United States securities and exchange commission logo





                            October 11, 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 June 30, 2022
                                                            File No. 001-36555

       Dear Hugh Gallagher:

               We have reviewed your August 1, 2022, August 5, 2022, and August
26, 2022 responses
       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
       June 24, 2022 letter.

       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

   1.                                                   You indicate in
response to prior comment 2 that you determined that the loan did not
                                                        meet the derecognition
criteria in ASC 606 because the Company held a repurchase right
                                                        in the form of a call
option under ASC 606-10-55-67(b) and therefore retained control per
                                                        ASC 606-10-55-68.
Please elaborate on the material rights and obligations of both parties
                                                        to the borrowings. As
part of your response, explain the rights of the borrower with
                                                        respect to the digital
assets and whether there are any restrictions on what the borrower
                                                        can do with the
borrowed digital assets. Further explain to us why you believe the
                                                        customer does not
obtain control of the asset. That is, explain whether the borrower has
 Hugh Gallagher
Marathon Digital Holdings, Inc.
October 11, 2022
Page 2
         the ability to direct the use of, and obtain substantially all of the
remaining benefits from,
         the digital assets. Please also clarify whether, and if so how, your
accounting policy
         captures counterparty non-performance related to their obligation to
return the borrowed
         digital assets to you.
2.       We note your response to prior comment 2 indicating that you will
reclassify the cash
         interest received on the BTC loans prospectively to conform any
comparable prior period
         amounts to the current period classification. Please clarify the
category of the statements
         of cash flow within which this line item will be presented. Refer to
ASC 230-10-45-
         16(b).
3.       We note and continue to consider your response to prior comment 3 in
your letter dated
         August 5, 2022.
Note 2 - Summary of Significant Accounting Policies
Digital Currencies, page F-13

4.       Please reconcile for us your discussion in response to prior comment 4
indicating that a
         decline in fair value below carrying value    could be an indication
 of impairment with
         your stated policy that an impairment exists when carrying value
exceeds fair value and
         with ASC 350-30-35-19.
Note 5 - Debt, Commitments and Contingencies
Revolving Credit Line, page F-27

5.       In order to help us evaluate your response to prior comment 14:

                You state,    The lender has exclusive control over the
collateral account, including
              liquidation of the collateral only in the event of a default
under the RLOC.    Clarify
              to what the phrase    in the event of a default    refers and
what you mean by    exclusive
              control    and how that is differentiated from control. For
example, are you
              representing that the lender cannot direct the use of, and obtain
substantially all of the
              benefits from, each distinct nonfinancial asset you transfer as
collateral unless and
              until an event of default occurs?

             Tell us whether the lender has the right to pledge, rehypothecate,
assign, commingle,
           or otherwise use the assets posted as collateral absent an event of
default.
FirstName LastNameHugh Gallagher
Comapany   NameMarathon
           Provide            Digital Holdings,
                    a more fulsome  analysis ofInc.
                                                 what you identify as the
control indicators in
October 11,ASC
            2022606-10-25-25
                  Page 2       and 25-30.
FirstName LastName
 Hugh Gallagher
FirstName LastNameHugh
Marathon Digital Holdings,Gallagher
                          Inc.
Comapany
October 11,NameMarathon
            2022          Digital Holdings, Inc.
October
Page 3 11, 2022 Page 3
FirstName LastName
Form 10-Q for the quarterly period ended June 30, 2022

Consolidated Condensed Statement of Operations, page 4

6.       We note that you reclassified the change in fair value of digital
currencies held in fund
         from other income (expenses) to operating income (loss) in all prior
periods presented.
         Tell us what consideration was given to identifying this material
change as a restatement
         and amending prior filings. In this regard, changing the
classification of an account
         balance from an incorrect presentation to the correct presentation is
considered a
         correction of an error, not a reclassification. Refer to ASC 250-10.
In addition, please
         explain the impact on your assessments of disclosure controls and
procedures and internal
         controls over financial reporting as a result of the revision to your
accounting for and
         presentation of your limited partnership interest in the NYDIG Digital
Assets Fund III,
         LP.
7.       Please explain the basis for your classification of operating expenses
separately from other
         operating income (expenses). In this regard, explain why impairments
of digital
         currencies and patents are considered operating expenses and the
change in fair value of
         digital currencies held in fund and gain on sale of equipment are
considered other
         operating income (expenses).
Consolidated Condensed Statements of Cash Flows, page 6

8.       Please tell us the nature of the $14.0 million purchase of equity
investments in the six
         months ended June 30, 2022. Tell us where the relevant disclosures are
provided in your
         notes to consolidated condensed financial statements.
9.       We note from your disclosure on page 8 that you transferred all of
your bitcoin holdings
         from NYDIG Digital Assets Fund III, LP to your own account on June 10,
2022. Tell us
         what consideration you gave to disclosing this non-cash activity in
your supplemental
         schedule of non-cash investing and financing activities.
Note 1 - Organization and Description of Business
Digital Currencies Held in Fund, page 8

10.      We note your revised disclosure in response to prior comment 7
indicating that you
         consolidate the Fund under a voting interest model. Tell us why your
disclosure continues
         to reference ASC 825-10.
11.      In order to help us continue to evaluate your investment company
conclusion, please
         provide a more robust and fulsome ASC 946 accounting analysis,
including your
         evaluation of the ASC 946 implementation guidance to the Fund. Address
in your
         analysis, but do not limit it to, the following:

                Whether your ability to take the assets of the Fund at any time
is a benefit normally
              attributable to ownership interests and the reasons why or why
not;
 Hugh Gallagher
FirstName LastNameHugh
Marathon Digital Holdings,Gallagher
                          Inc.
Comapany
October 11,NameMarathon
            2022          Digital Holdings, Inc.
October
Page 4 11, 2022 Page 4
FirstName LastName
                Your consideration of the combination of you being the sole
investor, the fund having
              a single investment, your ability to take assets of the Fund at
any time, management   s
              statements in your January 25, 2021 press release of its strategy
of holding bitcoin,
              and your June 2022 transfer of digital assets out of the Fund in
evaluating ASC 946-
              10-15-6(b) and the related implementation guidance, including,
but not limited to,
              ASC 946-10-55-8 and 55-16;

                The economic substance of the Fund and how you concluded that
substance is
              consistent with the characteristics of an investment company. For
example, how does
              the economic substance of the Fund differ from direct holding of
bitcoin given your
              stated ability to take the Fund   s bitcoin?;

                Whether the General Partner interest represents an ownership
interest in the Fund,
              including the reasons why or why not and your analysis of the ASC
946
              implementation guidance related to ownership interests. If you
believe it does not,
              clarify what that interest represents; and

                Whether you directed the Fund to actively identify other
investors and if so, a
              description of when and how those activities occurred. See e.g.,
ASC 946-10-55-17.
12.      Please provide your ASC 820 accounting analysis that supports the use
of the    CoinDesk
         Bitcoin Price Index    to determine fair value for the Fund   s
investments. As part of your
         analysis, clarify for us what this index is, how it relates to the
Fund   s principal market,
         and how your analysis contemplates the presumption in ASC
820-10-35-5A.
13.      Please provide supporting accounting analysis with appropriate
citations to authoritative
         literature for your accounting policy of determining fair value at the
4pm New York time
         on the end of each reporting period, which implies you only measure
the Fund   s
         investments at four points in time each year.
14.      Please clarify for us and consider the need for revised disclosure to
clarify how sales of
         digital assets by the Fund are depicted in your statements of
operations, which includes
         the line items    Change in fair value of investment in NYDIG fund
and    Realized gain
         (loss) on sale of digital currencies,    and whether such presentation
differentiates between
         realized and unrealized. To the extent helpful to understand your
policy, cite applicable
         authoritative literature in your reply.
Note 3 - Revenues from Contracts with Customers, page 10

15.      In your proposed revised revenue recognition policy in response to
prior comment 13 in
         your letter dated August 26, 2022, you indicate that the fees are
transferred to the
         Company as part of closing the successful block so collection is
probable. Please
         reconcile this statement in light of your prior responses indicating
that the fees may not be
         transferred to you at the point that a block is successfully mined.
Specifically, your
         response to prior comment 14 in your letter dated April 22, 2022
indicates that
 Hugh Gallagher
FirstName LastNameHugh
Marathon Digital Holdings,Gallagher
                          Inc.
Comapany
October 11,NameMarathon
            2022          Digital Holdings, Inc.
October
Page 5 11, 2022 Page 5
FirstName LastName
         constructive receipt of the mining reward can be up to two days from
contract inception,
         considering 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. In addition, your response to
prior comment 11
         indicates that the day the reward is earned is not the date it is
received upon settlement and
         there may be a delay between confirmation from NYDIG and the back-end
settlement into
         the pool wallet. To help us understand your accounting, please address
this comment
         separately for when you operate a mining pool as the sole participant,
when you operated
         a mining pool with third party participants, and when you participated
in another mining
         pool.
16.      In your proposed revised revenue recognition policy disclosure in
response to prior
         comment 13 in your letter dated August 26, 2022, you state that
contract inception
         coincides with the time at which the transaction fees and block
rewards are earned...
         Please revise to clarify when it is considered to be    earned    in
accordance with the
         guidance in ASC 606.
17.      In your capacity as a mining pool operator, you indicate in response
to prior comment 12
         in your letter dated August 26, 2022 that you used third party
computing power to verify a
         block of transactions for the network. Describe the rights and
obligations of the parties in
         your agreements with pool participants and with the blockchain
network. Clarify what
         you considered to be the specified service provided to the customer in
the arrangements
         with the pool participant and with the blockchain network. In this
regard, it appears that
         the pool participants were providing you with computing power and you
were providing
         transaction verification services to the network. While computing
power is an input to the
         combined output of transaction verification services, computing power
alone does not
         appear sufficient to verify a transaction and earn a mining reward. In
this regard, you
         indicate in your June 13, 2022 response to comment 13 that the pool
aggregates all
         computing power of the mining devices, which are connected to the
bitcoin network, and
         utilizes the combined hashrate to provide transaction verification
services to the
         blockchain.
18.      We note your response to prior comment 12 in your letter dated August
26, 2022. Please
         provide us with a revised analysis of whether you, in your capacity as
the pool operator,
         controlled the transaction verification services before being provided
to the blockchain
         network. Refer to ASC 606-10-55-37. Ensure that your assessment
focuses on which
         party had the ability to control the transaction verification services
when it was being
         provided (i.e., when the contract existed according to ASC
606-10-25-1), regardless of it
         being an at-will contract pursuant to which the third-party miners
had the ability to join
         or leave for another pool and you having no ability to control or
curtail the third-party
         miners providing computing power. In this regard, it is unclear why
you believe not
         having control over any third party contributing hashrate to your pool
is relevant to who
         controls the transaction verification services before being
transferred to the blockchain.
         As part of your response, please also address the following, at the
time a contract existed:
 Hugh Gallagher
Marathon Digital Holdings, Inc.
October 11, 2022
Page 6
             Tell us who was primarily responsible for fulfillment from the
blockchain   s
           perspective and which party was the miner of record. Tell us whether
the blockchain
           network had any record of the pool participant   s involvement in
the arrangement.

             Tell us whether, as the pool operator, you had the discretion to
determine which
           transactions to validate within a mined block.

             Explain why inventory risk and pricing risk are relevant to your
conclusion, given the
           nature of BTC transaction verification services and the transaction
fees and block
           rewards are pre-determined by the bitcoin blockchain network.

             Explain how you compensated pool participants for the provision of
their computing
           power to your mining pool. Tell us whether the pool participant   s
reward was
           contingent on successfully solving transactions.
19.   In your proposed revised revenue recognition policy for your operation of
a mining pool
      that included certain third parties, your reference to ASC 606-10-55-39
appears to suggest
      the accounting conclusion is limited to the indicators listed there. To
the extent you chose
      to retain a description of the required accounting analysis, please
revise your disclosure to
      be consistent with the guidance which states that an entity is a
principal if it controls the
      specified good or service before that good or service is transferred to a
customer. Refer to
      ASC 606-10-55-37.
20.   We note your proposed revised revenue recognition policy in response to
prior comment
      13 in your letter dated August 26, 2022. As previously requested in
comment 13 in our
      letter dated May 27, 2022, please revise to ensure your disclosures
distinguish your
      revenue recognition policies between when you operate a mining pool as
the sole
      participant, when you operated a mining pool with third party
participants, and when you
      participated in another mining pool. Please also provide us with a
comprehensive analysis
      of ASC 606 supporting how you recognized revenue as a pool participant.
In your
      analysis, address what you believed to be the promised good or service,
how you
      measured the transaction price, and how and when you determined the
promised good or
      service was transferred.
       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
October 11, 2022 Page 6
cc:       Jolie Kahn
FirstName LastName