What changed in this filing

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Item 1. Business

2023-03-16 compared with 2022-03-10 · 345 added, 909 removed, 12 unchanged (99% of the section changed)

is a digital asset technology company that mines cryptocurrencies with a focus on the blockchain ecosystem and the generation of digital

Marathon also acquires bitcoin when our cash, cash equivalents and short-term investments exceed current working capital requirements,

and we may from time to time, subject to favorable market conditions, issue debt or equity securities to raise capital to use the proceeds

to purchase bitcoin.

To Marathon, the strategy is to hold bitcoin as a long term investment rather than engaging in regular trading of

bitcoin or to hedge or otherwise enter into derivative contracts with respect to our bitcoin holdings, though we may sell bitcoin in

future periods as needed to generate cash for treasury management and other general corporate purposes.

Holding bitcoin is a strategy

to act as a store of value, supported by a robust and public open source architecture, that is not linked to any country’s monetary

policy and can therefore serve as a hedge against inflation.

We are of the firm belief that bitcoin offers additional opportunity for

appreciation in value with increasing adoption due to its limited supply.

We may also explore opportunities to become involved in businesses

ancillary to our bitcoin mining business as favorable market conditions and opportunities arise.

CORPORATE OVERVIEW

HISTORY AND PIVOT TO BITCOIN MINING

is a digital asset technology company that produces or “mines” digital assets with a focus on the blockchain ecosystem and

the generation of digital assets.

Marathon’s strategy is to produce and hold bitcoin (after paying for cash operating costs of

production) as a long term investment.

Holding bitcoin is a strategy to act as a store of value, supported by a robust and public open

source architecture, that is not linked to any country’s monetary policy and can therefore serve as a store of value outside of

government control.

We believe that bitcoin offers additional opportunity for appreciation in value with increasing adoption due to its

limited supply.

We may also explore opportunities to become involved in businesses ancillary to our bitcoin mining business as favorable

market conditions and opportunities arise.

were incorporated in the State of Nevada on February 23, 2010 under the name Verve Ventures, 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

name to American Strategic Minerals Corporation and were engaged in exploration and potential development of a uranium and vanadium minerals

In June 2012, we discontinued our minerals business and began to invest in real estate properties in Southern California.

October 2012, we commenced our IP licensing operations, at which time the Company’s name was changed to Marathon Patent Group,

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

(“GBV”), which is focused on

mining digital assets.

We purchased cryptocurrency mining machines and established a data center in Canada to mine digital assets.

are expanding our activities in the mining of new digital assets, while at the same time harvesting the value of our remaining IP assets.

June 28, 2018, our Board has determined that it is in the best interests of the Company and our shareholders to allow the Amended Merger

Agreement with GBV to expire on its current termination date of June 28, 2018 without further negotiation or extension.

The Board approved

to issue 3,000,000 shares of our common stock to GBV as a termination fee for us cancelling the proposed merger between the two companies.

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 which occurred on April 8, 2019.

September 30, 2019, the Company consummated the purchase of 6000 S-9 Bitmain 13.5 TH/s Bitcoin Antminers (“Miners”) from

SelectGreen Blockchain Ltd.

(the “Seller”), 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

on December 27, 2019.

On March 30, 2020, the Seller agreed to amend the total of number of shares to be issued was reduced to 2,101,500

shares and the rest of 350,250 shares was issued at $0.49 per share.

There was no mining payable outstanding as of September 30, 2020.

May 11, 2020, the Company announced the purchase of 700 M30S+ (80 TH) miners.

On May 12, 2020, the Company announced the purchase 660

Bitmain S19 Pro Miners.

On June 11, 2020, the Company announced the purchase of an additional 500 of the latest generation Bitmain S19

Pro Miners, bringing the Company’s total Hashrate to approximately 240 PH/s when fully deployed.

May 20, 2020, the Company amended its note, originally dated August 31, 2017, with Bi-Coastal Consulting Defined Benefit Plan to reduce

the conversion price to $0.60 per share.

The current principal balance of the Note was $999,105.60 and accrued the interest was $215,411.30.

The Company agreed to the reduction in the conversion price from $0.80 to $0.60 to incentivize the Note holder to convert the Note to

common stock.

As the Note has been fully converted to common stock, the Company has no Long-Term debt.

July 28, 2020, the Company closed a public offering of 7,666,666 shares of common stock, including the exercise in full by the underwriter

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, before deducting underwriting discounts and commissions and other offering expenses payable by Marathon, were approximately

$6.9 million.

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

in 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.

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 (with a 6.62% discount for a discounted price of $23,159,174).

The parties confirm that the total

hashrate of the Antminers under this agreement shall not be less than 1,155,000 TH/s.

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

1,500 units on or before

January 31, 2021;

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

March 31, 2021;

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

As of December 31, 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 was for 2,500 units to be delivered in January, 4,500 units delivered in February and the final 3,000

units delivered in March 2021.

The gross purchase price was $23,620,000.00 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 $21,581,594.00.

As of December 31, 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

Miners, with 6,000 units delivered in August 2021, and the remaining 4,000 units delivered in September 2021.

The gross purchase price

is $23,770,000 with 10% of the purchase price due within 48 hours of execution of the contract, 30% due on January 14, 2021, 10% 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 December

31, 2021, the Company paid the entire purchase price under this agreement and 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:

48 hours of signing of contract;

30% on or before March 1, 2021;

4.75% on June 15, 2021;

1.76% on July 15, 2021;

4.58% on August 15,

10.19% on September 15, 2021;

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

As of December 31, 2021, the Company

has paid the entire purchase price under this agreement and received over 40,000 units from Bitmain.

December 31, 2020, The Board of Directors of Marathon Digital Holdings, Inc.

(the “Company”) ratified the following arrangements

approved by its Compensation Committee:

Okamoto, CEO was awarded a cash bonus of $2,000,000 which was paid before year end 2020.

He was also awarded a special bonus of 1,000,000

RSUs with immediate vesting.

He was given a new three-year employment agreement effective January 1, 2021 with the same salary and bonus

as the prior agreement.

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.

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 was 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 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 $217.6 million in cash and 74,656,549

shares outstanding.

January 15, 2021, Marathon Digital Holdings, Inc., a Nevada corporation (the “Company”), held an annual meeting of stockholders

(the “Meeting”).

As of the record date for the Meeting, 51,403,280 shares of common stock were issued and outstanding.

total of 33,981,556 shares of common stock, constituting a quorum, were present and accounted for at the Meeting.

At the Meeting, the

Company’s stockholders approved the following proposals:

Incentive Plan by 5

Advisory Vote

Broker Non-Vote

January 19, 2021, David Lieberman resigned as a director of Marathon Digital Holdings, Inc.

(the “Company”).

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.

He 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.

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

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

Thiel has succeeded Merrick Okamoto, who has

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

the transition until his retirement at the end of 2021.

March 25, 2021, Marathon Digital Holdings, Inc.

(the “Company”) entered into a licensing agreement with DMG Blockchain Solutions,

to license DMG’s proprietary Blockseer pool technology for use in its new Marathon OFAC Pool .

Pursuant to the terms and conditions

of the Agreement, the Company will be granted an exclusive and irrevocable license to use the technology in the U.S., and DMG will receive:

$500,000 in restricted common stock of the Company (stock to be issued in a transaction exempt from registration under Section 4(a)(2)

under the Securities Act of 1933, as amended);

a monthly license fee with a sliding scale based on the MARAPool’s block rewards

and transaction fees received by the pool;

and technical support services to be provided on an as-needed basis with payment in US dollars.

As of December 31, 2021, DMG has received shares equivalent to $500,000 in restricted common stock of the Company.

May 20, 2021, the Company appointed Georges Antoun and Jay Leupp to its board of directors, effective immediately, as Peter Benz transitions

to become the company’s vice president of corporate development and Michael Berg stepped down from his position of director to

pursue other projects.

As a result, Marathon’s board of directors now consists of five directors, including three independent directors

and two inside directors.

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 December 31, 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 whereas the

Company will pay an initial deposit of $14.6 million in aggregate over five instalments.

As of December 31, 2021, the Company paid

the full $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.

August 9, 2021, the Company appointed Sarita James and Said Ouissal to its board of directors, effective immediately as independent directors.

August 23, 2021 , the Company issued 2,722,435 shares of common stock pursuant to the 2018 Equity Incentive Plan.

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 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.

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

previously disclosed in the Company’s monthly production updates, there have been multiple instances of the power generating station

in Hardin, MT operating below peak capacity and thus limiting the Company’s ability to mine bitcoin during 2021.

To mitigate these

issues in the future, system upgrades will be performed on the power generating station beginning in November 2021 and continuing into

Each phase of this maintenance will require the plant, and therefore the Company’s mining operations in Hardin, MT, to be

offline for approximately three to five days.

The upgrades are intended to improve the power generating station’s efficacy and

efficiency, increase safety, mitigate the potential for unexpected downtime in the future, and ultimately improve the Company’s

ability to effectively mine bitcoin.

The Company believes that the impact of these upgrades on its mining operations will minimize future

downtime and thus counterbalance any maintenance downtime experienced as a result of these repairs.

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

(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.

On November 9, 2021,

the Company received a waiver letter from Silvergate Bank whereas Silvergate Bank has waived its default rights with respect to noncompliance

of Section VII.

Negative Covenants 7.3 Indebtedness and Section VI.

Affirmative Covenants 6.5.

Financial Covenants.

Silvergate Bank accepts

and acknowledges convertible notes in the aggregate principal amount up to $650,000,000, plus an option to purchase an additional $97,500,000

principal amount of Convertible Notes shall not constitute “Indebtedness” for purpose of Section 7.3 of the Revolving Credit

and Security Agreement.

Further the maximum debt-to-equity ratio in Section 6.5 shall be revised to be 1.50:1.00.

the quarter ended September 30, 2021, the Company and certain of its executives received a subpoena from the SEC to produce documents

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

On 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.

The 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.

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 SEC.

November 18, 2021, Marathon Digital Holdings, Inc.

(the “ Company ”) issued $650,000,000 principal amount of its 1.00%

Convertible Senior Notes due 2026 (the “ Notes ”).

The Notes were issued pursuant to, and are governed by, an indenture

(the “ Indenture ”), dated as of November 18, 2021, between the Company and U.S.

Bank National Association, as trustee

(the “ Trustee ”).

Pursuant to the purchase agreement between the Company and the initial purchasers of the Notes, the

Company also granted the initial purchasers an option, for settlement within a period of 13 days from, and including, November 18, 2021

to purchase up to an additional $97,500,000 principal amount of Notes.

As noted below, this option was exercised and an additional $97,500,000

principal amount of Notes was issued on November 23, 2021.

Notes will be the Company’s senior, unsecured obligations and will be (i) equal in right of payment with the Company’s existing

and future senior, unsecured indebtedness;

(ii) senior in right of payment to the Company’s existing and future indebtedness that

is expressly subordinated to the Notes;

(iii) effectively subordinated to the Company’s existing and future secured indebtedness,

to the extent of the value of the collateral securing that indebtedness;

and (iv) structurally subordinated to all existing and future

indebtedness and other liabilities, including trade payables, and (to the extent the Company is not a holder thereof) preferred equity,

if any, of the Company’s subsidiaries.

Notes will accrue interest at a rate of 1.00% per annum, payable semi-annually in arrears on June 1 and December 1 of each year, beginning

on June 1, 2022.

The Notes will mature on December 1, 2026, unless earlier repurchased, redeemed or converted.

Before the close of business

on the business day immediately before June 1, 2026, noteholders will have the right to convert their Notes only upon the occurrence

of certain events.

From and after June 1, 2026, noteholders may convert their Notes at any time at their election until the close of

business on the second scheduled trading day immediately before the maturity date.

The Company will settle conversions by paying or delivering,

as applicable, cash, shares of its common stock or a combination of cash and shares of its common stock, at the Company’s election.

The initial conversion rate is 13.1277 shares of common stock per $1,000 principal amount of Notes, which represents an initial conversion

price of approximately $76.17 per share of common stock.

The conversion rate and conversion price will be subject to customary adjustments

upon the occurrence of certain events.

In addition, if certain corporate events that constitute a “Make-Whole Fundamental Change”

(as defined in the Indenture) occur, then the conversion rate will, in certain circumstances, be increased for a specified period of

Notes will be redeemable, in whole or in part (subject to certain limitations described below), at the Company’s option at any

time, and from time to time, on or after December 6, 2024 and on or before the 21st scheduled trading day immediately before the maturity

date, at a cash redemption price equal to the principal amount of the Notes to be redeemed, plus accrued and unpaid interest, if any,

to, but excluding, the redemption date, but only if the last reported sale price per share of the Company’s common stock exceeds

130% of the conversion price on (1) each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days

ending on, and including, the trading day immediately before the date the Company sends the related redemption notice;

and (2) the trading

day immediately before the date the Company sends such notice.

However, the Company may not redeem less than all of the outstanding Notes

unless at least $100.0 million aggregate principal amount of Notes are outstanding and not called for redemption as of the time the Company

sends the related redemption notice.

In addition, calling any Note for redemption will constitute a Make-Whole Fundamental Change with

respect to that Note, in which case the conversion rate applicable to the conversion of that Note will be increased in certain circumstances

if it is converted during the related redemption conversion period.

certain corporate events that constitute a “Fundamental Change” (as defined in the Indenture) occur, then, subject to a limited

exception for certain cash mergers, noteholders may require the Company to repurchase their Notes at a cash repurchase price equal to

the principal amount of the Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change

repurchase date.

The definition of Fundamental Change includes certain business combination transactions involving the Company and certain

de-listing events with respect to the Company’s common stock.

Notes will have customary provisions relating to the occurrence of “Events of Default” (as defined in the Indenture), which

include the following:

(i) certain payment defaults on the Notes (which, in the case of a default in the payment of interest on the Notes,

will be subject to a 30-day cure period);

(ii) the Company’s failure to send certain notices under the Indenture within specified

periods of time;

(iii) the Company’s failure to comply with certain covenants in the Indenture relating to the Company’s

ability to consolidate with or merge with or into, or sell, lease or otherwise transfer, in one transaction or a series of transactions,

all or substantially all of the assets of the Company and its subsidiaries, taken as a whole, to another person;

(iv) a default by the

Company in its other obligations or agreements under the Indenture or the Notes if such default is not cured or waived within 60 days

after notice is given in accordance with the Indenture;

(v) certain defaults by the Company or any of its subsidiaries with respect to

indebtedness for borrowed money of at least $50,000,000;

and (vi) certain events of bankruptcy, insolvency and reorganization involving

the Company or any of its significant subsidiaries.

an Event of Default involving bankruptcy, insolvency or reorganization events with respect to the Company (and not solely with respect

to a significant subsidiary of the Company) occurs, then the principal amount of, and all accrued and unpaid interest on, all of the

Notes then outstanding will immediately become due and payable without any further action or notice by any person.

If any other Event

of Default occurs and is continuing, then, the Trustee, by notice to the Company, or noteholders of at least 25% of the aggregate principal

amount of Notes then outstanding, by notice to the Company and the Trustee, may declare the principal amount of, and all accrued and

unpaid interest on, all of the Notes then outstanding to become due and payable immediately.

However, notwithstanding the foregoing,

the Company may elect, at its option, that the sole remedy for an Event of Default relating to certain failures by the Company to comply

with certain reporting covenants in the Indenture consists exclusively of the right of the noteholders to receive special interest on

the Notes for up to 270 days at a specified rate per annum not exceeding 0.50% on the principal amount of the Notes.

November 23, 2021, Marathon Digital Holdings, Inc.

(the “Company”) issued $97,500,000 aggregate principal amount of the Company’s

1.00% Convertible Senior Notes due 2026 (the “Option Notes”) to Jefferies LLC, as representative of the several initial purchasers

(collectively, the “Initial Purchasers”) in connection with the exercise of the Initial Purchasers’ option to purchase

additional notes.

The Option Notes, together with the $650,0000,000 aggregate principal amount of the Company’s 1.00% Convertible

Senior Notes due 2026 that were previously issued, were issued in connection with a private offering to qualified institutional buyers

pursuant to Rule 144A under the Securities Act of 1933, as amended, and were issued pursuant to the Indenture dated as of November 18,

2021 by and between the Company and U.S.

Bank National Association, as trustee.

November 30, 2021, Marathon Digital Holdings, Inc.

(the “Company”) entered into an amended five year hosting agreement

with Compute North, LLC (“Compute North”) to host 73,000 S19 miners to be deployed during the first two quarters of 2022

at a hosting fee of $0.044 per kilowatt hour with substantially the same terms as the Company’s prior hosting agreements with

Compute North.

On that same date, the Company also entered into a joint venture with Compute North to form Marathon Compute North 1

LLC (the “LLC”) of which the equity is owned 82% by Marathon and 18% by Compute North, the business purpose of which

is to jointly host bitcoin miners.

The LLC entered into a hosting agreement with Compute North to host an additional

30,000 S19 miners along substantially similar terms to the hosting agreement between the Company and Compute North also at $0.044

per kilowatt hour.

December 15, 2021, Marathon Digital Holdings, Inc.

(the “Company”) entered into a Severance and Release Agreement (“Agreement”)

with Merrick Okamoto, its Executive Chairman (“Okamoto”).

Pursuant to the Agreement, Okamoto is retiring effective December

He is providing a standard release to the Company in exchange for payment of 83,333 restricted stock units of the Company,

which shall vest immediately upon grant.

The shares underlying the RSUs are being issued pursuant to the Company’s registration

statement on Form S-8 (file no.

333-258928), filed with the SEC on August 19, 2021.

Additionally on December 31, 2021, the Company shall

pay Okamoto the following:

(i) accrued wages of $30,942.92, his annual 2021 bonus in the amount of $371,315 and any remaining approved

and unpaid Company expenses incurred by him, if any.

He is also entitled to medical insurance reimbursement as currently maintained through

December 31, 2022, and thereafter is entitled to COBRA at his own expense, to the extent available by law.

December 17, 2021, a putative class action complaint was filed in the United States District Court for the District Court of Nevada,

against the company and present and former senior management.

The Complaint alleges securities fraud related to the disclosures of an

SEC investigation previously made by the Company on November 15, 2021.

Plaintiff Tad Schaltre served the Complaint on the Company

We purchased digital asset mining machines and established a data center in Canada to mine digital assets in 2017.

The Company ceased

operating in Canada in 2020 and relocated all owned mining rigs from Canada to the U.S.

The Company has since expanded its activities

in the mining of bitcoin across the U.S.

The Company changed its name to Marathon Digital Holdings, Inc.

on March 1, 2021.

December 21, 2021, Marathon Digital Holdings, Inc.

(the “Company”) executed a contract with Bitmain to purchase an additional

78,000 next generation Antminer S-19 XP Miners, with 13,000 units being delivered in each of July 2022, August 2022, September 2022,

October 2022, November 2022 and December 2022.

The purchase price is $879,060,000.

The purchase price for the miners shall be paid as

35% of the total amount within two days of execution of the purchase contract, 35% of each single shipment price at least six

months prior to each such shipment, and the remaining 30% of each single shipment price at least one month prior to each such shipment.

December 27, 2021, Marathon Digital Holdings, Inc.

(the “Company”) appointed Ashu Swami as its Chief Technology Officer and

entered into an Executive Employment Agreement (“Agreement”) with Mr.

Swami joins Marathon Digital Holdings from Core Scientific where he served as the CPO since Feb 2021, leading the company’s foray

into DeFi and heading the mining hardware and software optimization tech.

Prior to that, from Jan 2019 to Feb 2021, he was the CTO of

Apifiny, a hybrid CEX and DEX crypto exchange.

Previously, from Jan 2016 to Dec 2018, Mr.

Swami headed a SPV of Quadeye Securities which

pioneered and traded Mining Swaps, operated cloud mining data centers, and served as the Chief Advisor to Fortune 50 companies including

Intel Corp on Blockchain initiatives.

From May 2013 to Dec 2015, he founded LocalPad, a p2p marketplace and payments plugin that provided

ebay-in-a-box like functionality to large blogs to monetize their user base.

Prior to that, from May 2007 to Apr 2013, Mr.

a Portfolio Manager and led the high frequency market-making business at Morgan Stanley Program Trading to become a top 5 market maker

Previously, since May 2002, Mr.

Swami spent over 4 years as a Sr Component Designer and then Tech Lead in Intel’s Enterprise

Platforms Group.

Swami holds a BTech in CSE from IIT Bombay, and M.B.A.

from Duke University.

to the terms of the Agreement, Mr.

Swami is employed as CTO for a one year term which shall automatically renew unless either he or the

Company notifies the other at least 90 days before the end of the initial or any renewal term of the intent to terminate the Agreement.

Swami’s base salary is $275,000 per year with a cash bonus of up to $137,500 per year.

Swami shall also be granted 80,000

restricted stock units, of which 20,000 shall vest on the one year anniversary of the effective date of the Agreement, and then 5000

RSUs shall vest on each subsequent three month anniversary with the last 5000 RSUs vesting on the four year anniversary of the effective

date of the Agreement.

Upon certain not for cause termination events under the Agreement, Mr.

Swami would be entitled to vesting of all

unvested RSUs and a severance payment of six months of salary in addition to all accrued and unpaid salary and vacation and the like.

The Agreement contains other commercially standard terms for events of termination and the like.

December 21, 2021, the Company executed a contract with Bitmain to purchase an additional 78,000 next generation Antminer S-19 XP Miners,

with 13,000 units being delivered in each of July 2022, August 2022, September 2022, October 2022, November 2022 and December 2022.

purchase price is $879,060,000.

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

35% of the total amount within two days of

execution of the purchase contract, 35% of each single shipment price at least six months prior to each such shipment, and the remaining

30% of each single shipment price at least one month prior to each such shipment.

As of December 31, 2021, the Company has paid $307,671,000

of the purchase price.

February 11, 2022, we entered into an At The Market Offering Agreement, or sales agreement, with H.C.

Wainwright & Co., LLC, or Wainwright,

relating to shares of our common stock offered by this prospectus supplement.

In accordance with the terms of the sales agreement, we

may offer and sell shares of our common stock having an aggregate offering price of up to $750,000,000 from time to time through Wainwright

acting as our sales agent.

February 18, 2022, a shareholder derivative complaint was filed in the United States District Court for the District of Nevada, against

current and former members of the Company’s board of directors and senior management.

The complaint is based on allegations substantially

similar to the allegations in the December 2021 putative securities class action complaint, related to the Company’s disclosure

of an SEC investigation previously made by the Company on November 15, 2021.

On March 4, 2022, the Complaint was served on the Company.

and Cryptocurrencies Generally

is a digital asset that is issued by and transmitted through an open source protocol collectively maintained by a peer-to-peer network

of decentralized user nodes.

This network hosts a public transaction ledger, known as the bitcoin blockchain, on which bitcoin holdings

and transactions in bitcoin are recorded.

Balances of bitcoin are stored in individual “wallet” functions, which associate

network public addresses with a “private key” that controls the transfer of bitcoin.

The bitcoin blockchain can be updated

without any single entity owning or operating the network.

New bitcoin is created and allocated by the protocol that governs bitcoin

through a “mining” process that rewards users that verify transactions in the bitcoin blockchain.

The bitcoin protocol limits

the total issuance of bitcoin over time to 21 million.

can be used to pay for goods and services, or it can be converted to fiat currencies, such as the U.S.

dollar, at rates of exchange determined

by market forces on bitcoin trading platforms, which operate 24-hours-a-day, 7-days-a-week and are not regulated in as comprehensive

a manner as traditional securities exchanges.

As a result, trading on these markets is likely more subject to manipulation than on securities

markets regulated by the SEC, and pricing on these markets is likely affected by such manipulative activity.

In addition to these platforms,

over-the-counter markets and derivatives markets for bitcoin also exist;

however, these markets are still maturing and many are unregulated.

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.

While the 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.

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.

blockchain technology is a decentralized and encrypted ledger that is designed to offer a secure, efficient, verifiable, and permanent

way of storing records and other information without the need for intermediaries.

Cryptocurrencies serve multiple purposes.

serve as a medium of exchange, store of value or unit of account.

Examples of cryptocurrencies include:

bitcoin, bitcoin cash, and litecoin.

Blockchain technologies are being evaluated for a multitude of industries due to the belief in their ability to have a significant impact

in many areas of business, finance, information management, and governance.

Cryptocurrencies

are decentralized currencies that enable near instantaneous transfers.

Transactions occur via an open source, cryptographic protocol

platform which uses peer-to-peer technology to operate with no central authority.

The online network hosts the public transaction ledger,

known as the blockchain, and each cryptocurrency is associated with a source code that comprises the basis for the cryptographic and

algorithmic protocols governing the blockchain.

In a cryptocurrency network, every peer has its own copy of the blockchain, which contains

records of every historical transaction - effectively containing records of all account balances.

Each account is identified solely by

its unique public key (making it effectively anonymous) and is secured with its associated private key (kept secret, like a password).

The combination of private and public cryptographic keys constitutes a secure digital identity in the form of a digital signature, providing

strong control of ownership.

single entity owns or operates the network.

The infrastructure is collectively maintained by a decentralized public user base.

network is decentralized, it does not rely on either governmental authorities or financial institutions to create, transmit or determine

the value of the currency units.

Rather, the value is determined by market factors, supply and demand for the units, the prices being

set in transfers by mutual agreement or barter among transacting parties, as well as the number of merchants that may accept the cryptocurrency.

Since transfers do not require involvement of intermediaries or third parties, there are currently little to no transaction costs in

direct peer-to-peer transactions.

Units of cryptocurrency can be converted to fiat currencies, such as the US dollar, at rates determined

on various exchanges, such as Cumberland, Coinsquare (in Canada), Coinbase, Bitsquare, Bitstamp, and others.

Cryptocurrency prices are

quoted on various exchanges and fluctuate with extreme volatility.

believe cryptocurrencies offer many advantages over traditional, fiat currencies, although many of these factors also present potential

disadvantages and may introduce additional risks, including:

as a fraud deterrent, as cryptocurrencies are digital and cannot be counterfeited or reversed arbitrarily by a sender;

of counterparty risk;

trusted intermediary required;

theft prevention;

are verified and protected through a confirmation process, which prevents the problem of double spending;

decentralized

– no central authority (government or financial institution);

universally and not bound by government imposed or market exchange rates.

cryptocurrencies may not provide all of the benefits they purport to offer at all or at any time.

was first introduced in 2008 and was first introduced as a means of exchange in 2009.

Bitcoin is a consensus network that enables a new

payment system and a completely new form of digital money.

It is the first decentralized peer-to-peer payment network that is powered

by its users with no central authority or middlemen.

From a user perspective, we believe bitcoin can be viewed as cash for the Internet.

The bitcoin network shares a public ledger called the “blockchain.” This ledger contains every transaction ever processed,

allowing a user’s computer to verify the validity of each transaction.

The authenticity of each transaction is protected by digital

signatures corresponding to the sending addresses, allowing all users to have full control over sending bitcoins currency rewards from

their own bitcoin addresses.

In addition, anyone can process transactions using the computing power of specialized hardware and earn

a reward in bitcoins for this service.

This process is often called “mining.”

with many new and emerging technologies, there are potentially significant risks.

Businesses (including the Company) which are seeking

to develop, promote, adopt, transact or rely upon blockchain technologies and cryptocurrencies have a limited track record and operate

within an untested new environment.

These risks are not only related to the businesses the Company pursues, but the sector and industry

as a whole, as well as the entirety of the concept behind blockchain and cryptocurrency as value.

Factors such as access to computer

processing capacity, interconnectivity, electricity cost, environmental factors (such as cooling capacity) and location play an important

role in “mining,” which is the term for using the specialized computers in connection with the blockchain for the creation

of new units of cryptocurrency.

Mathematically

Controlled Supply

method for creating new bitcoins is mathematically controlled in a manner so that the supply of bitcoins grows at a limited rate pursuant

to a pre-set schedule.

The number of bitcoins awarded for solving a new block is automatically halved every 210,000 blocks.

current fixed reward for solving a new block is 12.5 bitcoins per block and the reward decreased by half to become 6.25 bitcoins around

May 10, 2020, which is the current reward (based on estimates of the rate of block solution calculated by BitcoinClock.com).

This deliberately

controlled rate of bitcoin creation means that the number of bitcoins in existence will never exceed 21 million and that bitcoins cannot

be devalued through excessive production unless the Bitcoin Network’s source code (and the underlying protocol for bitcoin issuance)

The Company monitors the Blockchain network and, as of December 9, 2020, based on the information we collected from our network

access, more than 18.45 million bitcoins have been mined.

intend to power and secure blockchains by verifying blockchain transactions using custom hardware and software.

We are currently using

our hardware to mine bitcoin (“BTC”) and expect to mine BTC, and potentially other cryptocurrencies.

Bitcoin relies on different

technologies based on the blockchain.

Wherein bitcoin is a digital currency, we will be compensated in BTC based on the mining transactions

we perform, which is how we will earn revenue.

are decentralized digital ledgers that record and enable secure peer-to-peer transactions without third party intermediaries.

enable the existence of digital assets by allowing participants to confirm transactions without the need for a central certifying authority.

When a participant requests a transaction, a peer-to-peer network consisting of computers, known as nodes, validate the transaction and

the user’s status using known algorithms.

After the transaction is verified, it is combined with other transactions to create a

new block of data for the ledger.

The new block is added to the existing blockchain in a way that is permanent and unalterable, and the

transaction is complete.

assets (also known as cryptocurrency) are a medium of exchange that uses encryption techniques to control the creation of monetary units

and to verify the transfer of funds.

Many consumers use digital assets because it offers cheaper and faster peer-to-peer payment options

without the need to provide personal details.

Every single transaction and the ownership of every single digital asset in circulation

is recorded in the blockchain.

Miners use powerful computers that tally the transactions to run the blockchain.

These miners update each

time a transaction is made and ensure the authenticity of information.

The miners receive a transaction fee for their service in the

form of a portion of the new digital “coins” that are issued.

Metrics – Hashing

operate mining hardware which performs computational operations in support of the blockchain measured in “hash rate” or “hashes

per second.” A “hash” is the computation run by mining hardware in support of the blockchain;

therefore, a miner’s

“hash rate” refers to the rate at which it is capable of solving such computations.

The original equipment used for mining

bitcoin utilized the Central Processing Unit (CPU) of a computer to mine various forms of cryptocurrency.

Due to performance limitations,

CPU mining was rapidly replaced by the Graphics Processing Unit (GPU), which offers significant performance advantages over CPUs.

purpose chipsets like CPUs and GPUs have since been replaced in the mining industry by Application Specific Integrated Circuits (ASIC)

These ASIC chips are designed specifically to maximize the rate of hashing operations.

measure our mining performance and competitive position based on overall hash rate being produced in our mining sites.

The latest equipment

utilized in our mining operation performs in the range of approximately 86 – 110 terahash per second (TH/s) per unit.

hardware is on the cutting edge of available mining equipment and we believe our acquisition of our units places us among leaders of

publicly-traded cryptocurrency miners;

however, advances and improvements to the technology are ongoing and may be available in quantities

to the market in the near future which may affect our perceived position.

We believe that our current inventory of miners establishes

us among the top public companies in the United States mining cryptocurrency.

Marathon Digital Holdings’ primary focus is to support the adoption, security, and evolution of Bitcoin by building

one of the largest, most agile, and most sustainably operated Bitcoin mining operations in the world.

Our strategy is to purchase hardware

(“miners”) that are specially designed to solve complex cryptographic problems set forth by the Bitcoin protocol and to partner

with third-party hosting providers to deploy this hardware, predominantly at renewable power sources, with the ultimate aim of adding

blocks to the Bitcoin blockchain and earning bitcoin.

the second quarter of 2021, we determined that the most effective strategy for expanding and improving the efficiency of our mining operations

is to invest in mining hardware rather than the construction and maintenance of the infrastructure that supports Bitcoin mining, including

but not limited to hosting centers and power facilities.

As a result, we now employ an “asset light” business model, opting

to outsource the deployment and hosting of our machines to third party hosting providers, including Compute North, who deploy our miners

at locations with low costs of electricity and access to clean and/or renewable energy sources.

We believe this strategy provides a superior

return on assets, increases our optionality, and reduces risks to our business.

with our hosting partners, we focus on deploying our miners predominantly “behind the meter” at renewable power stations

to reduce our costs, to optimize for sustainably generated power, to incentivize the construction of new renewable power stations in

the United States, and to help improve the stability of power grids by operating as a flexible, base load customer.

Mining Operations :

In 2020, we began rapidly expanding our Bitcoin mining operations by purchasing large numbers of state-of-the-art

Bitcoin miners from Bitmain, one of the leading Bitcoin mining hardware manufacturers.

By expanding our mining operations and increasing

our “hash rate” (computing power) relative to the rest of the network, we can improve the probability of successfully adding

a block to Bitcoin’s blockchain and therefore earning bitcoin.

Bitcoin Miners:

In the second half of 2020, we began purchasing large quantities of new Bitcoin miners from Bitmain to expand

and upgrade our Bitcoin mining operations.

Our major orders to date are as follows:

10,500 Antminer S19 Pros (110 TH/s)

10,000 Antminer S19 Pros (110 TH/s)

10,000 Antminer S19j Pros (100 TH/s)

70,000 Antminer S19s (90-110 TH/s)

30,000 Antminer S19j Pros (110 TH/s)

78,000 Antminer S19 XPs (140 TH/s)

have paid an average price of $6,054 per machine, or $52 per Terahash, for these miners, which we believe are among the most powerful

and most efficient currently available.

Shipment schedules by month are as follows:

of January 2021, we had 2,060 miners deployed, generating approximately 0.2 Exahash per second (“EH/s”).

Once deployments

and upgrades are complete, we expect our total fleet to consist of approximately 199,000 state of the art Bitcoin miners, capable of

producing 23.3 EH/s.

Based on current construction and deployment schedules, we currently believe all machines may be deployed by early

Mining Facilities:

We deploy miners in various locations across the United States, including South Dakota, Nebraska, Montana,

Our blended costs for electricity and hosting across our entire fleet is $0.0426 per kilowatt hour (“kWh”).

Our objective is for our mining operations to be 100% carbon neutral and predominantly powered by renewable power sources (solar,

wind, etc.) by the end of fiscal year 2022.

MT Data Center:

In October 2020, we entered into a series of agreements to construct a Bitcoin mining facility adjacent to a

stranded power station in Hardin, MT.

We house approximately 30,000 Bitcoin miners at this facility, half of which reside in air

cooled containers, while the other half reside in an air cooled building.

Our miners at this location derive all of their power from

the previously dormant power station, which is owned by Beowulf Energy and can produce up to 100 megawatt (MW) of power.

power station and our mining facility reside on land owned by the Crow Nation.

The construction of our mining facility in Hardin,

MT was completed in December 2021.

North Hosting Arrangements:

Since 2017, we have been hosting Bitcoin miners with Compute North at their mining facilities in

North Dakota and Nebraska.

In May 2021, we announced that we had entered into a binding letter of intent with Compute North to host

73,000 of our Bitcoin miners at a new 300 MW data center in Texas.

In December 2021, we announced that we were expanding our agreement

to include up to 100,000 of our Bitcoin miners.

arrangements with Compute North provide us with reliable hosting, access to renewable power, and low costs of operations.

a fixed rate for electricity and hosting to Compute North, who develops and operates the facilities while managing the deployment

of our miners.

Through these arrangements, we are deploying miners at multiple locations in Texas and elsewhere, the majority of

which are behind the meter at wind and solar farms operated by one of the largest renewable energy power providers in North America.

of new facilities is currently underway and continuing throughout 2022.

Once completed, we expect our mining operations to be 100%

carbon neutral.

Bitcoin Holdings:

While we may sell bitcoin in future periods as needed to generate cash for treasury management and other general

corporate purposes, Marathon Digital Holdings views its bitcoin holdings as long-term holdings.

We last sold bitcoin on October 21, 2020

and have since been accumulating and holding (“hodling”) all the bitcoin we produce.

As of December 31, 2021, we held approximately

8,115 bitcoin, including the 4,794 bitcoin held in the investment fund.

A total of 4,812.66 bitcoin was purchased

and placed into an investment fund in January 2021 for an average price of $31,168 per bitcoin.

During 2021, 18 bitcoin were

liquidated as needed by the investment manager in order to pay the management fee and other operating expenses of the fund pursuant to

the management agreement.

believe that bitcoin is attractive because it can serve as a store of value and a hedge against inflation as it is supported by a robust

and public open source architecture that is untethered to sovereign monetary policy.

We also believe that bitcoin, due to its limited

supply, has the potential to further appreciate in value as adoption increases.

Halving/Halvening

Bitcoin miners receive a reward in the form of bitcoin for each block they successfully process and add to Bitcoin’s

This reward, frequently referred to as a “block reward”, is the foundation of Bitcoin’s supply algorithm.

It is the process by which new bitcoin enter the marketplace.

supply is finite, and the rate at which new bitcoin enter the marketplace is designed to decrease over time, reducing the rate of inflation.

Every 210,000 blocks, the block reward is cut in half (i.e., decreased by 50%).

This event is commonly referred to as a “halving”

or “halvening.” On average, blocks are added to Bitcoin’s blockchain every 10 minutes.

As a result, a halving/halvening

event occurs approximately every four years.

the first four years of Bitcoin’s life, the block reward was 50 bitcoin per block.

In 2012, the block reward decreased to 25 bitcoin

In 2016, the block reward was reduced to 12.5 bitcoin per block.

The last halving occurred on May 12, 2020 when the block

reward was cut to 6.25 bitcoin per block.

The next halving is expected to occur in 2024, at which time, the block reward will be reduced

to 3.125 bitcoin per block.

Halving events will continue until all 21,000,000 bitcoin have been mined, which is expected to occur in

approximately 2140.

not guaranteed, historically, halving events have been correlated with increases Bitcoin’s price.

Marathon Digital Holdings operates its own bitcoin mining pool, MaraPool.

The pool functions as a strategic differentiator for Marathon,

as it provides us with improved insight into the performance of our mining operations, the potential to further optimize our performance,

and the ability to vote on proposed upgrades and changes to the Bitcoin network.

Cybersecurity .

To the Company’s knowledge there has been no security breach or incident, unauthorized access or disclosure, or other compromise

of or relating to the Company or its subsidiaries information technology and computer systems, networks, hardware, software, data and

databases, equipment or technology.

The Company has not been notified of, and has no knowledge of any event or condition that could result

in, any security breach or incident, unauthorized access or disclosure or other compromise to their IT Systems and Data, and the Company

has implemented appropriate controls, policies, procedures, and technological safeguards to maintain and protect the integrity, continuous

operation, redundancy and security of their IT Systems and Data reasonably consistent with industry standards and practices, or as required

by applicable regulatory standards.

The Company is presently in material compliance with all applicable laws or statutes and all judgments,

orders, rules and regulations of any court or arbitrator or governmental or regulatory authority, internal policies and contractual obligations

relating to the privacy and security of IT Systems and Data and to the protection of such IT Systems and Data from unauthorized use,

access, misappropriation or modification.

& Development:

have recently made several R&D forays.

operates a proof-of-work research initiative focused on accelerating the development and deployment of the best new mining practices.

This initiative focuses on the proprietary testing and experimentation of proof-of-work related matters such as miners, firmware, immersion

technologies, power supply units, miner software, and pools.

The initiative is also focused on researching and publishing thought pieces

related to the future of mining, impact on the electrical grid, impact on local economies, security, performance issues, as well as general

Research is performed both within Marathon, as well as via partnerships with complimentary corporations, startups, non-profits,

and universities.

This initiative’s purview extends beyond just Bitcoin to include investigation and experimentation of all proof-of-work

cryptocurrencies, as well as examining optimal participation with proof-of-stake cryptocurrencies at the infrastructure layer.

operates an incubator/accelerator for the Bitcoin ecosystem.

The purpose of the incubator is to support the development of new technologies

and businesses that seek to expand and enrich Bitcoin as a decentralized global monetary, settlement, and digital information network.

These technologies may include, but are not limited to, infrastructure building blocks, and “layer 2” protocols.

We believe our ongoing success depends on our employees.

Development and investment in our people are central to who we

are and will continue to be so.

We take a comprehensive approach to sourcing, hiring, onboarding, integrating, developing, engaging and

rewarding employees.

As of December 31, 2021, our workforce consisted of nine full time employees.

Digital Holdings, Inc.

is committed to the principles of equal employment.

We are committed to complying with all federal, state, and

local laws providing equal employment opportunities, and all other employment laws and regulations.

It is our intent to maintain a work

environment that is free of harassment, discrimination, or retaliation because of age (40 and older), race, color, national origin, ancestry,

religion, sex, sexual orientation (including transgender status, gender identity or expression), pregnancy (including childbirth, lactation,

and related medical conditions), physical or mental disability, genetic information (including testing and characteristics), veteran

status, uniformed servicemember status, or any other status protected by federal, state, or local laws.

The Company is dedicated to the

fulfilment of this policy in regard to all aspects of employment, including but not limited to recruiting, hiring, placement, transfer,

training, promotion, rates of pay, and other compensation, termination, and all other terms, conditions, and privileges of employment.

cryptocurrency mining, companies, individuals and groups generate units of cryptocurrency through mining.

Miners can range from individual

enthusiasts to professional mining operations with dedicated data centers.

As of December

31, 2022, the Company is solely focused on the mining of bitcoin and ancillary opportunities within the Bitcoin ecosystem.

term “Bitcoin” with a capital “B” is used to denote the Bitcoin protocol which implements a highly available,

public, permanent, and decentralized ledger.

The term “bitcoin” with a lower case “b” is used to denote the token,

CORPORATE INFORMATION

2022, we moved our corporate headquarters to Fort Lauderdale, FL and maintain an address at 101 SE 3 rd Avenue, Suite 1200,

Fort Lauderdale, FL 33301.

We also maintain a West Coast office at 300 Spectrum Center Drive, Suite 950, Irvine, CA 92618.

is www.mara.com .

As of February 20, 2023, we had 30 full-time employees and we expect this number to continue to grow in support

of the increased scale of the business.

We believe our employee relations to be good.

2022 AND 2023 EVENTS

March 31, 2022, Hugh Gallagher was appointed Chief Financial Officer of the Company.

March 31, 2022, the Company amended its previously announced 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 (“2P1”),

pursuant to which Beowulf and 2P1 have been designing and developing a data center facility of up to 110-megawatts (the “Facility”)

located next to, and supplied energy directly from, Beowulf’s power generation station in Hardin, MT.

As part of the Company’s

mandate to become carbon neutral by the end of the 2022 fiscal year, the Company, Beowulf and 2P1 agreed to terminate the Data Facility

Services Agreement, the Power Purchase Agreement and the Ground Lease for the Facility as of August 15, 2022, and the Company redeployed

its Hardin-installed mining rigs to renewable power facilities in the third quarter of 2022.

On July 28, 2022, the Company entered into a Revolving Credit and Security

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

Company up to $100 million on a revolving basis pursuant to the terms of the Agreement and the $100 million principal amount revolving

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

On February 6, 2023, the Company provided Silvergate Bank with the required

30-day notice stating the Company’s intent to prepay the outstanding balance on its term loan facility as well as the Company’s

intent to terminate the term loan facility.

The Company and Silvergate subsequently agreed to also terminate the revolving line of credit

(“RLOC”) facility.

On March 8, 2023, the term loan prepayment was completed, and the Company’s term loan and RLOC facilities

with Silvergate Bank were terminated.

September 14, 2022, the Company amended its Amended and Restated Bylaws to document the previously disclosed unanimous Board approval

to reduce its quorum requirements to 33-1/3% of the issued and outstanding shares of common stock of the Company.

September 22, 2022, Compute North Holdings, Inc.

(along with its affiliated debtors, collectively, “Compute North”), filed

for chapter 11 bankruptcy protection in the U.S.

Bankruptcy Court for the Southern District of Texas under chapter 11 of the U.S.

Code (11 U.S.

Code section 101 et seq .).

Compute North provided operating services to the Company and hosted our mining rigs in

multiple facilities.

On December 15, 2022, US Bitcoin Corp (“US Bitcoin”) replaced Compute North as the operator of the facilities

in McCamey, TX, Granbury, TX and Kearney, NE as a result of the Compute North bankruptcy.

We currently have arrangements in place with

respect to the McCamey, Granbury and Kearney facilities.

We no longer operate at South Souix City.

On February 16, 2023, the Bankruptcy

Court approved the Debtors Plan of Reorganization, pursuant to which Marathon’s claim has been fixed at $40,000 thousand as an

unsecured claim to be paid out according to the timing and percentages within the approved Debtor’s plan.

connection with a dispute concerning the settlement of certain restricted stock unit awards previously granted to Merrick D.

former Chief Executive Officer and Chairman of the Company on October 12, 2022, the Company entered into a settlement agreement with

Okamoto, pursuant to which the Company agreed to pay Mr.

Okamoto $24,000 thousand.

Okamoto agreed to a settlement and a broad

release of known or unknown claims against the Company, which relate to the Company’s Amended 2018 Equity Incentive Plan or related

restricted stock unit award agreements.

The Company also entered into agreements in respect to seven other recipients of the same restricted

stock unit awards including a director and our current Chief Operating Officer and Chief Executive Officer and Chairman.

Payments related

to these agreements totaled approximately $2,100 thousand in the aggregate.

November 21, 2022, John Lee was appointed Chief Accounting Officer of the Company.

January 27, 2023, the Company and FS Innovation, LLC (“FSI”) entered into a Shareholders’ Agreement (the “Agreement”)

regarding formation of an Abu Dhabi Global Markets company (the “ADGM Entity”), whose purpose shall be to jointly (a) establish

and operate one or more mining facilities for digital assets;

and (b) mine digital assets (collectively, the “Business”).

The initial project by the ADGM Entity shall consist of two digital asset mining sites comprising 250 MW in Abu Dhabi, and the initial

equity ownership in the ADGM Entity shall be 80% FSI and 20% the Company, and capital contributions will be made, subject to the satisfaction

or waiver of certain conditions, during the 2023 development period in those proportions, consisting of both cash and in kind, in amounts

of approximately $406,000 thousand in aggregate.

FSI will appoint four directors to the board of the ADGM Entity, and the Company will

appoint one director.

Unless otherwise not permitted by applicable law, the digital assets mined by the ADGM Entity will be distributed

to the Company and FSI twice a month in proportion to their respective equity interests in the ADGM Entity.

There are market provisions

in the Agreement with respect to financial and tax matters.

The Agreement shall terminate at the earlier of the mutual written agreement

of the parties, winding up of the ADGM Entity or the ownership by a shareholder of all of the outstanding equity interests in the ADGM

The Agreement contains market terms on transfer of shares by a shareholder, preemptive rights and certain tag along and drag

along rights upon a sale of the ADGM Entity.

Furthermore, there are five year restrictive covenants which, inter alia, prevent Marathon

from competing in the UAE with the Business or with the business of FSI or any of certain related parties and prevent FSI from competing

with the business of Marathon.

BITCOIN BLOCKCHAIN

OVERVIEW OF BITCOIN

is a decentralized digital asset that operates on a peer-to-peer network, allowing users to send and receive payments without the need

for intermediaries such as banks.

This is made possible through the use of blockchain technology, which is a distributed ledger that

records and verifies all transactions on the network.

Bitcoin blockchain is a public, transparent, and immutable record of all transactions that have ever occurred on the network.

is maintained by a network of computers, known as nodes, that work together to verify and validate new transactions.

Each transaction

is cryptographically signed and added to the blockchain as a new block, which is then permanently recorded and cannot be altered or deleted.

of the key advantages of the Bitcoin blockchain is that it allows for trustless, secure transactions without the need for a central authority.

Because the blockchain is decentralized and transparent, all users can verify the legitimacy of a transaction without having to rely

on a third party.

This eliminates the need for intermediaries, which can be slow and expensive, and it also makes the network resistant

to censorship and fraud.

decentralized and transparent nature makes it secure, efficient, and accessible, and gives it the potential to enable new forms of value

exchange and innovation.

OVERVIEW OF BITCOIN “HALVING” EVENTS

Bitcoin halving is a phenomenon that occurs approximately every four years on the Bitcoin network.

The halving is a key part of the Bitcoin

protocol, and it serves to control the overall supply and reduce the risk of inflation in digital assets using a Proof-of-Work consensus

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

For bitcoin the reward was

initially set at 50 bitcoin currency rewards per block.

The Bitcoin blockchain has undergone halving three times since its inception

(1) on November 28, 2012 at block height 210,000;

(2) on July 9, 2016 at block height 420,000;

(3) on May 11, 2020 at block

height 630,000, when the reward was reduced to its current level of 6.25 bitcoin per block.

The next halving for the Bitcoin blockchain

is anticipated to occur on or around March 2024 at block height 840,000.

This process will reoccur until the total amount of bitcoin

currency rewards issued reaches 21,000 thousand and the theoretical supply of new bitcoin is exhausted, which is expected to occur around

Affecting Profitability

Price of Bitcoin

business is heavily dependent on the price of bitcoin.

The prices of digital assets, including bitcoin, have experienced substantial

volatility, meaning that high or low prices may be based on speculation and incomplete information, may be subject to rapidly changing

investor sentiment, and may be influenced by factors such as technology, regulatory void or changes, fraudulent actors, manipulation,

and media reporting.

Bitcoin (as well as other digital assets) may have value based on various factors, including their acceptance as

a means of exchange by consumers and producers, scarcity, and market demand which are beyond our control.

halving is an important part of the Bitcoin ecosystem, and it is closely watched by miners, investors, and other participants in the

digital asset market.

Each halving event has historically been associated with significant price movements in the value of bitcoin.

Hash Rate and Difficulty

a bitcoin mining rig’s chance of solving a block on the Bitcoin blockchain and earning a bitcoin reward is a function of the mining

rig’s hash rate, relative to the global network hash rate (i.e., the aggregate amount of computing power devoted to supporting

the Bitcoin blockchain at a given time).

As demand for bitcoin has increased, the global network hash rate has increased rapidly, and

as more adoption of bitcoin occurs, we expect the demand for new bitcoin will likewise increase as more mining companies are drawn into

the industry by this increased demand.

Further, as more and increasingly powerful mining rigs are deployed, the network difficulty for

Bitcoin has increased.

Network difficulty is a measure of how difficult it is to solve a block on the Bitcoin blockchain, which is adjusted

every 2016 blocks (every 2 weeks approximately) so that the average time between each block remains ten minutes.

A high difficulty means

that it will take more computing power to solve a block and earn a new bitcoin reward, which, in turn, makes the Bitcoin network more

secure by limiting the possibility of one miner or mining pool gaining control of the network.

Therefore, as new and existing miners

deploy additional hash rate, the global network hash rate will continue to increase, meaning a miner’s share of the global network

hash rate (and therefore its chance of earning bitcoin rewards) will decline if it fails to deploy additional hash rate at pace with

the industry.

OVERVIEW OF BITCOIN MINING

mining is the process by which new bitcoin are created and transactions on the Bitcoin network are verified.

In order to mine bitcoin,

mining rigs use specialized computer hardware to win a lottery, which allows them to add new blocks to the bitcoin blockchain and receive

a reward in the form of newly minted bitcoin.

The bitcoin mining process serves several important functions in the bitcoin ecosystem.

bitcoin mining helps to secure the Bitcoin network by verifying transactions and preventing fraud.

When a user sends a transaction on

the Bitcoin network, it is broadcast to the network and added to the pool of unconfirmed transactions known as the “mempool.”

Mining rigs then compete in a sort of lottery required to add these transactions to the blockchain, which is the decentralized ledger

that records all Bitcoin transactions.

When a mining rig successfully adds a new block to the blockchain, the transactions included in

that block are considered confirmed, and the mining rig receives a reward in the form of newly minted bitcoins.

bitcoin mining helps to decentralize the Bitcoin network and distribute new bitcoin in a fair and transparent manner.

Unlike traditional

currencies, which are issued and controlled by central banks, bitcoin is a decentralized digital asset that is not controlled by any

government or institution.

Instead, new bitcoin are created and distributed through the mining process, which allows anyone with the

necessary hardware and expertise to participate in the mining process and potentially earn rewards.

This decentralized distribution of

new bitcoin helps to ensure that the supply of the digital asset is controlled in a fair and transparent manner.

bitcoin mining plays a key role in the maintenance and growth of the Bitcoin network.

The mining process helps to support the infrastructure

of the network by providing the computational power needed to verify transactions and add new blocks to the blockchain.

As more people

become interested in mining bitcoin, the network becomes more secure and efficient.

STRATEGIC FOCUS

Company’s focus at the onset of 2022 was on growth execution and transition into a larger operation.

This focus consisted of both

the expansion of operations of our core bitcoin mining business (operating mining rigs at third-party owned and operated data centers)

and operating MaraPool – our proprietary bitcoin mining pool which orchestrates the operation of our fleet of mining rigs.

activities and milestones throughout 2022 included the following:

deployed capital to secure the most efficient ASICs mining rigs through contracts that included price protection clauses which benefited

the Company as ASICs prices declined throughout the second and third quarters of 2022.

shut down operations at the coal powered Hardin, MT data center facility

started operations at the wind powered site in McCamey, TX and other smaller sites

focused on securing additional hosting services for our planned expansion of operations, entering into third-party hosting relationships

with Applied Digital to host S19XP mining rigs at sites in Texas and North Dakota.

increased our hashrate from 3.5 exahashes per second at the beginning of the year to 7.0 exahashes per second at the end of 2022.

was also a year of adaptation, as the Company had to overcome several operational and financial headwinds, including:

primary mining facility in Hardin, MT going offline after being damaged by a storm in mid-2022

in the energization of the McCamey, TX site during the second and third quarters of 2022

largest hosting partner (Compute North) entering bankruptcy in September 2022

significant decline in the price of bitcoin, which resulted in impairments of our bitcoin holdings throughout the year and an impairment

charges related to the value of our mining rigs and certain contracts during the fourth quarter of 2022

financial markets and macroeconomic conditions

primary focus in 2023 will be the realization of the full energization of our fleet of nearly 200,000 bitcoin mining rigs and growing

our total operational hashrate from 7.0 exahashes per second at year end 2022 to over 23 exahashes per second by the third quarter of

We will also be focused on our first international expansion, a joint venture that will result in the formation of an Abu Dhabi

Global Markets company whose purpose will be to operate one or more mining facilities for digital assets.

The initial project will consist

of two mining sites comprising 250 MW in Abu Dhabi and the Company will own 20% of this entity, which is expected to commence bitcoin

mining operations in the second half of 2023.

Additionally, we expect to operationalize a number of technology innovations developed

by our technology team and partners including mining using immersion as well as new hardware and software solutions to optimize mining

rig performance and the reliability of MaraPool operations.

place a strong emphasis on research and development (R&D) as a key driver of innovation and growth.

Our R&D process is designed

to support the creation and development of new tools and processes that are an integral part of our overall business strategy and enhance

our productivity as an advanced and sustainable bitcoin miner.

first step in our R&D process is ideation, which is the process of generating and evaluating new ideas.

We encourage our team members

to come up with creative and innovative ideas, and we provide them with the resources and support they need to explore these ideas further.

we have identified a promising idea, the next step is to develop a prototype.

This typically involves creating a small-scale version

of the product or service, which can be tested and evaluated in order to identify potential issues and improve the design.

We also conduct

market research to understand the potential market for the product or service.

final step in our R&D process is testing and validation.

This involves conducting thorough testing of the prototype to identify any

issues or flaws, and to ensure that it meets our quality standards.

We also conduct market testing to gather feedback from real-world

users, and we use this feedback to refine and improve the product or service.

our R&D process is designed to support the creation and development of innovative technology advancements that ensure we maintain

our competitive advantages and improves our position as a leading bitcoin miner.

We believe that this process is essential for driving

growth and staying ahead of the competition, and we are committed to continuously improving and refining it to support our success.

OUR STRATEGIC INVESTMENTS

are committed to pursuing strategic investments that align with our vision and values.

Our strategy is focused on identifying and partnering

with companies that have the potential to generate long-term value for our stakeholders.

key element of our investment strategy is to focus on companies that are at the forefront of emerging technologies and industries.

believe that these companies have the potential to drive significant innovation and growth, and we are committed to supporting their

development through investments in both hardware and software companies

key aspect of our strategy is to prioritize investments in companies that are aligned with our values and mission.

We believe that our

stakeholders expect us to support businesses that operate in a responsible and sustainable manner, and we are committed to making investments

that reflect these values.

our investment strategy is designed to support our growth and success, while propelling us to be the most advanced, agile, and efficient

bitcoin miner.

We are committed to making strategic investments that are aligned with our vision and values, and we believe that this

approach will help us to achieve long-term success.

OUR OPERATIONS

deploy or are in the process of deploying our assets at various sites in the United States.

All of our sites are currently hosted by

third parties to whom we pay a fee.

A summary of our current and anticipated operating locations follows:

TX - Approximately 63,000 S19j Pros are deployed and operational at this site, with another 4,000 S19j Pros pending delivery and

deployment in 2023.

Our contract for this facility expires in August 2027.

City, TX - Approximately 28,000 S19 XPs are installed at this site, which is currently pending final regulatory approval for energization.

Our current expansion plans call for the deployment of 19 MW of immersion from a combination of new capacity and replacement of air-cooled

units for immersion during 2023.

Our contract for this facility expires in July 2027.

ND - Approximately 57,000 S19 XPs are expected to be deployed at this site during the first half of 2023.

Energization is expected

to start late in the first quarter of 2023.

Our contract for this site expires in July 2027.

ND - Approximately 5,600 S19 XPs are deployed and operational at this site, with planned deployments of another 10,400 air-cooled

units during the first quarter of 2023.

In addition to this air-cooled installation, the Company plans to deploy 768 units in immersion

on the site during the second quarter of 2023.

Our contract for the immersion deployment expires in August 2026 and our contract

for the air-cooled deployment at the site expires in December 2027.

TX - Approximately 12,500 S19j Pros and 4,400 XPs are currently deployed and being energized at this facility.

There are no plans

to expand operations at this facility.

OH - Approximately 2,800 S19 Pros are currently deployed and operational at this facility.

Our contract for this facility expires

in June 2023 and we do not expect to renew this contract beyond this termination date.

TX - Approximately 345 S19 Pros are currently deployed and operational at this facility.

There are no plans to expand operations

at this facility and our contract for this facility expires in June 2027.

NE - Approximately 2,300 S19 J Pros are deployed and operational at this site.

The Company expects to deploy an additional 1,300

MicroBT units at this site in 2023.

Sioux City, SD - Approximately 660 S19 Pros were deployed at this site.

The Company’s contract for this facility expired and

the Company exited this facility in early 2023.

January 27, 2023, the Company and FSI entered into an Agreement regarding formation of an Abu Dhabi Global Markets company whose purpose

shall be to jointly (a) establish and operate one or more mining facilities for digital assets;

and (b) mine digital assets.

project by the ADGM Entity shall consist of two digital asset mining sites comprising 250 MW in immersion in Abu Dhabi, and the initial

equity ownership shall be 80% FSI and 20% the Company.

The facility is expected to be operational in the second half of 2023.

digital asset mining, companies and individuals use computing power to solve cryptographic algorithms to record and publish transactions

to blockchain ledgers or provide transaction verification services to the Bitcoin network in exchange for digital asset rewards.

current reward for verifying a block on the Bitcoin blockchain is 6.25 bitcoin.

Miners can range from individual enthusiasts to professional

mining operations with dedicated data centers.

Miners may organize themselves in mining pools.

competes or may in the future compete with other companies that focus all or a portion of their activities on owning or operating cryptocurrency

exchanges, developing programming for the blockchain, and mining activities.

At present, the information concerning the activities of

these enterprises is not readily available as the vast majority of the participants in this sector do not publish information publicly

or the information may be unreliable.

Published sources of information include “bitcoin.org” and “blockchain.info”;

however, the reliability of that information and its continued availability cannot be assured.

The Company competes or may in the future

compete with other companies that focus all or a portion of their activities on owning or operating digital asset exchanges, developing

programming for the blockchain, and mining activities.

At present, the information concerning the activities of these enterprises is

not readily available as the vast majority of the participants in this sector do not publish information publicly or the information

may be unreliable.

public companies (traded in the U.S.

and Internationally), such as the following, may be considered to compete with us, although we believe

there is no company, including the following, which engages in the same scope of activities as we do.

Overstock.com

Investment Trust

Industries, Inc.

(formerly Omni Global Technologies, Inc.)

Technologies Ltd.

(formerly Blockchain Mining Ltd)

Blockchain Solutions Inc.

International, Inc.

Blockchain Technologies Inc.

and Internationally), such as the following, may be considered to compete with us:

Platforms, Inc.

8 Mining Corp.

Technology, Inc.

Capital Investments, Inc.

Holdings, Inc.

Technologies, LLC

there is limited available information regarding our non-public competitors, we believe that our recent acquisition and deployment of

miners (as discussed further above) positions us well among the publicly traded companies involved in the cryptocurrency mining industry.

The cryptocurrency industry is a highly competitive and evolving industry and new competitors and/or emerging technologies could enter

the market and affect our competitiveness in the future.

regulation of blockchain and cryptocurrency is being actively considered by the United States federal government via a number of agencies

and regulatory bodies, as well as similar entities in other countries.

State government regulations also may apply to our activities

and other activities in which we participate or may participate in the future.

Other regulatory bodies are governmental or semi-governmental

and have shown an interest in regulating or investigating companies engaged in the blockchain or cryptocurrency business.

that are engaged in the transmission and custody of bitcoin and other digital assets, including brokers and custodians, can be subject

Treasury Department regulations as money services businesses as well as state money transmitter licensing requirements.

and other digital assets are subject to anti-fraud regulations under federal and state commodity laws, and digital asset derivative instruments

are substantively regulated by the U.S.

Commodity Futures Trading Commission.

Certain jurisdictions, including, among others, New York

and a number of countries outside the United States, have developed regulatory requirements specifically for digital assets and companies

that transact in them.

may substantially change in the future and it is presently not possible to know how regulations will apply to our businesses, or when

they will be effective.

As the regulatory and legal environment evolves, we may become subject to new laws, further regulation by the

SEC and other agencies, which may affect our mining and other activities.

For instance, various bills have also been proposed in Congress

related to our business, which may be adopted and have an impact on us.

For additional discussion regarding our belief about the potential

risks existing and future regulation pose to our business, see the Section entitled “Risk Factors” herein.

addition, since transactions in bitcoin provide a reasonable degree of pseudo anonymity, they are susceptible to misuse for criminal

activities, such as money laundering.

This misuse, or the perception of such misuse (even if untrue), could lead to greater regulatory

oversight of bitcoin platforms, and there is the possibility that law enforcement agencies could close bitcoin platforms or other bitcoin-related

infrastructure with little or no notice and prevent users from accessing or retrieving bitcoin held via such platforms or infrastructure.

For example, in her January 2021 nomination hearing before the Senate Finance Committee, Treasury Secretary Janet Yellen noted that cryptocurrencies

have the potential to improve the efficiency of the financial system but that they can be used to finance terrorism, facilitate money

laundering, and support malign activities that threaten U.S.

national security interests and the integrity of the U.S.

and international

financial systems.

Accordingly, Secretary Yellen expressed her view that federal regulators needed to look closely at how to encourage

the use of cryptocurrencies for legitimate activities while curtailing their use for malign and illegal activities.

Furthermore, in December

2020, the Financial Crimes Enforcement Network (“FinCEN”), a unit of the Treasury Department focused on money laundering,

proposed a new set of rules for cryptocurrency-based exchanges aimed at reducing the use of cryptocurrencies for money laundering.

proposed rules would require filing reports with FinCEN regarding cryptocurrency transactions in excess of $10,000 and also impose record-keeping

requirements for cryptocurrency transactions in excess of $3,000 involving users who manage their own private keys.

In January 2021,

the Biden Administration issued a memorandum freezing federal rulemaking, including these proposed FinCEN rules, to provide additional

time for the Biden Administration to review the rulemaking that had been proposed by the Trump Administration.

As a result, it remains

unclear whether these proposed rules will take effect.

actively use specific hardware and software for our cryptocurrency mining operation.

Blockchain Technologies Ltd.

Energy Limited

Digital, Inc.

Blockchain plc

Generation Holdings Inc.

Scientific, Inc.

Digital Mining, Inc.

there is limited available information regarding our non-public competitors, we believe that our recent acquisition and ongoing deployment

of miners positions us well among the publicly traded companies involved in the digital asset mining industry.

The digital asset mining

industry is a highly competitive and evolving industry and new competitors and/or emerging technologies could enter the market and affect

our competitiveness in the future.

INTELLECTUAL PROPERTY

actively use specific hardware and software for our digital asset mining operations.

In certain cases, source code and other software

2 unchanged sentences

we intend to adhere to the terms of any license agreements that may be in place.

do not currently own, and do not have any current plans to seek, any patents in connection with our existing and planned blockchain and

cryptocurrency related operations.

We do expect to rely upon trade secrets, trademarks, service marks, trade names, copyrights and other

intellectual property rights and expect to license the use of intellectual property rights owned and controlled by others.

we have developed and may further develop certain proprietary software applications for purposes of our cryptocurrency mining operation.

of February 28, 2022, we had ten full-time employees.

We believe our employee relations to be good.

for Digital Currencies

Generally Accepted Accounting Principles (U.S.

GAAP) instruction regarding the proper accounting treatment of digital currency

assets has created uncertainty regarding the reporting and proper asset classification of digital currency holdings.

Management intends

to exercise its business judgment in determining appropriate accounting treatment for the recognition of revenue from mining of digital

Management, in conjunction with its outside public accountants and its auditors, has examined various factors surrounding

the substance of the Company’s operations and the available guidance published for public company accounting practices in Accounting

Standards Codification.

Company intends to account for its digital currency assets as indefinite life intangible assets.

An intangible asset with an indefinite

useful life is not amortized, but rather is assessed for impairment annually, or more frequently, when events or changes in circumstances

occur which indicate that it is more likely than not that the indefinite-lived asset is impaired.

Impairment exists when the carrying

amount exceeds its fair value.

In testing for impairment, the Company will have the option to first perform a qualitative assessment

to determine whether it is more likely than not that an impairment exists.

If it is determined that it is not more likely than not that

an impairment exists, a quantitative impairment test is not necessary.

If the Company concludes otherwise, it is required to perform

a quantitative impairment test.

To the extent an impairment loss is recognized, the loss establishes the new cost basis of the asset.

Subsequent reversal of impairment losses is not permitted.

Realized gain or loss on the sale of digital currencies is included in other

income or expenses in the Company’s statements of operations.

do not currently own any patents except as set forth below.

We may in the future plan to seek further patents in connection with our

existing and planned blockchain and digital asset related operations.

We do expect to rely upon trade secrets, trademarks, service marks,

trade names, copyrights and other intellectual property rights and expect to license the use of intellectual property rights owned and

controlled by others.

In addition, we have developed and may further develop certain proprietary software applications for purposes of

our digital asset mining operation.

have two patent applications pending with the USPTO:

Application No.

And Methods For Decreasing Counterparty Settlement Risk

Digital Holdings

Application No.

And Methods For Overclocking Mining Rigs

Digital Holdings

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-K

Item 1. Business