MARA Holdings, Inc. 10-K

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. Market Information Our common stock is currently quoted on The NASDAQ Capital Market under the symbol “MARA”. Holders As of March 12, 2021, there were 230 holders of record of 98,804,636 shares of the Company’s Common Stock. Securities Authorized for Issuance under Equity Compensation Plans 2012, 2014, 2017 and 2018 Equity Incentive Plans The following table gives information about the Company’s common stock that may be issued upon the exercise of options granted to employees, directors and consultants under its 2012, 2014, 2017 and 2018 Equity Incentive Plans as of December 31, 2021. On August 1, 2012, our board of directors and stockholders adopted the 2012 Equity Incentive Plan, pursuant to which 96,154 shares of our common stock are reserved for issuance as awards to employees, directors, consultants, advisors and other service providers. On September 16, 2014, our board of directors adopted the 2014 Equity Incentive Plan, subsequently approved by the shareholders on July 31, 2015, pursuant to which up to 125,000 shares of our common stock, stock options, restricted stock, preferred stock, stock-based awards and other awards are reserved for issuance as awards to employees, directors, consultants, advisors and other service providers. On September 6, 2017, our board of directors adopted the 2017 Equity Incentive Plan, subsequently approved by the shareholders on September 29, 2017, pursuant to which up to 625,000 shares of our common stock, stock options, restricted stock, preferred stock, stock-based awards and other awards are reserved for issuance as awards to employees, directors, consultants, advisors and other service providers. On January 1, 2018, our board of directors adopted the 2018 Equity Incentive Plan, subsequently approved by the shareholders on March 7, 2018, pursuant to which up to 2,500,000 shares of our common stock, stock options, restricted stock, preferred stock, stock-based awards and other awards are reserved for issuance as awards to employees, directors, consultants, advisors and other service providers. On January 15, 2021, the Company’s shareholders approved an increase in the number of shares authorized for issuance under the 2018 Equity Incentive Plan by 5,000,000 shares, which increase took effect automatically. As of March 12, 2021, the 2012, 2014, 2017 and 2018 Equity Incentive Plans had outstanding grants and remaining unissued shares, taking into account issuance of restricted stock to officers and directors, as follows: Equity Compensation Plan Information Plan category Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted- average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance under equity compensation plans Equity compensation plans approved by security holders 393,777 $ 21.18 880,804 Equity compensation plans not approved by security holders — $ — — Total 393,777 $ 21.18 880,804 Recent issuances of unregistered securities On January 3, 2018, the Company issued 150,000 shares of the Company’s Common Stock pursuant to the conversion of $480,000 in principal amount invested in the Convertible Note. On January 4, 2018, the Company issued 150,000 shares of the Company’s Common Stock pursuant to the conversion of $480,000 in principal amount invested in the Convertible Note. On January 6, 2018, the Company issued 150,000 shares of the Company’s Common Stock pursuant to the conversion of $480,000 in principal amount invested in the Convertible Note. On January 11, 2018, the Company entered into a Patent Rights Purchase and Assignment Agreement with XpresSpa Group, Inc., a Delaware Corporation and Crypto Currency Patent Holdings Company LLC, a Delaware limited liability company and wholly owned subsidiary of the Company (“CCPHC”). The Company issued 62,500 shares of common stock of the Company, par value $0.0001 per share, subject to the terms and conditions of a lock-up agreement. 32 On January 11, 2018, the Company agreed to issue 6,250 shares of the Company’s common stock to Andrew Kennedy Lang, one of the named inventors of the patents, in exchange for consulting services, and 12,500 shares of the Company’s common stock to another individual in exchange for consulting services, in connection with the acquisition of the Assigned IP. On February 5, 2018, the Company issued 7,763 shares of the Company’s Common Stock pursuant to the conversion of $24,842 in principal amount invested in the Convertible Note. On February 27, 2018, the Company issued 175,000 shares of the Company’s Common Stock pursuant to the conversion of $560,000 in principal amount invested in the Convertible Note. On February 28, 2018, the Company issued 4,601 shares of the Company’s Common Stock to board members as compensation earned as members of the board. On March 6, 2018, the Company issued 4,433 shares of the Company’s Common Stock pursuant to the exercise of 4,433 shares of warrants. On March 8, 2018, the Company issued 12,500 shares of the Company’s Common Stock pursuant to the conversion of $40,000 in principal amount invested in the Convertible Note. On March 14, 2018, the Company issued 105,636 shares pursuant to the conversion of 106 shares of the Company’s Series E Convertible Preferred Stock. On March 15, 2018, the Company issued 89,250 shares pursuant to the conversion of 89 shares of the Company’s Series E Convertible Preferred Stock. On March 16, 2018, the Company issued 89,250 shares pursuant to the conversion of 89 shares of the Company’s Series E Convertible Preferred Stock. On March 19, 2018, the Company issued 74,250 shares pursuant to the conversion of 74 shares of the Company’s Series E Convertible Preferred Stock. On March 20, 2018, the Company issued 89,250 shares pursuant to the conversion of 89 shares of the Company’s Series E Convertible Preferred Stock. On March 21, 2018, the Company issued 89,250 shares pursuant to the conversion of 89 shares of the Company’s Series E Convertible Preferred Stock. On March 22, 2018, the Company issued 89,250 shares pursuant to the conversion of 89 shares of the Company’s Series E Convertible Preferred Stock. On March 23, 2018, the Company issued 89,250 shares pursuant to the conversion of 89 shares of the Company’s Series E Convertible Preferred Stock. On March 26, 2018, the Company issued 89,250 shares pursuant to the conversion of 89 shares of the Company’s Series E Convertible Preferred Stock. On March 26, 2018, the Company issued 9,608 shares of the Company’s Common Stock pursuant to the conversion of $30,746 in principal amount invested in the Convertible Note. On March 27, 2018, the Company issued 87,750 shares pursuant to the conversion of 88 shares of the Company’s Series E Convertible Preferred Stock. 33 On April 17, 2018, the Company issued 12,500 shares to Mr. Knuettel pursuant to his termination agreement. In connection with this issuance, the Company valued the shares at the quoted market price on the date of grant at $6.88 per share or $86,000. The transaction did not involve any underwriters, underwriting discounts or commissions, or any public offering. The issuance of these securities was deemed to be exempt from the registration requirements of the Securities Act by virtue of Section 4(a)(2) thereof, as a transaction by an issuer not involving a public offering. On April 27, 2018, the Company issued 300,000 shares of the Company’s Common Stock pursuant to the conversion of $960,000 in principal amount invested in the Convertible Note. On June 28, 2018, the board has determined that it is in the best interests of the Company and its shareholders to allow the Amended Merger Agreement to expire on its current termination date of June 28, 2018 without further negotiation or extension. The Board approved to issue 750,000 shares of our common stock to Global Bit Ventures, Inc as a termination fee for canceling the proposed merger between the two companies. The fair value of the common stocks was $2,850,000. On August 2, 2018, the Company issued 121,250 shares pursuant to the conversion of 121 shares of the Company’s Series E Convertible Preferred Stock. On August 10, 2018, the Company issued 121,250 shares pursuant to the conversion of 121 shares of the Company’s Series E Convertible Preferred Stock. On August 21, 2018, the Company issued 121,250 shares pursuant to the conversion of 121 shares of the Company’s Series E Convertible Preferred Stock. On August 29, 2018, the Company issued 121,250 shares pursuant to the conversion of 121 shares of the Company’s Series E Convertible Preferred Stock. On September 30, 2019, the Company consummated the purchase of 6000 S-9 Bitmain 13.5 TH/s Bitcoin Antminers (“Miners”) from SelectGreen Blockchain Ltd., a British Columbia corporation, for which the purchase price was $4,086,250 or 2,335,000 shares of its common stock at a price of $1.75 per share. As a result of an exchange cap requirement imposed in conjunction with the Company’s Listing of Additional Shares application filed with Nasdaq to the transaction, the Company issued 1,276,442 shares of its common stock which represented $2,233,773 of the $4,086,250 (constituting 19.9% of the issued and outstanding shares on the date of the Asset Purchase Agreement) and upon the receipt of shareholder approval, at the Annual Shareholders Meeting to be held on November 15, 2019, the Company can issue the balance of the 1,058,558 unregistered common stock shares. The shareholders did approve the issuance of the additional shares at the Annual Shareholders Meeting. The Company has issued and additional 474,808 at $0.90 per share. On March 30, 2020, the Company has issued an additional 350,250 shares at $1.75 per share. The $513,700 set forth on the balance sheet for mining servers payable reflects the fair value of 583,750 shares to be issued at $0.88 per share to conclude the purchase of the Miners at December 31, 2019. The Company recorded change in fair value of mining payable of $66,547 and $507,862 during the year ended December 31, 2020 and 2019, respectively.. As of December 31, 2020, there is no requirement for the Company to make a payment in cash in lieu of issuing the remaining shares. Subsequent to year end, on January 14, 2021, the Company sold its inventory of approximately 5,900 S9, 13.5 TH/s miners. As such, management determined that those crypto-currency machines were impaired by a total of $871,302 based upon an assessment as of December 31, 2020. On June 1, 2020, the Company issued 2,023,739 shares at $0.60 per share pursuant to the conversion of $999,106 of principal and $215,137 of interest related to the extinguishment of the Convertible Note. On October 6, 2020, the Company issued 6,000,000 shares at $1.87 per share pursuant to the Long Term Prepaid Service Contract with Liefern LLC and Lucky Liefern LLC each receiving 3,000,000 shares for the operation and servicing of the Hardin, Montana facility through September 2025. Recent Repurchases of Securities None. 34 ITEM 6. SELECTED FINANCIAL DATA We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 (the “Exchange Act”) and are not required to provide the information under this item. ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis is intended as a review of significant factors affecting our financial condition and results of operations for the periods indicated. The discussion should be read in conjunction with our consolidated financial statements and the notes presented herein. In addition to historical information, the following Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements that involve risks and uncertainties. Our actual results could differ significantly from those expressed, implied or anticipated in these forward-looking statements as a result of certain factors discussed herein and any other periodic reports filed and to be filed with the Securities and Exchange Commission. Cautionary Note Regarding Forward-Looking Statements This report and other documents that we file with the Securities and Exchange Commission contain forward-looking statements that are based on current expectations, estimates, forecasts and projections about our future performance, our business, our beliefs and our management’s assumptions. Statements that are not historical facts are forward-looking statements. Words such as “expect,” “outlook,” “forecast,” “would,” “could,” “should,” “project,” “intend,” “plan,” “continue,” “sustain”, “on track”, “believe,” “seek,” “estimate,” “anticipate,” “may,” “assume,” and variations of such words and similar expressions are often used to identify such forward-looking statements, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward- looking statements are not guarantees of future performance and involve risks, assumptions and uncertainties, including, but not limited to, those described in our reports that we file or furnish with the Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. Accordingly, you are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they are made. Except to the extent required by law, we undertake no obligation to update publicly any forward-looking statements after the date they are made, whether as a result of new information, future events, changes in assumptions or otherwise. Business of the Company We were incorporated in the State of Nevada on February 23, 2010 under the name Verve Ventures, Inc. As of the date of this filing, our name has been changed to Marathon Digital Holdings, Inc. On December 7, 2011, we changed our name to American Strategic Minerals Corporation and were engaged in exploration and potential development of uranium and vanadium minerals business. In June 2012, we discontinued our minerals business and began to invest in real estate properties in Southern California. In October 2012, we discontinued our real estate business when our former CEO joined the firm and we commenced our IP licensing operations, at which time the Company’s name was changed to Marathon Patent Group, Inc. On November 1, 2017, we entered into a merger agreement with Global Bit Ventures, Inc. (“GBV”), which is focused on mining digital assets. We have since purchased our cryptocurrency mining machines and established a data center in Canada to mine digital assets. Following the merger, we intended to add GBV’s existing technical capabilities and digital asset miners and expand our activities in the mining of new digital assets, while at the same time harvesting the value of our remaining IP assets. On June 28, 2018, the board has determined that it is in the best interests of the Company and its shareholders to allow the Amended Merger Agreement to expire on its current termination date of June 28, 2018 without further negotiation or extension. The Board approved to issue 750,000 shares of our common stock to GBV as a termination fee for canceling the proposed merger between the two companies. The fair value of the common stocks was $2,850,000. 35 Recent Developments Purchase of Digital Asset Mining Servers On September 30, 2019, the Company consummated the purchase of 6000 S-9 Bitmain 13.5 TH/s Bitcoin Antminers (“Miners”) from SelectGreen Blockchain Ltd., a British Columbia corporation, for which the purchase price was $4,086,250 or 2,335,000 shares of its common stock at a price of $1.75 per share. As a result of an exchange cap requirement imposed in conjunction with the Company’s Listing of Additional Shares application filed with Nasdaq to the transaction, the Company issued 1,276,442 shares of its common stock which represented $2,233,773 of the $4,086,250 (constituting 19.9% of the issued and outstanding shares on the date of the Asset Purchase Agreement) and upon the receipt of shareholder approval, at the Annual Shareholders Meeting to be held on November 15, 2019, the Company can issue the balance of the 1,058,558 unregistered common stock shares. The shareholders did approve the issuance of the additional shares at the Annual Shareholders Meeting. The Company has issued and additional 474,808 at $0.90 per share. The $513,700 set forth on the balance sheet for mining servers payable reflects the fair value of 583,750 shares to be issued at $0.88 per share to conclude the purchase of the Miners at December 31, 2019. The Company recorded change in fair value of mining payable of $66,547 and $507,862 during the year ended December 31, 2020 and 2019, respectively.. There is no requirement for the Company to make a payment in cash in lieu of issuing the remaining shares. Subsequent to year end, on January 14, 2021, the Company sold its inventory of approximately 5,900 S9, 13.5 TH/s miners. As such, management determined that those crypto-currency machines were impaired by a total of $871,302 based upon an assessment as of December 31, 2020. Critical Accounting Policies and Estimates We believe that the following accounting policies are the most critical to aid you in fully understanding and evaluating this management discussion and analysis: Digital Currencies Digital currencies are included in current assets in the consolidated balance sheets as intangible assets with indefinite useful lives. Digital currencies are recorded at cost less impairment. An intangible asset with an indefinite useful life is not amortized but assessed for impairment annually, or more frequently, when events or changes in circumstances occur indicating that it is more likely than not that the indefinite-lived asset is impaired. Impairment exists when the carrying amount exceeds its fair value, which is measured using the quoted price of the digital currency at the time its fair value is being measured. In testing for impairment, the Company has the option to first perform a qualitative assessment to determine whether it is more likely than not that an impairment exists. If it is determined that it is not more likely than not that an impairment exists, a quantitative impairment test is not necessary. If the Company concludes otherwise, it is required to perform a quantitative impairment test. To the extent an impairment loss is recognized, the loss establishes the new cost basis of the asset. Subsequent reversal of impairment losses is not permitted. At December 31, 2020, we carried $2.272 million of digital assets on our balance sheet, consisting of the approximately 126 bitcoins, and held $141.3 million in cash and cash equivalents, compared to $0.001 million of digital assets and $0.7 million in cash and cash equivalents at December 31, 2019, reflecting the shift in our liquid assets. As of March 4, 2021, we held approximately 5,035 bitcoins, of which, 4,813 bitcoins were acquired at an aggregate purchase price of $150 million at an average purchase price of approximately $31,137 per bitcoin, inclusive of fees and expenses. We expect to purchase additional bitcoin in future periods, though we may also sell bitcoin in future periods as needed to generate Cash Assets for treasury management purposes. Impairment of Long-lived Assets Management reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to undiscounted future cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Subsequent to year end, on January 14, 2021, the Company sold its inventory of approximately 5,900 S9, 13.5 TH/s miners. As such, management determined that those crypto-currency machines were impaired by a total of $871,302 based upon an assessment as of December 31, 2020. During the year ended December 31, 2019 we moved certain of our bitcoin miners to a new location in the United States and recorded an impairment of $447,776 in our leasehold improvements in Canada. 36 Recent Issued Accounting Standards See Note 2 to our consolidated financial statements for a discussion of recent accounting standards and pronouncements. Results of Operations for the Years Ended December 31, 2020 and December 31, 2019 We generated revenues of $4.4 million during the year ended December 31, 2020 as compared to $1.2 million during the year ended December 31, 2019. For the year ended December 31, 2020, this represented an increase of $3.2 million or 268%. Revenue for the years ended December 31, 2020 and 2019 were derived primarily from cryptocurrency mining. Direct cost of revenues during the year ended December 31, 2020 and 2019 amounted to approximately $7.0 million and $2.5 million, respectively. For the year ended December 31, 2020, this represented an increase of $4.5 million or 182%. Direct costs of revenue include depreciation and amortization expenses of the cryptocurrency mining machines and patents, contingent payments to patent enforcement legal costs, patent enforcement advisors and inventors as well as various non-contingent costs associated with enforcing the Company’s patent rights and otherwise in developing and entering into settlement and licensing agreements that generate the Company’s revenue. We incurred other operating expenses of $7.2 million for the year ended December 31, 2020 and $2.9 million for the year ended December 31, 2019. For the year ended December 31, 2020, this represented an increase of $4.3 million or 144%. These expenses primarily consisted of the impairment of mining equipment, compensation to our officers, directors and employees, professional fees and consulting incurred in connection with the day-to-day operation of our business and break-up fee to GBV. The operating expenses consisted of the following: Total Other Operating Expenses For the Years Ended December 31, 2020 December 31, 2019 Compensation and related taxes (1) $ 4,730,143 $ 1,475,450 Consulting fees (2) 302,561 130,813 Professional fees (3) 733,741 422,335 Other general and administrative (4) 551,671 465,783 Impairment of mining equipment (5) 871,302 - Impairment of leasehold improvements (6) - 477,776 Total $ 7,189,418 $ 2,942,157 (1) Compensation expense and related taxes: Compensation expense includes cash compensation and related payroll taxes and benefits, and non-cash equity compensation expenses. For the year ended December 31, 2020 and 2019, compensation expense and related payroll taxes were $4.7 million and $1.5 million, an increase of $3.3 million or 221%. During the years ended December 31, 2020 and 2019, we recognized non-cash employee and board equity-based compensation of $1,258,735 and $674,182, respectively. (2) Consulting fees: For the year ended December 31, 2020 and 2019, we incurred consulting fees of $0.3 million and $0.1 million, respectively, an increase of $0.2 million or 131%. Consulting fees include consulting fees primarily for investor relations and public relations services as well as other consulting services. The increase in consulting fees for the year ended December 31, 2020 compared to the same period in the prior year was primarily due to the write-off of prepaid consulting fees from a prior period. (3) Professional fees: For the year ended December 31, 2020 and 2019, professional fees were $0.7 million and $0.4 million, respectively, an increase of $0.3 million or 74%. Professional fees primarily reflect the costs of professional outside accounting fees, legal fees and audit fees. The increase in professional fees was mainly the result of legal fees related to the ATM financing offerings. 37 (4) Other general and administrative expenses: For the year ended December 31, 2020 and 2019, other general and administrative expenses were $0.6 million and $0.5 million, respectively, an increase of $0.1 million or 18%. General and administrative expenses reflect the other non-categorized operating costs of the Company and include expenses related to being a public company, rent, insurance, technology and other expenses incurred to support the operations of the Company. (5) Impairment of mining equipment: For the years ended December 31, 2020, the Company recorded a loss on the impairment of mining equipment in the amounts of $0.9 million. (6) Impairment of leasehold improvements: For the years ended December 31, 2019, the Company recorded a loss on the impairment of leasehold improvements in the amounts of $0.4 million. Operating Loss We reported operating loss from continuing operations of $9.8 million and $4.2 million for the years ended December 31, 2020 and 2019, respectively. Other Expenses Total other expenses were $0.6 million for the year ended December 31, 2020 compared to total other income of $0.7 million for the year ended December 31, 2019. The changes are de minimis. Net Loss Available to Common Shareholders We reported net loss of $10.4 million and $3.5 million for the year ended December 31, 2020 and 2019, respectively. Liquidity and Capital Resources The Company’s consolidated financial statements have been prepared assuming that it will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business. As reflected in the consolidated financial statements, the Company had and accumulated deficit of approximately $116.1 million and $105.6 million at December 31, 2020 and December 31, 2019, respectively, a net loss of approximately $10.4 million and $3.5 million, respectively, and approximately $7.8 million and $3.3 million net cash used in operating activities for the year ended December 31, 2020 and December 31, 2019, respectively. Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis. At December 31, 2020, the Company’s cash and cash equivalents balances totaled $141.3 million compared to $0.7 million at December 31, 2019. The increase in liquidity is due to the issuance of common stock during 2020 as it relates to the various At The Market Offerings. Net working capital increased by $285.3 million, to working capital of $285.0 million at December 31, 2020 from working capital deficit of $0.4 million at December 31, 2019. Cash used in operating activities was $7.8 million during the year ended December 31, 2020 compared to $3.3 million during the year ended December 31, 2019. Cash used in investing activities was $81.3 million during the year ended December 31, 2020 compared to cash provided of $1.2 million for the year ended December 31, 2019. Cash provided by financing activities was $229.7 million during the year ended December 31, 2020 compared to $0.2 million for the year ended December 31, 2019. 38 During the month of August 2019, the Company issued 16,081 shares of common stock under the At The Market Offering for the total proceeds of $35,764, net of offering cost of $1,371. During the month of September 2019, the Company issued 25,533 shares of common stock under the At The Market Offering for the total proceeds of $47,689, net of offering cost of $2,257. During the month of October 2019, the Company issued 15,510 shares of common stock under the At The Market Offering for the total proceeds of $24,756, net of offering cost of $1,289. During the month of November 2019, the Company issued 92,037 shares of common stock under the At The Market Offering for the total proceeds of $122,039, net of offering cost of $4,437. During the month of December 2019, the Company issued 22,965 shares of common stock under the At The Market Offering for the total proceeds of $25,645, net of offering cost of $1,088. During the month of January 2020, the Company issued 118,524 shares of common stock under the At The Market Offering for the total proceeds of $131,215, net of offering cost of $5,045. During the month of February 2020, the Company issued 186,211 shares of common stock under the At The Market Offering for the total proceeds of $220,802, net of offering cost of $8,687. During the month of March 2020, the Company issued 98,340 shares of common stock under the At The Market Offering for the total proceeds of $49,874, net of offering cost of $3,042. On March 30, 2020, the Company issued 350,250 shares of common stock in exchange for S9 miners with a fair market value of $612,938. During the month of April 2020, the Company issued 3,016,385 shares of common stock under the At The Market Offering for the total proceeds of $1,514,969, net of offering cost of $58,532. During the month of May 2020, the Company issued 5,987,723 shares of common stock under the At The Market Offering for the total proceeds of $3,607,398, net of offering cost of $127,765. During the month of June 2020, the Company issued 1,540,710 shares of common stock under the At The Market Offering for the total proceeds of $1,537,346, net of offering cost of $51,526. On June 1, 2020, the Company issued 2,023,739 shares of common stock in exchange for the conversion and extinguishment of the note payable outstanding in an amount of $999,106. During the month of August 2020, the Company issued 5,820,761 shares of common stock under the At The Market Offering for the total proceeds of $20,178,935, net of offering cost of $630,283. During the month of September 2020, the Company issued 943,981 shares of common stock under the At The Market Offering for the total proceeds of $2,516,199, net of offering cost of $78,874. During the month of October 2020, the Company issued 7,813,218 shares of common stock under the At The Market Offering for the total proceeds of $21,320,409, net of offering cost of $665,773. On October 6, 2020, the Company issued 6,000,000 shares of common stock in exchange for five years of services pursuant to the Power Purchase Agreement and Data Facility Services Agreement for the total proceeds of $0, net of offering cost of $0 valued at the time of execution at $1.87 per share or $11,220,000 in aggregate. During the month of November 2020, the Company issued 5,851,295 shares of common stock under the At The Market Offering for the total proceeds of $16,685,649, net of offering cost of $519,992. During the month of December 2020, the Company issued 22,924,550 shares of common stock under the At The Market Offering for the total proceeds of $239,301,605, net of offering cost of $7,255,610. 39 We believe that existing cash and cash equivalents held by us and cash and cash equivalents anticipated to be generated by us are sufficient to meet working capital requirements, anticipated capital expenditures, and contractual obligations for at least the next 12 months. As of December 31, 2020, we held approximately 125 bitcoins. Subsequent to year end, in January 2021, we purchased over 4,800 bitcoin for approximately $150 million. We do not believe we will need to sell any of our bitcoins within the next twelve months to meet our working capital requirements, although we may from time to time sell bitcoins as part of treasury management operations, including to increase our cash balances. The Bitcoin market historically has been characterized by significant volatility in its price, limited liquidity and trading volumes compared to sovereign currencies markets, relative anonymity, a developing regulatory landscape, susceptibility to market abuse and manipulation, and various other risks inherent in its entirely electronic, virtual form and decentralized network. During times of instability in the Bitcoin market, we may not be able to sell our bitcoins at reasonable prices or at all. As a result, our bitcoins are less liquid than our existing cash and cash equivalents and may not be able to serve as a source of liquidity for us to the same extent as cash and cash equivalents. In addition, upon sale of our bitcoin, we may incur additional taxes related to any realized gains or we may incur capital losses as to which the tax deduction may be limited. Off-Balance Sheet Arrangements None. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item. 40