MARA Holdings, Inc. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. This 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. Information regarding market and industry statistics contained in this Report is included based on information available to us that we believe is accurate. 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. The following discussion and analysis is intended as a review of significant factors affecting our financial condition and results of operations for the periods indicated. The discussion should be read in conjunction with our consolidated financial statements and the notes presented herein. In addition to historical information, the following Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements that involve risks and uncertainties. Our actual results could differ significantly from those expressed, implied or anticipated in these forward-looking statements as a result of certain factors discussed herein and any other periodic reports filed and to be filed with the Securities and Exchange Commission. Cautionary Note Regarding Forward-Looking Statements This report and other documents that we file with the Securities and Exchange Commission contain forward-looking statements that are based on current expectations, estimates, forecasts and projections about our future performance, our business, our beliefs and our management’s assumptions. Statements that are not historical facts are forward-looking statements. Words such as “expect,” “outlook,” “forecast,” “would,” “could,” “should,” “project,” “intend,” “plan,” “continue,” “sustain”, “on track”, “believe,” “seek,” “estimate,” “anticipate,” “may,” “assume,” and variations of such words and similar expressions are often used to identify such forward-looking statements, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward- looking statements are not guarantees of future performance and involve risks, assumptions and uncertainties, including, but not limited to, those described in our reports that we file or furnish with the Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. Accordingly, you are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they are made. Except to the extent required by law, we undertake no obligation to update publicly any forward-looking statements after the date they are made, whether as a result of new information, future events, changes in assumptions or otherwise. 18 Business of the Company The Company was incorporated in the State of Nevada on February 23, 2010 under the name Verve Ventures, Inc. On December 7, 2011, the Company changed its name to American Strategic Minerals Corporation and were engaged in exploration and potential development of uranium and vanadium minerals business. In June 2012, the Company discontinued the minerals business and began to invest in real estate properties in Southern California. In October 2012, the Company discontinued its real estate business and the Company commenced IP licensing operations, at which time the Company’s name was changed to Marathon Patent Group, Inc. The Company commenced mining bitcoin in 2018 and changed its name to Marathon Digital Holdings, Inc. on March 1, 2021. As of June 30, 2022, the Company no longer holds any legacy IP assets and is solely focused on the mining of bitcoin and ancillary opportunities within the bitcoin ecosystem under the name Marathon Digital Holdings, Inc. Recent developments During the three-month period ended June 30, 2022, deteriorating macroeconomic conditions contributed to a significant downturn in financial markets. These conditions were more pronounced in businesses exposed to digital assets, including bitcoin mining. Many digital asset companies executed cost savings measures, reduced expansion plans and capital expenditures, sold digital assets and in some cases executed layoffs of staff. Holders of digital assets including bitcoin experienced a significant decrease in the value of their digital asset holdings during the period. The price of bitcoin dropped from $45,539 on April 1, 2022 to a low of $19,018 on June 18, 2022, and was $19,785 on June 30, 2022. The Company faced these same challenges, along with operational issues at our Hardin, MT facility and delays in the energization of a bitcoin mining facility in Texas. The Company did not sell any bitcoin during the period as a means of raising cash, although we did execute a previously-contracted sale of equipment during the quarter, details of which are included below. Despite the economic and operational challenges experienced during the quarter, the Company ended the period with $89.7 million in cash on hand and continues to expect to have sufficient liquidity sources in the future to support ongoing operations. Our primarily sources of liquidity are expected to be cash on hand, available borrowing capacity with our Revolving and Term Loan facilities with Silvergate Bank, our ATM facility and our bitcoin holdings. A brief discussion of some of the more significant recent events impacting the Company’s operations follows. On June 11, 2022, a severe storm passed through Hardin damaging the power generating facility that supplies the data center with power. As a result, the Company’s bitcoin production at the plant was significantly reduced. Anticipated repairs to the plant were persistently delayed until July 14, at which point the plant resumed operations at reduced power levels and operating capacity. Additional outages continued to occur at the plant throughout July, and the Company decided to accelerate its exit from Hardin, moving the date up from the planned date of August 15 to July 28. As a result, the Company further accelerated the cost of a prepaid service contract and the remaining depreciation and amortization related to the infrastructure assets at Hardin during the month of July. The data center infrastructure assets and the prepaid service contract have therefore been fully depreciated or amortized as of July 31, 2022. The bitcoin mining servers that are on site are in the process of being inventoried and removed from the facility and will be sold or redeployed to other locations in the near future. On June 10, 2022 the Company withdrew approximately 4,769 bitcoin from its investment in NYDIG Digital Assets Fund III, LP, the (“Investment Fund”) and transferred the bitcoin directly into the Company’s account. As a result, the Company will no longer receive “mark-to-market” accounting for the bitcoin formerly held in the Investment Fund and the 4,769 bitcoin will now be classified as “Digital currencies” on the balance sheet and subject to impairment analysis as a indefinite-lived intangible. On June 14, 2022 the Company terminated its loan of 600 bitcoin with NYDIG. The Company decided to terminate the bitcoin loan in response to recent market conditions and its desire to hold all of its bitcoin directly so it could fully utilize these holdings for corporate purposes as needed, including as collateral for credit facilities. On July 5, 2022, the Company expanded certain hosting arrangements to include an additional 42 megawatts of hosting capacity at a facility near Granbury, Texas. The Company expects to have an additional 14,000 miners installed at this facility, bringing the total number of miners installed near Granbury to 26,000 or approximately 3.6 EH/s. Based on current construction schedules these miners are expected to be installed before the end of 2022. On July 12, 2022, the Company entered into an agreement to secure approximately 200 megawatts of hosting capacity for the Company’s previously purchased miners, including 90 megawatts of hosting capacity in Texas and at least 110 megawatts of hosting capacity in North Dakota. The Company expects to have 66,000 miners, representing approximately 9.2 EH/s, hosted across these facilities. Based on current construction schedules, installations of the Company’s miners are expected to begin at these facilities during the fourth quarter of 2022 with all miners installed by approximately mid-year 2023. As part of this agreement, the Company has an option to increase hosting capabilities utilizing up to an additional 70 megawatts in North Dakota. The Company also secured an additional 12 megawatts of hosting capacity with a variety of other providers and expects to install approximately 4,000 miners, representing approximately 0.8 EH/s, with these hosting providers, starting in August 2022. 19 On July 15, 2022 the Federal Energy Regulatory Commission found that King Mountain Upton Wind, LLC would retain its status as an exempt wholesale generator notwithstanding a proposal to share ownership of the Interconnection Facilities as tenants-in-common with a retail energy customer. King Mountain had filed a petition on April 5, 2022 seeking a declaratory order to confirm its status as an exempt wholesale generator. In the Petition, King Mountain stated that it proposed to share ownership of interconnection facilities that are currently eligible facilities within the meaning of section 32(a)(2) of the Public Utility Holding Company Act as tenants-in common with a retail energy customer. King Mountain stated that it intended to sell wholesale electricity from the Generating Facility to a third party, who would then sell electricity at retail to the owner of a modular data center which would operate adjacent to the Generating Facility and supply it with renewable energy. This action enabled the energization a modular data center adjacent to the Generating Facility. Approximately 69,000 of the Company’s bitcoin mining machines are located at this data center and energization enabled this equipment to come online starting on August 5, 2022. Non-GAAP Financial Measures We provide investors with a reconciliation from net income to the non-GAAP measure known as Adjusted EBITDA as a component of Management’s Discussion and Analysis. For each period in question, we define “Adjusted EBITDA” as (a) GAAP net income (or loss) plus (b) adjustments to add back the impacts of (1) depreciation and amortization, (2) interest expense, (3) income tax expense and (4) adjustments for non-cash and non-recurring items (which currently include (i) stock compensation expense, (ii) net of withholding taxes and (iii) impairments of patents (if any). Adjusted EBITDA is not a measurement of financial performance under GAAP and, as a result, this measure may not be comparable to similarly titled measures of other companies. Non-GAAP financial measures are subject to material limitations as they are not in accordance with, or a substitute for, measurements prepared in accordance with GAAP. Adjusted EBITDA is not meant to be considered in isolation and should be read only in conjunction with our Quarterly Reports on Form 10-Q and our Annual Reports on Form 10-K as filed with the Securities and Exchange Commission. Management uses both Adjusted EBITDA and the supplemental information provided herein as a means of understanding, managing and evaluating business performance and to help inform operating decision making. We rely primarily on our Consolidated Condensed Financial Statements to understand, manage, and evaluate our financial performance and use the non-GAAP financial measures only supplementally . Recent Issued Accounting Standards See Note 2 to our Consolidated Condensed Financial Statements for a discussion of recent accounting standards and pronouncements. Results of Operations For the Three Months ended June 30, 2022 and 2021 Three Months Ended June 30, Favorable 2022 2021 (Unfavorable) Revenues $ 24,921,816 $ 29,321,857 $ (4,400,041 ) Cost of revenues - energy, hosting and other (16,684,759 ) (4,056,168 ) (12,628,591 ) Cost of revenues - depreciation and amortization (24,709,797 ) (2,937,666 ) (21,772,131 ) Total margin (16,472,740 ) 22,328,023 (38,800,763 ) Gain on sale of equipment 58,181,516 - 58,181,516 General and administrative expenses (12,641,331 ) (6,831,040 ) (5,810,291 ) Changes in carrying value of digital assets: Change in fair value of digital currencies held in fund (79,688,590 ) (114,704,596 ) 35,016,006 Impairment of digital currencies (127,590,231 ) (11,078,660 ) (116,511,571 ) (207,278,821 ) (125,783,256 ) (81,495,565 ) Non-operating income 165,280 1,400,872 (1,235,592 ) Net loss (191,646,642 ) (108,884,620 ) (82,762,022 ) Bitcoin (“BTC”) production during the period, in BTC 707 654 53 Reconciliation to Adjusted EBITDA Net loss $ (191,646,642 ) $ (108,884,620 ) $ (82,762,022 ) Exclude: Interest expense 3,748,322 1,203 3,747,119 Exclude: Income tax expense (benefit) 9,852,224 (1,984 ) 9,854,208 EBIT (178,046,096 ) (108,885,401 ) (69,160,695 ) Exclude: Depreciation and amortization 24,709,797 2,937,666 21,772,131 EBITDA (153,336,299 ) (105,947,735 ) (47,388,564 ) Exclude: Stock compensation expense, net of withholding tax 6,132,224 875,971 5,256,253 Adjusted EBITDA $ (147,204,075 ) $ (105,071,764 ) $ (42,132,311 ) 20 Revenues and Total Margin We generated revenues of $24.9 million during the three months ended June 30, 2022 compared with $29.3 million during the three months ended June 30, 2021. This $4.4 million decrease in revenue was driven by lower revenue per bitcoin mined ($6.8 million) resulting from lower market prices for bitcoin in the current-year period when compared with the prior-year period. This decrease was partially offset by an 8% increase in bitcoin production activity (a $2.4 million increase in revenues) from the prior-year period. Cost of revenues – energy, hosting and other during the three months ended June 30, 2022 amounted to $16.7 million compared with $4.1 million in the prior-year period. This $12.6 million increase was driven by accelerated cost recognition associated with the early exit from Hardin ($9.4 million) and to a lesser extent higher costs per bitcoin mined. Total margin, which we define as revenues less cost of revenues – energy, hosting and other and cost of revenues – depreciation and amortization, totalled a loss of $16.5 million compared with an income position of $22.3 million in the prior-year period. This $38.8 million decrease in total margin was driven primarily by the impact of accelerated costs related to the Hardin exit and the lower revenue per bitcoin mined. Notwithstanding the increased mining activities vs. the prior-year period, our production of bitcoin during the three months ended June 30, 2022 was negatively impacted by ongoing maintenance issues and the storm at our Hardin, MT facility as well as the delays in energizing our bitcoin mining equipment at the King Mountain data center in Texas. Gain on sale of assets On December 2, 2021, we entered into an agreement with DCRBN Ventures Development and Acquisition LLC (“DCRBN”) in which the Company agreed to sell certain equipment to DCRBN starting in April 2022, in conjunction with the development of commercial activities at the King Mountain wind farm in McCamey, TX. During the three months ended June 30, 2022, the Company sold equipment for cash proceeds totalling $87.2 million and realized a pre-tax gain on the sale of such assets of $58.2 million. There were no such sales in the prior-year period. General and administrative expenses General and administrative expenses were $12.6 million for the three months ended June 30, 2022, an increase of $5.8 million from the prior-year period. Our general and administrative expenses increased primarily as a result of higher stock-based (non-cash) compensation expense, which increased to $6.2 million from $0.9 million in the prior-year period; and higher costs associated with increased business activities. Changes in carrying value of digital assets: ● Impairment of digital currencies recorded in operating expenses : We incurred significant impairment of digital assets during the three months ended June 30, 2022 as the price of bitcoin declined to a low of $19,018 on June 18, 2022. Total impairment expense was $127.6 million for the three months ended June 30, 2022 compared with an impairment expense of $11.1 million for the prior-year period. ● Change in fair value of digital currencies recorded in operating income (expense) : On June 10, 2022 the company withdrew 4,769 bitcoin from its investment fund. Total changes in the fair value of investment fund from April 1 through the June 10 withdrawal date resulted in a loss of $79.7 million in the current year period. During the prior-year quarter, the change in fair value of the bitcoin held in the investment fund was a loss of $114.9 million. Non-operating income Non-operating income decreased primarily due to changes in the fair value of a stock warrant liability recorded in the prior-year period. Depreciation and amortization Depreciation and amortization, which we classify as “Cost of revenues – depreciation and amortization” in our statements of operations, increased significantly when compared to the prior-year period primarily due to the acceleration of depreciation related to our exit of the Hardin, MT facility (a $15.8 million increase in depreciation) and, to a lesser extent increased depreciation costs associated with a higher number of mining servers in operation ($4.7 million). Interest expense Interest expense increased $3.7 million from the prior-year as a result interest related to the convertible notes issued in November 2021 ($2.8 million) and interest on borrowings outstanding under the Company’s revolving credit agreement ($0.9 million). Income tax expense Income tax expense was $9.8 million for the period ended June 30, 2022. We recorded tax expense despite a pre-tax loss from operations due to a valuation adjustment related to the certain deferred tax benefits. 21 Net loss We recorded a net loss of $(191.6) million in the current year period compared with net loss of $(108.9) million in the prior period. This $82.7 million decline was primarily driven by the impact of declines in the carrying value of our digital assets ($81.5 million), higher depreciation expense ($21.8 million), lower total margin $(17.0 million), increased income tax expense ($9.8 million), higher operating expenses ($5.8 million) increased interest expense ($3.7 million) partially offset by the gain on the sale of equipment of $58.1 million. Adjusted EBITDA Adjusted EBITDA was a loss of $(147.2) million compared with a loss of $(105.1) million in the prior-year period. This $42.1 million decline was primarily driven by the impact of declines in the carrying value of our digital assets ($81.5 million) and lower total margin $(17.0 million) partially offset by the gain on the sale of equipment ($58.1 million). Results of Operations For the Six Months ended June 30, 2022 and 2021 Six Months Ended June 30, Favorable 2022 2021 (Unfavorable) Revenues $ 76,639,534 $ 38,474,672 $ 38,164,862 Cost of revenues - energy, hosting and other (29,201,710 ) (5,724,646 ) (23,477,064 ) Cost of revenues - depreciation and amortization (38,586,480 ) (3,675,603 ) (34,910,877 ) Total margin 8,851,344 29,074,423 (20,223,079 ) Gain on sale of equipment 58,181,516 - 58,181,516 General and administrative expenses (26,835,089 ) (60,175,421 ) 33,340,332 Changes in carrying value of digital assets: Change in fair value of digital currencies held in fund (85,016,208 ) 17,323,121 (102,339,329 ) Impairment of digital currencies (147,141,486 ) (11,740,859 ) (135,400,627 ) (232,157,694 ) 5,582,262 (237,739,956 ) Non-operating income (expenses) 393,973 (7,250 ) 401,223 Net loss (204,605,231 ) (25,527,878 ) (179,077,353 ) Bitcoin ("BTC") production during the period, in BTC 1,966 846 1,119 Reconciliation to Adjusted EBITDA Net loss $ (204,605,231 ) $ (25,527,878 ) $ (179,077,353 ) Exclude: Interest expense 6,562,358 2,406 6,559,952 Exclude: Income tax expense (benefit) 5,557,560 (514 ) 5,558,074 EBIT (192,485,313 ) (25,525,986 ) (166,959,327 ) Exclude: Depreciation and amortization 38,586,480 3,675,603 34,910,877 EBITDA (153,898,833 ) (21,850,383 ) (132,048,450 ) Exclude: Stock compensation expense, net of withholding tax 15,407,576 51,907,111 (36,499,535 ) Exclude: Impairment of patents 919,363 - 919,363 Adjusted EBITDA $ (137,571,894 ) $ 30,056,728 $ (167,628,622 ) Revenues and Total Margin We generated revenues of $76.6 million during the six months ended June 30, 2022 compared with $38.5 million during the six months ended June 30, 2021. This increase in revenue was driven by a 132% increase in bitcoin production ($50.9 million) partially offset by lower revenue per bitcoin mined ($12.7 million) resulting from lower market prices for bitcoin in the current-year period when compared with the prior-year period. Cost of revenues – energy, hosting and other during the six months ended June 30, 2022 amounted to $29.2 million compared with $5.7 million in the prior-year period. This $23.5 million increase was driven by higher costs per bitcoin mined ($15.9 million, including the impact of accelerated costs related to the exit from Hardin) and increased costs associated with higher bitcoin production ($7.6 million). Total margin, which we define as revenues less cost of revenues – energy, hosting and other and cost of revenues – depreciation and amortization, totalled $8.9 million compared with $29.1 million in the prior-year period. This $20.2 million decrease in total margin was driven primarily by the impact of accelerated costs related to the Hardin exit partially offset by the increase in bitcoin production. Notwithstanding the increased mining activities vs. the prior-year period, our production of bitcoin during the six months ended June 30, 2022 was negatively impacted by ongoing maintenance issues and the storm at our Hardin, MT facility as well as the delays in energizing our bitcoin mining equipment at the King Mountain data center in Texas. Gain on sale of assets On December 2, 2021, we entered into an agreement with DCRBN Ventures Development and Acquisition LLC (“DCRBN”) in which the Company agreed to sell certain equipment to DCRBN starting in April 2022, in conjunction with the development of commercial activities at the King Mountain wind farm in McCamey, TX. During the six months ended June 30, 2022, the Company sold equipment for cash proceeds totalling $87.2 million and realized a pre-tax gain on the sale of such assets of $58.2 million. There were no such sales in the prior-year period. 22 General and administrative expenses General and administrative expenses were $26.8 million for the six months ended June 30, 2022 compared with $60.2 million for the prior year period, a decrease of $33.4 million from the prior-year period. This decrease was primarily the result of a $36.5 million decrease in stock-based (non-cash) compensation expense partially offset by higher costs associated with increased business activities. Changes in carrying value of digital assets: ● Impairment of digital currencies recorded in operating expenses : We incurred significant impairment of digital assets during the six months ended June 30, 2022 as the price of bitcoin hit new lows in June 2022. Total impairment expense was $147.1 million for the six months ended June 30, 2022 compared with an impairment expense of $11.7 million for the prior-year period. ● Change in fair value of digital currencies recorded in operating income (expense) : During the month of June the company withdrew 4,769 bitcoin from its investment fund. Total year to day changes in the fair value of investment fund through the June 10 withdrawal date resulted in a loss of $85.0 million in the current year period. During the prior-year period, the change in fair value of the bitcoin held in the investment fund was an increase in fair value of $17.3 million. Non-operating income (loss) Non-operating income increased primarily due to changes in the fair value of a stock warrant liability recorded in the prior-year period. Depreciation and amortization Depreciation and amortization, which we classify as “Cost of revenues – depreciation and amortization” in our statements of operations, increased $34.9 million when compared to the prior-year period primarily due to the acceleration of depreciation related to our exit of the Hardin, MT facility (a $19.9 million) and increased depreciation costs associated with a higher number of mining servers in operation when compared with the prior year period ($10.8 million). Interest expense Interest expense increased $6.6 million from the prior-year as a result interest related to the convertible notes issued in November 2021 ($5.7 million) and interest on borrowings outstanding under the Company’s revolving credit agreement ($0.9 million). Income tax expense (benefit) Income tax expense was $5.5 million for the six months ended June 30, 2022 compared with a small tax benefit in the prior year. We recorded tax expense despite a pre-tax loss from operations due to a valuation adjustment related to the certain deferred tax benefits record in the current year period. Net loss We recorded a net loss of $(204.6) million in the current year period compared with net loss of $(25.5) million in the prior period. This $179.1 million decline was primarily driven by the impact of declines in the carrying value of our digital assets ($237.7 million), higher depreciation expense ($34.9 million), and to a lesser extent higher interest expense and income tax expense. Partially offsetting these unfavorable variances was the gain on the sale of equipment ($58.1 million), lower general and administrative expenses ($33.3 million), and higher total margin ($14.7 million). Adjusted EBITDA Adjusted EBITDA was a loss of $(137.6) million compared with positive Adjusted EBITDA of $30.1 million in the prior year period. This $167.6 million decline was primarily driven by the impact of declines in the carrying value of our digital assets ($232.2 million) partially offset by the gain on the sale of equipment ($58.2 million), higher total margin ($14.7 million). 23 Financial Condition and Liquidity Cash, cash equivalents and restricted cash totalled $89.7 million at June 30, 2022, a decrease of $178.9 million from December 31, 2021. The decrease in cash, cash equivalents and restricted cash was primarily driven by a $334.0 million use of cash from investing activities resulting primarily from significant levels of advances to vendors related to bitcoin mining server orders ($394.0 million) and, to a lesser extent, purchases of property and equipment ($13.8 million) and equity investments ($14.0 million) partially offset by proceeds from assets sales ($87.2 million). Cash flows from financing activities resulted in a source of cash of $196.0 million, primarily from proceeds from the issuance of common stock ($161.0 million) and proceeds from borrowings outstanding under the Company’s $100 million revolving credit agreement ($35.0 million). Cash flows from operating activities resulted in a use of funds of $40.8 million. Positive cash flow impacts of operating activities before the impact of changes in operating assets and liabilities (a $47.9 million source of funds) were more than offset by a $88.7 million use of funds from changes in operating assets and liabilities, primarily due to changes in digital currencies (a $76.5 million use of funds). We had $35 million outstanding under its revolving credit agreement at June 30, 2022. The maximum borrowings outstanding under the credit agreement during the six months ended June 30, 2022, was $70 million. The Company expects to have sufficient liquidity, including cash on hand and available borrowing capacity to support ongoing operations. We will continue to seek to fund the growth in our business activities through the capital markets, including both debt and equity issuances. Bitcoin Holdings At June 30, 2022, we held approximately 10,055 bitcoin with a total carrying value of $190.4 million on the balance sheet. Approximately 2,820 bitcoin were being utilized as collateral for revolving credit borrowings and were classified as “digital currencies, restricted”. The remaining bitcoin were classified as “Digital currencies” on the balance sheet. The fair market value of our bitcoin holdings at June 30, 2022 was approximately $198.9 million and the value of a single bitcoin was approximately $19,785. At June 30, 2021 we held a total of 5,784 bitcoin with a total carrying value of $195.9 million on the balance sheet. The fair market value of our bitcoin holdings at June 30, 2021 was approximately $202.7 million and the value of a single bitcoin was approximately $35,041. We expect to increase our bitcoin holdings over time primarily through mining activities. As our mining activities increase, we may sell a portion of bitcoin produced in future periods to fund monthly operations, for treasury management purposes or for general corporate purposes. Off-balance Sheet Arrangements We have not entered into any other financial guarantees or other commitments to guarantee the payment obligations of any third parties. We have not entered into any derivative contracts that are indexed to our shares and classified as stockholder’s equity or that are not reflected in our consolidated condensed financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity.