What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-11-15 compared with 2021-08-13 · 389 added, 270 removed, 690 unchanged (49% of the section changed)

3 unchanged sentences

CONDENSED BALANCE SHEETS

September 30,

Current assets:

1 unchanged sentence

$ 141,322,776

Digital currencies

Digital currencies, restricted

Other receivable

3 unchanged sentences

Other assets:

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

Property and equipment, net of accumulated depreciation and impairment charges of $ 14,442,777 and $ 6,480,359 for September 30, 2021 and December 31, 2020, respectively

Prepaid service contract

Right-of-use assets

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

Intangible assets, net of accumulated amortization of $ 260,980 and $ 207,598 for September 30, 2021 and December 31, 2020, respectively

Total other assets

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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

Preferred stock, 0.0001 par value, 50,000,000 shares authorized, no shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively

Common stock, 0.0001 par value;

200,000,000 shares authorized;

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

102,506,558 and 81,974,619 issued and outstanding at September 30, 2021 and December 31, 2020, respectively

Additional paid-in capital

12 unchanged sentences

For the Three Months Ended

For the Six Months Ended

For the Nine Months Ended

September 30,

Cryptocurrency mining revenue

12 unchanged sentences

( 106,717,049 )

( 4,877,232 )

Other income (expenses)

1 unchanged sentence

Change in fair value of investment in NYDIG fund

( 114,907,879 )

Realized gain (loss) on sale of digital currencies

4 unchanged sentences

Total other (expenses) income

( 113,506,226 )

Income (loss) before income taxes

Loss before income taxes

$ ( 22,172,567 )

3 unchanged sentences

Income tax expense

Net income (loss)

$ ( 22,172,567 )

2 unchanged sentences

$ ( 5,213,544 )

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

Net loss per share, basic and diluted:

Weighted average shares outstanding, basic and diluted:

3 unchanged sentences

CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY

the Three Months Ended June 30, 2021

Comprehensive

Stockholders’

as of March 31, 2021

the Three Months Ended September 30, 2021

Preferred Stock

Additional Paid-in

Other Comprehensive

Total Stockholders’

Income (Loss)

Balance as of June 30, 2021

$ 722,543,196

2 unchanged sentences

$ 580,519,285

based compensation, net of tax withholding

Stock based compensation, net of withholding taxes

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

6 unchanged sentences

Options exercised on cashless basis, shares

Warrants exercised for cash

Issue common stock and warrant for cash

Issue common stock and warrant for cash, shares

Warrant exercised for cash

Warrant exercised for cash, shares

stock issued for cashless exercise of warrants

stock issued for service and license agreements

Common stock issued for cashless exercise of warrants

Common stock issued for cashless exercise of warrants, shares

Common stock issued for service and license agreements

( 22,172,567 )

as of June 30, 2021

Balance as of September 30, 2021

$ 824,612,618

2 unchanged sentences

$ 660,416,428

the Three Months Ended June 30, 2020

the Three Months Ended September 30, 2020

Preferred Stock

Other Comprehensive

Stockholders’

Comprehensive

Total Stockholders’

Income (Loss)

Balance as of March 31, 2020

Balance as of June 30, 2020

$ 118,933,134

3 unchanged sentences

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

Common stock issued for note conversion

Warrants exercised for cash

Issue common stock and warrant for cash

Warrant exercised for cash

( 1,994,417 )

Balance as of June 30, 2020

Balance as of September 30, 2020

$ 147,554,790

1 unchanged sentence

$ ( 450,719 )

the Six Months Ended June 30, 2021

the Nine Months Ended September 30, 2021

Preferred Stock

Comprehensive

Stockholders’

Additional Paid-in

Other Comprehensive

Total Stockholders’

Income (Loss)

4 unchanged sentences

$ 311,744,964

Stock based compensation, net of tax withholding

Stock based compensation, net of withholding taxes

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

5 unchanged sentences

( 47,700,445 )

Balance as of June 30, 2021

Balance as of September 30, 2021

$ 824,612,618

2 unchanged sentences

$ 660,416,428

the Six Months Ended June 30, 2020

the Nine months Ended September 30, 2020

Preferred Stock

Comprehensive

Stockholders’

Additional Paid-in

Other Comprehensive

Total Stockholders’

Income (Loss)

4 unchanged sentences

Stock based compensation

Stock based compensation, net of tax withholding

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

1 unchanged sentence

Common stock issued for note conversion

Issue common stock and warrant for cash

Warrant exercised for cash

( 5,213,544 )

3 unchanged sentences

( 5,213,544 )

Balance as of June 30, 2020

Balance as of September 30, 2020

$ 147,554,790

5 unchanged sentences

CONDENSED STATEMENTS OF CASH FLOWS

For the Six Months Ended

For the Nine Months Ended

September 30,

CASH FLOWS FROM OPERATING ACTIVITIES

4 unchanged sentences

Amortization of patents and website

Amortization of leasehold improvements

Realized gain (loss) on sale of digital currencies

10 unchanged sentences

( 90,182,155 )

( 1,713,832 )

Lease liability

Prepaid expenses and other assets

( 28,700,147 )

Accounts payable and accrued expenses

4 unchanged sentences

Sale of digital currencies

Interest received from digital currencies, restricted

Purchase of investment securities

( 150,000,000 )

( 1,277,455 )

Purchase of property and equipment

( 84,670,324 )

( 3,133,908 )

Deposits for the purchase of mining servers

11 unchanged sentences

( 4,688,065 )

Proceeds from issuance of common stock and warrant, net

Proceeds received on exercise of options and warrants

Net cash provided by financing activities

Net increase in cash and cash equivalents

Net (decrease) increase in cash and cash equivalents

( 108,468,684 )

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:

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value of its remaining IP assets.

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.

The purchase price per unit is $ 2,362 ($ 2,206 with a 6.62 % discount) for a total

gross purchase price of $ 24,801,000 .

The parties confirm that the total hashrate of the Antminers under this agreement shall not be less

than 1,155,000 TH/s.

Subsequent to executing this agreement, due to the additional executed contracts, Bitmain applied a total net discount

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

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

As of September 30, 2021, the Company has since terminated the lease in Canada and deployed over 17,300

Hardin, Montana.

the third quarter of 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.

The purchase price per unit is $ 2,362 ( $ 2,206 with a 6.62 %

discount) for a total gross purchase price of $ 24,801,000 .

The parties confirm that the total hashrate of the Antminers under this agreement

shall not be less than 1,155,000 TH/s.

Subsequent to executing this agreement, due to the additional executed contracts, Bitmain applied

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

to the timely payment of the purchase price, Bitmain has delivered products according to the following schedule:

1,500 Units on or before

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

June 30, 2021;

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

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.

September 30, 2021;

April 30, 2021, May 31, 2021 and September

As of September 30, 2021, the Company has paid the entire purchase price under this agreement and has received 10,500 units

from Bitmain.

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

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cost for the full 100 MW project is approximately $ 34 million.

These are all in costs covering all equipment and labor needed starting

from the power coming off the Generating Station distributed down to running the actual miners:

including breakers, transformers, switches,

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.

These are all in costs covering all equipment and labor needed

starting from the power coming off the Generating Station distributed down to running the actual miners:

including breakers, transformers,

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

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

totaling $ 34 million in actual costs related to the 100 MW build out.

DIGITAL HOLDINGS, INC.

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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.

Upon completion of Phase I, Marathon will issue to Beowulf an additional 150,000 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.

The cost to maintain and run

the Facility will be $0.006/kWh .

All shares issued under the Data Facility Services Agreement are issued pursuant to transactions exempt

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

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

The 2021 delivery schedule will be 2,500 Units in January, 4,500 Units in February and the final 3,000 Units in March 2021.The

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

and 2P1 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.

Upon completion of Phase I, Marathon issued to Beowulf an additional 150,000 shares of its common

During Phase II, Marathon issued 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.

The cost to maintain and run the Facility will

be $0.006/kWh.

All shares issued under the Data Facility Services Agreement have issued pursuant to transactions exempt from registration

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

October 23, 2020, the Company executed a contract with Bitmain to purchase an additional 10,000

next generation Antminer S-19 Pro ASIC Miners.

The 2021 delivery schedule was for 2,500

units to be delivered in January, 4,500

units to be delivered

in February and the final 3,000

units to be delivered

in March 2021.

The gross purchase price was $ 23,620,000

due upon the execution of the contract and the

balance paid over the next 4 months.

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

units from Bitmain.

6 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 June 30,

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

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.

As of September

30, 2021, the Company has paid the entire purchase price under this agreement.

Subsequent to September 30, 2021, the Company has received

10,000 units from Bitmain.

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 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 .

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

within 48 hours of signing of contract;

48 hours of signing of contract;

30 % on or before March 1, 2021;

3 unchanged sentences

10.19 % on September 15, 2021;

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 .

17.63 % on October 15, 2021 and 11.55 % on November 15, 2021.

As of September 30, 2021, the Company

has paid $ 118,799,091 of the total balance of $ 167,763,452 and has received 6,460 units from Bitmain.

DIGITAL HOLDINGS, INC.

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receivable was recorded in an amount of $ 74.8 million.

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

As of September 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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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

a proxy statement on Schedule 14A to hold an annual or special meeting of shareholders to gain shareholder approval to increase the number

issued, he was owed an additional 2,547,392 RSUs, for which the Company, within 15 business days of the date of this report, filed a

proxy statement on Schedule 14A to hold an annual or special meeting of shareholders to gain shareholder approval to increase the number

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

As of June 30, 2021, these shares

are still due to be issued.

The shares underlying these 2,547,392

RSUs were issued on August 23, 2021.

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

6 unchanged sentences

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

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.

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 NYDIG Digital Assets Fund III, LP, 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.

3 unchanged sentences

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

DIGITAL HOLDINGS, INC.

AND SUBSIDIARIES

TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

May 21, 2021, Marathon Digital Holdings, Inc.

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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.

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

deposit on the balance sheet and loaned Compute North $30 million.

On September 3, 2021, the Company entered into a master agreement

with Compute North, LLC whereas the Company will pay an initial deposit of $ 14.6 million in aggregate over five installments.

As of September

30, 2021, the Company paid $ 9.1 million of the $ 14.6 million initial deposit recorded as a deposit on the balance sheet.

July 30, 2021, Marathon Digital Holdings, Inc.

(the “Company”) entered into a fully executed contract with Bitmain to purchase

an additional 30,000 S-19j Pro ASIC Miners, with 5,000 units scheduled to be delivered in each of January 2022, February 2022, March

2022, April 2022, May 2022, and June 2022.

The purchase price is $126,000,000 with (i) 25% of

the purchase price due paid within one day of execution of the contract, (ii) 35% of the purchase price of each batch due in consecutive

months with 35% of the January 2022 batch due immediately, and then 35% of each of the remaining five batches due on the 15 th

of each consecutive month starting August 15, 2021, through December 15, 2021 and (iii) the remaining 40% of the purchase price of each

batch due on the 15 th of each consecutive month starting November 15, 2021 and then 40% of each of the remaining five batches

due on the 15 th of each consecutive month through April 2022.

As of September 30, 2021, the Company has paid $ 54,775,000

of the total balance of $ 120,711,500 .

August 27, 2021, Marathon Digital Holdings, Inc.

(the “Company”) entered into a Master Securities Loan Agreement (the “Agreement”)

with NYDIG Funding, LLC (“NYDIG”).

Pursuant to the Agreement, the Company will loan its bitcoin (“BTC”) to NYDIG

with an interest rate of three percent (3%) per annum.

Interest accrues daily and is payable on a monthly basis.

The Agreement provides

that the Company may recall its BTC at any time.

NYDIG shall, prior to or concurrently with the transfer of the of the BTC to NYDIG,

but in no case later than the close of business on the day of such transfer, transfer to the Company collateral with a market value at

least equal to 100% of the market value of the loaned BTC, and the Company is granted a first priority lien on such collateral.

August 27, 2021, the Company loaned 300 BTC to NYDIG.

and Uncertainties

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occurred on May 12, 2020.

Many factors influence the price of bitcoin and potential increases or decreases in prices in advance of or

following a future halving is unknown.

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

following table presents the activities of the digital currencies for the nine months ended September 30, 2021:

SCHEDULE OF ACTIVITIES OF DIGITAL CURRENCIES

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( 18,472,750 )

Interest received on cryptocurrencies, restricted

Sale of digital currencies

Digital currencies at June 30, 2021

Digital currencies at September 30, 2021

August 27, 2021, Marathon Digital Holdings, Inc.

(the “Company”) entered into a Master Securities Loan Agreement (the “Agreement”)

with NYDIG Funding, LLC (“NYDIG”).

Pursuant to the Agreement, the Company will loan its bitcoin (“BTC”) to NYDIG

with an interest rate of three percent ( 3 %) per annum and classify the bitcoin loaned out as digital currencies, restricted on the consolidated

condensed balance sheets.

As of September 30, 2021, the Company held an aggregate amount of digital currencies that comprised of restricted

and unrestricted bitcoin of $ 73,931,594 .

Of that amount, $ 9,573,684 and $ 64,357,910 was restricted and unrestricted, respectively.

DIGITAL HOLDINGS, INC.

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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

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

31, 2020, respectively:

OF ASSETS AND LIABILITIES MEASURED AT FAIR VALUE ON RECURRING BASIS

Fair value measured at June 30, 2021

SCHEDULE OF ASSETS AND LIABILITIES MEASURED AT FAIR VALUE ON RECURRING BASIS

Fair value measured at September 30, 2021

Total carrying

value at June 30,

value at September 30,

Quoted prices in active markets

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Warrant liability

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

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

value of warrant liabilities

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.

September 30, 2021, the Company had an outstanding warrant liability in the amount of $ 549,663

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 June 30, 2021.

for the nine months ended September 30, 2021.

SCHEDULE OF FAIR VALUE OF WARRANT LIABILITIES

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Change in fair value of warrants

Outstanding as of June 30, 2021

Non-recurring measurement of Fair Value

Outstanding as of September 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

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of the asset.

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

The last impairment date for the digital currencies was September 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.

of digital assets of approximately $ 74 million, net of impairment losses incurred of $ 18.5 million for the nine month period ended September

As of September 30, 2021, the fair value of the approximate 2,223 bitcoin held as digital currencies is approximately $ 97.2

DIGITAL HOLDINGS, INC.

1 unchanged sentence

TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

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 )

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

loss for the three and nine months ended September 30, 2021 is ($ 22,172,567 )

and ($ 47,700,445 ) .

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.

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,

As of September 30,

Warrants to purchase common stock

3 unchanged sentences

SCHEDULE OF COMPUTATION OF BASIC AND DILUTED LOSS PER SHARE

For the Three Months Ended June 30,

For the Six Months Ended June 30,

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

Net loss attributable to common shareholders

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2019-12, “ Income Taxes (Topic 740):

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.

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

2020, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) 2020-06, Debt—Debt with Conversion and

Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40):

for Convertible Instruments and Contracts in an Entity’s Own Equity , to address the complexity in accounting for certain financial

instruments with characteristics of liabilities and equity.

Amongst other provisions, the amendments in this ASU significantly change

the guidance on the issuer’s accounting for convertible instruments and the guidance on the derivative scope exception for contracts

in an entity’s own equity such that fewer conversion features will require separate recognition, and fewer freestanding instruments,

like warrants, will require liability treatment.

This guidance is effective for fiscal years beginning after December 15, 2021, with

early adoption permitted.

The Company adopted ASU 2020-06 early as of January 1, 2021.

Such adoption did not result in any

material changes to its financial position, results of operations or cash flows.

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

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occurred on May 12, 2020.

Many factors influence the price of bitcoin and potential increases or decreases in prices in advance of or

following a future halving is unknown.

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

4 unchanged sentences

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.

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 of 2020, 500 were received in November and installed

in the Company’s Hosting Facility in Montana, while 500 were 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.

As of September 30, 2021, these miners were received and installed.

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

9 unchanged sentences

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

June 30, 2021;

April 30, 2021, May

31, 2021 and June 30, 2021.

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.

September 30, 2021;

April 30, 2021,

May 31, 2021 and September 30, 2021.

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

has received 10,500 units from Bitmain.

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

The 2021 delivery schedule will be 2,500 Units in January, 4,500 Units in February and the final 3,000 Units in March 2021.The

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.

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

The 2021 delivery schedule was for 2,500 units to be delivered in January, 4,500 units to be delivered in

February and the final 3,000 units to be delivered in March 2021.The gross purchase price was $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 September 30, 2021, the Company has paid the entire purchase price under this agreement and has received 10,000

units from Bitmain.

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

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 September

30, 2021, the Company has paid the entire purchase price under this agreement.

Subsequent to September 30, 2021, the Company has received

10,000 units from Bitmain.

DIGITAL HOLDINGS, INC.

2 unchanged sentences

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 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.

with 7,000 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.

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

20% within 48 hours of signing of contract;

or before March 1, 2021;

48 hours of signing of contract;

30% on or before March 1, 2021;

4.75% on June 15, 2021;

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17.63% 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 .

As of September 30, 2021, the Company

has paid $ 118,799,091 of the total balance of $ 167,763,451 and has received 6,460 units from Bitmain.

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

addition to the initial 4,000 miners delivered to the Hardin facility in February, Bitmain has shipped another 22,960 miners

Marathon has received over 26,900 miners as of September 30, 2021 and subsequent to quarter end increased its active

mining fleet to approximately 25,272 miners, generating approximately 2.74 EH/s.

of September 30, 2021, approximately $ 185.6 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

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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:

As of September 30, 2021, the

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

On September 3, 2021, the

Company entered into a master agreement with Compute North, LLC pursuant to which the Company is paying an initial deposit of $ 14.6 million

in the aggregate over five installments.

As of September 30, 2021, the Company paid $ 9.1 million of the $ 14.6 million initial deposit

recorded as a deposit on the balance sheet.

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

SCHEDULE OF COMPONENTS OF PROPERTY, EQUIPMENT AND INTANGIBLE ASSETS

Useful life (Years)

June 30, 2021

September 30, 2021

December 31, 2020

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Property, equipment and intangible assets, net

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.

Company’s depreciation expense for the three months ended September 30, 2021 and 2020 were $ 4.3 million and $ 787,689 , and amortization

expense were $ 18,483 and $ 17,794 for the three months ended September 30, 2021 and 2020, respectively.

The Company’s depreciation

expense for the nine months ended September 30, 2021 and 2020 were $ 8.0 million and $ 1.8 million, and amortization expense were $ 54,071

and $ 53,382 for the nine months ended September 30, 2021 and 2020, respectively.

4 - STOCKHOLDERS’ EQUITY

2 unchanged sentences

are reserved for issuance as awards to employees, directors, consultants, advisors and other service providers.

In August 2021, the Plan

was increased by an additional 7.5 million shares which were registered pursuant to a Registration Statement on Form S-8.

DIGITAL HOLDINGS, INC.

11 unchanged sentences

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.

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

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

of September 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 June 30, 2021.

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

Stock Warrants

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 the status of the Company’s outstanding stock warrants and changes during the nine months ended September 30, 2021 is

SUMMARY OF OUTSTANDING STOCK WARRANTS

Number of Warrants

Exercise Price

Average Exercise Price

Contractual Life

Outstanding as of December 31, 2020

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

Outstanding as of September 30, 2021

Warrants exercisable as of September 30, 2021

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

DIGITAL HOLDINGS, INC.

2 unchanged sentences

Stock Options

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

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

SUMMARY OF STOCK OPTIONS

2 unchanged sentences

Outstanding as of December 31, 2020

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:

Outstanding as of September 30, 2021

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

Options vested and exercisable as of September 30, 2021

The aggregate intrinsic value of options outstanding and exercisable at September 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,

Subsequent to year end, the Company issued 172,948 and 23,500 shares of common stock pursuant to warrant and option exercises,

respectively .

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

SUMMARY OF RESTRICTED STOCK AWARD ACTIVITY

Number of Units

Weighted Average Grant Date Fair Value

Weighted Average Grant Date Fair

Nonvested at December 31, 2020

( 8,089,677 )

Nonvested at June 30, 2021

Nonvested at September 30, 2021

The Company anticipates incurring non-cash stock

based compensation expense of $ 642,789 , $ 232,241 and $ 2,533 on December 31, 2021, March 31, 2022 and June 30, 2022, respectively related

to the 95,179 nonvested shares.

5 - DEBT, COMMITMENTS AND CONTINGENCIES

19 unchanged sentences

SCHEDULE OF COMPONENTS OF LEASE COST

June 30, 2021

June 30, 2020

September 30, 2021

September 30, 2020

For the Three Months Ended

June 30, 2021

June 30, 2020

September 30, 2021

September 30, 2020

Operating leases

3 unchanged sentences

Total rent expense

June 30, 2021

June 30, 2020

For the Six Months Ended

June 30, 2021

June 30, 2020

September 30, 2021

September 30, 2020

For the Nine months Ended

September 30, 2021

September 30, 2020

Operating leases

3 unchanged sentences

Total rent expense

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

SCHEDULE OF LEASING ACTIVITIES

For the Six Months Ended

June 30, 2021

June 30, 2020

For the Nine months Ended

September 30, 2021

September 30, 2020

Operating cash flows from operating leases

1 unchanged sentence

Weighted-average discount rate – operating leases

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

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

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

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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 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.

5 unchanged sentences

the dismissal of the case.

DIGITAL HOLDINGS, INC.

AND SUBSIDIARIES

TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

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

21 unchanged sentences

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

The Company will move to have Plaintiff’s

claims dismissed before trial .

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.

Due to outstanding issues of fact

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

however, after consulting legal counsel 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.

October 6, 2020, the Company entered into a series of agreements with multiple parties to design and build a data center for up to

100-megawatts in Hardin, MT.

In conjunction therewith, the Company filed a Current Report on Form 8-K on October 13, 2020.

8-K discloses that, pursuant to a Data Facility Services Agreement, the Company issued 6,000,000 shares of restricted Common Stock,

in transactions exempt from registration under Section 4(a)(2) of the Securities Act of 1933, as amended.

During the quarter ended

September 30, 2021, the Company and certain of its executives received a subpoena to produce documents and communications concerning

the Hardin, Montana data center facility described in our Form 8-K dated October 13, 2020.

We understand that the SEC may be

investigating whether or not there may have been any violations of the federal securities law.

We are cooperating with the

6 – Subsequent Events

August 2, 2021, the Company executed a contract with Bitmain to purchase an additional 30,000 next generation Antminer S-19j Pro ASIC

Miners, to be delivered between January 2022 and June 2022.

The purchase price is $ 120,711,500 .

The purchase price for the miners shall

be paid as follows:

32.76% within 48 hours of signing of contract;

6.45% on or before August 15, 2021;

6.16% on or before September 15,

6.02% on or before October 15, 2021;

12.66% on or before November 15, 2021;

12.17% on or before December 15, 2021;

6.32% on January

6.13% on February 15, 2022;

5.79 % on March 15, 2022 and 5.53% on April 15, 2021.

October 1, 2021, Marathon Digital Holdings, Inc.

(the “Company”) entered into a Revolving Credit and Security Agreement (the

“Agreement”) with Silvergate Bank (the “Bank”) pursuant to which Silvergate has agreed to loan the Company up

to $ 100,000,000 on a revolving basis pursuant to the terms of the Agreement and the $100,000,000 principal amount revolving credit note

issued by the Company in favor of the Bank under the Agreement (“Note”).

The terms of the facility (“RLOC”) set

forth in the Agreement and Note are as follows:

Availability:

RLOC shall be made available from time to time to the Company for periodic draws (provided no event of default then exists) from

its closing date up to and including the one- year anniversary of the loan date.

of the Loan Commitment to the Bank (or $ 250,000 );

due at RLOC closing.

Commitment Fee:

per annum of the portion of the unused Loan Commitment, payable monthly in arrears.

RLOC may be renewed annually by agreement between the Bank and the Company, subject to (without limitation):

(i) Company makes a

request for renewal, in writing, no less than sixty (60) days prior to the then current maturity date, (ii) no event of default then

exists, (iii) Company provides all necessary documentation to extend the RLOC, (iv) Company has paid all applicable fees related

to the loan renewal, and (v) the Bank has approved such extension request according to its internal credit policies as determined

by the Bank in its sole and absolute discretion.

the Bank approves a request by Company to renew the RLOC upon any maturity, then a Renewal Fee of 0.25 % of the Loan Commitment (or

$ 250,000 ) shall be due and payable upon extension of the Loan Commitment.

only to be paid monthly, with principal all due at maturity.

RLOC will be secured by a pledge of a sufficient amount of Company’s right, title and interest in and to bitcoin and/or U.S.

Dollar (“USD”) stored in a custody account for the benefit of the Bank (the “Collateral Account”).

will establish a Collateral Account with a regulated custodial entity (the “Custodian”) that has been approved by the

the Bank and Custodian will have a custodial agreement to perfect the security interest in the pledged Collateral Account which,

among other things, allows for 1) the Bank to monitor the balance of the Collateral Account and 2) allows the Bank to have exclusive

control over the Collateral Account including liquidation of the collateral in the event of Company’s default under the terms

the Bank may also file a UCC financing statement on the pledged collateral.

Advance Rate:

origination, the Company must ensure the Collateral Account balance has sufficient bitcoin (and/or US$) to cause a Loan to Value

(the “LTV”) ratio of 65 % (or less) (“Minimum Advance Rate”) on the unpaid principal balance of the RLOC.

Company must maintain a minimum debt to equity ratio of 0.5:1.

The Company must maintain a minimum liquidity of $25,000,000.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements