Item 1A. Risk Factors
Item
1A. Risk Factors.
There
are no updates or changes to the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2022except
as set forth below.
Further
significant disruptions in the crypto asset markets, such as those experienced in the second half of 2022, may cause further material
impairment of the value and use of our mining rigs.
During
the fourth quarter of 2022, the per coin price of bitcoin reached a low of approximately $15,500 from a high of high of almost
$21,500 earlier in the quarter. This decrease in the price of bitcoin combined with the general market sentiment caused in
large part by the FTX collapse and various bitcoin company related bankruptcies and restructurings led to a material decline in the
fair value of our mining rigs and deposits for future mining rig purchases. As a result, we recorded an impairment charge of
$332,933 thousand on these assets during that period, although operations were unaffected and continued throughout. Furthermore,
future decreases in the value of bitcoin could cause us to record additional impairments in the value of these and future mining rig
assets.
In
addition, if bitcoin prices dropped to levels below that experienced in 2022 and held at those levels for a significant period of time,
it could impact our profitability to the point that we would have to consider whether there would be less diminution of value if we were
to leave certain of our miners to idle until the price of bitcoin recovered.
Theoretically, there is a minimum bitcoin price that is
so low that Marathon would want to turn off its miners. However, this is a complex projection involving multiple ever-changing, dynamic
variables. Marathon has multiple mining sites and hosting partners, all with different hosting prices, electricity prices, and contract
structures. These costs, some fixed and some variable, would need to be compared to the current revenue being produced by the miners.
Item
2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item
3. Defaults Upon Senior Securities.
None.
Item
4. Mine Safety Disclosures.
Not
applicable.
37
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