United States securities and exchange commission logo





                               June 24, 2022

       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 March 31, 2022
                                                            File No. 001-36555

       Dear Mr. Gallagher:

              We have reviewed your June 13, 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
       May 27, 2022 letter.

       Form 10-K for the Fiscal Year Ended December 31, 2021

       Consolidated Statements of Operations, page F-5

   1.                                                   Your response to prior
comment 1 addresses your classification during 2021. Please also
                                                        explain the basis for
classifying the realized gain on the sale of digital currencies outside
                                                        of loss from operations
within other income/expenses for all periods presented. Cite the
                                                        authoritative
accounting literature that supports your accounting.
       Notes to Consolidated Financial Statements
       Note 1 - Organization and Description of Business
       Organization, page F-8

   2.                                                   We note your response
to prior comment 2 regarding the bitcoin loaned to NYDIG under
                                                        the Master Securities
Loan Agreements. Our comment was meant to solicit a
 Hugh Gallagher
FirstName  LastNameHugh
Marathon Digital Holdings,Gallagher
                          Inc.
Comapany
June       NameMarathon Digital Holdings, Inc.
     24, 2022
June 24,
Page 2 2022 Page 2
FirstName LastName
         comprehensive accounting analysis on how you are accounting for the
borrowed bitcoin
         and the collateral and your classification of the interest received on
the bitcoin loans in
         your statement of cash flows with reference to the specific
authoritative literature that
         supports your accounting. Please provide such a response. Ensure that
your response
         includes, but is not limited to, how you determined that you did not
meet the
         derecognition criteria and control was not transferred to the
borrower. Also, tell us how
         the interest received on the bitcoin loans is classified in your
statement of cash flows and
         the basis for such classification. In addition, please explain why
your response indicates
         that there was no collateral, while your disclosure on page F-12
states that NYDIG is to
         transfer collateral to you with a market value at least equal to 100%
of the market value of
         the loaned BTC.
3.       We note your response to prior comment 3 regarding the Simple
Agreement for Future
         Equity (   SAFE   ) agreements. As previously requested, please
address the following:

                Provide us with a complete description of the material rights
and obligations of these
              agreements.

                Explain why the SAFEs are considered equity method investments
under ASC 323.
              Refer to ASC 323-10-15-3.

                Provide us with your comprehensive analysis to support your
accounting for these
              agreements with contextual references to the authoritative
literature applied.
Note 2 - Summary of Significant Accounting Policies
Digital Currencies, page F-13

4.       We note your response to prior comment 4. Your policy of utilizing a
standardized time
         on a daily basis to assess for impairment does not appear to comply
with ASC 350-30-35-
         18 that indicates intangible assets should be tested for impairment at
any time events or
         changes in circumstances indicate that it is more likely than not that
the asset is impaired.
         Please revise your accounting to comply with ASC 350. We note from
your response to
         prior comment 11 in your letter dated April 22, 2022 that compliance
with ASC 350
         would not result in a material difference from your valuation on a
nightly basis. For each
         of the periods presented, please provide us with your materiality
analysis of the difference
         between the results of an impairment evaluation based on the pricing
of BTC on a nightly
         basis and the price of BTC at any time it is below the cost.
5.       We note your response to prior comment 5. As previously requested,
please explain the
         basis for any differences from prior periods in the presentation of
cash flows from the
         disposition of digital currencies on the statement of cash flows. In
this regard, explain the
         basis for your classification as investing activities in 2019 and
2020, and provide the
         contextual reference to the authoritative accounting literature relied
upon.
 Hugh Gallagher
FirstName  LastNameHugh
Marathon Digital Holdings,Gallagher
                          Inc.
Comapany
June       NameMarathon Digital Holdings, Inc.
     24, 2022
June 24,
Page 3 2022 Page 3
FirstName LastName
6.       You indicate in response to prior comment 5 that you are currently
loaning 600 bitcoin to
         NYDIG and are not currently purchasing forward contracts related to
cryptocurrency.
         Please tell us the type of contracts you do enter into involving your
cryptocurrency
         holdings and, for those other than the arrangements addressed in other
comments, please
         explain how you are accounting for such arrangements. In this regard,
please explain the
         arrangements referred to by your CEO in the May 2, 2022 Bloomberg News
article
         entitled,    Bitcoin-Hoarding Miners Turn to Options Market for Cash
Infusion.
Investment Fund, page F-15

7.       In response to prior comment 6, you state,    As the Company owns 100%
of the limited
         partnership interests in the fund, and the fund can be collapsed at
any time, with the
         Company retaking direct ownership of the bitcoin in question, the
Company, for all
         practical purposes, does own the bitcoin, even if technically
indirectly through the fund of
         one.    Please explain how this assertion is consistent with your
accounting treatment for
         your investment in NYDIG Digital Assets Fund III, LP.
8.       We note your response to prior comment 7. Notwithstanding that you
anticipate the
         investment fund to be dissolved by the end of the third quarter of
2022, your historical
         financial statements will include your investment. Please provide us
with your proposed
         revised accounting policy for your investment in the investment fund.
That is, as
         previously requested, please address how you are accounting for your
limited partnership
         interest in NYDIG Digital Assets Fund III, LP. As part of your
response, also clarify for
         us where you provide the disclosures required by ASC 820-10-50-6A.
9.       We note your response to prior comment 8 indicating that the purchase
of that amount of
         bitcoin requires expertise unrelated to your business. Tell us whether
the management fee
         is meant to compensate for this expertise and how you considered ASC
810-10-25-38H.
         Further explain the basis for why you would fund 100% of the capital
of DAF III, yet not
         retain any control over how that capital is deployed. Address how you
considered
         whether you had the opportunity and the incentive to establish
arrangements that result in
         you being the variable interest holder with that power to direct the
activities that most
         significantly impact the economic performance of the VIE. Also explain
how it was
         considered that your economic interest is proportionately greater than
your stated power to
         direct the activities of DAF III. Refer to ASC 810-10-25-38F through
25-38G.
10.      We note your response to prior comment 9. As previously requested,
please provide us
         with your comprehensive analysis of de facto agents pursuant to ASC
810-10-25-43. As
         part of your analysis, tell us how you considered your BTC loans to
NYDIG and that you
         rely on NYDig for custodian services.
Revenue Recognition, page F-15

11.      In response to prior comment 12, you indicate that there is only a
delay in the transfer
         from the pool wallet to the respective customer's wallet (including
the Company) when
         bitcoin is earned outside of normal business hours. We noted in the
prior comment that
 Hugh Gallagher
FirstName  LastNameHugh
Marathon Digital Holdings,Gallagher
                          Inc.
Comapany
June       NameMarathon Digital Holdings, Inc.
     24, 2022
June 24,
Page 4 2022 Page 4
FirstName LastName
         the constructive receipt of the mining reward can be at least two days
from contract
         inception based on your response to prior comment 14 in your letter
dated April 22, 2022
         indicating that NYDIG confirms the allocation among pool participants
within 24 hours of
         a block reward and, once the NYDIG calculations are confirmed, you
aggregate all the
         BTC rewards at the end of that day. As previously requested, please
provide us with your
         analysis of how you comply with the requirement to recognize the
estimated fair value of
         the non-cash consideration at contract inception. In this regard, your
analysis of ASC
         606-10-32-21 does not appear to address the concept that noncash
consideration should be
         measured at contract inception. In addition, please address the
concept in ASC 606-10-
         32-23 that changes in the fair value of noncash consideration after
contract inception that
         are due to the form of the consideration should not be included in the
transaction price.
         Your disclosure should address any difference between the fair value
of the BTC when
         you recognize revenue at the end of the day upon constructive receipt
and the fair value of
         the noncash consideration at contract inception.
12.      We note your response to prior comment 13. Please further clarify the
statement in the
         context of the operation of your own mining pool that    revenues
associated directly with
         bitcoin mining activities are recorded net of any pool fee with an
offsetting cost of
         revenue.    Explain why the pool fee revenue you earn as the pool
operator would be a
         reduction to revenue. In this regard, we note your conclusion that, as
the pool operator,
         you are the principal and you have full control of the bitcoin rewards
to be transferred to
         the pool participant. You indicate that you provide transaction
verification service to the
         blockchain network by the pool. It is our understanding that the pool
participants provide
         you with computing power in exchange for the bitcoin reward. As the
pool operator, tell
         us what consideration you gave to the gross presentation of the reward
from your bitcoin
         mining activities as revenue with the net bitcoin reward distributed
to your customer   s
         wallets, which you indicate is the transaction price, presented as
your cost of revenue.
          Your revenue recognition accounting policy should be revised,
accordingly.
13.      You indicate that you are not proposing a revised revenue recognition
policy. However,
         we note the accounting policy disclosed in Critical Accounting Matters
in your Form 10-Q
         for the quarterly period ended March 31, 2022 was revised and does not
address certain
         aspects of revenue recognition that are disclosed in your revenue
recognition policy in
         your Form 10-K for the year ended December 31, 2021, such as how you
account for
         variable consideration. As such, and in light of the nature of our
comments, as previously
         requested, and to facilitate our review, please provide us with your
proposed revised
         revenue recognition policy disclosure.
Note 5 - Debt, Commitments and Contingencies
Revolving Credit Line, page F-27

14.      We note your response to prior comment 14. Our comment was meant to
solicit a
         comprehensive analysis of your accounting for bitcoin stored in a
custody account for the
         benefit of the Bank pledged as collateral. In this regard, please
explain why it is
 Hugh Gallagher
FirstName  LastNameHugh
Marathon Digital Holdings,Gallagher
                          Inc.
Comapany
June       NameMarathon Digital Holdings, Inc.
     24, 2022
June 24,
Page 5 2022 Page 5
FirstName LastName
         appropriate to classify the required collateral as restricted digital
currency on your balance
         sheet pursuant to ASC 820. Provide the contextual reference to the
authoritative
         accounting literature that supports your accounting for the transfer
of the bitcoin. Your
         response should address, but not be limited to, what consideration was
given to terms of
         the collateral under the revolving line of credit as disclosed on page
F-27. In addition,
         please explain the reference to ASC 805 and the impact on measurement
from the risk of
         loss due to theft.
Form 10-Q for the Quarterly Period Ended March 31, 2022
Consolidated Condensed Statement of Operations, page 4

15.      We note your response to prior comment 15. As previously requested,
please clarify that
         the line item of total other (expenses) income excludes interest
expense. In this regard,
         you should revise the line item description, accordingly.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Recent Developments, page 15

16.      You indicate in response to prior comment 16 that,    Pursuant to ASC
360, the Company
         has given consideration to impairment and determined that the value of
the asset is not
         impaired.    Please provide us with your accounting analysis that
supports this conclusion.
         Address the change in the cash flows expected to result from the use
and eventual
         disposition of the asset as compared to the carrying amount. Refer to
ASC 360-10-35-17.
         In addition, please tell us what consideration was given to the impact
of the intent to
         transition the Hardin operations on the carrying amount of the prepaid
service contract and
         any other assets related to the Hardin Station.
Non-GAAP Financial Measures, page 17

17.      We note your response to prior comment 17 regarding your non-GAAP
measures. Please
         address the following:

                You indicate in your response that you will exclude the change
in fair value of the
              fund from the calculation of Adjusted Net Income. Also revise
your computation of
              Adjusted EBITDA to remove this adjustment, as it appears to
result in an individually
              tailored accounting principal. Refer to Question 100.04 of the
Compliance and
              Disclosure Interpretations on Non-GAAP Financial Measures.

                We continue to object to your adjustment for impairment of
digital currencies, as we
              believe that adjusting for this item does not provide useful
information to investors.
              Accepting and holding bitcoin and using cryptocurrency for
treasury management
              appear to be core business functions and inconsistent with the
purpose of including
              the measure of Adjusted EBITDA in your filing. In this regard,
you state the purpose
              of the measure is to    provide a meaningful view of earnings
performance.    We
              further acknowledge that bitcoin   s price volatility will
continue to result in recurring
 Hugh Gallagher
Marathon Digital Holdings, Inc.
June 24, 2022
Page 6
           impairment charges that will continue to impact earnings performance
in future
           periods. Please revise your presentation of Adjusted EBITDA to
remove this
           adjustment, consistent with the removal of the adjustment from your
non-GAAP
           measure of Adjusted Net Income as noted in your response to prior
comment 3 in
           your letter dated April 22, 2022. Refer to Rule 100(b) of Regulation
G and CD&I
           Question 100.04.

             As previously requested, explain the nature of amortization of
prepaid service
           contracts included in the non-GAAP adjustment to Adjusted EBITDA for
           depreciation and amortization. Tell us if it relates to the
operation and maintenance
           services for the Hardin Facility pursuant to the Data Facility
Services Agreement as
           noted from your disclosure on page F-10 of your Form 10-K for the
year ended
           December 31, 2021. Explain how adjusting for the cost of services
complies with
           Rule 100(b) of Regulation G, Item 10(e)(1)(i)(C) of Regulation S-K,
and Question
           100.01 of the Compliance and Disclosure Interpretations on Non-GAAP
Financial
           Measures.

       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,
FirstName LastNameHugh Gallagher
                                                            Division of
Corporation Finance
Comapany NameMarathon Digital Holdings, Inc.
                                                            Office of
Technology
June 24, 2022 Page 6
cc:       Jolie Kahn
FirstName LastName