, ensuring consistent
references to
              computing power and transaction verification services;

                How the transaction price is determined, including when you
measure noncash
              consideration. In this regard, you disclose that it is measured
at contract inception,
              but we also note your disclosures that it is determined using the
daily closing rate.
              Please also clarify any reference to consideration as variable if
it is known at contract
              inception;

                Whether your conclusion that the accounting convention for
measuring noncash
              consideration is not materially different is based on the
volatility of bitcoin on the day
              it is measured or for purposes of financial reporting; and

                Disclose the amount of revenue recognized from each of your
types of arrangements
              in each of the periods presented.
 Hugh Gallagher
FirstName LastNameHugh
Marathon Digital Holdings,Gallagher
                          Inc.
Comapany22,
February  NameMarathon
            2023          Digital Holdings, Inc.
February
Page 3 22, 2023 Page 3
FirstName LastName
6.       In order to help us to continue to evaluate your accounting policy for
your participation in
         third party bitcoin mining pools, please address the following:

         a) Clarify for us whether your contracts with third party bitcoin
mining pool operators are
         terminable by either party at any time without compensating the other
party for the
         termination (that is, other than paying amounts due as a result of
goods or services
         transferred up to the termination date).

         b) Clarify for us whether you are only entitled to consideration for
computing power
         provided for the successful placement of a block on the bitcoin
blockchain by the third
         party and that you are not entitled to any compensation for computing
power provided for
         unsuccessful attempts to place a block on the bitcoin blockchain by
the third party.

         c) Provide your materiality analysis for the difference between your
accounting
         convention for measuring noncash consideration received for your third
party pool
         participation for each quarterly and year-to-date period through
December 31, 2022.
7.       In order to help us continue to evaluate your accounting policy for
your role as a pool
         operator, please address the following:

         a) Confirm for us whether the specified good or service being received
by the bitcoin
         blockchain is the successful placement of a block on the bitcoin
blockchain (i.e.,
         transaction verification services).

         b) Supplement your ASC 606 control analysis to evaluate control over
the
         placement/broadcasting of a block on the bitcoin blockchain assuming
participation by the
         mine pool participant. In your analysis, clarify how an individual
mine pool participant
         could exercise control over the transaction verification service on
behalf of the pool.

         c) Clarify the role of individual miners that participated in your
pool. In your reply,
         clarify whether an individual miner created and proposed individual
blocks to be
         broadcast to the bitcoin blockchain (and if so, how they were able to
do so) or
         alternatively, whether they directed their computing power to specific
nonce ranges.

         d) Clarify the material terms of the software license and whether that
license conveyed
         control to an individual miner over the mining server used by the
company to establish
         and maintain its node.

         e) Clarify for us the nature of your relationship with and the role of
NYDIG in your
         bitcoin mining pool and in the node you operated. We note that you
refer to NYDIG as a
         custodian.

         f) Provide your materiality analysis of the fair value of the pro rata
block reward and
         transaction fee payment attributable to each third-party pool
participant for each quarterly
         and year-to-date period in which third parties participated in your
mining pool.
 Hugh Gallagher
FirstName LastNameHugh
Marathon Digital Holdings,Gallagher
                          Inc.
Comapany22,
February  NameMarathon
            2023          Digital Holdings, Inc.
February
Page 4 22, 2023 Page 4
FirstName LastName
8.       In response to prior comment 20, you indicate that you provided
computing power to the
         third party pool operator in your capacity as a pool participant in
the third party   s bitcoin
         mining pool. Please explain the differences in the facts and
circumstances of the
         Marapool bitcoin mining pool the Company operated that leads you to
believe that the
         Marapool pool participants provide transaction verification services
to the bitcoin
         blockchain, as noted from your response to prior comment 18, rather
than computing
         power to the Company, as pool operator of Marapool.
Note 9 - Debt, page 17

9.       We note that the interest rate of the RLOC is based, in part, on Loan
to Value (   LTV   )
         Ratio. Tell us what consideration you gave to separately accounting
for any embedded
         derivative related to the interest rate. Refer to ASC 815-15.
Management's Discussion and Analysis of Financial Condition and Results of
Operations, page
22

10.      Provide disclosure of any significant crypto asset market developments
material to
         understanding or assessing your business, financial condition and
results of operations, or
         share price since your last reporting period, including any material
impact from the price
         volatility of crypto assets.
11.      We note that you own crypto assets and certain of these crypto assets
may serve as
         collateral for loan, margin, rehypothecation, or other similar
activities to which you or
         your affiliates are a party. Identify and quantify the crypto assets
used in these financing
         arrangements and disclose the nature of your relationship for loans
with parties other than
         third-parties. State whether there are any encumbrances on the
collateral. Discuss
         whether the current crypto asset market disruption has affected the
value of the underlying
         collateral.
12.      If material to an understanding of your business, describe any direct
or indirect exposures
         to other counterparties, customers, custodians, or other participants
in crypto asset markets
         known to:

                Have filed for bankruptcy, been decreed insolvent or bankrupt,
made any assignment
              for the benefit of creditors, or have had a receiver appointed
for them.
                Have experienced excessive redemptions or suspended redemptions
or withdrawals
              of crypto assets.
                Have the crypto assets of their customers unaccounted for.
                Have experienced material corporate compliance failures.
Significant developments for the three-month period ended September 30, 2022,
page 23

13.      We note your discussion of the impact of the Compute North Bankruptcy.
To the extent
         material, also discuss how the bankruptcies of FTX and BlockFi, as
well as any other
         crypto asset companies, and the downstream effects of those
bankruptcies have impacted
 Hugh Gallagher
Marathon Digital Holdings, Inc.
February 22, 2023
Page 5
         or may impact your business, financial condition, customers, and
counterparties, either
         directly or indirectly. Clarify whether you have material assets that
may not be recovered
         due to the bankruptcies or may otherwise be lost or misappropriated.
14.      We note that, in early July 2022, the Company expanded certain hosting
arrangements
         with Compute North. We further note from your Q2 2022 earnings call
that under the
         renegotiated contract, you now have the ability to control when the
miners will be
         curtailed and can benefit from selling energy back to the grid. Please
provide us with a
         detailed accounting analysis of whether the revised agreement with
Compute North, LLC
         is or contains a lease under ASC 842. Also address the energy
agreements as part of your
         analysis.
15.      Please provide us with a detailed accounting analysis of whether the
hosting agreement
         with Applied Blockchain is or contains a lease under ASC 842.
Risk Factors, page 34

16.      Describe any material risk to you, either direct or indirect, due to
excessive redemptions,
         withdrawals, or a suspension of redemptions or withdrawals, of crypto
assets. Identify
         any material concentrations of risk and quantify any material
exposures.
17.      To the extent material, discuss any reputational harm you may face in
light of the recent
         disruption in the crypto asset markets. For example, discuss how
market conditions have
         affected how your business is perceived by customers, counterparties,
and regulators, and
         whether there is a material impact on your operations or financial
condition.
18.      Describe any material risks to your business from the possibility of
regulatory
         developments related to crypto assets and crypto asset markets.
Identify material pending
         crypto legislation or regulation and describe any material effects it
may have on your
         business, financial condition, and results of operations.
19.      Describe any material risks you face related to the assertion of
jurisdiction by U.S. and
         foreign regulators and other government entities over crypto assets
and crypto asset
         markets.
20.    Describe any material risks related to safeguarding your or your
affiliates    crypto assets.
       Describe any material risks to your business and financial condition if
your policies and
       procedures surrounding the safeguarding of crypto assets, conflicts of
interest, or
       comingling of assets are not effective.
FirstName LastNameHugh Gallagher
21.    To the extent material, describe any gaps your board or management have
identified with
Comapany   NameMarathon
       respect               Digital processes
               to risk management    Holdings, and
                                               Inc.policies in light of current
crypto asset market
       conditions
February  22, 2023asPage
                      well5as any changes they have made to address those gaps.
FirstName LastName
 Hugh Gallagher
FirstName LastNameHugh
Marathon Digital Holdings,Gallagher
                          Inc.
Comapany22,
February  NameMarathon
            2023          Digital Holdings, Inc.
February
Page 6 22, 2023 Page 6
FirstName LastName
22.      Describe any material financing, liquidity, or other risks you face
related to the impact
         that the current crypto asset market disruption has had, directly or
indirectly, on the value
         of the crypto assets you use as collateral or the value of your crypto
assets used by others
         as collateral.
23.      To the extent material, describe any of the following risks due to
disruptions in the crypto
         asset markets:

                Risk from depreciation in your stock price.
                Financing risk, including equity and debt financing.
                Risk of increased losses or impairments in your investments or
other assets.
                Risks of legal proceedings and government investigations,
pending or known to be
              threatened, in the United States or in other jurisdictions
against you or your affiliates.
                Risks from price declines or price volatility of crypto assets.
24.      We note the recent enactment of legislation in New York establishing a
two-year
         moratorium on issuing permits for certain cryptocurrency mining
operations that use
         carbon-based power sources. Although you do not operate in New York,
discuss the
         possibility of similar laws being enacted in jurisdictions that you do
operate in.
Form 10-K for the Fiscal Year Ended December 31, 2021
Notes to Consolidated Financial Statements
Note 1 - Organization and Description of Business
Organization, page F-8

25.      We do not believe that your response to prior comment 1 provides a
sufficient basis to
         support the Company   s conclusion that it does not transfer control
of the bitcoin it loaned.
         We observe that the nature of the Company   s bitcoin lending
arrangements is different
         than that of a repurchase agreement as described in ASC 606-10-55-68.
We further
         observe that, based on the Company   s analysis and representation of
the facts, the
         borrower of the Company   s bitcoin could deploy the bitcoin at its
discretion, bore the risk
         of loss or theft of those bitcoin, and otherwise had the ability to
direct the use of the
         bitcoin transferred to it under such a lending arrangement. As such,
please tell us whether
         you considered derecognizing the bitcoin lent and concurrently
recognizing a receivable
         reflective of the Company   s right to receive bitcoin from the
borrower. We note such
         accounting may be appropriate based on your facts and circumstances.
We further note
         that such receivable may be measured at the fair value of the lent
bitcoin, both initially
         and at subsequent reporting dates and that such accounting may include
a separately
         recognized allowance for expected credit losses under the principles
of ASC Topic 326
         that incorporates forecasts reflecting the Company   s expectation of
credit losses on such
         receivable.
 Hugh Gallagher
FirstName LastNameHugh
Marathon Digital Holdings,Gallagher
                          Inc.
Comapany22,
February  NameMarathon
            2023          Digital Holdings, Inc.
February
Page 7 22, 2023 Page 7
FirstName LastName
       You may contact Melissa Walsh, Staff Accountant, at (202) 551-3224 or
Stephen
Krikorian, Accounting Branch Chief, at (202) 551-3488 with any questions.

                                                        Sincerely,

                                                        Division of Corporation
Finance
                                                        Office of Technology
cc:      Jolie Kahn

```

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