What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-08-13 compared with 2021-05-10 · 580 added, 948 removed, 380 unchanged (80% of the section changed)

4 unchanged sentences

Current assets:

Cash and cash

Cash and cash equivalents

$ 170,615,847

3 unchanged sentences

Investment fund

expenses and other current assets

Prepaid expenses and other current assets

Total current assets

Other assets:

Property and equipment,

net of accumulated depreciation and impairment charges of $7,200,501 and $6,480,359 for March 31, 2021 and December 31, 2020, respectively

Property and equipment, net of accumulated depreciation and impairment charges of $ 10,120,373 and $ 6,480,359 for June 30, 2021 and December 31, 2020, respectively

Prepaid service contract

Right-of-use assets

assets, net of accumulated amortization of $225,392 and $207,598 for March 31, 2021 and December 31, 2020, respectively

Intangible assets, net of accumulated amortization of $ 243,187 and $ 207,598 for June 30, 2021 and December 31, 2020, respectively

Total other assets

$ 583,863,856

$ 313,251,239

LIABILITIES AND STOCKHOLDERS’

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable and accrued

Current portion of lease

Accounts payable and accrued expenses

Current portion of lease liability

Warrant liability

Total current liabilities

Long-term liabilities

PPP loan payable

long-term liabilities

SBA PPP loan payable

Total long-term liabilities

Total liabilities

Commitments and Contingencies

Stockholders’

Preferred stock, $0.0001

par value, 50,000,000 shares authorized, no shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively

Common stock,$ 0.0001 par

Stockholders’ Equity:

Preferred stock, 0.0001 par value, 50,000,000 shares authorized, no shares issued and outstanding at December 31, 2020 and December 31, 2019, respectively

Common stock, 0.0001 par value;

200,000,000 shares authorized;

99,370,465 and 81,974,619 issued and outstanding at March 31, 2021 and December 31, 2020, respectively

99,634,123 and 81,974,619 issued and outstanding at June 30, 2021 and December 31, 2020, respectively

Additional paid-in capital

Accumulated other comprehensive

Accumulated other comprehensive loss

Accumulated deficit

( 141,583,155 )

( 116,055,277 )

stockholders’

LIABILITIES AND STOCKHOLDERS’

Total stockholders’ equity

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$ 583,863,856

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CONDENSED STATEMENTS OF OPERATIONS

For the Three

Cryptocurrency

mining revenue

For the Three Months Ended

For the Six Months Ended

Cryptocurrency mining revenue

Total revenues

Operating costs and expenses

Cost of revenue

Compensation and related

Compensation and related taxes

Consulting fees

1 unchanged sentence

General and administrative

Impairment of cryptocurrencies

Impairment of mined cryptocurrency

Total operating expenses

Operating loss

Income (loss) from Operations

( 1,791,233 )

( 42,433,807 )

( 2,883,035 )

Other income (expenses)

Change in fair value of

investment in NYDIG fund

Realized gain (loss) on

sale of digital currencies

Change in fair value of

warrant liability

Change in fair value of

mining payable

Loss on conversion of note

Change in fair value of investment in NYDIG fund

( 114,907,879 )

Realized gain (loss) on sale of digital currencies

Change in fair value of warrant liability

Change in fair value of mining payable

Interest income

Total other (expenses)

(loss) before income taxes

Interest expense

Total other (expenses) income

( 113,506,226 )

income (loss)

Income (loss) before income taxes

$ ( 108,884,620 )

income (loss) per share, basic:

income (loss) per share, diluted:

Weighted average shares

outstanding, basic:

Weighted average shares

outstanding, diluted:

$ ( 2,161,196 )

$ ( 25,527,878 )

$ ( 3,219,127 )

Income tax expense

Net income (loss)

$ ( 108,884,620 )

$ ( 2,161,196 )

$ ( 25,527,878 )

$ ( 3,219,127 )

Net income (loss) per share, basic and diluted:

Weighted average shares outstanding, basic and diluted:

accompanying notes are an integral part to these unaudited consolidated condensed financial statements.

1 unchanged sentence

AND SUBSIDIARIES

CONDENSED STATEMENTS OF STOCKHOLDERS’

the Three Months Ended March 31, 2021

CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY

the Three Months Ended June 30, 2021

Comprehensive

Stockholders’

as of December 31, 2020

Stockholders’

as of March 31, 2021

$ 716,862,400

1 unchanged sentence

$ ( 450,719 )

based compensation

of common stock, net of offering costs/At-the-market offering

exercised for common stock

exercised for cash

as of March 31, 2021

$ 683,723,083

based compensation, net of tax withholding

Issuance of common stock, net of offering costs/At-the-market offering

Issuance of common stock, net of offering costs/At-the-market offering, shares

Common stock issued for purchase of mining servers

Common stock issued for purchase of mining servers, shares

Common stock issued for note conversion

Common stock issued for note conversion, shares

Options exercised on cashless basis

Options exercised on cashless basis, shares

Warrants exercised for cash

Warrant exercised for cash, shares

stock issued for cashless exercise of warrants

stock issued for service and license agreements

( 108,884,620 )

the Three Months Ended March 31, 2020

Additional Paid-in

as of June 30, 2021

$ 722,543,196

$ ( 141,583,155 )

$ ( 450,719 )

$ 580,519,285

the Three Months Ended June 30, 2020

Preferred Stock

Other Comprehensive

Stockholders’

Income (Loss)

Balance as of March 31, 2020

$ 110,284,952

$ ( 106,665,437 )

$ ( 450,719 )

Stock based compensation

Issuance of common stock, net of offering costs/At-the-market offering

Common stock issued for note conversion

Warrants exercised for cash

( 2,161,196 )

Balance as of June 30, 2020

$ 118,933,134

$ ( 108,826,633 )

$ ( 450,719 )

the Six Months Ended June 30, 2021

Preferred Stock

Comprehensive

Stockholders’

as of December 31, 2019

Stockholders’

Income (Loss)

Balance as of December 31, 2020

$ 428,242,763

$ ( 116,055,277 )

based compensation

of common stock, net of offering costs/At-the-market offering

stock issued for purchase of mining servers

as of March 31, 2020

$ ( 450,719 )

$ 311,744,964

Stock based compensation, net of tax withholding

Issuance of common stock, net of offering costs/At-the-market offering

Options exercised on cashless basis

Warrant exercised for cash

Common stock issued for cashless exercise of warrants

Common stock issued for service and license agreements

( 25,527,878 )

Balance as of June 30, 2021

$ 722,543,196

$ ( 141,583,155 )

$ ( 450,719 )

$ 580,519,285

the Six Months Ended June 30, 2020

Preferred Stock

Comprehensive

Stockholders’

Income (Loss)

Balance as of December 31, 2019

$ 109,705,051

$ ( 105,607,506 )

$ ( 450,719 )

Stock based compensation

Issuance of common stock, net of offering costs/At-the-market offering

Common stock issued for purchase of mining servers

Common stock issued for note conversion

( 3,219,127 )

Net income loss

( 3,219,127 )

Balance as of June 30, 2020

$ 118,933,134

$ ( 108,826,633 )

$ ( 450,719 )

accompanying notes are an integral part to these unaudited consolidated condensed financial statements.

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CONDENSED STATEMENTS OF CASH FLOWS

For the Three

CASH FLOWS FROM OPERATING

For the Six Months Ended

CASH FLOWS FROM OPERATING ACTIVITIES

Net income (loss)

$ ( 25,527,878 )

Adjustments to reconcile net loss to net cash

used in operating activities:

Amortization of patents

Amortization of prepaid

service contract

Realized gain (loss) on

sale of digital currencies

Change in fair value of

warrant liability

Change in fair value of

mining payable

Change in fair value of

investment securities

$ ( 3,219,127 )

Adjustments to reconcile net loss to net cash used in operating activities:

Amortization of patents and website

Realized gain (loss) on sale of digital currencies

Change in fair value of warrant liability

Change in fair value of mining payable

Change in fair value of investment securities

( 16,915,071 )

Gain on PPP loan forgiveness

Impairment of cryptocurrencies

Stock based compensation

Loss on cancellation of

Amortization of right-of-use

Changes in operating assets

and liabilities:

Other receivables

Amortization of right-of-use assets

Changes in operating assets and liabilities:

Digital currencies

( 38,474,672 )

Lease liability

Prepaid expenses and other

payable and accrued expenses

cash used in operating activities

CASH FLOWS FROM INVESTING

Prepaid expenses and other assets

Accounts payable and accrued expenses

Net cash used in operating activities

( 6,791,842 )

( 2,090,044 )

CASH FLOWS FROM INVESTING ACTIVITIES

Sale of digital currencies

Purchase of investment

Purchase of investment securities

( 150,000,000 )

Purchase of property and

( 1,277,455 )

for the purchase of mining servers

Purchase of property and equipment

( 66,566,839 )

cash (used in) provided by investing activities

Deposits for the purchase of mining servers

( 55,935,273 )

CASH FLOWS FROM FINANCING

Proceeds from issuance

of common stock/At-the-market offering

Offering costs for the

issuance of common stock/At-the-market offering

( 4,195,200 )

received on exercise of warrants

cash provided by financing activities

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents

beginning of period

Cash and cash equivalents

end of period

Net cash used in investing activities

( 272,462,112 )

Supplemental schedule of

non-cash investing and financing activities:

stock issued for purchase of mining servers

of share commitment for purchase of mining servers

exercised into common stock

( 4,697,306 )

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds received on issuance of notes payable

Proceeds from issuance of common stock/At-the-market offering

Offering costs for the issuance of common stock/At-the-market offering

( 12,571,648 )

Value of shares withheld for taxes

( 3,809,983 )

Proceeds received on exercise of options and warrants

Net cash provided by financing activities

Net increase in cash and cash equivalents

Cash and cash equivalents — beginning of period

Cash and cash equivalents — end of period

$ 170,615,847

Supplemental schedule of non-cash investing and financing activities:

Common stock issued for purchase of mining servers

Reduction of share commitment for purchase of mining servers

Options exercised into common stock

Common stock issued for note conversion

Common stock issued for service and license agreements

accompanying notes are an integral part to these unaudited consolidated condensed financial statements.

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Digital Holdings, Inc.

(the “Company”) was incorporated in the State of Nevada on February 23, 2010 under the name Verve

Ventures, Inc.

4 unchanged sentences

In October 2012, the Company discontinued its real estate business

when the former CEO joined the firm and the Company commenced IP licensing operations, at which time the Company’s name was changed

to Marathon Patent Group, Inc.

On November 1, 2017, the Company entered into a merger agreement with Global Bit Ventures, Inc.

(“GBV”),

which is focused on mining digital assets.

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value of its remaining IP assets.

As of October 2020, the financial operations were brought in house and are completed by the Company’s

accounting team that consists of a Chief Financial Officer, Chief Operating Officer and bookkeeper.

Subsequent to December 31, 2020,

the Company hired a full-time Controller.

We have also moved all of our data mining operations to our new facility in Hardin Montana.

Company’s Board of Directors adopted the reverse stock split approved by its shareholders at its December 2018 Board Meeting.

the effectiveness of the reverse stock split, every four shares of issued and outstanding common stock before the open of business on

April 8, 2019 was combined into one issued and outstanding share of common stock, with no change in par value per share.

All share and

per share values for all periods presented in the accompanying consolidated financial statements have been retroactively adjusted to

reflect the 1:4 Reverse Split.

January 1, 2018, our Board adopted the 2018 Equity Incentive Plan, subsequently approved by the stockholders on March 7, 2018, pursuant

to which up to 625,000 shares of 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.

May 21, 2019, the Company received notice from the Nasdaq Capital Market (the “Capital Market”) that the Company has failed

to maintain a minimum of $2,500,000 in stockholders’

equity for continued listing as required under Listing Rule 5550(b)(1) as

its Form 10-Q for the period ended March 31, 2019 reported stockholders’

equity of $2,158,192.

On July 23, 2019, we announced Nasdaq

approved the Company’s plan to regain compliance, and the Company was required to file its Form 10-Q for the period ending September

30, 2019 with the SEC on or before November 13, 2019, which it did, evidencing compliance with the stockholders’

equity requirement.

DIGITAL HOLDINGS, INC.

AND SUBSIDIARIES

to Consolidated Financial Statements

March 31, 2020, 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 an 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, 2020.

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

Subsequent to year end, on January 14, 2021, the Company sold its inventory of approximately 5,900 S9, 13.5 TH/s miners.

management determined that those crypto-currency machines were impaired by a total of $871,302 based upon an assessment as of December

Company believes that bitcoin is attractive because it can serve as a store of value, supported by a robust and public open source architecture,

that is untethered to sovereign monetary policy and can therefore serve as a hedge against inflation.

Bitcoin exists entirely in electronic

form, as virtually irreversible public transaction ledger entries on the blockchain, and transactions in bitcoin are recorded and authenticated

not by a central repository, but by a decentralized peer-to-peer network.

This decentralization avoids certain threats common to centralized

computer networks, such as denial of service attacks, and reduces the dependency of the bitcoin network on any single system.

bitcoin network as a whole is decentralized, the private keys used to access bitcoin balances are not widely distributed and are held

on hardware (which can be physically controlled by the holder or by a third party such as a custodian) or via software programs on third-party

servers and loss of such private keys results in an inability to access, and effective loss of, the corresponding bitcoin.

Consequently,

bitcoin holdings are susceptible to all of the risks inherent in holding any electronic data, such as power failure, data corruption,

security breach, communication failure, and user error, among others.

These risks, in turn, make bitcoin subject to theft, destruction,

or loss of value from hackers, corruption, or technology-specific factors such as viruses that do not affect conventional fiat currency.

In addition, the bitcoin network relies on open source developers to maintain and improve the bitcoin protocol.

Accordingly, bitcoin

may be subject to protocol design changes, governance disputes such as “forked”

protocols, competing protocols, and other

open source-specific risks that do not affect conventional proprietary software.

Company believes that in the context of the economic and public health crisis precipitated by COVID-19 and the unprecedented government

financial stimulus measures adopted around the world, decreasing interest rates, as well as the breakdown of trust in and between political

institutions and political parties in the United States and globally, bitcoin represents a more attractive store of value than fiat currency,

and further that opportunity for appreciation in the value of bitcoin exists in the event that such factors lead to even more widespread

adoption of bitcoin as a treasury reserve alternative.

May 11, 2020, the Company purchased 700 new generation M305+ASIC Miners from MicroBT for approximately $1.3 million.

The 700 miners produce

80/Th and will generate 56 PH/s (petahash) of hashing power, compared to the Company’s current S-9 production of 46 PH/s.

next generation MicroBT ASIC miners are markedly more energy efficient than our existing Bitmain models.

These miners were delivered

to the Company’s Hosting Facility in June and are producing Bitcoins.

Company purchased 660 latest generation Bitmain S19 Pro Miners on May 12, 2020, 500 units on May 18, 2020 and an additional 500 units

on June 11, 2020.

These miners produce 110 TH/s and will generate 73 PH/s (petahash) of hashing power, compared to the Company’s

S-9 production of 46 PH/s.

The Company made the payments of approximately $4.2 million in the second quarter of 2020 and received 660

of the 1,660 units at its Hosting Facility in August, and its hosting partner, Compute North, had installed them upon their arrival.

Of the 1,000 remaining S-19 Pro Miners due to arrive in the 4 th quarter, 500 were received in November and installed in the

Company’s Hosting Facility in Montana, while 500 were received and installed during the remainder of the 4 th quarter.

These miners will produce an additional 110 PH/s increasing the Company to an aggregate Hashpower of 294 PH/s.

July 29, 2020, the Company announced the purchase of 700 next generation M31S+ASIC Miners from MicroBT.

The miners arrived mid-August.

August 13, 2020, the Company entered into a Long Term Purchase Contract with Bitmaintech PTE., LTD (“Bitmain”) for the purchase

As of June 30, 2021, the Company has since terminated the lease in Canada and deployed

over 17,300 of our data mining operations in our facility in Hardin, Montana.

August 13, 2020, the Company entered into a Long Term Purchase Contract with Bitmaintech PTE., LTD (“Bitmain”) for the purchase

of 10,500 next generation Antminer S-19 Pro ASIC Miners.

5 unchanged sentences

of 8.63 % to the purchase price adjusting the amount due to $ 22,660,673 .

DIGITAL HOLDINGS, INC.

AND SUBSIDIARIES

to Consolidated Financial Statements

Company shall pay for the Antminers as follows:

percent (20%) of the total purchase price shall be paid as a nonrefundable down payment within forty-eight (48) hours of execution

of the agreement.

Company shall pay the twenty percent (20%) of the total purchase price prior to September 20, 2020.

Company shall pay the ten percent (10%) of the total purchase price prior to October 10, 2020.

Company shall pay the remaining fifty percent (50%) of the total purchase price in equal monthly installments due not less than fifty-five

(55) days prior to the scheduled delivery of the Product(s) as follows:

thirty-three percent (8.33%) no later than 55 days prior to each scheduled delivery period as to the first installment of products

to be shipped to the Company in January 2021.

thirty-three percent (8.33%) no later than 55 days prior to each scheduled delivery period as to the second installment of the products

to be shipped to the Company in February 2021.

thirty-three percent (8.33%) no later than 55 days prior to each scheduled delivery period as to the third installment of the products

to be shipped to the Company in March 2021.

thirty-three percent (8.33%) no later than 55 days prior to each scheduled delivery period as to the fourth installment of the products

to be shipped to the Company in April 2021.

thirty-three percent (8.33%) no later than 55 days prior to each scheduled delivery period as to the fifth installment of the products

to be shipped to the Company in May 2021.

thirty-three percent (8.33%) no later than 55 days prior to each scheduled delivery period as to the sixth installment of the products

to be shipped to the Company in June 2021.

to the timely payment of the purchase price, Bitmain shall deliver products according to the following schedule:

2 unchanged sentences

and 1,800 units on or before each of February 28, 2021;

March 31, 2021;

June 30, 2021;

April 30, 2021, May 31, 2021 and June 30, 2021.

As of March 31, 2021, the Company has paid $22,660,679 of the total balance of $22,660,679.

As of June 30, 2021, the Company has paid the entire purchase price under this agreement and has received 9,399 units from Bitmain with

an additional 1,101 in transit.

October 6, 2020, the Company entered into a series of agreements with affiliates of Beowulf Energy LLC, a Delaware limited liability

company (collectively and as applicable, “Beowulf”) and Two Point One, LLC, a Delaware limited liability company (“2Pl”;

Marathon, Beowulf and 2Pl each a “Party”

and, collectively, the “Parties”).

company (collectively and as applicable, “Beowulf”) and Two Point One, LLC, a Delaware limited liability company (“2Pl”;

Marathon, Beowulf and 2Pl each a “Party” and, collectively, the “Parties”).

Beowulf and 2Pl have been designing

and developing a data center facility of up to 100-megawatts (the “Facility”) that will be located next to, and supplied

energy directly from, Beowulf’s power generating station in Hardin, MT (the “Hardin Station”).

and developing a data center facility of up to 100-megawatts (the “Facility”) that will be located next to, and supplied

energy directly from, Beowulf’s power generating station in Hardin, MT (the “Hardin Station”).

The Facility is being

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containers, PDUs, fans, network cables, and the like.

As of June 30, 2021, the Company has paid all of the required installments totaling

$ 33 million in actual costs related to the 100 MW build out.

DIGITAL HOLDINGS, INC.

AND SUBSIDIARIES

to Consolidated Financial Statements

TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

and Beowulf entered into an exclusive Power Purchase Agreement for the initial supply of 30 MW (Phase I), and up to 100 MW in the aggregate

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After the execution of the contract, the Company entered into additional miner purchase agreements.

Due to the increased size of the Company’s fleet of miners, Phase I was increased from the initial 30 MW to 70 MW, while Phase

II will encompass the completion of the remaining 30 MW for the project.

and 2P1 will provide operation and maintenance services for the Facility pursuant to a Data Facility Services Agreement, in exchange

for an initial issuance of 3,000,000 shares of Marathon’s common stock to each of Beowulf and 2Pl valued at the time of execution

at $ 1.87 per share or $ 11,220,000 in aggregate.

1 unchanged sentence

of its common stock.

During Phase II, Marathon will issue to Beowulf an additional 350,000 shares of its common stock –

During Phase II, Marathon will issue to Beowulf an additional 350,000 shares of its common stock – 150,000

shares upon reaching 60 MW of Facility load and 200,000 at completion of the full 100 MW of Facility load.

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from registration under Section 4(a)(2) of the Securities Act of 1933.

October 19, 2020, David Lieberman retired as the Company’s Chief Financial Officer, and Simeon Salzman was appointed Chief Financial

October 23, 2020, the Company executed a contract with Bitmain to purchase an additional 10,000 next generation Antminer S-19 Pro ASIC

3 unchanged sentences

the amount due to $ 21,581,594 .

As of March 31, 2021, the Company has paid $21,581,594 of the total balance of $21,581,594.

of the November 12, 2020, the Company sold all shares of our common stock available thereunder for an aggregate purchase price of $100,000,000

under our 2020 At the Market Offering pursuant to our registration statement on Form S-3 declared effective by the SEC on August 6, 2020,

which was the total amount available for sale thereunder.

As of June 30, 2021, the Company has paid the entire purchase price under this agreement and has received

10,000 units from Bitmain.

December 8, 2020, the Company executed a contract with Bitmain to purchase an additional 10,000 next generation Antminer S-19j Pro ASIC

5 unchanged sentences

executed contracts, Bitmain applied a discount of 8.63 % to the purchase price adjusting the amount due to $ 21,718,649 .

As of March 31,

As of June 30,

2021, the Company has paid $ 17,374,924 of the total balance of $ 21,718,649 .

December 11, 2020, the Company entered into an At The Market Agreement with HC Wainwright for up to $200,000,000.

On January 12, 2021,

the Company also announced that it had successfully completed its previously announced $200 million shelf offering by utilizing its at-the-market

(ATM) facility.

As a result, the Company ended the 2020 fiscal year with $141.3 million in cash and 81,974,619 shares outstanding.

December 23, 2020, the Company executed a contract with Bitmain to purchase an additional 70,000 next generation Antminer S-19 ASIC Miners,

with 7,000 units to be delivered in July 2021, and the remaining 63,000 units to be delivered in December 2021.

December 23, 2020, the Company executed a contract with Bitmain to purchase an additional 70,000

next generation Antminer S-19 ASIC Miners,

units to be delivered by August 2021, 2,100 units to be delivered by September 2021, 6,500 units to be delivered by October 31, 2021, 14,700 units to be delivered by November

30, 2021, 24,500 units to be delivered by December 31, 2021 and 15,200 units to be delivered by January 31, 2022.

The purchase price is $ 167,763,451 .

$167,763,451.

The purchase price for the miners shall be paid as follows:

within 48 hours of signing of contract;

30% on or before

March 1, 2021;

on or before March 1, 2021;

on June 15, 2021;

2 unchanged sentences

on September 15, 2021;

17.63% on October

15, 2021 and 11.55% on November 15, 2021.

As of March 31, 2021, the Company has paid $83,881,726 of the total balance of $167,763,452.

on October 15, 2021 and 11.55 %

on November 15, 2021.

As of June 30, 2021, the

Company has paid $ 91,080,311

of the total balance of $ 167,763,452 .

DIGITAL HOLDINGS, INC.

AND SUBSIDIARIES

to Consolidated Financial Statements

TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

December 31, 2020, the Company sold 6,632,712 shares of common stock pursuant to the At The Market offering.

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receivable was recorded in an amount of $ 74.8 million.

As of March 31, 2021, this amount was received in full.

As of June 30, 2021, this amount was received in full.

December 31, 2020, the Board of Directors of the Company ratified the following arrangements approved by its Compensation Committee:

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He was also granted the following:

award of 1,000,000 RSUs when the company’s market capitalization reaches

and sustains a market capitalization for 30 consecutive days above $ 500,000,000 ;

award of 1,000,000 RSUs priced when the company’s

market capitalization reaches and sustains a market capitalization for 30 consecutive days above $ 750,000,000 ;

award of 2,000,000 RSUs

priced at lowest closing stock price in past 30 trading days when the company’s market capitalization reaches and sustains a market

capitalization for 30 consecutive days above $ 1,000,000,000 ;

and award of 2,000,000 RSUs when the Company’s market capitalization

reaches and sustains a market capitalization for 30 consecutive days above $ 2,000,000,000 .

1 unchanged sentence

Okamoto had earned

all bonuses set forth, and as a result of the maximum shares available under the Company’s 2018 Equity Incentive Plan having been

issued, he is owed an additional 2,547,392 RSUs, for which the Company will, within 15 business days of the date of this report, file

1 unchanged sentence

of shares available under the Plan in a sufficient number to cover issuance of these 2,547,392 RSUs.

Salzman, CFO, was granted a bonus payment of $40,000 in cash;

and a bonus of 91,324 RSUs with immediate vesting.

James Crawford, COO,

was granted a bonus payment of $127,308 in cash and a stock bonus of 57,990 RSUs with immediate vesting.

Furthermore, per his employment

agreement, his base salary for the 2021 will be increased by 3%.

for directors of the board for 2021 as follows:

(i) cash compensation of $60,000 per year for each director, plus an additional $15,000

per year for each committee chair, paid 25% at the end of each calendar quarter;

(ii) for existing directors, the equivalent of 54,795

and (iii) for newly elected directors, a one-time grant of 91,324 RSUs, vesting 25% each calendar quarter during 2021.

For clarification,

new directors will also receive the same annual compensation as existing directors in addition to their one time grant.

January 6, 2021, the Company issued 566,279 shares pursuant to the 2018 Equity Incentive Plan for shares that vested as of December 31,

Subsequent to year end, the Company issued 170,904 and 23,500 shares of common stock pursuant to warrant and option exercises,

respectively.

January 12, 2021, the Company also announced that it had successfully completed its previously announced $200 million shelf offering

by utilizing its at-the-market (ATM) facility.

Pursuant to the terms of the offering 12,500,000 shares of common stock were issued at

a value of $20 per share.

As a result, the Company ended the 2020 fiscal year with $141.3 million in cash and 81,974,619 shares outstanding.

January 12, 2021, the Company, entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain purchasers

named therein (the “Purchasers”), pursuant to which the Company agreed to issue and sell, in a registered direct offering

(the “Offering”), 12,500,000 shares of its common stock (the “Securities”) at an offering price of $20.00 per

As of June 30, 2021, these shares

are still due to be issued.

January 12, 2021, the Company, entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain purchasers

named therein (the “Purchasers”), pursuant to which the Company agreed to issue and sell, in a registered direct offering

(the “Offering”), 12,500,000 shares of its common stock (the “Securities”) at an offering price of $ 20.00 per

Purchase Agreement contains customary representations and warranties and agreements of the Company and the Purchasers and customary indemnification

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of $ 250,000,000 in connection with the Offering, before deducting placement agent fees and related offering expenses.

January 19, 2021, David Lieberman resigned as a director of the Company.

On the same date, the Company’s Board appointed Kevin

DeNuccio as a director to fill the vacancy created by Mr.

Lieberman’s resignation.

DeNuccio is the Founder and General Partner of Wild West Capital LLC since 2012 where he focused on angel investments, primarily in SAAS

software start-ups.

brings to Marathon more than 25 years of experience as a chief executive, global sales leader, public and private board member, and more

than a dozen angel investments, managing and growing leading technology businesses.

He served in senior executive positions with Verizon,

Cisco Systems, Ericsson, Redback Networks, Wang Laboratories and Unisys Corporation.

January 25, 2021, the Company announced that it has purchased 4,812.66 BTC in

an aggregate purchase price of $150 million through an investment fund of one managed by NYDIG as the general partner, while the Company

retains 100% of the limited partner interests.

We expect to purchase additional bitcoin held by the investment fund in future

periods, though we may also sell bitcoin in future periods as needed to generate Cash Assets for treasury management purposes.

February 11, 2021, the Company issued 4,701,442 shares of common stock pursuant to the 2018

Equity Incentive Plan.

January 25, 2021, the Company announced that it has purchased 4,812.66 BTC in an aggregate purchase price of $ 150 million through an

investment fund of one managed by NYDIG as the general partner, while the Company retains 100% of the limited partner interests.

to purchase additional bitcoin held by the investment fund in future periods, though we may also sell bitcoin in future periods as needed

to generate Cash Assets for treasury management purposes.

February 11, 2021, the Company issued 4,701,442 shares of common stock pursuant to the 2018 Equity Incentive Plan.

March 1, 2021, the Company changed its name to Marathon Digital Holdings, Inc.

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2017, the Company assumed a lease in connection with the mining operations in Quebec, Canada.

April 26, 2021, the Company appointed Fred Thiel as its new chief executive officer.

Thiel will succeed Merrick Okamoto, who has

served as the Company’s chief executive officer since 2018, and who will serve as executive chairman of the board of directors

following the transition.

and Financial Condition

Company’s consolidated condensed 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.

March 31, 2021, the Company had approximately $212,000,000 in cash on hand.

March 31, 2021, we carried $292.6 million of digital assets on our balance sheet as digital currencies and investment fund, which include

cumulative impairments of $662k, consisting of the approximately 5,130 bitcoins, and held $211.9 million in cash and cash equivalents,

compared to $2.3 million of digital assets and $141.3 million in cash and cash equivalents at December 31, 2020, reflecting the shift

in our liquid assets.

As of May 10, 2021, we held approximately 5,290 bitcoins, of which, 4,812.66 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.

These purchased bitcoins are held in an investment fund of one where the Company is the sole limited partner.

We expect to purchase additional

bitcoin held by the investment fund in future periods, though we may also sell bitcoin in future periods as needed to generate Cash Assets

for treasury management purposes.

January 12, 2021, the Company, entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain purchasers

named therein (the “Purchasers”), pursuant to which the Company agreed to issue and sell, in a registered direct offering

(the “Offering”), 12,500,000 shares of its common stock (the “Securities”) at an offering price of $20.00 per

The closing of the Offering occurred on January 15, 2021.

The Company received gross proceeds of $250,000,000 in connection with

the Offering, before deducting placement agent fees and related offering expenses.

impact of the worldwide spread of a novel strain of coronavirus (“COVID 19”) has been and continues to be unprecedented and

unpredictable, but based on the Company’s current assessment, the Company does not expect any material impact on its long-term

May 21, 2021, Marathon Digital Holdings, Inc.

(the “Company”) entered into a binding letter of intent with Compute North,

LLC to host 73,000 Bitcoin Miners over a staged in implementation between October 2021 and March 2022.

The hosting cost is $ 0.50 per

machine per month and the hosting rate will be $ 0.044 per kWh.

In order to build out the infrastructure without paying for the capital

expenditure, the Company will provide an 18 month bridge loan to Compute North of up to $ 67 million dollars, in tranches, based upon

specified requirements being met.

The terms of the contract are limited to three years with increases thereafter capped at three percent

per year thereafter.

The Company has also agreed to pay up to $ 14 million in expedite fees for construction/electrical and supply chain

expediting activities.

As of June 30, 2021, the Company paid $ 8 million of the $ 14 million in expedite fees recorded as a deposit on

the balance sheet.

and Uncertainties

impact of the worldwide spread of a novel strain of coronavirus (“COVID 19”) has been and continues to be unprecedented and

unpredictable, but based on the Company’s current assessment, the Company does not expect any material impact on its long-term

strategic plans, operations and its liquidity due to the worldwide spread of COVID-19.

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of Presentation and Principles of Consolidation

accompanying unaudited consolidated condensed financial statements, including the accounts of the Company’s subsidiaries, Marathon

Crypto Mining, Inc., Crypto Currency Patent Holding Company and Soems Acquisition Corp., have been prepared by the Company, without audit,

8 unchanged sentences

condensed financial statements be read in conjunction with the consolidated financial statements and the notes thereto included in the

Company’s most recent Annual Report on Form 10-K.

The results of operations for the interim periods are not necessarily indicative

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Accounting Policies

have been no material changes to the Company’s significant accounting policies to those previously disclosed in the Company’s

Annual Report on Form 10-K for the fiscal year ended December 31, 2020.

14 unchanged sentences

is a process designed to control the overall supply and reduce the risk of inflation in cryptocurrencies using a Proof-of-Work consensus

At a predetermined block, the mining reward is cut in half, hence the term “Halving”.

The last halving for bitcoin

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following a future halving is unknown.

following table presents the activities of the digital currencies for the three months ended March 31, 2021:

currencies at December 31, 2020

following table presents the activities of the digital currencies for the six months ended June 30, 2021:

SCHEDULE OF ACTIVITIES OF DIGITAL CURRENCIES

Digital currencies at December 31, 2020

Additions of digital currencies

Realized gain on sale of

digital currencies

Realized gain on sale of digital currencies

Impairment of cryptocurrencies

of digital currencies

currencies at March 31, 2021

( 11,740,859 )

Sale of digital currencies

Digital currencies at June 30, 2021

DIGITAL HOLDINGS, INC.

1 unchanged sentence

TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

2016, the FASB issued Accounting Standards Update (ASU) 2016-01, Financial Instruments —

Overall (Subtopic 825-10):

2016, the FASB issued Accounting Standards Update (ASU) 2016-01, Financial Instruments — Overall (Subtopic 825-10):

and Measurement of Financial Assets and Financial Liabilities, that requires entities to generally measure investments in equity

securities at fair value and recognize changes in fair value in net income.

January 25, 2021, the Company entered into a limited partnership agreement with NYDIG Digital Assets Fund III, LP (“fund”)

whereas the fund purchased 4,812.66 BTC in

an aggregate purchase price of $150 million.

The Company owns 100% of the limited partnership interest.

The investment fund is included

in current assets in the consolidated balance sheets.

January 25, 2021, the Company entered into a limited partnership agreement with NYDIG Digital Assets Fund III, LP (“fund”)

whereas the fund purchased 4,812.66 BTC in an aggregate purchase price of $ 150 million.

The Company owns 100 % of the limited partnership

The investment fund is included in current assets in the consolidated balance sheets.

Fund qualifies and operates as an investment company for accounting purposes pursuant to the accounting and reporting guidance under

ASC 946, Financial Services –

Investment Companies, which requires fair value measurement of the Fund’s investments in digital

The digital assets held by each Fund are traded on a number of active markets globally, including the over-the-counter (“OTC”)

ASC 946, Financial Services – Investment Companies, which requires fair value measurement of the Fund’s investments in digital

The digital assets held by each Fund are traded on a number of active markets globally, including the over-the-counter (“OTC”)

market and digital asset exchanges.

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market-based inputs or unobservable inputs that are corroborated by market data

inputs for which there is little or no market data, which require the use of the reporting entity’s own assumptions.

carrying amounts reported in the consolidated balance sheet for cash, accounts receivable, accounts payable, and accrued expenses, approximate

4 unchanged sentences

to their fair value measurement.

The Company measures the fair value of its marketable securities and investments

by taking into consideration valuations obtained from third-party pricing sources.

The pricing services utilize industry standard valuation

models, including both income and market-based approaches, for which all significant inputs are observable, either directly or indirectly,

to estimate fair value.

These inputs included reported trades of and broker-dealer quotes on the same or similar securities, issuer credit

spreads, benchmark securities and other observable inputs.

following tables present information about the Company’s assets and liabilities measured at fair value on a recurring basis and

the Company’s estimated level within the fair value hierarchy of those assets and liabilities as of March 31, 2021 and December

The Company measures the fair value of its marketable securities and investments by taking into consideration

valuations obtained from third-party pricing sources.

The pricing services utilize industry standard valuation models, including both

income and market-based approaches, for which all significant inputs are observable, either directly or indirectly, to estimate fair

These inputs included reported trades of and broker-dealer quotes on the same or similar securities, issuer credit spreads, benchmark

securities and other observable inputs.

DIGITAL HOLDINGS, INC.

AND SUBSIDIARIES

TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

following tables present information about the Company’s assets and liabilities measured at fair value on a recurring basis and

the Company’s estimated level within the fair value hierarchy of those assets and liabilities as of June 30, 2021 and December

31, 2020, respectively:

value measured at March 31, 2021

OF ASSETS AND LIABILITIES MEASURED AT FAIR VALUE ON RECURRING BASIS

Fair value measured at June 30, 2021

Total carrying

value at March 31,

Quoted prices

in active markets

other observable inputs

unobservable inputs

value at June 30,

Quoted prices in active markets

Significant other observable inputs

Significant unobservable inputs

Investment Fund

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$ 166,915,071

value measured at December 31, 2020

carrying value at December 31,

prices in active markets

other observable inputs

unobservable inputs

were no transfers between Level 1, 2 or 3 during the three months ended March 31, 2021.

Warrant liability

Fair value measured at December 31, 2020

Total carrying value at December 31,

Quoted prices in active markets

Significant other observable inputs

Significant unobservable inputs

Warrant liability

were no transfers between Level 1, 2 or 3 during the three months ended June 30, 2021.

value of warrant liabilities

March 31, 2021, the Company had an outstanding warrant liability in the amount of $1,914,332 associated with warrants that were issued

in January 2017 and January 2021 and warrants issued related to the Convertible Notes issued in August and September of 2017.

June 30, 2021, the Company had an outstanding warrant liability in the amount of $ 718,329 associated with warrants that were issued in

January 2017 and January 2021 and warrants issued related to the Convertible Notes issued in August and September of 2017.

The following

table rolls forward the fair value of the Company’s warrant liability, the fair value of which is determined by Level 3 inputs

for the three months ended March 31, 2021.

table rolls forward the fair value of the Company’s warrant liability, the fair value of which is determined by Level 3 inputs

for the three months ended June 30, 2021.

SCHEDULE OF FAIR VALUE OF WARRANT LIABILITIES

Outstanding as of December 31, 2020

in fair value of warrants

Outstanding as of March 31, 2021

Income and Basic and Diluted Net Income per Share

for the three months ended March 31, 2021 is $ 83,356,742, however approximately $132 million

of that income was generated as an unrealized gain from the change in value of our “fund of one”

the Company had previously generated NOL carry-forwards for federal and state purposes of approximately $45.6 million and $27.2

million, respectively.

As such, the Company would not owe corporate income taxes as of March 31, 2021.

income per common share is calculated in accordance with ASC Topic 260:

Earnings Per Share (“ASC 260”).

per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period.

The computation of diluted net incomes per share does not include dilutive common stock equivalents in the weighted average shares

outstanding, as they would be anti-dilutive.

Change in fair value of warrants

Outstanding as of June 30, 2021

Non-recurring measurement of Fair Value

Company accounts for its digital currencies as indefinite-lived intangible assets in accordance with Accounting Standards Codification

(“ASC”) 350, Intangibles – Goodwill and Other .

The Company’s digital currencies are initially recorded

at fair value upon receipt (or “carrying value”).

On a quarterly basis, they are measured at carrying value, net of any impairment

losses incurred since receipt.

Pursuant to guidance from ASC 820, Fair Value Measurement, the Company is required to determine

the non-recurring fair value measurement used to determine impairment of the digital currencies held on the balance sheet.

will record impairment losses as the fair value falls below the carrying value of the digital currencies.

The digital currencies can

only be marked down when impaired and not marked up when their value increases.

The resulting carrying value represents the fair value

of the asset.

The last impairment date for the digital currencies was June 30, 2021.

The Company had an outstanding carrying balance

of digital assets of approximately $ 29 million, net of impairment losses incurred of $ 11.7 million for the six month period ended June

As of June 30, 2021, the fair value of the approximate 971 bitcoin held as digital currencies is approximately $ 33.8 million.

DIGITAL HOLDINGS, INC.

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TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

of potential shares for the diluted earning (loss) per share calculation at March 31, 2021 and 2020 are as follows:

Income and Basic and Diluted Net Income (Loss) per Share

income (loss) for the three and six months ended June 30, 2021 is $ ( 108,884,620 )

and $ ( 25,527,878 ) ;

however approximately $ 16.9

million of that income was generated as an unrealized gain

from the change in value of our “fund of one” investment.

In addition, the Company had previously generated NOL carry-forwards

for federal and state purposes of approximately $ 45.6

million and $ 27.2

million, respectively.

As such, the Company would

not owe corporate income taxes as of June 30, 2021.

Net income (loss) per common share is calculated in accordance with ASC Topic 260:

Earnings Per Share (“ASC 260”).

Basic income (loss) per share is computed by dividing net income (loss) by

the weighted average number of shares of common stock outstanding during the period.

The computation of diluted net loss per share

does not include dilutive common stock equivalents in the weighted average shares outstanding, as they would be anti-dilutive.

dilutive securities that are not included in the calculation of diluted net loss per share because their effect is anti-dilutive are

SCHEDULE OF ANTIDILUTIVE SECURITIES EXCLUDED FROM COMPUTATION OF EARNINGS PER SHARE

As of June 30,

Warrants to purchase common stock

Restricted stock

Options to purchase common stock

Convertible notes to

exchange common stock

following table sets forth the computation of basic and diluted loss per share:

the Three Months Ended March 31,

Net income (loss) attributable

to common shareholders

SCHEDULE OF COMPUTATION OF BASIC AND DILUTED LOSS PER SHARE

For the Three Months Ended June 30,

For the Six Months Ended June 30,

Net loss attributable to common shareholders

$ ( 108,884,620 )

Weighted average common shares - basic

Weighted average common shares - diluted

Income (loss) per common share - basic

Income (loss) per common share - diluted

connection with August 14, 2017 Convertible Note financing, the Company adopted a sequencing policy whereby all future instruments may

be classified as a derivative liability with the exception of instruments related to share-based compensation issued to employees or

This convertible note was satisfied in full during the second quarter of 2020, therefore as of March 31, 2021, no future instruments

are subject to the Company sequencing policy.

$ ( 2,161,196 )

$ ( 25,527,878 )

$ ( 3,219,127 )

Weighted average common shares - basic and diluted

Income (loss) per common share - basic and diluted

Accounting Pronouncements

December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2019-12, “

Company adopted Accounting Standards Update (“ASU”) No.

2019-12, “ Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes (“ASU 2019-12”)”

is intended to simplify various aspects related to accounting for income taxes.

ASU 2019-12 removes certain exceptions to the general

principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application.

This guidance is effective

for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted.

Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures.

Simplifying the

Accounting for Income Taxes (“ASU 2019-12”)” effective as of January 1, 2021, which is intended to simplify various

aspects related to accounting for income taxes.

ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also

clarifies and amends existing guidance to improve consistent application.

This guidance is effective for fiscal years, and interim periods

within those fiscal years, beginning after December 15, 2020, with early adoption permitted.

The Company believes that its income tax

positions and deductions would be sustained on audit and does not anticipate any adjustments that would result in material changes to

its financial position.

new accounting standards, not disclosed above, that have been issued or proposed by FASB that do not require adoption until a future

date are not expected to have a material impact on the financial statements upon adoption.

DIGITAL HOLDINGS, INC.

AND SUBSIDIARIES

TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

3 – DEPOSIT, PROPERTY AND EQUIPMENT AND INTANGIBLE ASSETS

3 unchanged sentences

is a process designed to control the overall supply and reduce the risk of inflation in cryptocurrencies using a Proof-of-Work consensus

At a predetermined block, the mining reward is cut in half, hence the term “Halving”.

The last halving for bitcoin

4 unchanged sentences

The 700 miners produce

80/Th and will generate 56 PH/s (petahash) of hashing power, compared to the Company’s current S-9 production of 46 PH/s.

next generation MicroBT ASIC miners are markedly more energy efficient than our existing Bitmain models.

These miners were delivered

to the Company’s Hosting Facility in June 2020 and are producing Bitcoins.

Company purchased 660 latest generation Bitmain S19 Pro Miners on May 12, 2020, 500 units on May 18, 2020 and an additional 500 units

on June 11, 2020.

These miners produce 110 TH/s and will generate 73 PH/s (petahash) of hashing power, compared to the Company’s

S-9 production of 46 PH/s.

The Company made the payments of approximately $4.2 million in the second quarter of 2020 and received 660

of the 1,660 units at its Hosting Facility in August, and its hosting partner, Compute North, had installed them upon their arrival.

Of the 1,000 remaining S-19 Pro Miners due to arrive in the 4 th quarter, 500 were received in November and installed in the

Company’s Hosting Facility in Montana, while 500 are anticipated to be received and installed during the remainder of the 4 th

These miners will produce an additional 110 PH/s increasing the Company to an aggregate Hashpower of 294 PH/s.

to the Company’s Hosting Facility in June 2020 and are producing Bitcoins.

Company purchased 660

latest generation Bitmain S19 Pro Miners on May

12, 2020, 500

units on May 18, 2020 and an additional 500

units on June 11, 2020.

miners produce 110 TH/s and will generate 73 PH/s (petahash) of hashing power, compared to the Company’s S-9 production of 46 PH/s.

The Company made the payments of approximately $4.2 million in the second quarter of 2020 and received 660 of the 1,660 units at its

Hosting Facility in August, and its hosting partner, Compute North, had installed them upon their arrival.

Of the 1,000 remaining S-19

Pro Miners due to arrive in the 4 th quarter, 500 were received in November and installed in the Company’s Hosting Facility

in Montana, while 500 are anticipated to be received and installed during the remainder of the 4 th quarter.

These miners will

produce an additional 110 PH/s increasing the Company to an aggregate Hashpower of 294 PH/s.

July 29, 2020, the Company announced the purchase of 700 next generation M31S+ASIC Miners from MicroBT.

The miners arrived mid-August.

August 13, 2020, the Company entered into a Long Term Purchase Contract with Bitmaintech PTE., LTD (“Bitmain”) for the purchase

of 10,500 next generation Antminer S-19 Pro ASIC Miners.

3 unchanged sentences

than 1,155,000 TH/s.

Company shall pay for the Antminers as follows:

percent (20%) of the total purchase price shall be paid as a non-refundable down payment within forty-eight (48) hours of execution

of the agreement.

Company shall pay the twenty percent (20%) of the total purchase price prior to September 20, 2020.

Company shall pay the ten percent (10%) of the total purchase price prior to October 10, 2020.

Company shall pay the remaining fifty percent (50%) of the total purchase price in equal monthly installments due not less than fifty-five

(55) days prior to the scheduled delivery of the Product(s) as follows:

thirty-three percent (8.33%) no later than 55 days prior to each scheduled delivery period as to the first installment of products

to be shipped to the Company in January 2021.

thirty-three percent (8.33%) no later than 55 days prior to each scheduled delivery period as to the second installment of the products

to be shipped to the Company in February 2021.

thirty-three percent (8.33%) no later than 55 days prior to each scheduled delivery period as to the third installment of the products

to be shipped to the Company in March 2021.

thirty-three percent (8.33%) no later than 55 days prior to each scheduled delivery period as to the fourth installment of the products

to be shipped to the Company in April 2021.

thirty-three percent (8.33%) no later than 55 days prior to each scheduled delivery period as to the fifth installment of the products

to be shipped to the Company in May 2021.

thirty-three percent (8.33%) no later than 55 days prior to each scheduled delivery period as to the sixth installment of the products

to be shipped to the Company in June 2021.

to the timely payment of the purchase price, Bitmain is and has been scheduled deliver products according to the following schedule:

1 unchanged sentence

and 1,800 units on or before each of February 28, 2021;

March 31, 2021;

June 30, 2021;

April 30, 2021, May

31, 2021 and June 30, 2021.

As of March 31, 2021, the Company has paid $22,660,679 of the total balance of $22,660,679.

As of June 30, 2021, the Company has paid the entire purchase price under this agreement and has received

9,399 units from Bitmain with an additional 1,101 in transit.

October 23, 2020, the Company executed a contract with Bitmain to purchase an additional 10,000 next generation Antminer S-19 Pro ASIC

1 unchanged sentence

gross purchase price is $23,620,000 with 30% due upon the execution of the contract and the balance paid over the next 4 months.

to executing this agreement, due to the additional executed contracts, Bitmain applied a discount of 8.63% to the purchase price adjusting

the amount due to $21,581,594.

As of March 31, 2021, the Company has paid $21,581,594 of the total balance of $21,581,594.

Subsequent to executing this agreement, due to the additional executed contracts, Bitmain applied a discount of 8.63% to the purchase

price adjusting the amount due to $ 21,581,594 .

As of June 30, 2021, the Company has paid the entire purchase price under this agreement and has received 10,000

units from Bitmain.

December 8, 2020, the Company executed a contract with Bitmain to purchase an additional 10,000 next generation Antminer S-19j Pro ASIC

3 unchanged sentences

due on February 15, 2021, 30% due on June 15, 2021 and 20% due on July 15, 2021.

Subsequent to executing this agreement, due to the additional

executed contracts, Bitmain applied a discount of 8.63% to the purchase price adjusting the amount due to $21,718,649.

As of March 31,

2021, the Company has paid $10,859,330 of the total balance of $21,718,649.

Subsequent to executing this agreement, due to

the additional executed contracts, Bitmain applied a discount of 8.63% to the purchase price adjusting the amount due to $21,718,649.

As of June 30, 2021, the Company has paid $ 17,374,924

of the total balance of $ 21,718,649 .

DIGITAL HOLDINGS, INC.

AND SUBSIDIARIES

TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

December 23, 2020, the Company executed a contract with Bitmain to purchase an additional 70,000 next generation Antminer S-19 ASIC Miners,

with 7,000 units to be delivered in July 2021, and the remaining 63,000 units to be delivered in December 2021.

The purchase price is

$167,763,451.

with 7,000 units to be delivered by August

2,100 units to be delivered by September 2021, 6,500 units to be delivered by October 31, 2021, 14,700 units to be delivered by November

30, 2021, 24,500 units to be delivered by December 31, 2021 and 15,200 units to be delivered by January 31, 2022.

price is $167,763,451.

The purchase price for the miners shall be paid as follows:

20% within 48 hours of signing of contract;

30% on or before

March 1, 2021;

or before March 1, 2021;

4.75% on June 15, 2021;

2 unchanged sentences

10.19% on September 15, 2021;

17.63% on October

15, 2021 and 11.55% on November 15, 2021.

As of March 31, 2021, the Company has paid $83,881,726 of the total balance of $167,763,451.

February 1, 2021, Marathon announced that Bitmain had shipped approximately 4,000 S-19 Pro ASIC miners to the Company’s mining

on October 15, 2021 and 11.55% on November 15, 2021.

30, 2021, the Company has paid $ 91,080,311

of the total balance of $ 167,763,451 .

February 1, 2021, Marathon announced that Bitmain had shipped approximately 4,000 S-19 Pro ASIC miners to the Company’s mining

facility in Hardin, MT, all of which were delivered as scheduled.

addition to the initial 4,000 miners delivered to the Hardin facility in February, Bitmain recently shipped another 6,300 miners to Hardin.

Marathon has received over 13,000 miners as of March 31, 2021 and subsequent to quarter end increased its active mining fleet to approximately

addition to the initial 4,000 miners delivered to the Hardin facility in February, Bitmain has shipped another 14,702 miners to Hardin.

Marathon has received over 18,702 miners as of June 30, 2021 and subsequent to quarter end increased its active mining fleet to approximately

19,749 miners, generating approximately 2.13 EH/s.

of March 31, 2021, approximately $128.4 million cash paid for Miners was recorded as a deposit on the balance sheet.

DIGITAL HOLDINGS, INC.

AND SUBSIDIARIES

TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

components of property, equipment and intangible assets as of March 31, 2021 and December 31, 2020 are:

of June 30, 2021, approximately $ 113.6 million cash paid for Miners was recorded as a deposit on the balance sheet.

May 21, 2021, the Company entered into a binding letter of intent with Compute North, LLC to host 73,000 Bitcoin Miners over a staged

in implementation between October 2021 and March 2022.

The hosting cost is $0.50 per machine per month and the hosting rate will be $0.044

In order to build out the infrastructure without paying for the capital expenditure, the Company will provide an 18 month bridge

loan to Compute North of up to $ 67 million dollars, in tranches, based upon specified requirements being met.

The terms of the contract

are limited to three years with increases thereafter capped at three percent per year thereafter.

The Company has also agreed to pay

up to $ 14 million in expedite fees for construction/electrical and supply chain expediting activities.

As of June 30, 2021, the Company

paid $ 8 million of the $ 14 million in expedite fees recorded as a deposit on the balance sheet.

components of property, equipment and intangible assets as of June 30, 2021 and December 31, 2020 are:

SCHEDULE OF COMPONENTS OF PROPERTY, EQUIPMENT AND INTANGIBLE ASSETS

Useful life (Years)

March 31, 2021

June 30, 2021

December 31, 2020

4 unchanged sentences

Accumulated depreciation and amortization

( 10,363,560 )

( 6,687,957 )

Property, equipment and intangible assets, net

Company’s depreciation expense for the three months ended March 31, 2021 and 2020 were $720,142 and $510,781, and amortization

expense were $17,794 and $17,794 for the three months ended March 31, 2021 and 2020, respectively.

4 - STOCKHOLDERS’

July 23, 2020, the Company entered into an underwriting agreement with H.C.

The Company agreed to sell H.C.

7,666,666 shares of its common stock, including the exercise in full by H.C.

Wainwright of the option to purchase an additional

999,999 shares of common stock, at a public offering price of $0.90 per share.

The gross proceeds of this offering, which closed

on July 28, 2020, were approximately $6.9 million, and proceeds, net of underwriting discount and expenses of $0.6 million, were

$6.3 million.

Additionally, representative’s warrant to purchase 536,667 shares of our common stock with a five year term

and an exercise price of $1.125 per share were issued.

Registration Statements on Form S-3 and At The Market Offering Agreements

August 13, 2020, the Company’s Shelf Registration Statement on Form S-3, filed on August 6, 2020, was declared effective

by the SEC, along with the Company’s At The Market Offering Agreement, entered into by the Company and H.C.

Co., LLC, as Exhibit 1.1 to the Form S-3 (the “2020 At The Market Agreement”).

This 2020 At the Market Agreement establishes

an at-the-market equity program pursuant to which the Company may offer and sell shares of its common stock, par value $0.0001

per share, with an aggregate offering price of up to $100 million, from time to time as set forth in the agreement.

December 22, 2020, the Company’s Shelf Registration Statement on Form S-3, filed on December 11, 2020, was declared effective

by the SEC, along with the Company’s At The Market Offering Agreement, entered into by the Company and H.C.

Co., LLC, as Exhibit 1.1 to the Form S-3 (the “2020 At The Market Agreement”).

This 2020 At the Market Agreement establishes

an at-the-market equity program pursuant to which the Company may offer and sell shares of its common stock, par value $0.0001

per share, with an aggregate offering price of up to $200 million, from time to time as set forth in the agreement.

the year ended December 31, 2020, 54,301,698 shares of common stock were issued under the Company’s 2020 At The Market Agreements

for total proceeds of approximately $307.1 million, net of offering costs, of $9.4 million, and the Company has sold all shares

possible under the Agreements.

the year ended December 31, 2019, 172,126 of common stock were issued under the Company’s 2019 At The Market Agreements

for total proceeds of approximately $0.3 million, net of offering costs, of $0.01 million, and the Company has sold all shares

possible under the Agreements.

Company’s depreciation expense for the three months ended June 30, 2021 and 2020 were $ 2.9 million and $ 499,489 , and amortization

expense were $ 17,794 and $ 17,794 for the three months ended June 30, 2021 and 2020, respectively.

The Company’s depreciation expense

for the six months ended June 30, 2021 and 2020 were $ 3.6 million and $ 1.0 million, and amortization expense were $ 35,589 and $ 35,588

for the six months ended June 30, 2021 and 2020, respectively.

4 - STOCKHOLDERS’ EQUITY

January 1, 2018, our Board adopted the 2018 Equity Incentive Plan, subsequently approved by the stockholders on March 7, 2018, pursuant

to which up to 625,000 shares of 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.

DIGITAL HOLDINGS, INC.

AND SUBSIDIARIES

TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

Direct Offering

January 12, 2021, the Company, entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain

purchasers named therein (the “Purchasers”), pursuant to which the Company agreed to issue and sell, in a registered

direct offering (the “Offering”), 12,500,000 shares of its common stock (the “Securities”) at an offering

price of $20.00 per share.

Purchase Agreement contains customary representations and warranties and agreements of the Company and the Purchasers and customary

indemnification rights and obligations of the parties.

January 12, 2021, the Company, entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain purchasers

named therein (the “Purchasers”), pursuant to which the Company agreed to issue and sell, in a registered direct offering

(the “Offering”), 12,500,000 shares of its common stock (the “Securities”) at an offering price of $ 20.00 per

Purchase Agreement contains customary representations and warranties and agreements of the Company and the Purchasers and customary indemnification

rights and obligations of the parties.

The closing of the Offering occurred on January 15, 2021.

The Company received

gross proceeds of $250,000,000 in connection with the Offering, before deducting placement agent fees and related offering expenses.

to a letter agreement, dated August 2020 (the “Engagement Letter”), the Company engaged H.C.

Wainwright & Co.,

LLC (the “Placement Agent”) as placement agent in connection with the Offering.

The Placement Agent agreed to use

its reasonable best efforts to arrange for the sale of the Securities.

The Company agreed to pay to the Placement Agent a cash

fee of 5.0% of the aggregate gross proceeds raised in the Offering.

Company also issued to designees of the Placement Agent warrants to purchase up to 3.0% of the aggregate number of shares of Common

Stock sold in the transactions, or warrants to purchase up to 375,000 shares of Common Stock (the “Placement Agent Warrants”).

The Placement Agent Warrants have an exercise price equal to 125% of the offering price per share (or $25.00 per share).

also agreed to pay the Placement Agent $50,000 for accountable expenses, to reimburse an investor’s legal fees in an amount

up to $7,500 and to pay $12,900 for the Placement Agent’s clearing fees.

to the terms of the Engagement Letter, the Placement Agent has the right, for a period of twelve months following the closing

of the Offerings, to act (i) as financial advisor in connection with any merger, consolidation or similar business combination

by the Company and (ii) as sole book-running manager, sole underwriter or sole placement agent in connection with certain debt

and equity financing transactions by the Company.

The Company received gross proceeds

of $ 250,000,000 in connection with the Offering, before deducting placement agent fees and related offering expenses.

to a letter agreement, dated August 2020 (the “Engagement Letter”), the Company engaged H.C.

Wainwright & Co., LLC (the

“Placement Agent”) as placement agent in connection with the Offering.

The Placement Agent agreed to use its reasonable best

efforts to arrange for the sale of the Securities.

The Company agreed to pay to the Placement Agent a cash fee of 5.0% of the aggregate

gross proceeds raised in the Offering.

The Company also issued to designees of the Placement Agent warrants to purchase up to 3.0% of

the aggregate number of shares of Common Stock sold in the transactions, or warrants to purchase up to 375,000 shares of Common Stock

(the “Placement Agent Warrants”).

The Placement Agent Warrants have an exercise price equal to 125% of the offering price

per share (or $ 25.00 per share).

The Company also agreed to pay the Placement Agent $ 50,000 for accountable expenses, to reimburse an

investor’s legal fees in an amount up to $ 7,500 and to pay $ 12,900 for the Placement Agent’s clearing fees.

Pursuant to the

terms of the Engagement Letter, the Placement Agent has the right, for a period of twelve months following the closing of the Offerings,

to act (i) as financial advisor in connection with any merger, consolidation or similar business combination by the Company and (ii)

as sole book-running manager, sole underwriter or sole placement agent in connection with certain debt and equity financing transactions

by the Company.

B Convertible Preferred Stock

of March 31, 2021, there were no shares of Series B Convertible Preferred Stock outstanding.

of June 30, 2021, there were no shares of Series B Convertible Preferred Stock outstanding.

E Preferred Stock

was no Series E Convertible Preferred Stock outstanding as of March 31, 2021.

DIGITAL HOLDINGS, INC.

AND SUBSIDIARIES

TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

was no Series E Convertible Preferred Stock outstanding as of June 30, 2021.

Stock Warrants

summary of the status of the Company’s outstanding stock warrants and changes during the three months ended March 31, 2021

is as follows :

summary of the status of the Company’s outstanding stock warrants and changes during the six months ended June 30, 2021 is as follows:

SUMMARY OF OUTSTANDING STOCK WARRANTS

Number of Warrants

Weighted Average

Exercise Price

Weighted Average Remaining Contractual Life

Contractual Life

Outstanding as of December 31, 2020

Outstanding as of March 31, 2021

Warrants exercisable as of March 31, 2021

The aggregate intrinsic value of warrants outstanding and exercisable at March 31, 2021 was

Outstanding as of June 30, 2021

Warrants exercisable as of June 30, 2021

The aggregate intrinsic value of warrants outstanding and exercisable at June 30, 2021 was

DIGITAL HOLDINGS, INC.

AND SUBSIDIARIES

TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

Stock Options

summary of the stock options as of March 31, 2021 and changes during the period are presented below:

Number of Shares

Weighted Average

summary of the stock options as of June 30, 2021 and changes during the period are presented below:

SUMMARY OF STOCK OPTIONS

Exercise Price

Weighted Average Remaining Contractual Life

Average Remaining Contractual Life

Outstanding as of December 31, 2020

Outstanding as of March 31, 2021

Options vested and expected to vest as of March 31, 2021

Options vested and exercisable as of March 31, 2021

The aggregate intrinsic value of options outstanding and exercisable at March 31, 2021 was

summary of the restricted stock award activity for the three months ended March 31, 2021 as follows :

Outstanding as of June 30, 2021

Options vested and expected to vest as of June 30, 2021

Options vested and exercisable as of June 30, 2021

The aggregate intrinsic value of options outstanding and exercisable at June 30, 2021 was

January 6, 2021, the Company issued 566,279

shares pursuant to the 2018 Equity Incentive

Plan for shares that vested as of December 31, 2020.

Subsequent to year end, the Company issued 172,948

shares of common stock pursuant to warrant and

option exercises, respectively.

summary of the restricted stock award activity for the six months ended June 30, 2021 as follows:

SUMMARY OF RESTRICTED STOCK AWARD ACTIVITY

Number of Units

Average Grant

Date Fair Value

Weighted Average Grant Date Fair Value

Nonvested at December 31, 2020

Nonvested at March 31, 2021

DIGITAL HOLDINGS, INC.

AND SUBSIDIARIES

TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

( 5,367,240 )

Nonvested at June 30, 2021

5 - DEBT, COMMITMENTS AND CONTINGENCIES

June 1, 2018, the Company rented its corporate office at 1180 North Town Center Drive, Suite 100, Las Vegas, Nevada 89144, on

a month to month basis.

June 1, 2018, the Company rented its corporate office at 1180 North Town Center Drive, Suite 100, Las Vegas, Nevada 89144, on a month

to month basis.

The monthly rent is $ 1,997 .

1 unchanged sentence

Company also assumed a lease in connection with the mining operations in Quebec, Canada.

Operating leases are included in operating

lease right-of-use assets, operating lease liabilities, and noncurrent operating lease liabilities on the balance sheets.

On March 7, 2021, the Company entered into a termination agreement with the 9349-0001 Quebec Inc., to agree to terminate the outstanding

As of that date, the Company was fully released and discharged from any and all obligations under the Lease Agreement.

Due to the lease termination, the Company incurred a loss on cancellation in an amount of approximately $81,000.

Operating leases are included in operating lease

right-of-use assets, operating lease liabilities, and noncurrent operating lease liabilities on the balance sheets.

On March 7, 2021,

the Company entered into a termination agreement with the 9349-0001 Quebec Inc., to agree to terminate the outstanding lease.

date, the Company was fully released and discharged from any and all obligations under the Lease Agreement.

Due to the lease termination,

the Company incurred a loss on cancellation in an amount of approximately $ 81,000 .

lease costs are recorded on a straight-line basis within operating expenses.

The Company’s total lease expense is comprised

of the following:

The Company’s total lease expense is comprised of

the following:

DIGITAL HOLDINGS, INC.

1 unchanged sentence

TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

information regarding the Company’s leasing activities as a lessee is as follow:

SCHEDULE OF COMPONENTS OF LEASE COST

June 30, 2021

June 30, 2020

For the Three Months Ended

March 31, 2021

March 31, 2020

June 30, 2021

June 30, 2020

Operating leases

3 unchanged sentences

Total rent expense

information regarding the Company’s leasing activities as a lessee is as follow:

For the Three Months Ended

March 31, 2021

March 31, 2020

Operating cash flows from operating leases

Weighted-average remaining lease term –

operating leases

Weighted-average discount rate –

June 30, 2021

June 30, 2020

For the Six Months Ended

June 30, 2021

June 30, 2020

Operating leases

of March 31, 2021, contractual minimal lease payments are nil.

Operating lease cost

Operating lease expense

Short-term lease rent expense

Total rent expense

SCHEDULE OF LEASING ACTIVITIES

For the Six Months Ended

June 30, 2021

June 30, 2020

Operating cash flows from operating leases

Weighted-average remaining lease term – operating leases

Weighted-average discount rate – operating leases

of June 30, 2021, contractual minimal lease payments are nil.

March 27, 2018, Jeffrey Feinberg, purportedly joined by the Jeffrey L.

Feinberg Personal Trust and the Jeffrey L.

Feinberg Family

Trust, filed a complaint against the Company and certain of its former officers and directors.

The complaint was filed in the

Supreme Court of the State of New York, County of New York.

The plaintiffs purported to state claims under Sections 11, 12(a)(2)

and 15 of the federal Securities Act of 1933 and common law claims for “actual fraud and fraudulent concealment,”

constructive fraud, and negligent misrepresentation, seeking unspecified money damages (including punitive damages), as well as

costs and attorneys’

fees, and equitable or injunctive relief.

On June 15, 2018, the defendants filed a motion to dismiss

all claims asserted in the complaint and, on July 27, 2018, the plaintiffs filed an opposition to that motion.

The court heard

argument on the motion and, on January 15, 2019, the court granted the motion to dismiss, allowing 30 days for the filing of an

amended complaint.

On February 15, 2019, Jeffrey Feinberg, individually and as trustee of the Jeffrey L.

Feinberg Personal Trust,

and Terrence K.

Feinberg Family Trust,

filed a complaint against the Company and certain of its former officers and directors.

The complaint was filed in the Supreme Court

of the State of New York, County of New York.

The plaintiffs purported to state claims under Sections 11, 12(a)(2) and 15 of the federal

Securities Act of 1933 and common law claims for “actual fraud and fraudulent concealment,” constructive fraud, and negligent

misrepresentation, seeking unspecified money damages (including punitive damages), as well as costs and attorneys’ fees, and equitable

or injunctive relief.

On June 15, 2018, the defendants filed a motion to dismiss all claims asserted in the complaint and, on July 27,

2018, the plaintiffs filed an opposition to that motion.

The court heard argument on the motion and, on January 15, 2019, the court granted

the motion to dismiss, allowing 30 days for the filing of an amended complaint.

On February 15, 2019, Jeffrey Feinberg, individually

and as trustee of the Jeffrey L.

Feinberg Personal Trust, and Terrence K.

Ankner, as trustee of the Jeffrey L.

Feinberg Family Trust, filed an amended complaint that purports to state

the same claims and seeks the same relief sought in the original complaint.

On March 7 and 22, 2019, defendants filed motions

to dismiss the amended complaint and on April 5, 2019, plaintiffs filed an opposition to those motions.

The court heard oral argument

on the motions to dismiss on July 9, 2019, and at the conclusion of the argument the court took the motions under submission.

On April 22, 2021, the Company was notified the appellate court affirmed the decision to dismiss the case in its entirety

January 14, 2021, Plaintiff Michael Ho (“Plaintiff”

or “Ho”) filed a Civil Complaint for Damages and Restitution

(“Complaint”) against Marathon Digital Holdings, Inc.

(the “Company”) and 10 Doe Defendants.

Complaint alleges six causes of action against the Company, (1) Breach of Written Contract;

Feinberg Family Trust,

filed an amended complaint that purports to state the same claims and seeks the same relief sought in the original complaint.

7 and 22, 2019, defendants filed motions to dismiss the amended complaint and on April 5, 2019, plaintiffs filed an opposition to those

The court heard oral argument on the motions to dismiss on July 9, 2019, and at the conclusion of the argument the court took

the motions under submission.

On March 13, 2020, the court issued its Decision in which it granted the motions to dismiss in full

and ordered that the case be dismissed with prejudice.

On or about May 4, 2020, the plaintiffs filed a notice of appeal.

Plaintiffs filed

their opening appellate brief on January 4, 2021, and defendants filed their responsive appellate briefs on February 3, 2021.

Oral argument

on the appeal was conducted on April 1, 2021.

On April 22, 2021, the court’s Appellate Division issued its Decision and Order affirming

the dismissal of the case.

January 14, 2021, Plaintiff Michael Ho (“Plaintiff” or “Ho”) filed a Civil Complaint for Damages and Restitution

(“Complaint”) against Marathon Patent Group, Inc., now known as Marathon Digital Holdings, Inc.

(the “Company”)

and 10 Doe Defendants in the Superior Court of the State of California for the County of Riverside.

The Complaint alleges six causes

of action against the Company, (1) Breach of Written Contract;

(2) Breach of Implied Contract;

2 unchanged sentences

(5) Intentional Interference with Prospective Economic Relations;

and (6) Negligent Interference

with Prospective Economic Relations, which is the one plead against “all Defendants”

and is most likely to involve

later named defendants.

The claims arise from the same set of facts, Ho alleges that the Company profited from commercially-sensitive

information he shared with the Company and then it refused to compensate him for his role in securing the acquisition of a supplier

of energy for the Company.

On February 22, 2021, the Company responded to Mr.

Ho’s Complaint with a general denial and the

assertion of applicable affirmative defenses.

Then, on February 25, 2021, the Company removed the matter to federal court.

parties are currently engaged in discovery, including written discovery and depositions.

Due to outstanding issues of fact and

law, it is impossible to predict the outcome at this time;

however, the Company is confident that it will prevail in this litigation

since it did not have a contract with Mr.

Ho and he did not disclose any commercially-sensitive information that was used to structure

any joint venture with energy providers.

and (6) Negligent Interference with Prospective Economic Relations.

Claims 5 and 6 are pled against “all Defendants” and may involve later named defendants.

The Complaint seeks damages, restitution,

punitive damages, and costs of suit.

The claims arise from the same set of facts.

Ho alleges that the Company profited from commercially-sensitive

information he shared with the Company, purportedly under a mutual non-disclosure agreement, and that the Company failed to compensate

him for his role in securing the acquisition of a supplier of energy for the Company.

On February 22, 2021, the Company responded to

Ho’s Complaint with a general denial and the assertion of applicable affirmative defenses.

Then, on February 25, 2021, the

Company removed the action to the United States District Court in the Central District of California, where the action remains pending.

The parties are currently engaged in discovery, including written discovery and depositions.

Trial is set to begin on March 3, 2022.

Due to outstanding issues of fact and law, it is impossible to predict the outcome at this time;

however, the Company is confident that

it will prevail in this litigation since it did not have a contract with Mr.

Ho and he did not disclose any commercially-sensitive information

under any mutual nondisclosure agreement that was used to structure any joint venture with energy providers.

6 – Subsequent Events

Company has evaluated subsequent events through the date the consolidated financial statements were available to be issued and

has concluded that no such events or transactions took place that would require disclosure herein except as stated directly below.

April 1, 2021, the Company issued 665,349 shares of common stock related to the quarterly vesting of restricted stock units (“RSUs”)

to executives and management.

Of which, 565,829 related to restricted stock units granted on May 5, 2020 and 99,520 related to

restricted stock units granted on February 5, 2021 pursuant to the 2018 Equity Incentive Plan.

April 7, 2021, the Company issued 2,044 shares of common stock related to the exercise of a warrant issued on December 8, 2017.

April 27, 2021, the Company received written notification from their banking partner that the U.S.

Small Business Administration

(“SBA”) has forgiven the loan payable that was classified and held as a long-term liability in full.

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

report on Form 10-Q (“Report”) and other written and oral statements made from time to time by us may contain so-called

“forward-looking statements,”

all of which are subject to risks and uncertainties.

Forward-looking statements can

be identified by the use of words such as “expects,”

“plans,”

“will,”

“forecasts,”

“projects,”

“intends,”

“estimates,”

and other words of similar meaning.

One can identify them

by the fact that they do not relate strictly to historical or current facts.

These statements are likely to address our growth

strategy, financial results and product and development programs.

One must carefully consider any such statement and should understand

that many factors could cause actual results to differ from our forward-looking statements.

These factors may include inaccurate

assumptions and a broad variety of other risks and uncertainties, including some that are known and some that are not.

No forward-looking

statement can be guaranteed and actual future results may vary materially.

regarding market and industry statistics contained in this Report is included based on information available to us that we believe

It is generally based on industry and other publications that are not produced for purposes of securities offerings

or economic analysis.

We have not reviewed or included data from all sources, and cannot assure investors of the accuracy or completeness

of the data included in this Report.

Forecasts and other forward-looking information obtained from these sources are subject to

the same qualifications and the additional uncertainties accompanying any estimates of future market size, revenue and market

acceptance of products and services.

We do not assume any obligation to update any forward-looking statement.

As a result, investors

should not place undue reliance on these forward-looking statements.

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.

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

Note Regarding Forward-Looking Statements

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.

of the Company

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

As of March 31, 2021

Existing Operations

Purchase Agreements

Cumulative Fleet

Total miners ordered

Total miners shipped

Total miners installed

Total produced hashrate to date

January 6, 2021, the Company issued 566,279 shares pursuant to the 2018 Equity Incentive Plan for shares that vested as of December

Subsequent to year end, the Company issued 170,904 and 23,500 shares of common stock pursuant to warrant and option

exercises, respectively.

January 12, 2021, the Company also announced that it had successfully completed its previously announced $200 million shelf offering

by utilizing its at-the-market (ATM) facility.

Pursuant to the terms of the offering 12,500,000 shares of common stock were issued

at a value of $20 per share.

As a result, the Company ended the 2020 fiscal year with $141.3 million in cash and 81,974,619 shares