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Item 8. Financial Statements and Supplementary Data

2025-03-03 compared with 2024-02-28 · 923 added, 574 removed, 570 unchanged (72% of the section changed)

FINANCIAL STATEMENTS AND SUPPLEMENTARY

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Index to Consolidated Financial Statements

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Consolidated Balance Sheets as of December 31, 2024 and 2023

Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2023, 2022 and 2021

Consolidated Statements of Stockholders' Equity for the years ended December 31, 2023, 2022 and 2021

Consolidated Statements of Operations for the years ended December 31, 2024, 2023 and 2022

Consolidated Statements of Equity for the years ended December 31, 2024, 2023 and 2022

Consolidated Statements of Cash Flows for the years ended December 31, 2024, 2023 and 2022

Notes to the Consolidated Financial Statements

Notes to Consolidated Financial Statements

The accompanying notes are an integral part to these audited Consolidated Financial Statements.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors of Marathon Digital Holdings, Inc.

To the Stockholders and Board of Directors of MARA Holdings, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Marathon Digital Holdings, Inc.

(the “Company”) as of December 31, 2023 and 2022, the related consolidated statements of comprehensive income (loss), stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023, and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2023, based on the criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in 2013.

Our report dated February 28, 2024 expressed an adverse opinion on the effectiveness of the Company’s internal control over financial reporting because of the existence of material weaknesses.

Changes in Accounting Principle

As discussed in Notes 2 and 4 to the financial statements, the Company changed its method of accounting for digital assets during the year ended December 31, 2023 by:

• making a voluntary change in accounting principle from last-in-first-out to first-in-first-out to reflect the disposition of its digital assets, effective January 1, 2023 using the full retrospective method;

• early adopting ASU 2023-08, Intangibles - Goodwill and Other - Crypto Assets (Topic 350-60):

We have audited the accompanying consolidated balance sheets of MARA Holdings, Inc.

(the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of operations, equity, and cash flows for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the “financial statements”).

In our opinion, based on our audits, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024, and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2024, based on the criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in 2013 and our report dated March 3, 2025, expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Change in Accounting Principle

As discussed in Note 5 to the financial statements, the Company changed its method of accounting for digital assets during the year ended December 31, 2023 by early adopting ASU 2023-08, Intangibles - Goodwill and Other - Crypto Assets (Topic 350-60):

Accounting for and Disclosure of Crypto Assets, effective January 1, 2023 using the modified retrospective method.

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(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

The accompanying notes are an integral part to these audited Consolidated Financial Statements.

on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Revenue Recognition

Revenue Recognition from Mining Operations

As disclosed in Note 4 to the financial statements, the Company’s ongoing major or central operation is to provide bitcoin transaction verification services to the transaction requestor, in addition to the bitcoin network through a Company-operated mining pool as the operator, and to provide a service of performing hash calculations to third-party pool operators alongside collectives of third-party bitcoin miners as a participant.

The principal consideration for our determination that performing procedures related to revenue recognition is a critical audit matter is due to the nature and extent of audit effort required to perform audit procedures over the completeness, and occurrence of revenue recognized.

We identified the procedures performed related to revenue recognition as a critical audit matter due to the nature and extent of audit effort required to perform audit procedures over the completeness, and occurrence of revenue recognized.

Addressing this matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the financial statements.

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• We performed site visits at the Company’s facilities where the mining hardware is located, which included observations of the physical controls and mining equipment inventory.

• We independently traced certain financial and performance data directly to the blockchain network to test the occurrence and accuracy of mining revenue as the operator.

• We independently traced certain financial and performance data directly to the blockchain network to test the completeness, occurrence and accuracy of mining revenue as the operator.

• We independently confirmed with the third-party mining pool operator the significant contractual terms utilized in the determination of mining revenue, total mining rewards earned, and the digital asset wallet addresses in which the rewards are deposited to test the occurrence and accuracy of mining revenue as the participant.

• We performed certain analytical procedures over the completeness and accuracy of revenue recognized by the Company.

• We confirmed the year-end digital asset balances directly with the custodians of the Company’s wallets.

Assets Acquired and Liabilities Assumed in Business Combinations

As disclosed in Note 3 to the financial statements, the Company completed acquisitions of two operational data centers and three operational bitcoin mining sites.

The Company accounted for these transactions under the acquisition method for business combinations.

Accordingly, the purchase price was allocated to the assets acquired and liabilities assumed based on their respective fair values, including identified property, plant and equipment, customer relationship related intangible assets, and contingent earnouts.

We identified the fair valuation of property, plant and equipment, customer relationship related intangible assets and contingent earnouts as a critical audit matter because of the significant estimates and assumptions made by management in the process.

This required a high degree of auditor judgment and an increased extent of effort when performing audit procedures to evaluate the reasonableness of management’s forecast of future cash flows, and use of significant unobservable inputs and assumptions, including the need to involve our fair value specialists.

Addressing this matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the financial statements.

These procedures included, among others:

• We obtained an understanding of management’s process over the valuation of these identified assets and liabilities.

• We evaluated the reasonableness of management’s forecast of future cash flows used in the fair valuation of customer relationship related intangible assets by comparing to contracts, historical results and other metrics.

• With the assistance of our fair value specialists, we evaluated the reasonableness of the valuation methodology, and significant unobservable inputs and assumptions by:

◦ Testing the source information underlying the determination of certain significant unobservable inputs and assumptions;

The accompanying notes are an integral part to these audited Consolidated Financial Statements.

◦ Developing a range of independent estimates for other unobservable assumptions and comparing them to the assumptions used by management;

◦ Testing the mathematical accuracy of the calculations.

/s/ Marcum LLP

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Costa Mesa, CA

February 28, 2024

March 3, 2025

The accompanying notes are an integral part to these audited Consolidated Financial Statements.

MARATHON DIGITAL HOLDINGS, INC.

MARA HOLDINGS, INC.

AND SUBSIDIARIES

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Restricted cash 12,000 —

Digital assets 639,660 121,842

Digital assets, current portion

4,327 639,660

Other receivables

Deposits 18,778 7,240

Derivative instrument, current portion 1,542 —

Prepaid expenses and other current assets 35,610 25,590

Total current assets 470,373 1,029,803

Digital assets, net of current portion

Digital assets - receivable, net

Property and equipment, net 1,549,491 671,772

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Long-term prepaids 14,221 27,284

Right-of-use assets 443 1,276

Digital assets, restricted — 68,875

Total long-term assets 961,170 917,696

Operating lease right-of-use assets 16,874 443

Derivative instrument, net of current portion 7,405 —

Goodwill 82,751 —

Intangible assets, net 2,714 —

TOTAL ASSETS $ 6,801,317 $ 1,990,973

LIABILITIES AND STOCKHOLDERS’ EQUITY

LIABILITIES AND EQUITY

Current liabilities:

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Accrued expenses 76,887 22,291

Legal reserve payable — 1,171

Operating lease liabilities 124 326

Accrued interest 276 1,011

Operating lease liabilities, current portion 239 124

Finance lease liability, current portion 168 —

Other current liabilities 5,347 —

Total current liabilities 95,197 33,758

Long-term liabilities:

Notes payable 2,246,578 325,654

Term loan — 49,882

Operating lease liabilities 354 1,017

Line of credit

Operating lease liabilities, net of current portion 22,977 354

Finance lease liability, net of current portion 3,709 —

Deferred tax liabilities 88,503 15,286

Other long-term liabilities 8,411 —

Total long-term liabilities 2,570,178 341,294

Commitments and Contingencies

Stockholders’ Equity:

Preferred stock, par value $ 0.0001 per share, 50,000,000 shares authorized and no shares issued and outstanding at December 31, 2023 and December 31, 2022, respectively

The accompanying notes are an integral part to these audited Consolidated Financial Statements.

Commitments and Contingencies (Note 19)

Preferred stock, par value $ 0.0001 per share, 50,000,000 shares authorized;

no shares issued and outstanding at December 31, 2024 and December 31, 2023

Common stock, par value $ 0.0001 per share, 500,000,000 shares authorized;

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Accumulated deficit ( 26,387 ) ( 567,640 )

Total stockholders’ equity 1,615,921 385,941

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 1,990,973 $ 1,195,244

Total stockholders’ equity attributable to MARA 4,129,033 1,615,921

Noncontrolling interest 6,909 —

4,135,942 1,615,921

TOTAL LIABILITIES AND EQUITY

$ 6,801,317 $ 1,990,973

The accompanying notes are an integral part to these audited Consolidated Financial Statements.

MARATHON DIGITAL HOLDINGS, INC.

MARA HOLDINGS, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

CONSOLIDATED STATEMENTS OF OPERATIONS

Year Ended December 31,

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Cost of revenues

Cost of revenues - energy, hosting and other ( 223,338 ) ( 72,715 ) ( 27,492 )

Cost of revenues - depreciation and amortization ( 179,513 ) ( 78,709 ) ( 14,904 )

Mining and hosting services

( 412,045 ) ( 223,338 ) ( 72,715 )

Depreciation and amortization ( 403,706 ) ( 179,513 ) ( 78,709 )

Total cost of revenues ( 815,751 ) ( 402,851 ) ( 151,424 )

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General and administrative expenses ( 272,078 ) ( 92,418 ) ( 56,641 )

Gains (losses) on digital assets and digital assets loan receivable

Change in fair value of digital assets 813,814 331,484 ( 14,460 )

Change in fair value of derivative instrument

( 2,043 ) — —

Research and development

( 13,229 ) ( 2,812 ) ( 98 )

Early termination expenses

( 38,061 ) — —

Amortization of intangible assets ( 22,919 ) — —

Legal reserves — — ( 26,131 )

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Gain on sale of equipment, net of disposals — — 83,879

Gains (losses) on digital assets held within investment fund

Losses on digital assets held within investment fund

— — ( 85,017 )

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306,111 220,911 ( 673,543 )

Net gain from extinguishment of debt

Change in fair value of digital assets - receivable, net

Gain on investments

Loss on hedge instruments

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Impairment of loan and investment due to vendor bankruptcy filing — — ( 31,013 )

Net gain from extinguishment of debt

13,121 82,267 —

Interest income 16,711 2,809 1,021

Interest expense ( 12,996 ) ( 10,350 ) ( 14,981 )

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$ 541,008 $ 261,173 $ ( 694,022 )

Net loss attributable to noncontrolling interest

Net income (loss) attributable to MARA

$ 541,253 $ 261,173 $ ( 694,022 )

Series A preferred stock accretion to redemption value

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311,841,347 192,293,277 113,467,837

Other comprehensive income (loss)

Series A preferred stock accretion to redemption value

Foreign currency translation adjustments — — ( 451 )

Comprehensive income (loss)

$ 261,173 $ ( 694,022 ) $ ( 30,264 )

The accompanying notes are an integral part to these audited Consolidated Financial Statements.

MARATHON DIGITAL HOLDINGS, INC.

MARA HOLDINGS, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Common Stock Additional Paid-in Capital Accumulated Deficit Accumulated Other Comprehensive Loss Total Stockholders’ Equity

(in thousands, except share data)

Number Amount

Balance at December 31, 2020 81,974,619 $ 8 $ 428,243 $ ( 116,055 ) $ ( 451 ) $ 311,745

Stock-based compensation, net of tax withholding 7,671,317 1 156,072 — — 156,073

Issuance of common stock, net of offering costs/At-the-Market offering 12,500,000 1 237,428 — — 237,429

Options exercised on cashless basis 23,500 — — — — —

Warrant exercised for cash 221,946 — 1,445 — — 1,445

Common stock issued for cashless exercise of warrants 29,797 — 1,371 — — 1,371

Common stock issued for service and license agreements 312,094 — 11,135 — — 11,135

Net income (loss) — — — ( 30,264 ) 451 ( 29,813 )

CONSOLIDATED STATEMENTS OF EQUITY

Common Stock Additional Paid-in Capital Accumulated Deficit Total Stockholders’ Equity

Noncontrolling Interest Total Equity

(in thousands, except share data) Number Amount

Balance at December 31, 2021

102,733,273 $ 10 $ 835,694 $ ( 146,319 ) $ 689,385 $ — $ 689,385

Stock-based compensation, net of tax withholding 490,910 1 24,514 — 24,515 — 24,515

Issuance of common stock, net of offering costs/At-the-Market offering 42,141,733 4 361,482 — — 361,486

Issuance of common stock, net of offering costs 42,141,733 4 361,482 — 361,486 — 361,486

Common stock issued for service and license agreements 200,000 — 4,577 — 4,577 — 4,577

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Stock-based compensation, net of tax withholding 1,269,230 — 32,264 — 32,264 — 32,264

Issuance of common stock, net of offering costs/At-the-Market offering 64,271,828 6 608,359 — — 608,365

Issuance of common stock, net of offering costs 64,271,828 6 608,359 — 608,365 — 608,365

Series A preferred stock accretion to redemption value — — ( 2,121 ) — ( 2,121 ) — ( 2,121 )

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Cumulative effect of the adoption of ASU 2023-08

— — — 11,483 11,483 — 11,483

Other — — — 45 45 — 45

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Balance at December 31, 2023 242,829,391 $ 24 $ 2,183,537 $ ( 567,640 ) $ 1,615,921 $ — $ 1,615,921

Stock-based compensation, net of tax withholding 5,894,877 — 155,095 — 155,095 — 155,095

Issuance of common stock, net of offering costs 93,411,158 10 1,851,611 — 1,851,621 — 1,851,621

Repurchase of shares in settlement of restricted stock ( 1,876,973 ) — ( 34,857 ) — ( 34,857 ) — ( 34,857 )

Contribution from noncontrolling interest — — — — — 7,154 7,154

Net income (loss) — — — 541,253 541,253 ( 245 ) 541,008

Balance at December 31, 2024 340,258,453 $ 34 $ 4,155,386 $ ( 26,387 ) $ 4,129,033 $ 6,909 $ 4,135,942

The accompanying notes are an integral part to these audited Consolidated Financial Statements.

MARATHON DIGITAL HOLDINGS, INC.

MARA HOLDINGS, INC.

AND SUBSIDIARIES

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— — ( 83,879 )

Deferred tax expense (benefit)

15,286 ( 24,968 ) 24,968

(Gains) losses on digital assets held within investment fund

Deferred tax expense

73,217 15,286 ( 24,968 )

(Gains) losses on digital assets and digital assets loan receivable

Losses on digital assets held within investment fund

Change in fair value of digital assets and digital assets - receivable, net

( 1,113,610 ) ( 331,484 ) 14,460

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Impairment of mining equipment and advances to vendors — — 332,933

Allowance for credit losses

Gain on investments

( 4,236 ) — —

Loss on hedge instruments

Stock-based compensation 157,642 32,644 24,595

Change in fair value of derivative instrument

Early termination expenses

Amortization of intangible assets 22,919 — —

Amortization of debt issuance costs 2,714 3,168 3,945

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Revenues from digital assets production ( 624,740 ) ( 385,959 ) ( 117,747 )

Accounts receivable ( 9,319 ) — —

Deposits ( 189,605 ) ( 23,777 ) ( 24,469 )

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Legal reserve payable — — 1,171

Accrued interest ( 735 ) 144 867

Net cash used in operating activities

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Advances to vendors ( 817,297 ) ( 158,940 ) ( 483,840 )

Loan receivable — — ( 30,000 )

Acquisitions, net of cash acquired

( 335,630 ) — —

Purchase of property and equipment ( 250,825 ) ( 27,611 ) ( 41,108 )

Sale of property and equipment — 178,371 —

Proceeds from sale of property and equipment

3,506 — 178,371

Purchase of intangible assets

( 2,633 ) — —

Proceeds from sale of digital assets 152,290 264,945 —

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— ( 2,004 ) —

Purchase of digital assets in investment fund — — ( 150,000 )

Investment in joint venture ( 71,795 ) — —

Purchase of digital assets ( 1,946,860 ) — —

Investment in equity method investments

( 21,654 ) ( 71,795 ) —

Purchase of equity investments ( 9,956 ) — ( 44,000 )

Deconsolidation of fund — — ( 500 )

The accompanying notes are an integral part to these audited Consolidated Financial Statements.

Sale of digital assets in investment fund — — 849

Net cash provided by (used in) investing activities

Net cash (used in) provided by investing activities

( 3,229,059 ) 4,595 ( 390,228 )

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Proceeds from issuance of Series A preferred stock, net of issuance costs

Proceeds from issuance of Convertible Notes, net of issuance costs

2,178,679 — —

Redemption of Series A preferred stock

— ( 15,750 ) —

Repurchase of shares in settlement of restricted stock ( 34,857 ) — —

Proceeds from term loan borrowings, net of issuance costs — — 49,250

The accompanying notes are an integral part to these audited Consolidated Financial Statements.

Proceeds from issuance of convertible debt, net of issuance costs — — 728,406

Borrowings from revolving credit agreement

— 120,000 77,500

Repayments of revolving credit agreement

Line of credit

Repayment of finance lease liabilities

Repayment of Convertible Notes

( 247,348 ) — —

Repayment of term loan borrowings — ( 50,000 ) ( 120,000 )

Contribution from noncontrolling interest 7,154 — —

Value of shares withheld for taxes ( 2,547 ) ( 380 ) ( 81 )

Proceeds received on exercise of options and warrants — — 1,445

Net cash provided by financing activities

3,952,539 555,864 410,655

Net increase (decrease) in cash, cash equivalents and restricted cash

Net increase in cash, cash equivalents and restricted cash

46,458 244,808 ( 156,051 )

Cash, cash equivalents and restricted cash — beginning of period

357,313 112,505 268,556

Cash, cash equivalents and restricted cash — end of period

$ 403,771 $ 357,313 $ 112,505

The accompanying notes are an integral part to these audited Consolidated Financial Statements.

MARATHON DIGITAL HOLDINGS, INC.

MARA HOLDINGS, INC.

AND SUBSIDIARIES

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NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS

Marathon is a digital asset technology company that is principally engaged in producing or “mining” digital assets with a focus on the Bitcoin ecosystem.

Marathon’s strategic initiatives primarily focus on mining and holding bitcoin as a long-term investment.

Bitcoin is seeing increasing adoption, and, due to its limited supply, the Company believes it offers opportunity for appreciation in value and long-term growth prospects for its business.

In addition to mining and holding bitcoin, from time to time Marathon has explored, and may in the future explore, opportunities to become more involved in businesses that expand or supplement those directly related to the self-mining of bitcoin as favorable market conditions and opportunities arise.

For example, Marathon has considered or engaged in owning and operating bitcoin mining facilities or data centers, selling proprietary software or technology to third parties operating in the Bitcoin ecosystem, offering advisory and consulting services to support bitcoin mining ventures in domestic and international jurisdictions, and generating electricity from renewable energy resources or methane gas capture to power bitcoin mining projects.

Marathon’s business is also active in Bitcoin-related projects related to the technological development of immersion, hardware, firmware, mining pools and side chains that use the blockchain cryptography.

MARA Holdings, Inc.

(together with its subsidiaries, the “Company” or “MARA”) leverages digital asset compute that develops and deploys innovative technologies to build a more sustainable future.

MARA secures the world’s preeminent blockchain ledger and supports the energy transformation by converting clean, stranded, or otherwise underutilized energy into economic value.

The Company also offers advanced technology solutions to optimize data center operations, including next-generation liquid immersion cooling and firmware for bitcoin miners.

The Company is primarily focused on computing for, acquiring, and holding digital assets as a long-term investment.

The 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, bitcoin.

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

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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The accompanying Consolidated Financial Statements include the accounts of the Company and its wholly owned and controlled subsidiaries.

Intercompany balances and transactions have been eliminated in consolidation.

The Company consolidates the financial results of the following 100% owned entities:

MARA USA Corporation

MARA Tech, Inc.

Marathon Digital International, Inc.

Marathon Digital Leasing, LLC

Crypto Currency Patent Holding Company, LLC

MARA Pool LLC

Marathon Crypto Mining, Inc.

Soems Acquisition Corp.

Consolidated subsidiaries’ results are included from the date the subsidiary was formed or acquired.

All significant intercompany accounts and transactions, including any noncontrolling interest, have been eliminated in consolidation.

Use of Estimates and Assumptions

The preparation of financial statements in conformity with U.S.

GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

The most significant accounting estimates inherent in the preparation of the Company’s financial statements include estimates associated with the useful lives of property and equipment, realization of long-lived assets, deferred income taxes, unrealized tax positions, and measurement of digital assets.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

The most significant accounting estimates inherent in the preparation of the Company’s financial statements include fair value of assets acquired and liabilities assumed in a business combination, estimates associated with the useful lives of property and equipment, realization of long-lived assets, impairment of goodwill, valuation of derivative instruments, deferred income taxes, unrealized tax positions, measurement of digital assets and related receivables and loss contingencies.

Actual results could differ from those estimates.

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Segment Information

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision–making group, in deciding how to allocate resources and assess performance.

The Company’s chief operating decision–making group (“CODM”) is composed of the chief executive officer and chief financial officer.

The Company currently operates in the Digital Currency Blockchain segment.

The CODM has determined that the Company operates as one operating segment as the CODM reviews financial information on a consolidated basis in making decisions regarding resource allocation and performance assessment.

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker (“CODM”), or decision–making group, in deciding how to allocate resources and assess performance.

The Company’s CODM group is composed of the Chief Executive Officer and Chief Financial Officer.

The Company operates as one operating segment and uses net income as measures of profit or loss on a consolidated basis in making decisions regarding resource allocation and performance assessment.

Additionally, the Company’s CODM regularly reviews the Company’s expenses on a consolidated basis.

The financial metrics used by the CODM help make key operating decisions, such as determination of digital asset purchases and significant acquisitions and allocation of budget between cost of revenues, general and administrative and research and development expenses.

Cash and Cash Equivalents

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During March 2023, the Company began to participate, to the extent practicable, in insured cash sweep programs which “sweep” its deposits across multiple FDIC insured accounts, each with deposits of no more than $250.0 thousand.

For the year ended December 31, 2023, the Company had a cash and cash equivalent balance of $ 357.3 million, of which $ 225.0 million was FDIC insured, and approximately $ 95.7 million was invested in treasury bills and other government backed securities.

For the year ended December 31, 2022, the Company had a cash balance of $ 103.7 million, all held at one financial institution.

As of December 31, 2024, substantially all of the Company’s cash and cash equivalents were FDIC insured.

Restricted Cash

Restricted cash as of December 31, 2024 principally represented those cash balances that support commercial letters of credit and are restricted from withdrawal.

During March 2023 , the Company eliminated its outstanding letters of credit.

Digital Assets

Digital assets are included in current assets in the Consolidated Balance Sheets due to the Company’s ability to sell bitcoin in a highly liquid marketplace and the sale of bitcoin to fund operating expenses to support operations.

In addition, digital assets provided as collateral for long-term loans were reported as Digital assets, restricted at December 31, 2022 and classified as long-term assets in the Consolidated Balance Sheets.

The proceeds from the sale of digital assets are included within investing activities in the accompanying Consolidated Statement of Cash Flows.

Following the adoption of ASU 2023-08 effective January 1, 2023, the Company measures digital assets at fair value with changes recognized in operating expenses in the Consolidated Statement of Comprehensive Income (Loss).

The Company tracks its cost basis of digital assets by-wallet in accordance with the first-in-first-out (“FIFO”) method of accounting.

Refer to Note 4 – Digital Assets, for further information regarding the Company’s impact of the adoption of ASU 2023-08.

Additionally, during the quarter ended March 31, 2023 and effective January 1, 2023, the Company enacted a voluntary change in accounting principle from last-in-first-out (“LIFO”) to FIFO in order to more accurately reflect the disposition of its digital assets.

The change in accounting principle resulted in an increase in gain on digital assets for the year ended December 31, 2021 and resulted in an impairment of digital assets for the years ending December 31, 2021 and 2022.

The voluntary change in accounting principle has been reflected in the Consolidated Financial Statements.

The Company contracts with other service providers for hosting of its equipment and operational support in data centers where the Company’s equipment is deployed.

These arrangements typically require advance payments to vendors pursuant to the contractual obligations associated with these services.

The Company classifies these payments as “Deposits” or “Long-term deposits” on the Consolidated Balance Sheets.

As of December 31, 2023 and 2022, such deposits totaled approximately $ 67.0 million and $ 43.3 million, respectively.

The Company occasionally enters into derivative financial instruments to manage its exposure to fluctuations in the price of bitcoin.

During the third and fourth quarters of 2023, the Company entered into fixed strike option collar contracts with financial institutions to mitigate Bitcoin short-term market pricing volatility risk.

On July 25, 2024, the Company adopted a full holding onto bitcoin (“HODL”) approach towards its bitcoin treasury policy, retaining all bitcoin mined in its operations, and may periodically make strategic open market purchases of bitcoin.

As a result, bitcoin digital assets are included in non-current assets on the Consolidated Balance Sheets due to the Company’s intent to retain and hold bitcoin.

Kaspa digital assets held with the intent to fund operating expenses are included in current assets on the Consolidated Balance Sheets.

In addition, digital assets loaned and collateralized were reported as “Digital assets - receivable, net” at December 31, 2024 and classified as long-term assets on the Consolidated Balance Sheets as it is the Company’s intent to maintain the loaned and collateralized bitcoin consistent with its HODL policy.

Proceeds from the sale of digital assets are included within investing activities in the accompanying Consolidated Statement of Cash Flows.

Following the adoption of Accounting Standards Update (“ASU”) 2023-08, Accounting for and Disclosure of Crypto Assets , effective January 1, 2023, the Company measures digital assets at fair value with changes recognized in operating expenses on the Consolidated Statements of Operations.

The Company tracks its cost basis of digital assets by-wallet in accordance with the first-in-first-out method of accounting.

Refer to Note 5 – Digital Assets, for further information.

Digital Assets - Receivable, net

The Company lends digital assets to counterparties under fixed term loans.

In addition, the Company pledged bitcoin as collateral for a line of credit.

Digital asset receivables that do not have a prespecified maturity date are repayable at the option of the Company, and the borrower may repay at any time, without penalty or premium.

While the loan is outstanding, the borrower has the right and the ability to use the digital assets at its discretion, including the ability to sell or pledge the borrowed digital assets to third parties.

At the conclusion of the loan, the borrower is obligated to return the same type and quantity of digital assets as those lent by the Company.

The digital asset receivables are initially measured upon transfer at fair value and subsequently remeasured at fair value each reporting period.

The changes in fair value is recognized on the Consolidated Statements of Operations, in accordance with ASC 2023-08.

A loan fee is accrued daily based on the amount owing, paid on a monthly basis consistent with each loan’s terms.

The digital asset receivable balance is evaluated for possible credit losses, in accordance with ASC 326 - Financial Instruments - Credit Losses (“ASC 326”).

The allowance for credit losses on digital assets receivables under the current expected credit loss (“CECL”) model is determined by utilizing the profitability of default (“PD”) loss given default (“LGD”) approach.

In order to apply the PD LGD approach, management considers the remaining expected life of the loans and forecasts of future economic conditions.

Allowance for credit losses are included in “Other non-operating income (loss)” on the Consolidated Statements of Operations.

Refer to Note 6 - Digital Assets - Receivable, Net for further information.

Other Receivable

The Company acquired accounts receivable as a result of its acquisition of GC Data Center Acquisition on January 12, 2024, which consist of trade receivables.

Refer to Note 3 - Acquisitions, for further information.

The Company provides an allowance for credit losses equal to the estimated uncollectible amounts, based on historical and customer specific experience and current economic and market conditions.

The allowance for credit losses was $ 8.6 million as of December 31, 2024.

The Company enters into derivative contracts to manage its exposure to fluctuations in the price of bitcoin and energy costs and not for any other purpose.

In addition, the Company evaluates its financing and service arrangements to determine whether certain arrangements contain features that qualify as embedded derivatives requiring bifurcation in accordance with Accounting Standard Codification (“ASC”) 815 - Derivatives and Hedging .

Embedded derivatives that are required to be bifurcated from the host instrument or arrangement are accounted for and valued as separate financial instruments.

Derivatives are initially recorded at fair value with subsequent changes in fair value recognized as gains or losses on hedge instruments in the Consolidated Statements of Comprehensive Income (Loss).

The Company classifies derivative assets or liabilities in the Consolidated Balance Sheets as current or non-current based on whether settlement of the instrument could be required within 12 months of the date of the Consolidated Balance Sheets.

During the year ended December 31, 2023, the Company recorded a $ 17.4 million loss on hedge contracts, which contracts were settled through payments of $ 15.4 million in bitcoin and $ 2.0 million in cash.

The Company had no open derivative contracts as of December 31, 2023 and 2022.

There were no embedded derivatives requiring separation from the host instrument as of December 31, 2024 and December 31, 2023.

The Company does not elect to designate derivatives as hedges for accounting purposes and as such, records derivatives at fair value with subsequent changes in fair value and settlements recognized in earnings.

The Company classifies derivative assets or liabilities on the Consolidated Balance Sheets as current or non-current based on whether settlement of the instrument could be required within 12 months of the balance sheet date of the Balance Sheets and for derivatives with multiple settlements, based on the term of the contract.

Bitcoin Derivatives

From time to time the Company enters into derivative contracts to mitigate bitcoin market pricing volatility risk.

During the year ended December 31, 2024, the Company recorded a $ 0.6 million loss on derivatives as a non-operating charge on the Consolidated Statements of Operations, all settled through cash payments.

There were various derivative instruments to mitigate bitcoin market pricing volatility risk outstanding as of December 31, 2024, and no derivatives instruments outstanding as of December 31, 2023.

Energy Derivatives

The Company acquired a commodity swap contract as a result of its acquisition of GC Data Center Acquisition on January 12, 2024, refer to Note 3 - Acquisitions, for further information.

The commodity swap contract hedges price variability in electricity purchases and expires on December 31, 2027.

The commodity swap contract meets the definition of a derivative due to terms that provide for net settlement.

As of December 31, 2024, the estimated fair value of the Company’s derivative asset instrument was $ 8.9 million, estimated using observable market-based inputs classified under Level 2 of the fair value hierarchy.

The significant assumptions used in the discounted cash flow model to estimate fair value include the discount rate and electricity forward curves.

Accordingly, the Company records the “ Change in fair value of derivative instrument ” on the Consolidated Statements of Operations.

The following table presents the changes in fair value of the derivative instrument:

(in thousands)

Balance at December 31, 2023

Commodity swap contract 10,989

Change in fair value of derivative instrument

Balance at December 31, 2024

Property and Equipment

Property and equipment are stated at cost, net of accumulated depreciation and impairment, as applicable.

Property and equipment acquired through business combinations are measured at fair value at the acquisition date.

Depreciation is computed using the straight-line method over the estimated useful lives of the assets.

The Company’s property and equipment is primarily composed of bitcoin mining rigs, which are largely homogeneous and have approximately the same useful lives.

Accordingly, the Company utilizes the group method of depreciation for its bitcoin mining rigs.

The Company will update the estimated useful lives of its bitcoin mining server group periodically as information on the operations of the mining equipment indicates changes are required.

The Company’s property and equipment is primarily composed of digital asset mining rigs, which are largely homogeneous and have approximately the same useful lives.

Accordingly, the Company utilizes the group method of depreciation for its digital asset mining rigs.

The Company will update the estimated useful lives of its digital asset mining server group periodically if information on the operations of the mining equipment indicates changes are required.

The Company will assess and adjust the estimated useful lives of its mining equipment when there are indicators that the productivity of the mining assets is longer or shorter than the assigned estimated useful lives.

Investments, which may be made from time to time for strategic reasons, are included in non-current assets in the Consolidated Balance Sheets.

Investments without a readily determinable fair value are recorded at cost minus impairment, plus or minus changes from observable price changes in orderly transactions for identical or similar investments of the same issuer, in accordance with the measurement alternative described in ASC 321 - Investments – Equity Securities .

Goodwill represents the excess of the purchase price over the fair value of the net assets acquired in a business combination.

Goodwill is not subject to amortization, and instead, assessed for impairment annually at the end of each fiscal year, or more frequently when events or changes in circumstances indicate that it is more likely than not that the fair value of a reporting unit is less than its carrying amount in accordance with ASC 350 - Intangibles - Goodwill and Other .

The Company has the option to first assess qualitative factors to determine whether events or circumstances indicate it is more likely than not that the fair value of a reporting unit is greater than its carrying amount, in which case a quantitative impairment test is not required.

As provided for by ASU 2017-04, Simplifying the Test for Goodwill Impairment , the quantitative goodwill impairment test is performed by comparing the fair value of the reporting unit with its carrying amount, including goodwill.

If the fair value of the reporting unit exceeds its carrying amount, goodwill is not impaired.

An impairment loss is recognized for any excess of the carrying amount of the reporting unit over its fair value up to the amount of goodwill allocated to the reporting unit.

Income tax effects from any tax-deductible goodwill on the carrying amount of the reporting unit are considered when measuring the goodwill impairment loss, if applicable.

Finite-Lived Intangible Assets

Intangible assets are recorded at cost less any accumulated amortization and any accumulated impairment losses.

Intangible assets acquired through business combinations are measured at fair value at the acquisition date.

Intangible assets with finite lives are comprised of customer relationships and intellectual property and are amortized over their estimated useful lives on an accelerated basis over the projected pattern of economic benefits, which range from two to three years .

Finite-lived intangible assets are reviewed for impairment annually, or more frequently when events or changes in circumstances indicate that it is more likely than not that the fair value has been reduced to less than its carrying amount.

Business Combinations

The Company accounts for business combinations under the acquisition method of accounting in accordance with ASC 805 - Business Combinations , by recognizing the identifiable tangible and intangible assets acquired and liabilities assumed, measured at the acquisition date fair value.

The determination of fair value involves assumptions, estimates and judgments.

The initial allocation of the purchase price is considered preliminary and therefore subject to change until the end of the measurement period (up to one year from the acquisition date).

Goodwill as of the acquisition date is measured as the excess of consideration transferred over the net assets acquired.

Contingent consideration is included within the purchase price and is initially recognized at fair value as of the acquisition date.

Contingent consideration, classified as either an asset or a liability, is remeasured to fair value each reporting period, until the contingency is resolved.

Changes in fair value of contingent consideration period-over-period are recognized in earnings.

Acquisition related expenses are recognized separately from the business combination and are expensed as incurred.

Investments, which may be made from time-to-time for strategic reasons, are included in non-current assets on the Consolidated Balance Sheets.

Refer to Note 9 - Investments, for further information.

Equity Method Investments

The Company accounts for investments in which it owns between 20% and 50% of the common stock and has the ability to exercise significant influence, but not control, over the investee using the equity method of accounting in accordance with ASC 323 - Equity Method Investments and Joint Ventures .

Under the equity method, an investor initially records its investment in the investee at cost and adjusts the carrying amount of its investment to recognize its proportionate share of the earnings or losses of the investee after the date of investment.

Other Investments

Investments in which the Company does not have the ability to exercise significant influence and does not have readily determinable fair values, are recorded at cost minus impairment, plus or minus changes from observable price changes in orderly transactions for identical or similar investments of the same issuer, in accordance with the measurement alternative described in ASC 321 - Investments – Equity Securities .

As part of the Company’s policy to maximize return on strategic investment opportunities, while preserving capital and limiting downside risk, the Company may at times enter into equity investments or Simple Agreements for Future Equity (“SAFE”).

The nature and timing of the Company’s investments will depend on available capital at any particular time and the investment opportunities identified and available to the Company.

However, we generally do not make investments for speculative purposes and do not intend to engage in the business of making investments.

As of December 31, 2023 and 2022, the Company has one remaining SAFE investment with a carrying value of $ 1.0 million, with no noted impairments or other adjustments.

During September 2023, the Company entered into an agreement with Auradine, Inc.

(“Auradine”) to secure certain rights to future purchases by the Company from Auradine for which the Company paid $ 15.0 million and recorded to “Long-term prepaids” in the Consolidated Balance Sheets.

The purchase rights that the Company secured do not expire, do not require minimum purchases and include most favored nation and right of first refusal provisions.

On September 27, 2022, the Company purchased additional shares of Auradine preferred stock with a purchase price of $ 30.0 million, bringing the total carrying amount of its investment in Auradine preferred stock to $ 35.5 million, with no noted impairments or other adjustments.

Refer to Note 17 – Related Party Transactions, for further information.

On May 3, 2022, the Company converted $ 2.0 million from its prior Auradine SAFE investment into preferred stock while purchasing additional Auradine preferred stock with a purchase price of $ 3.5 million.

At the same time, the Company entered into a commitment to acquire additional shares of Auradine preferred stock with a purchase price of $ 30.0 million .

This forward contract was accounted for under ASC 321 as an equity security.

On February 3, 2022, the Company purchased convertible preferred stock of Compute North Holdings, Inc.

with a purchase price of approximately $ 10.0 million.

The Company impaired this investment by approximately

$ 10.0 million following Compute North’s chapter 11 bankruptcy filing during September 2022.

Refer to Note 11 – Compute North Bankruptcy, for further information.

Equity Method Investments

The Company accounts for investments in which it owns between 20% and 50% of the common stock or has the ability to exercise significant influence, but not control, over the investee using the equity method of accounting in accordance with ASC 323 - Equity Method Investments and Joint Ventures .

Under the equity method, an investor initially records an investment in the stock of an investee at cost and adjusts the carrying amount of the investment to recognize the investor’s share of the earnings or losses of the investee after the date of acquisition.

On January 27, 2023, the Company and Zero Two (formerly known as FS Innovation, LLC) entered into a Shareholders’ Agreement regarding the formation of an Abu Dhabi Global Markets company (the “ADGM Entity”) in which the Company has a 20 % ownership interest.

The ADGM Entity started mining operations during September 2023.

The Company’s share of net losses was $ 0.6 million for the year ended December 31, 2023.

As of December 31, 2023, the Company’s investment in the ADGM Entity was $ 69.3 million and which is reflected in “Investments” in the Consolidated Balance Sheets.

However, the Company generally does not make investments for speculative purposes and does not intend to engage in the business of making investments.

The Company determines if an arrangement contains a lease at inception based on whether or not the Company has the right to control the asset during the contract period and other facts and circumstances.

At lease inception, the Company determines the lease classification as either an operating or finance lease, with classification effecting the expense recognition on the Consolidated Statements of Operations.

For leases with terms longer than 12 months, a lease liability is recorded on the Company’s Consolidated Balance Sheets for the present value of its fixed minimum payment obligations over the lease term, including renewal extension options, and a corresponding right-of-use (“ROU”) asset equal to the initial lease liability is recorded, adjusted for any prepayments, indirect costs and lease incentives, as well as adjustments to reflect favorable or unfavorable terms of an acquired lease when compared to market terms at the time of an acquisition.

Refer to Note 18 - Leases, for further information.

Stock-based Compensation

The Company expenses stock-based compensation to employees and non-employees over the requisite service period based on the grant date fair value of the awards.

The Company recognizes stock-based compensation expense for awards to employees and non-employees based on the grant date fair value of the award and uses the graded-vesting method to recognize expense on a straight-line basis over the requisite service period from the date of grant of the award for each separately vesting tranche.

The Company classifies its stock-based compensation within “General and administration expenses” on the Consolidated Statements of Operations as any portion of mining activities related to Cost of revenues is immaterial.

Refer to Note 14 – Stockholders' Equity, for further information.

The Company accounts for forfeitures as they occur and reverses compensation cost previously recognized in the period the award is forfeited.

Impairment of Long-lived Assets

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Refer to Note 4 – Revenues, for further information.

Research and Development

Research and development costs consist primarily of contractor costs, equipment, supplies, personnel, and related expenses for research and development activities.

Research and development costs are expensed as incurred in accordance with ASC 730 - Research and Development , and are included in operating expenses on the Consolidated Statements of Operations.

Research and development costs were $ 13.2 million, $ 2.8 million and $ 0.1 million, for the years ended December 31, 2024, 2023 and 2022 respectively.

The Company accounts for income taxes under the asset and liability method, in which deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards.

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ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition.

Recently Issued Accounting Pronouncements

Recent Accounting Pronouncements

The Company continually assesses any new accounting pronouncements to determine their applicability.

On December 14, 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

When it is determined that a new accounting pronouncement may affect the Company’s financial reporting, the Company undertakes an analysis to determine any required changes to its Consolidated Financial Statements and assures that there are proper controls in place to ascertain that the Company’s Consolidated Financial Statements properly reflect the change.

In December 2024, the Financial Accounting Standards Board (“FASB”) issued ASU No.

2024-04, Debt - Debt with Conversion and Other Options (Subtopic 470-20):

Induced Conversions of Convertible Debt Instruments.

ASU 2024-04 clarifies the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion to improve relevance and consistency.

The new standard is effective for the Company for its annual periods beginning January 1, 2026 and interim periods within those annual reporting periods, with early adoption permitted.

The Company is currently evaluating the impact of adopting the standard.

In November 2024, the FASB issued ASU No.

2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses.

ASU 2024-03 requires additional disclosures of certain expenses in the notes of the financial statements, to provide enhanced transparency into the expense captions presented on the Consolidated Statements of Operations.

Additionally, in January 2025, the FASB issued ASU 2025-01, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40), to clarify the effective date of ASU 2024-03.

The new standard is effective for the Company for its annual periods beginning January 1, 2027 and for interim periods

beginning January 1, 2028, with early adoption permitted.

The Company is currently evaluating the impact of adopting the standard.

In December 2023, the FASB issued ASU No.

2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures.

requires entities to disclose specific rate reconciliations, amount of income taxes separated by federal and individual jurisdiction, and the amount of income (loss) from continuing operations before income tax expense (benefit) disaggregated between federal, state, and foreign.

The new standard is effective for the Company for its fiscal year beginning January 1, 2025, with early adoption permitted.

ASU 2023-09 requires entities to disclose specific rate reconciliations, amount of income taxes separated by federal and individual jurisdiction, and the amount of income (loss) from continuing operations before income tax expense (benefit) disaggregated between federal, state, and foreign.

The new standard is effective for the Company for its annual periods beginning January 1, 2025, with early adoption permitted.

The Company is currently evaluating the impact of adopting the standard.

On December 13, 2023, the FASB issued ASU No.

2023-08, Intangibles - Goodwill and Other - Crypto Assets (Topic 350-60):

Accounting for and Disclosure of Crypto Assets.

ASU 2023-08 requires entities to measure crypto assets that meet specific criteria at fair value with changes recognized in net income each reporting period.

Additionally, ASU 2023-08 requires an entity to present crypto assets measured at fair value separately from other intangible assets in the balance sheets and record changes from remeasurement of crypto assets separately from changes in the carrying amounts of other intangible assets in the income statement.

The new standard is effective for the Company for its fiscal year beginning January 1, 2025, with early adoption permitted.

The Company early adopted ASU 2023-08 effective as of January 1, 2023, which had a material impact on the Consolidated Financial Statements.

Refer to Note 4 – Digital Assets, for further information.

On November 27, 2023, the FASB issued ASU No.

In November 2023, the FASB issued ASU No.

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.

ASU 2023-07 is designed to improve the reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses that are regularly provided to the CODM.

The new standard is effective for the Company for its fiscal year beginning January 1, 2025, with early adoption permitted.

The Company is currently evaluating the impact of adopting the standard.

On August 23, 2023, the FASB issued ASU No.

2023-05, Business Combinations - Joint Venture Formations (Subtopic 805-60):

Recognition and Initial Measurement .

ASU 2023-05 addresses the accounting for contributions made to a joint venture and requires contributions received by the joint venture to be measured at fair value upon formation.

ASU 2023-05 is designed to provide useful information to investors and reduce diversity in practice.

The new standard is effective for the Company for its fiscal year beginning January 1, 2025, with early adoption permitted.

The Company is currently evaluating the impact of adopting the standard.

On March 28, 2023, the FASB issued ASU No.

2023-01, Leases (Topic 842):

Common Control Arrangements.

ASU 2023-01 is designed to clarify the accounting for leasehold improvements associated with common control leases, thereby reducing diversity in practice.

The new standard is effective for the Company for its fiscal year beginning January 1, 2024, with early adoption permitted.

The Company is currently evaluating the impact of adopting the standard.

On June 30, 2022, the FASB issued ASU No.

2022-03, Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions.

ASU 2022-03 clarifies that a contractual sale restriction prohibiting the sale of an equity security is a characteristic of the reporting entity holding the equity security and should not be included in the equity security’s unit of account.

The new standard is effective for the Company for its fiscal year beginning January 1, 2024, with early adoption permitted.

The Company adopted ASU 2022-03 on July 1, 2023, which did not have a material impact on the Consolidated Financial Statements.

ASU 2023-07 is designed to improve the reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses that are regularly provided to the Company’s chief operating decision–making group (the “CODM”).

The new standard is effective for the Company for its annual periods beginning January 1, 2024 and for interim periods beginning January 1, 2025, with early adoption permitted.

The Company adopted ASU 2023-07 on January 1, 2024, which did not have a material impact on the Consolidated Financial Statements.

NOTE 3 – ACQUISITIONS

Arkon Acquisition ( Hannibal and Hopedale, Ohio )

On November 5, 2024, the Company acquired two operational data centers located in Hannibal and Hopedale, Ohio, with 222 megawatts of interconnect-approved capacity from Arkon Energy US Holdco LLC and Arkon Energy Hopedale, LLC (the “Arkon Acquisition”) for a total cash consideration of $ 67.0 million, including working capital adjustments that were paid during the three months ended December 31, 2024 plus up to an additional $ 10.0 million of cash, which amount is contingent on the attainment of certain average bitcoin hash price and additional land expansion during the one year period following the date of valuation.

The acquisition is intended to improve efficiencies and the scale of operations through the integration of the Company’s technology stack and realization of synergies.

The following table summarizes the components of total purchase consideration:

(in thousands) November 5, 2024

Initial cash consideration, net of cash acquired $ 59,897

Estimate fair value contingent earn-out and other

Total purchase consideration $ 66,995

The acquisition was accounted for as a business combination using the acquisition method of accounting in accordance with ASC 805 - Business Combinations .

The following table summarizes the preliminary allocation of the purchase price based on the estimated fair values of the assets acquired and liabilities assumed as of November 5, 2024:

(in thousands) November 5, 2024

Other current assets $ 2,881

Property and equipment 30,000

Right-of-use asset

Goodwill 37,389

Customer relationships

Total assets $ 83,767

Lease liability

Other long-term liabilities 4,275

Total liabilities 16,772

Total purchase consideration $ 66,995

Goodwill is calculated as the excess of the purchase price over the net assets acquired.

The Company expects the goodwill balance to be deductible for tax purposes over a period of 15 years.

Goodwill is primarily attributed to growth and efficiency opportunities as well as expected synergies from combining the operations of bitcoin mining sites with the Company.

The fair value of property and equipment was estimated by applying the cost approach, which estimates fair value using replacement or reproduction cost of an asset of comparable utility, adjusted for loss in value due to depreciation and economic obsolescence, which are considered Level 3 inputs.

The fair value of the contingent earn-out was estimated using a discounted cash flow approach, which included assumptions regarding the probability-weighted cash flows of achieving certain capacity development milestones, which are considered Level 3 inputs.

The fair value of the lease liability was estimated using a discounted cash flow approach, which included assumptions regarding current market prices for similar assets, estimated term and discount rates, which are considered Level 3 inputs.

The fair value of the customer relationships intangible asset was determined using a discounted cash flow model that incorporates the excess earnings method, which are considered Level 3 inputs, and will be amortized on an accelerated basis over the projected pattern of economic benefits of approximately 1.5 years.

Garden City Acquisition ( Garden City, Texas )

On April 1, 2024, the Company acquired an operational bitcoin mining site located in Garden City, Texas with 132 megawatts of operational capacity and 200 megawatts of nameplate capacity from APLD - Rattlesnake Den I, LLC (the “Garden City Acquisition”) for total cash consideration of $ 96.8 million, including working capital adjustments that were paid during the three months ended June 30, 2024.

The acquisition is intended to improve efficiencies and the scale of operations through the integration of the Company’s technology stack and realization of synergies.

The following table summarizes the components of total purchase consideration:

(in thousands) April 1, 2024

Initial cash consideration, net of cash acquired $ 92,025

Working capital adjustment

Total purchase consideration $ 96,773

The acquisition was accounted for as a business combination using the acquisition method of accounting in accordance with ASC 805 - Business Combinations .

The following table summarizes the preliminary allocation of the purchase price based on the estimated fair values of the assets acquired and liabilities assumed as of April 1, 2024:

(in thousands) April 1, 2024

Other current assets $ 4,644

Property and equipment 78,759

Finance lease right-of-use asset 4,040

Goodwill 14,510

Total assets $ 101,953

Finance lease liability $ 5,180

Total liabilities 5,180

Total purchase consideration $ 96,773

Goodwill is calculated as the excess of the purchase price over the net assets acquired.

The Company expects the goodwill balance to be deductible for tax purposes over a period of 15 years.

Goodwill is primarily attributed to growth and efficiency opportunities as well as expected synergies from combining the operations of bitcoin mining sites with the Company.

The fair value of the finance lease liability was estimated using a discounted cash flow approach, which included assumptions regarding current market prices for similar assets, estimated term and discount rates, which are considered Level 3 inputs.

GC Data Center Acquisition ( Granbury, Texas and Kearney, Nebraska )

On January 12, 2024, the Company acquired two operational bitcoin mining sites located in Granbury, Texas and Kearney, Nebraska, totaling 390 megawatts of nameplate capacity from GC Data Center Equity Holdings, LLC (the “GC Data Center Acquisition”) for total consideration of $ 189.6 million, including a working capital adjustment that was paid during the three months ended March 31, 2024, plus up to an additional $ 19.6 million of cash, which amount is contingent on the expansion of additional megawatt capacity at the acquired facilities by certain milestone dates during the three year period following the anniversary of closing.

The acquisition is intended to improve efficiencies and the scale of operations through the integration of the Company’s technology stack and realization of synergies.

The Company will not be taking on any new hosting services customers at these locations and will transition to self-mining at these two sites as existing customer agreements expire or are terminated early.

The following table summarizes the components of total purchase consideration:

(in thousands) January 12, 2024

Initial cash consideration, net of cash acquired $ 175,734

Working capital adjustments 8,081

Estimate fair value contingent earn-out and other

Total purchase consideration $ 189,647

The acquisition was accounted for as a business combination using the acquisition method of accounting in accordance with ASC 805 - Business Combinations .

The following table summarizes the preliminary allocation of the purchase price based on the estimated fair values of the assets acquired and liabilities assumed as of January 12, 2024:

(in thousands) January 12, 2024

Accounts receivable $ 20,411

Other current assets 8,506

Property and equipment 132,148

Right-of-use asset 8,852

Goodwill 30,852

Customer relationships 22,000

Derivative instrument 10,989

Other non-current assets 6,250

Total assets $ 240,008

Accounts payable and accrued expenses $ 13,940

Lease liability 13,992

Other long-term liabilities 22,429

Total liabilities 50,361

Total purchase consideration $ 189,647

Goodwill is calculated as the excess of the purchase price over the net assets acquired.

The Company expects the goodwill balance to be deductible for tax purposes over a period of 15 years.

Goodwill is primarily attributed to growth and efficiency opportunities as well as expected synergies from combining the operations of bitcoin mining sites with the Company.

The gross contractual amounts receivable were $ 24.0 million, of which, $ 3.6 million is expected to be uncollectible.

During the year ended December 31, 2024, the Company terminated various customer agreements and recognized an $ 18.4 million charge recorded to “Early termination expenses” on the Consolidated Statements of Operations.

The fair value of the derivative was estimated using a discounted cash flow approach that considers various assumptions including current market prices and electricity forward curves, time value, as well as other relevant economic measures, which are considered Level 2 inputs.

The fair value of the lease liability was estimated using a

discounted cash flow approach, which included assumptions regarding current market prices for similar assets, estimated term and discount rates, which are considered Level 3 inputs.

The following table presents the changes in the estimated fair value of the GC Data Center Acquisition contingent consideration liability:

(in thousands)

Balance at December 31, 2023

Contingent consideration liability 3,523

Change in fair value of contingent earn-out 15

Balance at December 31, 2024

Intangible assets were determined to meet the criterion for recognition apart from tangible assets acquired and liabilities assumed.

The fair values of intangible assets were estimated based on various valuation techniques including the use of discounted cash flow analyses, and multi-period excess earnings valuation approaches, which use significant unobservable inputs, or Level 3 inputs, as defined by the fair value hierarchy.

These valuation inputs included estimates and assumptions about forecasted future cash flows, long-term revenue growth rates, and discount rates.

The fair value of the customer relationships intangible asset was determined using a discounted cash flow model that incorporates the excess earnings method and will be amortized on an accelerated basis over the projected pattern of economic benefits of approximately 4 years.

As of December 31, 2024, the Company fully amortized customer relationships acquired for $ 22.0 million.

The results of the acquired facilities have been included in the Company’s Consolidated Statements of Operations as of the acquisition date.

The following unaudited pro forma financial information reflects the acquisition of the acquired facilities forementioned by the application of pro forma adjustments to the Company’s historical financial statements as if the acquisition had occurred on January 1, 2023, for the indicated periods:

Year Ended December 31,

(in thousands) 2024 2023

Revenue $ 675,045 $ 492,057

Income before income taxes

623,764 223,636

Earnings per common share:

Basic $ 1.89 $ 1.14

Diluted 1.76 0.81

The unaudited pro forma financial information should not be considered indicative of actual results that would have been achieved had the acquisition of the acquired facilities actually been consummated on the date indicated and does not purport to be indicative of the Company's future financial position or results of operations.

These pro forma results include the impact of amortizing certain purchase accounting adjustments such as intangible assets and the impact of the acquisition on interest and income tax expense.

No adjustments have been reflected in the pro forma financial information for anticipated growth and efficiency opportunities.

There were no material nonrecurring pro forma adjustments directly attributable to the acquisition included within the unaudited pro forma financial information.

NOTE 4 – REVENUES

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The transaction price allocated to each performance obligation is recognized when that performance obligation is satisfied, at a point in time or over time, as appropriate.

Application of the five-step model to the Company’s mining operations

Application of the Five-Step Model to the Company’s Mining and Hosting Operations

The Company’s ongoing major or central operation is to provide bitcoin transaction verification services to the transaction requestor, in addition to the Bitcoin network through a Company-operated mining pool as the operator (“Operator”) (such activity, “mining”) and to provide a service of performing hash calculations to third-party pool operators alongside collectives of third-party bitcoin miners (such collectives, “mining pools”) as a participant (“Participant”).

On January 12, 2024, the Company acquired two operational bitcoin mining sites for the purpose of improving efficiencies and the scale of the Company’s mining operations.

In addition, the Company acquired two bitcoin mining sites within the Arkon Acquisition on November 5, 2024, that provide hosting services to a single customer.

The Company provides hosting services to institutional-scale crypto mining companies at these sites.

The Company will not be taking on any new hosting services customers at these locations and will transition to self-mining at these sites as existing customer agreements expire or are terminated early.

Refer to Note 3 - Acquisitions, for further information.

The following table presents the Company’s revenues disaggregated for those arrangements in which the Company is the Operator and Participant:

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Revenues from contracts with customers

Operator - Transaction fees $ 32,598 $ 5,231 $ 3,317

Participant 25,101 4,652 20,903

Mining operator - transaction fees $ 32,884 $ 32,598 $ 5,231

Mining participant 32,002 25,101 4,652

Hosting services (1)

Total revenues from contracts with customers 96,524 57,699 9,883

Operator - Block rewards and other revenue 329,809 107,870 134,943

Mining operator - block rewards and other revenue 559,854 329,809 107,870

Total revenues $ 656,378 $ 387,508 $ 117,753

(1) Includes revenue beginning January 12, 2024, the date of the GC Data Center Acquisition and November 5, 2024, the date of the Arkon Acquisition.

The Company made a strategic decision to exit hosting services upon acquisition of the GC Data Center Acquisition.

Intercompany transactions have been eliminated in consolidation.

Refer to Note 3 - Acquisitions, for further information.

Mining Operator

As Operator, the Company provides transaction verification services to the transaction requestor, in addition to the Bitcoin network.

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however, the Company has concluded that it is appropriate to apply ASC 606 by analogy to block rewards earned from the Bitcoin network.

The Company is currently entitled to the block reward of 6.25 bitcoin from the bitcoin network upon each successful validation of a block.

The Company is currently entitled to the block reward of 3.125 bitcoin, subsequent to the halving that occurred on April 19, 2024.

Prior to the halving, the Company was entitled to the block reward of 6.25 bitcoin from each successful validation of a block.

The Company is also entitled to the transaction fees paid by the transaction requester payable in bitcoin for each successful validation of a block.

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From September 2021 until May 2022, the Company engaged unrelated third-party mining enterprises (“pool participants”) to contribute hash calculations, and in exchange, remitted transaction fees and block rewards to pool participants on a pro rata basis according to each respective pool participant’s contributed hash calculations.

The MaraPool wallet (owned by the Company as Operator) is recorded on the distributed ledger as the winner of proof of work block rewards and assignee of all validations and, therefore, the transaction verifier of record.

The MaraPool wallet (owned by the Company as Operator) is recorded on the distributed ledger as the winner of proof of

work block rewards and assignee of all validations and, therefore, the transaction verifier of record.

The pool participants entered into contracts with the Company as Operator;

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Depreciation on digital asset mining equipment is also recorded as a component of cost of revenues.

Mining Participant

The Company participates in third-party operated mining pools.

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The Company considers the third-party mining pool operators to be its customers under Topic 606.

Contract inception and our enforceable right to consideration begins when we commence providing hash calculation services to the mining pool operators.

Contract inception and the Company’s enforceable right to consideration begins when the Company commences providing hash calculation services to the mining pool operators.

Each party to the contract has the unilateral right to terminate the contract at any time without any compensation to the other party for such termination.

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Success-based mining pools pay a fractional share of the successfully mined block and transaction fees, reduced by pool operator expenses only if a block is successfully validated.

During 2024, the Company participated in FPPS mining pools.

During 2023, the Company primarily participated in FPPS mining pools and, to a lesser extent, success-based mining pools.

During 2022 and 2021, the Company primarily participated in success-based mining pools and, to a lesser extent, PPS mining pools.

During 2022, the Company primarily participated in success-based mining pools and, to a lesser extent, PPS mining pools.

FPPS Mining Pools

The Company primarily participates in mining pools that use the FPPS payout method for the year ended December 31, 2024.

The Company is entitled to compensation once it begins to perform hash calculations for the pool operator in accordance with the operator’s specifications over a 24-hour period beginning mid-night UTC and ending 23:59:59 UTC on a daily basis.

The non-cash consideration that we are entitled to for providing hash calculations to the pool operator under the FPPS payout method is made up of block rewards and transaction fees less pool operator expenses determined as follows:

The Company is entitled to compensation once it begins to perform hash calculations for the pool operator in accordance with the operator’s specifications over a 24-hour period beginning midnight UTC and ending 23:59:59 UTC on a daily basis.

The non-cash consideration that the Company is entitled to for providing hash calculations to the pool operator under the FPPS payout method is made up of block rewards and transaction fees less pool operator expenses determined as follows:

• The non-cash consideration in the form of a block reward is based on the total blocks expected to be generated on the Bitcoin network for the daily 24-hour period beginning midnight UTC and ending 23:59:59 UTC in accordance with the following formula:

the daily hash calculations that we provided to the pool operator as a percent of the Bitcoin Network’s implied hash calculations as determined by the network difficulty, multiplied by the total Bitcoin Network block rewards expected to be generated for the same daily period.

the daily hash calculations that the Company provided to the pool operator as a percent of the Bitcoin network’s implied hash calculations as determined by the network difficulty, multiplied by the total Bitcoin network block rewards expected to be generated for the same daily period.

• The non-cash consideration in the form of transaction fees paid by transaction requestors is based on the share of total actual fees paid over the daily 24-hour period beginning midnight UTC and ending 23:59:59 UTC in accordance with the following formula:

total actual transaction fees generated on the Bitcoin Network during the 24-hour period as a percent of total block rewards the Bitcoin Network actually generated during the same 24-hour period, multiplied by the block rewards we earned for the same 24-hour period noted above.

total actual transaction fees generated on the Bitcoin network during the 24-hour period as a percent of total block rewards the Bitcoin network actually generated during the same 24-hour period, multiplied by the block rewards the Company earned for the same 24-hour period noted above.

• The block reward and transaction fees earned by the Company is reduced by mining pool fees charged by the operator for operating the pool based on a rate schedule per the mining pool contract.

The mining pool fee is only incurred to the extent we perform hash calculations and generate revenue in accordance with the pool operator’s payout formula during the same 24-hour period beginning mid-night UTC daily.

The above non-cash consideration is variable in accordance with paragraphs ASC 606-10-32-5 to 606-10-32-7, since the amount of block reward earned depends on the amount of hash calculations we perform;

the amount of transaction fees we are entitled to depends on the actual Bitcoin Network transaction fees over the same 24-hour period;

and the operator fees for the same 24-hour period are variable since it is determined based on the total block rewards and transaction fees in accordance with the pool operator’s agreement.

The mining pool fee is only incurred to the extent the Company performs hash calculations and generates revenue in accordance with the pool operator’s payout formula during the same 24-hour period beginning midnight UTC daily.

the amount of transaction fees the Company is entitled to depends on the actual Bitcoin network transaction fees over the same 24-hour period;

and the operator fees for the same 24-hour period are variable since they are determined based on the total block rewards and transaction fees in accordance with the pool operator’s agreement.

While the non-cash consideration is variable, the Company has the ability to estimate the variable consideration at contract inception with reasonable certainty without the risk of significant revenue reversal.

The Company does not constrain this variable consideration because it is probable that a significant reversal in the amount of revenue recognized from the contract will not occur when the uncertainty is subsequently resolved and recognizes the non-cash consideration on the same day that control is transferred, which is the same day as contract inception.

The Company measures the non-cash consideration based on the simple average daily spot rate of bitcoin determined using the Company’s primary trading platform for bitcoin over a 24-hour period beginning mid-night UTC and ending 23:59:59 UTC on the day of contract inception.

The Company measures the non-cash consideration based on the simple average daily spot rate of bitcoin determined using the Company’s primary trading platform for bitcoin over a 24-hour period beginning midnight UTC and ending 23:59:59 UTC on the day of contract inception.

The Company recognizes non-cash consideration on the same day that control of the contracted service is transferred to the pool operator, which is the same day as the contract inception.

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While the non-cash consideration is variable, the Company has the ability to estimate the variable consideration at contract inception with reasonable certainty.

The Company does not constrain this variable consideration because it is probable that a significant reversal in the amount of revenue recognized from

the contract will not occur when the uncertainty is subsequently resolved and recognizes the non-cash consideration on the same day that control is transferred, which is the same day as contract inception.

The Company measures the non-cash consideration based on the simple average daily spot rate of bitcoin determined using the Company’s primary trading platform for bitcoin over a 24-hour period beginning midnight UTC and ending 23:59:59 UTC on the day of contract inception.

The Company recognizes non-cash consideration on the same day that control of the contracted service is transferred to the pool operator, which is the same day as the contract inception.

1 unchanged sentence

The Company also participates, to a lesser extent, in third-party mining pools that pay rewards only when the pool successfully validates a block.

For these pools, the Company only earns a reward when the third-party pool successfully mines a block and its reward is the fractional share of the successfully mined block and transaction fees, reduced by pool operator expenses, based on the proportion of hash calculations the Company performed for the mining pool operator to the total hash calculations performed by all mining pool participants in validating the block during the 24-hour period beginning at midnight UTC and ending 23:59:59 UTC daily.

Contract inception and our enforceable right to consideration begins when the Company commences the performance of hash calculations for the mining pool operator.

For these pools, the Company only earns a reward when the third-party pool

successfully mines a block and its reward is the fractional share of the successfully mined block and transaction fees, reduced by pool operator expenses, based on the proportion of hash calculations the Company performed for the mining pool operator to the total hash calculations performed by all mining pool participants in validating the block during the 24-hour period beginning at midnight UTC and ending 23:59:59 UTC daily.

Contract inception and the Company’s enforceable right to consideration begins when the Company commences the performance of hash calculations for the mining pool operator.

The non-cash consideration is variable in accordance with paragraphs ASC 606-10-32-5 to 606-10-32-7 as it depends on whether the third-party mining pool successfully validates a block during each 24-hour period.

In addition, other inputs such as the amount of hash calculations and our fractional share of consideration earned by the pool operator also cause variability.

In addition, other inputs such as the amount of hash calculations and the Company’s fractional share of consideration earned by the pool operator also cause variability.

The Company does not have the ability to estimate whether a block will be successfully validated with reasonable certainty at contract inception.

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Depreciation on digital asset mining equipment is also recorded as a component of cost of revenues.

Hosting Services

The Company operates three bitcoin mining sites, which were acquired during the year ended December 31, 2024, that provide hosting services to institutional-scale crypto mining companies.

Hosting services include colocation and managed services.

Colocation services include providing mining companies with sheltered data center space, electrical power, cooling, and internet connectivity.

Managed services generally include providing customers with technical support and maintenance services, in addition to colocation services.

The Company will not be taking on any new hosting services customers and will transition acquired sites to self-mining as existing customer agreements expire or are terminated early.

Colocation services revenue is recognized over time as the customer simultaneously receives and consumes the benefits of the Company’s performance.

Managed services revenue is recognized at a point-in-time as the control transfers to the customer, satisfying the performance obligation.

The transaction price for colocation services is variable based on the consumption of energy and the managed services price is a fixed rate per miner basis.

The Company recognizes hosting services revenue to the extent that a significant reversal of such revenue will not occur.

Hosting services customers are generally invoiced in advance of the month in which the Company satisfies its performance obligation, and deferred revenue is recorded for any upfront payments received in advance of the Company’s performance.

The monthly transaction price is generally variable based on the amount of megawatt hours (“MWh”) consumed by the customers equipment and when other monthly contracted services are performed.

At the end of each month, the customer is billed for the actual amount owed for services performed.

The Company recognizes revenue for hosting services under the right-to-invoice practical expedient in ASC 606-10-55-18, which allows for the recognition of revenue over time as the Company’s right-to-invoice for final payment corresponds directly with the value of services transferred to the customer to-date.

Expenses associated with providing hosting services are recorded as cost of revenues and depreciation on hosting equipment is recorded as a separate component of cost of revenues.

NOTE 5 – DIGITAL ASSETS

Adoption of ASU 2023-08, Accounting for and Disclosure of Crypto Assets

Effective January 1, 2023, the Company early adopted ASU 2023-08, which requires entities to measure crypto assets at fair value with changes recognized in the Consolidated Statement of Comprehensive Income (Loss) each reporting period.

The Company’s digital assets are within the scope of ASU 2023-08 and the transition guidance requires a cumulative-effect adjustment as of the beginning of the current fiscal year for any difference between the carrying amount of the Company’s digital assets and fair value.

As a result of the Company’s early adoption of ASU 2023-08, the Company recorded a $ 11.5 million increase to digital assets and a $ 11.5 million decrease to accumulated deficit on the Consolidated Balance Sheets as of the beginning of the fiscal year ended December 31, 2023.

The following table presents the Company’s significant digital asset holdings as of December 31, 2023:

The Company’s digital assets were within the scope of ASU 2023-08 and a cumulative-effect adjustment of $ 11.5 million as of the beginning of the fiscal year ended December 31, 2023 was recorded for the difference between the carrying amount of the Company’s digital assets and fair value.

The following table presents the Company’s significant digital asset holdings as of December 31, 2024 and 2023, respectively:

(in thousands, except for quantity) Quantity Cost Basis Fair Value

Bitcoin 34,519 $ 2,415,963 $ 3,223,989

Bitcoin - receivable (1)

10,374 401,334 968,436

Total bitcoin holdings 44,893 2,817,297 4,192,425

Kaspa 34,817,098 5,624 4,327

Total digital assets held as of December 31, 2024

$ 2,822,921 $ 4,196,752

At December 31, 2023, the Company had earned 48 bitcoin that were pending distribution from the Company’s equity method investee, the ADGM Entity, which are excluded from the Company’s holdings as of December 31, 2023.

The following table presents a roll-forward of total digital assets (including digital assets, restricted) for the year ended December 31, 2023, based on the fair value model under ASU 2023-08:

(in thousands) Fair Value

(in thousands, except for quantity) Quantity Cost Basis Fair Value

Bitcoin 15,126 $ 515,315 $ 639,660

Total digital assets held as of December 31, 2023

$ 515,315 $ 639,660

(1) The Company’s bitcoin - receivable holdings include 7,377 bitcoin lent out in digital asset loan receivable transactions and 2,997 bitcoin pledged as collateral.

Refer to Note 6 - Digital Assets - Receivable, Net and Note 17 - Debt, for further information.

The Company earned 51 and 48 bitcoin that were pending distribution from the Company’s equity method investee, the ADGM Entity (as defined below), which are excluded from the Company’s holdings as of December 31, 2024 and 2023, respectively.

The following table presents a roll-forward of the Company’s digital asset holdings during the years ended December 31, 2024 and 2023:

(in thousands) Bitcoin Fair Value KASPA Fair Value

Digital assets and digital assets, restricted at December 31, 2022

$ 190,717 $ —

Cumulative effect of the adoption of ASU 2023-08 11,483 —

Beginning Balance:

Digital assets and digital assets, restricted at January 1, 2023

Addition of digital assets

Additions of digital assets:

Mining 385,959 —

Disposition of digital assets ( 264,945 ) —

Realized gain (loss) on digital assets

Unrealized gain (loss) on digital assets

Realized gain on digital assets 28,738 —

Unrealized gain on digital assets 287,708 —

Digital assets at December 31, 2023

During the year ended December 31, 2023, the Company acquired $ 386.0 million of digital assets through mining activities and disposed of $ 264.9 million digital assets through the sale of digital assets.

During the year ended December 31, 2023, the Company realized total gains on digital assets of $ 52.5 million and total losses on digital assets of $ 23.8 million.

During the first quarter of 2023, the term loan was terminated, and the restrictions lapsed on the digital assets that had previously been classified as digital assets, restricted.

Refer to Note 14 – Debt, for further information.

Prior to Adoption of ASU 2023-08, Accounting for and Disclosure of Crypto Assets

Digital assets and Digital assets, restricted

Prior to the adoption of ASU 2023-08, digital assets were accounted for as indefinite-lived intangible assets and were initially measured in accordance with ASC 350 - Intangible-Goodwill and Other .

Digital assets were not amortized, but were assessed for impairment annually, or more frequently, when events or changes in circumstances occur indicating that it is more likely than not that the indefinite-lived intangible asset is impaired.

Whenever the exchange-traded price of digital assets declined below its carrying value, the Company was required to determine if an impairment existed and to record an impairment equal to the amount by which the carrying value exceeded the fair value.

The following table presents a roll-forward of digital assets and digital assets, restricted for the year ended December 31, 2022, based on the cost-impairment model under ASC 350:

(in thousands)

Digital assets and digital assets, restricted at December 31, 2021

Additions of digital assets:

Transfer of digital assets from digital assets held in Fund 137,844

Recognition of loaned digital assets 13,324

Impairment of digital assets ( 173,214 )

599,436 23,026

1,943,882 2,978

Dividends from equity method investee

Disposition of digital assets

Digital assets and digital assets, restricted at December 31, 2022

As of December 31, 2022, the Company held approximately 12,232 bitcoin, relating to digital assets and digital assets, restricted, with a carrying value of $ 190.7 million and a fair value of $ 202.4 million based on Level 1 inputs.

Refer to Note 8 - Fair Value Measurement, for further information.

Digital assets held in Fund

On January 25, 2021, the Company entered into a limited partnership agreement with NYDIG Digital Assets Fund III, LP (the “Fund”) pursuant to which the Fund purchased 4,813 bitcoin for an aggregate purchase price of $ 150.0 million.

The Company owned 100 % of the limited partnership interests and consolidated the Fund under a voting interest model.

The consolidated assets in the Fund were included in the Consolidated Balance Sheets under the caption “Digital assets held in Fund”.

The Fund qualified and operated as an investment company for accounting purposes pursuant to the accounting and reporting guidance under ASC 946 – Financial Services – Investment Companies , which requires fair value measurement of the Fund’s investments in digital assets.

The Company retains the Fund’s investment company specific accounting principles under ASC 946 upon consolidation.

The Company recorded changes in the fair value of the assets in the Consolidated Statements of Comprehensive Income (Loss) under the caption “Gains (losses) on digital assets held within investment fund.”

On June 10, 2022, the Company redeemed 100 % of its limited partnership interest in the Fund in exchange for approximately 4,769 bitcoin with a fair market value of approximately $ 137.8 million.

This bitcoin was transferred from the Fund’s custodial wallet to the Company’s digital wallet.

Upon redemption, the Company no longer had a majority voting interest in the Fund and therefore deconsolidated the Fund in accordance with ASC 810 – Consolidation .

The Company did not record any gain or loss upon deconsolidation as the digital assets in the Fund were measured at fair value.

Subsequent to the transfer, the bitcoin transferred to the Company’s digital wallet was accounted for at cost less impairment in line with its digital assets measurement policy.

The activity in the Fund for the year ended December 31, 2022, was as follows.

There was no activity in the Fund as of December 31, 2023.

( 133,165 ) ( 19,125 )

Realized gain (loss) on digital assets (1)

616,042 ( 1,255 )

Unrealized gain on (loss) digital assets

200,324 ( 1,297 )

Other 1,151 —

Transferred to Digital assets - receivable, net

( 668,640 ) —

Digital assets at December 31, 2024

$ 3,223,989 $ 4,327

(1) Realized gains (losses) result from digital asset dispositions and upon the lending or pledging of bitcoin as collateral.

The following tables summarizes the source of funds for the Company’s bitcoin purchases during the year ended December 31, 2024:

(in thousands, except for quantity) Quantity Approximate Value

Cash on hand 2,347 $ 160,356

Net proceeds from the issuance of the September 2031 Notes (1)

4,144 249,000

Net proceeds from the issuance of the March 2030 Notes (1)

9,074 872,353

Net proceeds from the issuance of the June 2031 Notes (1)

6,500 662,173

Total purchases

22,065 $ 1,943,882

(1) Defined below.

Refer to Note 17 - Debt, for further information.

NOTE 6 – DIGITAL ASSETS - RECEIVABLE, NET

Lending Arrangements

During the year ended December 31, 2024, the Company entered into four separate master securities loan agreements with various counterparties that represent digital asset loan receivables to generate yield from our loaned bitcoin holdings for the Company’s stakeholders.

A total of 7,377 bitcoin were loaned to the counterparties as of December 31, 2024.

Collateralized Digital Assets

During the year ended December 31, 2024, 2,997 bitcoin were collateralized in connection with the lines of credit of $ 200.0 million.

Refer to Note 17 - Debt, for further information on the line of credit.

Digital assets - receivable, net consists of the following:

(in thousands)

Digital assets held in Fund at December 31, 2021

Unrealized appreciation on digital assets held in Fund

Disposition of digital assets held in Fund ( 794 )

Realized loss on in-kind distribution ( 10,555 )

Digital assets transferred out of Fund ( 137,844 )

Digital assets held in Fund at December 31, 2022

December 31, 2024

Digital asset receivable - lending

Digital asset receivable - collateralized

Total digital asset receivable

Allowance for credit loss

Digital assets - receivable, net

The digital asset receivables forementioned are initially recognized at fair value upon transfer and subsequently remeasured at fair value each reporting period.

The changes in fair value are recognized as “Changes to digital assets - receivable, net” on the Consolidated Statements of Operations.

The allowance for credit losses reflects the Company’s current estimate of the potential credit losses associated with the digital asset loan receivable and bitcoin provided as collateral to secure the $ 200.0 million line of credit.

The credit loss is recorded as a valuation account, directly offsetting the Digital asset receivables on the Consolidated Balance Sheets.

Changes to the allowance for credit losses on loans, based on quarterly analysis’, are recorded as provision for credit losses within “Other non-operating income (loss)” on the Consolidated Statements of Operations.

The Company assesses the creditworthiness of our borrowers on a quarterly basis.

For the purpose of determining the allowance for credit loss, financial assets with similar risk characteristics are pooled together.

Our financial assets are aggregated by exposure term and assigned risk ratings.

The Company considers credit ratings and several factors including the collateral and/or security of the Digital asset receivable, and are aligned with the ratings used by major credit ratings agencies.

Given the limited historical data related to digital asset receivables and incurred losses related to digital asset receivables, the Company chose to rely on external data to perform the calculation of expected credit losses.

The Company utilized the profitability of default (“PD”) and loss given default (“LGD”) approach to estimate the allowance for credit loss.

In order to apply the PD LGD approach, management considered the lifetime of the digital asset receivables, the reasonable and supportable forecast, and the PD LGD.

As of December 31, 2024, the Company recorded a corresponding allowance for credit loss of $ 8.4 million, based on the PD LGD approach.

There were no digital asset receivables outstanding or allowance for credit losses recorded as of December 31, 2023,

NOTE 7 – ADVANCES TO VENDORS AND DEPOSITS

The Company contracts with bitcoin mining equipment manufacturers to procure equipment necessary for the operation of its bitcoin mining operations.

These agreements typically require a certain percentage of the value of the total order to be paid in advance at specific intervals, usually within several days of execution of a specific contract and periodically thereafter with final payments due prior to each shipment date.

These agreements typically require a certain percentage of the value of the total order to be paid in advance at specific intervals, usually within several days of execution of a contract and periodically thereafter with final payments due prior to each shipment date.

The Company accounts for these payments as “Advances to vendors” on the Consolidated Balance Sheets.

As of December 31, 2024 and 2023, such advances totaled approximately $ 121.3 million and $ 95.6 million, respectively.

In addition, the Company contracts with other service providers for the hosting of its equipment and operational support in data centers where the Company’s equipment is deployed.

These arrangements also typically require advance payments to be made to vendors in conjunction with the contractual obligations associated with these services.

In addition, the Company contracts with various service providers for hosting of its equipment, operational support in data centers where the Company’s equipment is deployed and construction of data centers on leased sites.

These contracts typically require advance payments to service providers in conjunction with the contractual obligations associated with these services.

Additionally, when applicable, funds related to a surety bond are included.

The Company classifies these payments as “Deposits” and “Long-term deposits” on the Consolidated Balance Sheets.

As of December 31, 2024 and 2023, such deposits totaled approximately $ 259.4 million and $ 67.0 million, respectively.

NOTE 8 – PROPERTY AND EQUIPMENT

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(in thousands, except useful life) Useful life (Years) December 31, 2024 December 31, 2023

— $ 3,510 $ —

Land improvements 9 26,530 —

Building and improvements 25 86,877 —

Mining rigs 3 1,705,648 862,055

Containers 10 - 15

Other 7 242 206

106,784 5,676

Equipment 4 - 15

Software and hardware 2 3,316 —

Asset retirement obligation 8 7,879 —

Construction in progress — 71,396 —

Other 7 6,335 242

Total gross property, equipment 2,143,175 867,973

Accumulated depreciation ( 196,201 ) ( 16,622 )

Accumulated depreciation and amortization ( 593,684 ) ( 196,201 )

Property and equipment, net $ 1,549,491 $ 671,772

The Company records mining rigs not yet placed into service as construction in progress.

Upon energization of the mining rigs, the mining rigs are reclassified to “Mining rigs” and depreciated over the estimated useful life.

The Company’s depreciation expense related to property and equipment for the years ended December 31, 2023 and 2022 was $ 179.5 million and $ 78.7 million, respectively.

In late 2021, the Company entered into an agreement with DCRBN Ventures Development and Acquisition LLC (“DCRBN”) in which the Company agreed to sell certain mining rigs to DCRBN in conjunction with the development of commercial activities at the McCamey, Texas facility.

In conjunction with its closure from the Hardin, Montana facility in September 2022 (the “Hardin Transaction”), the Company also sold bitcoin mining rigs to various third parties.

Total cash proceeds from these sales of assets for the year ended December 31, 2022, were $ 178.4 million and gains resulting from the asset sales totaled $ 83.9 million.

There were no such sales in 2023.

In connection with the Hardin Transaction, the Company recorded additional depreciation expense related to approximately 1,800 bitcoin mining rigs that were previously deployed and were no longer in operating condition based on inspections of the assets at the facility and experience with the assets formerly deployed at Hardin in the weeks following redeployment.

In addition, the Company determined that the useful lives of the remaining mining rigs formerly deployed at Hardin should be reduced from 36 months to 24 months.

In accordance with ASC 360 - Impairment and Disposal of Long-Lived Assets , a long-lived asset (group) that is held and used must be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the long-lived asset (group) might not be recoverable.

Due to the decrease in the cost of bitcoin mining rigs that was driven by the drop in bitcoin prices during the fourth quarter ended December 31, 2022, the Company assessed the need for an impairment write-down of its bitcoin mining rigs.

In accordance with ASC 360-10, the Company initially determined that the carrying value of its bitcoin miners was not recoverable.

As its bitcoin mining rigs had a carrying value in excess of fair value, the Company recognized an impairment charge of approximately $ 208.6 million for the year ended December 31, 2022.

The fair value of the bitcoin miners determined primarily using observable prices for similar assets as of December 31, 2022 was $ 271.3 million.

As a result of the impairment charge of its bitcoin mining rigs, the Company re-evaluated and reduced the estimated useful life for its asset group of mining rigs from 5 to 3 years, effective January 1, 2023.

No impairment indicators were identified during the year ended December 31, 2023 .

NOTE 7 – DIGITAL ASSET LOAN RECEIVABLE, NET OF ALLOWANCE

The Company’s digital asset loan receivable represents two separate digital asset loans made to NYDIG Funding, LLC (“NYDIG”) in August 2021 and December 2021 under a master securities loan agreement, which was terminated at the point of full repayment in kind for both loans in June 2022.

A total of 600 bitcoin were loaned to NYDIG.

No collateral was posted to Marathon under the terms of the two loans.

The digital assets loan receivables were initially and subsequently measured at the fair value of the underlying bitcoin lent at the time of the transfer, approximately $ 27.2 million, and adjusted for expected credit losses, with changes in fair value recorded as

unrealized gains and losses in the Consolidated Statements of Comprehensive Income (Loss).

A loan fee was accrued daily, based on the daily closing price of the underlying bitcoin and a set percentage rate, and paid in cash on a monthly basis consistent with each loan’s confirmation terms.

The loans were fully repaid by NYDIG in June 2022 at which time the 600 bitcoin were reclassified into digital assets at the carrying value of the digital assets loan receivable immediately prior to its derecognition at the end of loan.

The Company did not have any digital asset loan receivables outstanding as of December 31, 2023 or 2022.

As such, the Company recorded an allowance for loan losses as of December 31, 2021 with an initial provision expense of approximately $ 0.9 million.

As of December 31, 2022, the Company recognized a corresponding provision benefit of approximately $ 0.9 million for the June 2022 repayment in full.

(1) Refer to Note 18 - Leases, for further information regarding the Company’s finance land lease.

The Company recorded an asset retirement obligation of $ 7.9 million for the Granbury data center land lease.

The asset retirement obligation represents the estimated cost to return the site to its original state.

The asset retirement obligation is being depreciated over the term of the lease which is approximately 8 years.

The Company’s accretion expense related to the asset retirement obligation for the year ended December 31, 2024 was $ 0.9 million, respectively.

The Company’s depreciation expense related to property and equipment for the year ended December 31, 2024 and 2023 was $ 403.7 million and $ 179.5 million, respectively.

NOTE 9 – INVESTMENTS

The components of investments as of December 31, 2024 and 2023 are:

(in thousands)

December 31, 2024 December 31, 2023

Equity method investments

$ 57,447 $ 69,292

Other investments

54,046 37,000

Total investments

$ 111,493 $ 106,292

Equity Method Investment

The ADGM Entity

On January 27, 2023, the Company and Zero Two (formerly known as FS Innovation, LLC) entered into a Shareholders’ Agreement to form an Abu Dhabi Global Markets company (the “ADGM Entity”) in which the Company has a 20 % ownership interest, which is accounted for as an equity method investment.

The ADGM Entity commenced mining operations in September 2023.

During the year ended December 31, 2024, the Company received a non-monetary dividend in the amount of $ 8.5 million associated with approximately 1,950 mining rigs distributed by Zero Two.

The Company recorded the mining rigs to property and equipment at fair value and recognized a loss of $ 4.1 million that reduced the Company’s investment in the ADGM Entity for the year ended December 31, 2024.

The Company’s share of net losses was $ 1.5 million for the year ended December 31, 2024, including approximately $ 12.4 million of depreciation and amortization and $ 0.6 million for year ended December 31, 2023, including approximately $ 2.1 million of depreciation and amortization.

As of December 31, 2024, the Company’s investment in the ADGM Entity was $ 57.4 million and is reflected in “Investments” on the Consolidated Balance Sheets.

Other Investments

Other investments consist of strategic investments made from time to time in equity securities and SAFE investments.

Investments in Equity Securities

As of December 31, 2024, the total carrying amount of the Company’s investment in Auradine, Inc.

(“Auradine”) preferred stock was $ 50.7 million.

On September 26, 2024, the Company purchased additional shares of Auradine preferred stock with a purchase price of $ 0.8 million.

On January 10, 2024, the Company purchased additional shares of Auradine preferred stock with a purchase price of $ 8.0 million.

The preferred stock purchased on January 10, 2024 was similar to the Company’s other investments in Auradine preferred stock and, as a result, the Company recorded $ 5.2 million to “Gain on investments” on the Consolidated Statements of Operations to adjust the carrying amount of its investments to an observable price in accordance with the measurement alternative in ASC 321.

SAFE Investments

During the year ended December 31, 2024, the Company entered into two SAFE agreements, for a total carrying value of $ 1.4 million and wrote-down a previous SAFE investment of $ 1.0 million.

As of December 31, 2023, the Company had one SAFE investment with a carrying value of $ 1.0 million, with no impairments or other adjustments.

NOTE 10 – GOODWILL AND INTANGIBLE ASSETS

The components of goodwill as of December 31, 2024 are:

(in thousands)

As of December 31, 2024

GC Data Center Acquisition $ 30,852

Garden City Acquisition 14,510

Arkon Acquisition

Total goodwill

The Company acquired goodwill from completed acquisitions throughout the year ended December 31, 2024.

Refer to Note 3 – Acquisitions, for further information.

There was no goodwill as of December 31, 2023.

The Company completed its annual goodwill impairment analysis as of December 31, 2024 and concluded that its fair value substantially exceeded its carrying value, therefore no goodwill impairment was recorded as of December 31, 2024

Intangible assets

The following table presents the Company’s intangible assets as of December 31, 2024:

As of December 31, 2024

(in thousands) Cost Accumulated amortization Net

Customer relationships $ 23,000 $ ( 22,041 ) $ 959

Intellectual property

2,633 ( 878 ) 1,755

Total intangible assets $ 25,633 $ ( 22,919 ) $ 2,714

In June 2024, the Company fully amortized the customer relationship intangible assets acquired in the GC Data Center Acquisition due to the Company’s strategic decision to exit hosting services business and termination of customer relationships during the period.

In connection with the Arkon Acquisition in November 2024, the Company acquired an additional customer relationship intangible asset.

Refer to Note 3 - Acquisitions, for further information.

There were no intangible assets as of December 31, 2023.

The following table presents the Company’s estimated future amortization of finite-lived intangible assets as of December 31, 2024:

(in thousands)

Total $ 2,714

NOTE 11 – FAIR VALUE MEASUREMENT

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

The carrying amounts reported in the Consolidated Balance Sheets for cash and cash equivalents, restricted cash, other receivables, deposits, prepaid expenses and other current assets, property and equipment, advances to vendors, accounts payable, accrued expenses, and legal reserve payable, approximate their estimated fair market value based on the short-term maturity of these instruments.

Additionally, the carrying amounts reported in the Consolidated Balance Sheets for the Company’s term loan, operating lease liabilities and other long-term liabilities approximate fair value as the related interest rates approximate rates currently available to the Company.

The carrying amounts reported on the Consolidated Balance Sheets for cash and cash equivalents, restricted cash, other receivables, deposits, prepaid expenses and other current assets, property and equipment, advances to vendors, accounts payable, accrued expenses, and legal reserve payable approximate their estimated fair market value based on the short-term maturity of these instruments.

Additionally, the carrying amounts reported on the Consolidated Balance Sheets for the Company’s term loan, operating lease liabilities and other long-term liabilities approximate fair value as the related interest rates approximate rates currently available to the Company.

Financial assets and liabilities are classified in their entirety within the fair value hierarchy based on the lowest level of input that is significant to their fair value measurement.

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Recurring measurement of fair value

The following tables present information about the Company’s assets measured at fair value on a recurring basis and the Company’s estimated level within the fair value hierarchy of those assets and liabilities as of December 31, 2023 and December 31, 2022, respectively:

Recurring fair value measured at December 31, 2023

(in thousands) Total carrying value Quoted prices in active markets

The following tables present information about the Company’s assets and liabilities measured at fair value on a recurring basis and the Company’s estimated level within the fair value hierarchy for each of those assets and liabilities as of December 31, 2024 and 2023, respectively:

(in thousands) Total carrying value at December 31, 2024

Quoted prices in active markets

(Level 1) Significant other observable inputs

(Level 2) Significant unobservable inputs

Cash and cash equivalents (1)

$ 201,688 $ 201,688 $ — $ —

Money market funds $ 292,927 $ 292,927 $ — $ —

Digital assets 3,228,316 3,228,316 — —

Recurring fair value measured at December 31, 2022

(in thousands) Total carrying value Quoted prices in active markets

Digital assets - receivable, net (1)

960,057 — 960,057 —

Derivative instrument (2)

8,947 — 8,947 —

Contingent consideration liability (3)

8,138 — — 8,138

(in thousands) Total carrying value at December 31, 2023

Quoted prices in active markets

(Level 1) Significant other observable inputs

(Level 2) Significant unobservable inputs

Cash and cash equivalents (2)

$ 92,044 $ 92,044 $ — $ —

(1) Represents money market accounts, government backed securities, and investments.

Excludes $ 155.6 million of cash and cash equivalents as of December 31, 2023.

(2) Represents money market accounts.

Excludes $ 11.7 million of cash and cash equivalents as of December 31, 2022.

Money market funds $ 141,147 $ 141,147 $ — $ —

Treasury Bills 60,541 60,541 — —

Digital assets 639,660 639,660 — —

(1) The fair value of digital assets - receivable, net was estimated using the market approach, utilizing observable market prices and other relevant market data, which are considered Level 2 inputs.

Refer to Note 6 - Digital Assets - Receivable, Net, for further information.

(2) The fair value of the derivative instrument was estimated using a discounted cash flow approach that considers various assumptions including current market prices and electricity forward curves, which are considered Level 2 inputs.

Increases (decreases) in market prices and electricity forward curves could result in significant increases (decreases) in the fair value of derivative instruments.

Refer to Note 2 - Summary of Significant Accounting Policies - Derivatives, for further information.

(3) Represents the estimated amount of acquisition-related consideration expected to be paid in the future as of December 31, 2024 for the GC Center Equity Holdings, LLC acquired on January 12, 2024 and the Arkon Acquisition as of November 5, 2024.

Increases (decreases) in the probability of achieving the milestones could result in significant increases (decreases) in the fair value of the contingent consideration.

Refer to Note 3 - Acquisitions, for further information.

The Company includes the above money market funds and U.S.

treasury bills in cash and cash equivalents on the Consolidated Balance Sheets.

The Company’s U.S.

treasury bills have original remaining maturities of three months or less when purchased.

Effective January 1, 2023, the Company early adopted ASU 2023-08, measuring digital assets at fair value on a recurring basis.

Refer to Note 4 – Digital Assets, for further information.

Additionally, during March 2023, the fair value of digital assets were transferred from Level 2 to Level 1, as a result of using the quoted price in the active market in accordance with ASC 820.

There were no other transfers among Levels 1, 2 or 3 during the years ended December 31, 2023 and December 31, 2022.

On June 10, 2022, the Company withdrew approximately 4,769 bitcoin from its investment in NYDIG Digital Assets Fund III, LP and transferred the bitcoin directly into the Company’s account.

Non-recurring measurement of fair value

The following tables present information about the Company’s assets and liabilities measured at fair value on a non-recurring basis and are, therefore, not included in the tables above.

These assets include (a) digital assets and digital assets, restricted that are initially recorded at cost and subsequently impaired as the fair value falls below its carrying value and (b) mining rigs and advances to vendors that are written down to fair value due to the decrease in the cost of bitcoin mining rigs that was driven by the drop in bitcoin prices during the fourth quarter ended December 31, 2022.

These assets are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (e.g., impairment).

The Company’s estimated level within the fair value hierarchy for each of these assets and liabilities as of December 31, 2022 are as follows.

As of December 31, 2023, the Company had no assets and liabilities that were measured on a non-recurring basis, due to the early adoption of ASU 2023-08 and the requirement to measure crypto assets at fair value.

Refer to Note 4 – Digital Assets, for further information.

Non-recurring fair value measured at December 31, 2023

(in thousands) Total carrying value Quoted prices in active markets

There were no transfers among Levels 1, 2 or 3 during the years ended December 31, 2024.

Fair value of financial instruments not recognized at fair value

The following tables present information about the Company’s financial instruments that are not recognized at fair value on the Consolidated Balance Sheets as of December 31, 2024 and 2023, respectively, is as follows:

(in thousands) Total carrying value at December 31, 2024

Quoted prices in active markets

(Level 1) Significant other observable inputs

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$ 2,246,578 $ 1,974,398 $ — $ —

Non-recurring fair value measured at December 31, 2022

(in thousands) Total carrying value Quoted prices in active markets

December 31, 2023

(in thousands) Total carrying value at December 31, 2023

Quoted prices in active markets

(Level 1) Significant other observable inputs

(Level 2) Significant unobservable inputs

Digital assets $ 121,842 $ — $ 129,201 $ —

Property and equipment, net (1)

271,280 — 271,280 —

Advances to vendors 488,299 — 488,299 —

Digital assets, restricted 68,875 — 72,998 —

Notes payable

$ 325,654 $ 269,725 $ — $ —

(1) Represents mining rigs.

Excludes $ 1.7 million of property and equipment relating to containers, website, and leasehold improvements as of December 31, 2022.

There were no transfers among Levels 1, 2 or 3 during the years ended December 31, 2023 and December 31, 2022.

There were no transfers among Levels 1, 2 or 3 during the years ended December 31, 2024.

As of December 31, 2024 and 2023 there were no other assets and liabilities measured at fair value on a non-recurring basis.

NOTE 12 – INCOME TAXES

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Federal income tax expense (benefit) at the statutory rate

21.0 % $ 129,517 21.0 % $ 58,296 ( 21.0 ) % $ ( 150,785 )

State income taxes, net of federal tax expense 1.8 % 10,872 0.9 % 2,559 ( 1.6 ) % ( 11,495 )

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Income tax expense (benefit) from continuing operations

12.3 % $ 75,495 5.9 % $ 16,426 ( 3.4 ) % $ ( 24,232 )

The components of the provision for income taxes are as follows:

(in thousands) December 31, 2023

December 31, 2022

December 31, 2021

Current income tax expense (benefit)

For the Year Ended December 31,

(in thousands) 2024

Current income tax expense

Federal $ — $ — $ —

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Total current income tax expense

Deferred expense

2,278 1,140 733

Deferred tax expense (benefit)

Federal 142,087 66,129 ( 143,598 )

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Total deferred tax expense (benefit)

151,177 67,788 ( 155,427 )

Change in valuation allowance ( 77,960 ) ( 52,502 ) 130,462

Net deferred tax expense after valuation allowance (benefit)

73,217 15,286 ( 24,965 )

Income tax provision (benefit)

$ 75,495 $ 16,426 $ ( 24,232 )

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2024 and 2023 are presented below:

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Intangible assets 5,836 1,602

Property and equipment

Stock compensation 10,435 3,898

Digital assets — 52,535

Disallowed interest

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Deferred tax liabilities:

Unrealized gains — ( 2,494 )

Gain on investment

Property and equipment, net — ( 117,094 )

Digital assets

( 264,816 ) ( 37,133 )

Total gross deferred liabilities ( 265,728 ) ( 154,227 )

Net deferred tax liability $ ( 88,503 ) $ ( 15,286 )

The valuation allowance for deferred tax assets as of December 31, 2023 and 2022 was $ 78.0 million and $ 130.5 million, respectively.

The net change in the total valuation allowance was a decrease of $ 52.5 million in the year ended December 31, 2023 .

At year ended December 31, 2023 , the Company concluded, based upon all available evidence, it was more likely than not that it would not have sufficient future taxable income to realize the Company’s federal and state deferred tax assets.

As a result, the Company established a valuation allowance against deferred tax assets that are not supported by reversing deferred tax liabilities.

The valuation allowance for deferred tax assets as of December 31, 2023 was $ 78.0 million.

There was a zero valuation allowance for deferred tax assets as of December 31, 2024, resulting in a decrease of the total valuation allowance of $ 78.0 million for the year ended December 31, 2024.

For the year ended December 31, 2024 , the Company concluded, based upon all available evidence, it was more likely than not that it would have sufficient future taxable income to realize the Company’s federal and state deferred tax assets.

As a result, the Company is releasing the valuation allowance against deferred tax assets that are supported by reversing deferred tax liabilities.

At December 31, 2024 , the Company has federal and state net operating loss carryforwards of $ 612.8 million, which are available to offset future taxable income.

In addition, the Company has interest expense carryforwards of $ 14.2 million.

In addition, the Company has interest carryforwards of $ 10.5 million.

The Company has the following attributes and credit carryforwards:

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A reconciliation of the beginning and ending amount of total unrecognized tax benefits for the tax years ended December 31, 2024, 2023 and 2022 is as follows:

(in thousands) December 31, 2023

December 31, 2022

December 31, 2021

For the Year Ended December 31,

(in thousands) 2024

Balance, beginning of year $ 5,296 $ 5,252 $ 44.00

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Balance, end of year $ 5,857 $ 5,296 $ 5,252

The Company has established a reserve against its federal research and development (“R&D”) tax credits generated in 2023 and previous years.

The Company has established a reserve against its federal research and development tax credits generated in 2024 and previous years.

The Company has also established a reserve related to its executive compensation deduction limitation in 2022.

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If the unrecognized tax benefits were recognized as of December 31, 2024, there would be a $ 5.9 million favorable impact that would affect the effective rate on income from continuing operations.

The Company also accrues for interest and penalties on its uncertain tax positions and includes such charges in its income tax provision in the Consolidated Statements of Comprehensive Income (Loss).

The Company had no interest and penalty expenses in the years ended December 31, 2023 and 2022.

The Company did no t accrue either interest or penalties for the years ended December 31, 2024 and 2023.

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

For the year ended December 31, 2023, the Company recorded net income and as such, the Company calculated the impact of dilutive common stock equivalents in determining diluted earnings per share.

For the year ended December 31, 2022, the Company recorded a net loss and as such, t he computation of diluted net loss per share does not include dilutive common stock equivalents in the weighted average shares outstanding, as they would have been anti-dilutive.

The following table presents the securities that were not included in the computation of diluted income (loss) per share, as their inclusion would have been anti-dilutive:

For the year ended December 31, 2024, 2023 and 2022, the Company recorded net income (loss) and as such, the Company calculated the impact of dilutive common stock equivalents in determining diluted earnings per share.

The following table presents the total potential securities that were not included in the computation of diluted income (loss) per share, as their inclusion would have been anti-dilutive:

For the Year Ended December 31,

2024 2023 2022

324,375 324,375 326,779

Warrants 324,375 324,375 324,375

Restricted stock units — — 1,255,648

Convertible notes

The Convertible Notes (as defined below)

— — 9,812,955

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Restricted stock units 4,492,213 330,928 —

Convertible notes 8,106,779 — —

Performance-based restricted stock units 849,739 — —

The Convertible Notes

16,537,406 8,106,779 —

Weighted average shares of common stock - diluted

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$ 1.72 $ 1.06 $ ( 6.12 )

NOTE 11 – COMPUTE NORTH BANKRUPTCY

On 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.

Bankruptcy Code (11 U.S.

Code section 101 et seq .).

The Company’s financial exposure to Compute North at the time of the bankruptcy filing included:

• Approximately $ 10.0 million in convertible preferred stock of Compute North Holdings, Inc.

• Approximately $ 21.0 million related to an unsecured Senior Promissory note with Compute North LLC.

• Approximately $ 50.0 million in operating deposits with Compute North primarily related to the King Mountain and Wolf Hollow hosting facilities.

The Company recorded an impairment charge of $ 39.0 million during the third quarter of 2022.

During the fourth quarter of 2022, the company estimated that an additional $ 16.6 million in deposits had likely been impaired and as such recorded an additional impairment charge .

On February 16, 2023, the Bankruptcy Court approved the Debtors Plan of Reorganization, pursuant to which Marathon’s claim was fixed at $ 40.0 million as an unsecured claim to be paid out according to the timing and percentages within the approved Debtor’s plan.

The Company has yet to receive the settlement funds.

NOTE 14 – STOCKHOLDERS' EQUITY

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

In February 2024, we intend to commence a new at-the-market offering program with H.C.

Wainwright & Co., LLC (“Wainwright”) acting as sales agent (the “2024 ATM”) pursuant to the ATM Agreement, under which we may offer and sell shares of our common stock from time to time through Wainwright having an aggregate offering price of up to $ 1.5 billion.

On October 24, 2023, the Company entered into a new at-the-market offering program (the “2023 ATM”) with Wainwright relating to shares of the Company’s common stock.

In accordance with the terms of the sales agreement, the Company may offer and sell shares of its common stock having an aggregate offering price of up to $ 750.0 million from time to time through Wainwright acting as its sales agent.

As of December 31, 2023, the Company has sold 19,591,561 shares of common stock for an aggregate purchase price of $ 248.1 million, net of offering costs, pursuant to the 2023 ATM.

On February 11, 2022, the Company entered into an at-the-market Offering Agreement (the “2022 ATM”), or sales agreement, with Wainwright relating to shares of the Company’s common stock.

As of October 23, 2023, the Company has sold 86,822,000 shares of common stock for an aggregate purchase price of $ 727.9 million, net of offering costs, pursuant to the 2022 ATM, completing the agreement.

Common Stock Warrants

A summary of the Company’s issued and outstanding common stock warrants and changes during the year ended December 31, 2023 and 2022 is as follows:

Number of Warrants Weighted Average Exercise Price Weighted Average Remaining Contractual Life (in years)

Outstanding as of December 31, 2021 326,779 $ 25.54 3.5

Forfeited ( 2,404 ) 52.00 —

Outstanding as of December 31, 2022 324,375 25.00 2.5

Outstanding as of December 31, 2023 324,375 $ 25.00 2.5

In February 2024, the Company commenced a new at-the-market (“ATM”) offering program with H.C.

Wainwright & Co., LLC (“Wainwright”) acting as sales agent (the “2024 ATM”) pursuant to an ATM agreement, under which the Company may offer and sell shares of its common stock from time to time through Wainwright having an aggregate offering price of up to $ 1.5 billion.

During the year ended December 31, 2024, the Company sold 68,747,807 shares of common stock for an aggregate purchase price of $ 1.4 billion, net of offering expenses of $ 34.9 million for the year ended December 31, 2024, respectively, pursuant to the 2024 ATM.

As a result, the Company had $ 102.7 million aggregate offering price remaining under the 2024 ATM at December 31, 2024.

NOTE 15 – STOCK-BASED COMPENSATION

2018 Equity Incentive Plan

On January 1, 2018, the Board adopted the 2018 Equity Incentive Plan (as amended, the “2018 Plan”), which was subsequently approved by the Company’s shareholders on March 7, 2018.

The 2018 Plan provides for the issuance of stock options, restricted stock, restricted stock units (“RSUs”), preferred stock and other awards to employees, directors, consultants and other service providers.

In June 2024, the Company’s shareholders approved an amendment to the 2018 Plan that increased the number of shares authorized for issuance thereunder by 15,000,000 shares.

As of December 31, 2024, the Company had an aggregate of 15,680,345 shares of common stock reserved for future issuance under the 2018 Plan.

A summary of the Company’s stock-based compensation, by category, is as follows:

For the Year Ended December 31,

(in thousands) 2024 2023 2022

Performance-based stock awards $ 47,301 $ — $ —

Service-based stock awards 110,341 32,644 24,595

Total stock-based compensation $ 157,642 $ 32,644 $ 24,595

Restricted Stock Units

On January 1, 2018, the Board adopted the 2018 Equity Incentive Plan (as amended, the “2018 Plan”), which was subsequently approved by the Company’s shareholders on March 7, 2018, The 2018 Plan provides for the issuance of stock options, restricted stock, restricted stock units, preferred stock and other awards to employees, directors, consultants and other service providers.

The Company has granted restricted stock units (“RSU”) to employees, which generally vest over a four-year period from the date of grant;

The Company grants service-based RSUs to employees, directors, and consultants.

RSUs granted to employees generally vest over a four-year period from the date of grant;

however, in certain instances, all or a portion of a grant may vest immediately.

RSUs granted to directors generally vest over a one-year period or, in certain instances, immediately.

The Company measures the fair value of RSUs at the grant date and recognizes expense on a straight-line basis over the requisite service period from the date of grant for each separately-vesting tranche under the graded-vesting attribution method.

A summary of the Company’s RSU activity for the years ended December 31, 2023 and 2022, is as follows:

RSUs granted to directors generally vest over a one-year period.

The Company measures the fair value of RSUs at the grant date and recognizes expenses on a straight-line basis over the requisite service period from the date of grant for each separately-vesting tranche under the graded-vesting attribution method.

A summary of the Company’s service-based RSU activity for the year ended December 31, 2024, is as follows:

Number of RSUs Weighted Average Grant Date Fair Value

Nonvested at December 31, 2023

5,765,529 $ 9.40

Granted 7,793,855 18.29

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Nonvested at December 31, 2024

7,988,767 $ 15.44

As of December 31, 2024, there was approximately $ 64.7 million of aggregate unrecognized stock-based compensation related to unvested service-based RSUs that is expected to be recognized over the next 2.8 years.

Performance-based Restricted Stock Units

The Company granted performance-based restricted stock units (“PSUs”) on May 1, 2024, and subsequently to new hires and for promotions.

These awards generally vest over a four-year period from the date of grant.

Awards are issued in the form of RSUs and are granted pursuant to the 2018 Plan.

The number of PSUs that are subject to vest is directly correlated with the Company’s achievements of a pre-determined metric relating to total stockholder return (“TSR”) for the period from January 1, 2024 through December 31, 2024 (the “Performance Period”).

Based on the Company’s TSR performance relative to the peer group for the Performance Period, the PSU awards will vest between 0 % to 200 % of the target amount over an approximate four-year period.

Determination regarding the Company’s performance relative to the TSR metric will establish the maximum number of shares that are subject

to vesting pursuant to the PSU awards.

Once determined, (i) 25 % of the PSU awards will vest on January 31, 2025, and (ii) the balance of the awards will vest in 12 equal calendar quarters (with 6.25 % of the shares vesting each quarter).

The Company measures the fair value of the PSUs at the grant date using the Monte Carlo simulation model.

The Monte Carlo simulation model requires the input of subjective assumptions, including risk-free interest rate, expected term, expected stock price volatility, market capitalization of peer group, and dividend yield.

The risk-free interest rate assumption is based upon observed interest rates for constant maturity U.S.

Treasury securities as of the grant date.

Expected term is consistent with the Performance Period of the awards.

Expected volatility is based on the historical volatility of the Company’s common stock over the estimated expected life.

The Company does not pay a dividend, therefore, the dividend yield is assumed to be zero.

During the fourth quarter of 2024, the Company revised the peer group for its PSUs to ensure a relevant benchmark for performance evaluation and modified the vesting date of the first tranche to December 31, 2024.

This modification resulted in the recognition of $ 26.1 million of incremental expense in the quarter ended December 31, 2024.

The remaining $ 78.2 million of incremental expense will be recognized over the requisite service period.

A summary of the Company’s PSU activity for the year ended December 31, 2024, is as follows:

Number of PSUs Weighted Average Grant Date Fair Value

Nonvested at December 31, 2023

Granted 3,016,773 49.05

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Nonvested at December 31, 2024 (1)

As of December 31, 2023, there was approximately $ 43.1 million of aggregate unrecognized stock-based compensation related to unvested RSUs that is expected to be recognized over the next 2.5 years.

Series A Preferred Stock

On June 5, 2023, the Company entered into a securities purchase agreement for the offering of 15,000 shares of the Company’s Series A redeemable convertible preferred stock.

On June 8, 2023, upon closing of the offering, the Company issued 15,000 shares of Series A Preferred Stock for total gross proceeds of $ 14.3 million before deducting the placement agent’s fees and other estimated offering expenses.

Each share of Series A Preferred Stock had a purchase price of $ 952.38 , representing an original issue discount of approximately 5 % of the $ 1,000 stated value of each share.

Each share of Series A Preferred Stock was convertible into shares of the Company’s common stock at an initial conversion price of $ 14.52 per share, at the option of the holder, at any time following the Company’s receipt of stockholder approval for an increase in its authorized shares of common stock.

The Series A Preferred Stock was recorded outside of stockholder’s equity as mezzanine equity.

At June 30, 2023, the Company increased the carrying value of Series A Preferred Stock to its redemption value and recorded the difference to additional paid-in capital.

As of December 31, 2023, all of the outstanding Series A Preferred Stock were redeemed at 105 % of the $ 1,000 stated value per share for $ 15.8 million.

2,260,612 $ 49.05

(1) The actual performance resulted in a payout of 200 % of the target level.

As of December 31, 2024, there was approximately $ 100.5 million of aggregate unrecognized stock-based compensation related to unvested PSUs that is expected to be recognized over the next 3.1 years.

Common Stock Warrants

As of December 31, 2024, the Company’s issued and outstanding common stock warrants had no change from December 31, 2023.

The Company continues to have 324,375 outstanding warrants, at a weighted average exercise price of $ 25.00 , that are expected to expire in approximately 1.0 years.

NOTE 16 – ACCRUED EXPENSES

As of December 31, 2024 and 2023, the Company’s accrued expenses consisted of the following:

(in thousands) 2023 2022

(in thousands) December 31, 2024 December 31, 2023

Interest $ 2,500 $ 276

Non-income taxes 10,237 6,926

Payroll and related expenses

Compensation and related expenses

Termination and legal fees

Utility expenses

Professional fees

Other 5,480 3,747

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NOTE 17 – DEBT

As of December 31, 2023 and 2022, the Company’s debt consists of the following:

(in thousands, except for interest rate data) Maturity Date Interest Rate December 31, 2023 December 31, 2022

Convertible note December 1, 2026 1 % $ 330,707 $ 747,500

unamortized debt discount ( 5,053 ) ( 15,211 )

Total convertible notes, net of discount $ 325,654 $ 732,289

Term loan (1)

August 5, 2024

Variable — 50,000

unamortized deferred fees — ( 118 )

Total 325,654 782,171

current portion — —

Long-term portion $ 325,654 $ 782,171

(1) On March 8, 2023, the Company repaid the term loan, in full, and the Company’s RLOC facilities with Silvergate Bank were terminated.

The Company recorded a loss in the amount of $ 0.3 million to “Net gain on extinguishment of debt” on the Consolidated Statements of Comprehensive Income (Loss).

During the years ended December 31, 2023 and December 31, 2022, the Company recorded amortization of debt issuance costs of $ 3.2 million and $ 3.9 million, respectively.

Interest expense was $ 10.4 million and $ 15.0 million for the years ended December 31, 2023 and December 31, 2022, respectively.

The following summarizes the Company’s required payments on the Convertible Note in each of the next five years, and thereafter:

Year Repayment Amount

(in thousands)

Convertible Note

On November 18, 2021, the Company issued $ 650.0 million principal of 1.0 % 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”).

On November 23, 2021, the initial purchasers of the Notes purchased an additional $ 97.5 million principal of Notes for an aggregate principal amount of $ 747.5 million.

The Notes are the Company’s senior, unsecured obligations and are:

(i) Equ al 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;

(iv) Structurally subordinated to all existing and future indebtedness and other liabilities, including trade payables, and (to the exte nt the Company is not a holder thereof) preferred equity, if any, of the Company’s subsidiaries.

The Notes accrue interest at a rate of 1.0 % 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 September 1, 2026, noteholders will have the right to convert their Notes only upon the occurrence of certain events.

From and after September 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 one thousand dollar 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 time.

The 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.

If 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.

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

(i) Ce rtain payment defaults on the Notes (which, in the case of a default in the payment of interest on the Notes, are 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 $ 50.0 million;

(vi) Certain events of bankruptcy, insolvency and reorganization involving the Company or any of its significant subsidiaries.

If 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.

In September 2023, the Company entered into privately negotiated exchange agreements with certain holders of its Notes.

In total, the Company exchanged $ 416.8 million principal amount of Notes for an aggregate 31,722,417 shares of Company common stock.

The Company evaluated the exchange of debt to determine if it was an extinguishment or a modification of the debt.

The net carrying value of the Company’s outstanding debt as of December 31, 2024 and December 31, 2023, consisted of the following:

(in thousands) December 31, 2024 December 31, 2023

December 2026 Notes $ 67,492 $ 330,707

September 2031 Notes 300,000 —

March 2030 Notes 1,000,000 —

June 2031 Notes 925,000 —

Line of credit 200,000 —

Total debt 2,492,492 330,707

unamortized original issue discount and debt issuance costs ( 45,914 ) ( 5,053 )

Total long-term portion $ 2,446,578 $ 325,654

Convertible Senior Notes

The Company issued the following convertible notes (collectively, the “Convertible Notes”) in private offerings:

• $ 925.0 million aggregate principal amount of 0.0 % Convertible Senior Notes due 2031 (the “June 2031 Notes”)

• $ 1.0 billion aggregate principal amount of 0.0 % Convertible Senior Notes due 2030 (the “March 2030 Notes”)

• $ 300.0 million aggregate principal amount of 2.125 % Convertible Senior Notes due 2031 (the “September 2031 Notes”)

• $ 747.5 million aggregate principal amount of 1.0 % Convertible Senior Notes due 2026 (the “December 2026 Notes”)

The following table summarizes the key terms of each of the Convertible Notes:

December 2026

September 2031

Issuance Date November 2021 August 2024 November 2024 December 2024

Maturity Date December 1, 2026 September 1, 2031 March 1, 2030 June 1, 2031

Remaining Principal (in thousands)

$ 67,492 $ 300,000 $ 1,000,000 $ 925,000

Stated Interest Rate 1.0 % 2.125 % — % — %

Interest Payment Dates June 1 & December 1 March 1 & September 1 March 1 & September 1 June 1 & December 1

Net Proceeds (1) (in thousands)

$ 728,082 $ 291,595 $ 979,176 $ 907,908

Effective Interest Rate 1.0 % 2.6 % 0.4 % 0.3 %

Initial Conversion Rate 13.1277 52.9451 38.5902 28.9159

Initial Conversion Price $ 76.17 $ 18.89 $ 25.91 $ 34.58

Share Principal Price $ 1,000 $ 1,000 $ 1,000 $ 1,000

(1) Net proceeds are net of customary offering expenses associated with the issuance of each of the Convertible Notes (the “issuance costs”) at the time of issuance.

The Company accounts for these issuance costs as a reduction to the principal amount and amortizes the issuance costs to interest expense from the respective debt issuance date through the Maturity Date, on the Consolidated Statements of Operations.

Issuance of the June 2031 Notes

On December 4, 2024, the Company issued $ 850.0 million principal of 0.0 % Convertible Senior Notes due 2031.

In addition, on December 10, 2024, the initial purchasers of the June 2031 Notes purchased an additional $ 75.0 million principal of June 2031 Notes for an aggregate principal amount of $ 925.0 million.

The June 2031 Notes were issued pursuant to, and governed by, an indenture (the “Indenture”) with respect to the June 2031 Notes between the Company and the U.S.

Bank Trust Company, National Association, as trustee (the “Trustee”).

The June 2031 Notes are senior unsecured obligations of the Company and do not bear regular interest.

The June 2031 Notes will mature on June 1, 2031, unless earlier converted, redeemed or repurchased in accordance with their terms.

The June 2031 Notes are convertible into shares of the Company’s common stock at an initial conversion rate of 28.9159 shares per one thousand dollar principal amount of June 2031 Notes, which represents an initial conversion rate price of approximately $ 34.58 per share of common stock.

The conversion rate is subject to customary anti-dilution adjustments.

In addition, following certain events that occur prior to the maturity date or if the Company delivers a notice of redemption, the Company will increase the conversion rate for a holder who elects to convert its June 2031 Notes in connection with such corporate event or notice of redemption, as the case may be, in certain circumstances as provided by the Indenture.

Prior to March 1, 2031, the June 2031 Notes are convertible only upon the occurrence of certain events.

On or after March 1, 2031 until the close of business on the second scheduled trading day immediately preceding the maturity date of the June 2031 Notes, holders may convert the June 2031 Notes at any time.

Upon conversion of the June 2031 Notes, the Company will pay or deliver, as the case may be, cash, shares of the Company’s common stock or a combination of cash and shares of common stock, at the Company’s election.

Prior to June 5, 2029, the Company may not redeem the June 2031 Notes.

The Company may redeem for cash all or any portion of the June 2031 Notes, at its option, on or after June 5, 2029, if the last reported sale price of the Company’s common stock has been at least 130 % of the conversion price then in effect for at least 20 trading days, whether or not consecutive, including the trading day immediately preceding the date on which the Company provides a notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption.

The redemption price will be equal to 100 % of the principal amount of the June 2031 Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.

Holders have the right to require the Company to repurchase for cash all or any portion of their June 2031 Notes on June 4, 2027 and on June 4, 2029 at a repurchase price equal to 100 % of the principal amount of the June 2031 Notes to be repurchased, plus any accrued and unpaid interest to, but excluding the repurchase date.

In addition, if the Company undergoes a “fundamental change,” as defined in the Indenture, prior to maturity, subject to certain conditions, holders may require the Company to repurchase for cash all or any portion of their June 2031 Notes at a fundamental change repurchase price equal to 100 % of the principal amount of the June 2031 Notes to be repurchased, plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date.

The Indenture contains customary terms and covenants, including that upon certain events of default occurring and continuing, either the Trustee or the holders of at least 25 % in principal amount of the outstanding June 2031 Notes may declare 100 % of the principal of, and accrued and unpaid special interest, if any, on, all the June 2031 Notes to be due and payable.

Issuance of the March 2030 Notes

On November 20, 2024, the Company issued $ 850.0 million principal of 0.0 % Convertible Senior Notes due 2030.

In addition, on November 20, 2024, the initial purchasers of the March 2030 Notes purchased an additional $ 150.0 million principal of March 2030 Notes for an aggregate principal amount of $ 1.0 billion.

The March 2030 Notes were issued pursuant to, and governed by, an indenture (the “Indenture”) with respect to the March 2030 Notes between the Company and the U.S.

Bank Trust Company, Nation Association, as trustee (the “Trustee”).

The March 2030 Notes are senior unsecured obligations of the Company and do not bear regular interest.

The March 2030 Notes will mature on March 1, 2030, unless earlier repurchased, redeemed or converted in accordance with

The March 2030 Notes are convertible into shares of the Company’s common stock at an initial conversion rate of 38.5902 shares per one thousand dollar principal amount of March 2030 Notes, which represents an initial conversion price of approximately $ 25.91 per share of common stock.

The conversion rate is subject to customary anti-dilution adjustments.

In addition, following certain events that occur prior to the maturity date or if the Company delivers a notice of redemption, the Company will increase the conversion rate for a holder who elects to convert its March 2030 Notes in connection with such corporate event or notice of redemption, as the case may be, in certain circumstances as provided by the Indenture.

Prior to December 1, 2029, the March 2030 Notes are convertible only upon the occurrence of certain events.

On or after December 1, 2029 until the close of business on the second scheduled trading day immediately preceding the maturity date of the March 2030 Notes, holders may convert the March 2030 Notes at any time.

Upon conversion of the March 2030 Notes, the Company will pay or deliver, as the case may be, cash, shares of the Company’s common stock or a combination of cash and shares of common stock, at the Company’s election.

Prior to March 5, 2028, the Company may not redeem the March 2030 Notes.

The Company may redeem for cash all or any portion of the March 2030 Notes, at its option, on or after March 5, 2028, if the last reported sale price of the Company’s common stock has been at least 130 % of the conversion price then in effect for at least 20 trading days, whether or not consecutive, including the trading day immediately preceding the date on which the Company provides a notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption.

The redemption price will be equal to 100 % of the principal amount of the March 2030 Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.

Holders have the right to require the Company to repurchase for cash all or any portion of their March 2030 Notes on December 1, 2027 at a repurchase price equal to 100 % of the principal amount of the March 2030 Notes to be repurchased, plus any accrued and unpaid interest to, but excluding the repurchase date.

In addition, if the Company undergoes a “fundamental change,” as defined in the Indenture, prior to maturity, subject to certain conditions, holders may require the Company to repurchase for cash all or any portion of their March 2030 Notes at a fundamental change repurchase price equal to 100 % of the principal amount of the March 2030 Notes to be repurchased, plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date.

The Indenture contains customary terms and covenants, including that upon certain events of default occurring and continuing, either the Trustee or the holders of at least 25 % in principal amount of the outstanding March 2030 Notes may declare 100 % of the principal of, and accrued and unpaid special interest, if any, on, all the March 2030 Notes to be due and payable.

Issuance of the September 2031 Notes

On August 14, 2024, the Company issued $ 250.0 million principal of 2.125 % Convertible Senior Notes due 2031.

In addition, on August 14, 2024, the initial purchasers of the September 2031 Notes purchased an additional $ 50.0 million principal of September 2031 Notes for an aggregate principal amount of $ 300.0 million.

The September 2031 Notes were issued pursuant to, and are governed by, an indenture (the “Indenture”) with respect to the September 2031 Notes between the Company and the U.S.

Bank Trust Company, National Association, as trustee (the “Trustee”).

The September 2031 Notes are senior unsecured obligations of the Company and bear interest at a rate of 2.125 % per annum, payable semi-annually in arrears on March 1 and September 1 of each year, beginning on March 1 , 2025.

The September 2031 Notes will mature on September 1, 2031, unless earlier repurchased, redeemed or converted in accordance with their terms.

The September 2031 Notes are convertible into shares of the Company’s common stock at an initial conversion rate of 52.9451 shares per one thousand dollar principal amount of September 2031 Notes, which represents an initial conversion price of approximately $ 18.89 per share of common stock.

The conversion rate is subject to customary anti-dilution adjustments.

In addition, following certain events that occur prior to the maturity date or if the Company delivers a notice of redemption, the Company will increase the conversion rate for a holder who elects to convert its September 2031 Notes in connection with such corporate event or notice of redemption, as the case may be, in certain circumstances as provided by the Indenture.

Prior to March 1, 2031, the September 2031 Notes are convertible only upon the occurrence of certain events.

On or after March 1, 2031 until the close of business on the second scheduled trading day immediately preceding the maturity date of the September 2031 Notes, holders may convert the September 2031 Notes at any time.

Upon conversion of the September 2031 Notes, the Company will pay or deliver, as the case may be, cash, shares of the Company’s common stock or a combination of cash and shares of common stock, at the Company’s election.

Prior to September 6, 2028, the Company may not redeem the September 2031 Notes.

The Company may redeem for cash all or any portion of the September 2031 Notes, at its option, on or after September 6, 2028, if the last reported sale price of the Company’s common stock has been at least 130 % of the conversion price then in effect for at least 20 trading days, whether or not consecutive, including the trading day immediately preceding the date on which the Company provides a notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption.

The redemption price will be equal to 100 % of the principal amount of the September 2031 Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.

Holders have the right to require the Company to repurchase for cash all or any portion of their September 2031 Notes on March 1, 2029 at a repurchase price equal to 100 % of the principal amount of the September 2031 Notes to be repurchased, plus accrued and unpaid interest to, but excluding the repurchase date.

In addition, if the Company undergoes a “fundamental change,” as defined in the Indenture, prior to the maturity, subject to certain conditions, holders may require the Company to repurchase for cash all or any portion of their September 2031 Notes at a fundamental change repurchase price equal to 100 % of the principal amount of the September 2031 Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date.

The Indenture contains customary terms and covenants, including that upon certain events of default occurring and continuing, either the Trustee or the holders of at least 25 % in principal amount of the outstanding September 2031 Notes may declare 100 % of the principal of, and accrued and unpaid special interest, if any, on, all the September 2031 Notes to be due and payable.

December 2026 Notes Partial Extinguishment of Debt

On December 4, 2024, in connection with the issuance of the June 2031 Notes, the Company entered into a privately negotiated exchange agreement with certain holders of its December 2026 Notes to repurchase approximately $ 51.2 million principal amount of a portion of the December 2026 Notes.

Due to the additional of a substantive conversion feature, the Company determined that the exchange was an extinguishment of debt.

The Company measured a $ 2.4 million gain on extinguishment of debt based on the carrying value of the December 2026 Notes, cash paid and related transactions costs on the Consolidated Statements of Operations.

On November 20, 2024, in connection with the issuance of the March 2030 Notes, the Company entered into a privately negotiated exchange agreement with certain holders of its December 2026 Notes to repurchase approximately $ 212.0 million principal amount of a portion of the December 2026 Notes.

Due to the addition of a substantive conversion feature, the Company determined that the exchange was an extinguishment of debt.

The Company measured the gain on extinguishment of debt based on the carrying value of the Notes, the fair value of the Company’s common stock issued in the exchange and related transaction costs.

The Company recorded a gain on the exchange of Notes for the Company’s common stock in the amount of $ 82.6 million to “Net gain from extinguishment of debt” on the Consolidated Statements of Comprehensive Income (Loss).

The Company measured a $ 10.8 million gain on extinguishment of debt based on the carrying value of the December 2026 Notes, cash paid and related transaction costs on the Consolidated Statements of Operations.

In September 2023, the Company entered into privately negotiated exchange agreements with certain holders of its December 2026 Notes.

In total, the Company exchanged $ 416.8 million principal amount of December 2026 Notes for an aggregate 31,722,417 shares of Company common stock.

Due to the addition of a substantive conversion feature, the Company determined that the exchange was an extinguishment of debt.

The Company measured an $ 82.6 million gain on extinguishment of debt based on the carrying value of the December 2026 Notes, the fair value of the Company’s common stock issued in the exchange and related transaction costs on the Consolidated Statements of Operations.

The Company is permitted and may seek to repurchase additional notes prior to the maturity date, whether through privately negotiated purchases, open market purchases, or otherwise.

As of December 31, 2023 and December 31, 2022, Notes outstanding, net of unamortized discounts of approximately $ 5.1 million and $ 15.2 million, respectively, were $ 325.7 million and $ 732.3 million, respectively.

Term Loan and RLOC facilities

On October 1, 2021, the Company entered into a Revolving Credit and Security Agreement with Silvergate Bank pursuant to which Silvergate agreed to loan the Company up to $ 100.0 million on a revolving basis.

On July 28, 2022, the Company entered into a new Revolving Credit and Security Agreement (the “Agreement” or “RLOC”) with Silvergate Bank (the “Bank”) pursuant to which Silvergate agreed to loan the Company up to $ 100.0 million on a revolving basis pursuant to the terms of the Agreement.

This facility refinanced and replaced an existing $ 100.0 million facility the Company had in place with the Bank.

On the same date the Company also entered into a $ 100.0 million principal term loan facility (the “Term Loan”).

On February 6, 2023, the Company provided Silvergate Bank with the required 30 days’ 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 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 and the Company recorded a loss in the amount of $ 0.3 million to “Net gain from extinguishment of debt” on the Consolidated Statements of Comprehensive Income (Loss).

Line of Credit

In October of 2024, the Company secured line of credits (collectively, the “Line of credit”), with two counterparties for a total of $ 200.0 million, collateralized by 4,499 bitcoin.

The Line of credit, as amended in February 2025, bears interest rates ranging from 10.5 % to 11.5 % per annum and have maturity dates beginning in 2026.

The Line of credit automatically renews annually unless otherwise terminated by the Company.

As of December 31, 2024, it is the Company’s intent to maintain the amounts outstanding during the next year.

The Company drew $ 200.0 million from the Line of credit in October 2024 and concurrently transferred bitcoin to the counterparties as collateral at a fair value of $ 284.8 million.

As of December 31, 2024, the outstanding balance on the Line of credit was $ 200.0 million, and 2,997 bitcoin remained collateralized.

The following table summarizes the Company’s repayments due on the Convertible Notes and the Line of credit:

(in thousands)

Year Remaining Payments

Thereafter 2,225,000

Total $ 2,492,492

NOTE 18 – LEASES

In February 2016, the FASB issued ASU No.

2016-02 - Leases (“ASC 842”) related to the accounting for leases.

ASC 842 establishes a right-of-use (“ROU”) model, that requires a lessee to record a ROU asset and a lease liability on the Consolidated Balance Sheets for all leases with terms longer than 12 months.

Leases will be classified as either finance or operating, with classification affecting the expense recognition in the Consolidated Statements of Comprehensive Income (Loss).

Effective January 1, 2019, the Company adopted ASC 842.

The Company leases office space in the United States under operating lease agreements.

The Company also entered into an arrangement with Applied Blockchain for the use of energized cryptocurrency mining facilities under which the Company pays for electricity per megawatt based on usage.

As of December 31, 2024 the Company had operating and finance leases primarily for office space, mining facilities and land in the United States.

The Company had an arrangement with Applied Digital Corporation for the use of energized cryptocurrency mining facilities under which the Company pays for electricity per megawatt based on usage.

The Company has determined that it has embedded operating leases at two of the facilities governed by this arrangement that commenced in January and March 2023, and has elected not to separate lease and non-lease components.

Payments made for these two operating leases are entirely variable and are based on usage of electricity, and the Company therefore does not record a ROU asset or lease liability associated with the leases.

Variable lease cost during the year ended December 31, 2023 are disclosed

in the table below.

Office space and mining facilities comprise the Company’s material underlying asset class under operating lease agreements.

The Company has no material finance leases.

As of December 31, 2023, the Company’s ROU assets and total lease liabilities were $ 0.4 million and $ 0.5 million, respectively.

As of December 31, 2022, the Company’s ROU assets and total lease liabilities were $ 1.3 million and $ 1.3 million, respectively.

The Company has amortized the right-of-use assets totaling $ 0.3 million and $ 0.1 million for the year ended December 31, 2023 and 2022, respectively.

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

The Company’s total lease expense is comprised of the following:

Payment for these two operating leases are entirely variable and are based on usage of electricity, and expensed as incurred.

The Company has amortized the ROU assets totaling $ 0.8 million and $ 0.3 million for the year ended December 31, 2024 and 2023, respectively.

The following table presents the assets and liabilities related to the Company’s operating and finance leases as of December 31, 2024 and 2023:

(in thousands)

December 31, 2024 December 31, 2023

Balance Sheet Classification

Operating lease ROU assets

Operating lease right-of-use assets $ 16,874 $ 443

Finance lease ROU assets

Property and equipment, net 2,877 —

Total ROU assets

$ 19,751 $ 443

Current portion:

Operating lease liabilities

Operating lease liabilities, current portion $ 239 $ 124

Finance lease liability

Finance lease liability, current portion 168 —

Long-term portion:

Operating lease liabilities Operating lease liabilities, net of current portion 22,977 354

Finance lease liability Finance lease liability, net of current portion 3,709 —

Total lease liabilities $ 27,093 $ 478

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

The Company’s total lease expenses are comprised of the following:

For the Year Ended December 31,

(in thousands) 2024 2023 2022

Operating leases

Operating lease cost $ 838 $ 315 $ 327

Operating lease expense 315 327 —

Finance lease cost:

Amortization of ROU asset (1)

Short-term lease rent expense 59 36 29

1 unchanged sentence

Total rent expense $ 108,339 $ 80,459 $ 356

(1) Amortization of finance lease ROU asset is included in “Cost of revenues - depreciation and amortization” on the Consolidated Statements of Operations.

Additional information regarding the Company’s leasing activities is as follows:

2 unchanged sentences

Operating cash flows from operating leases $ 629 $ ( 32 ) $ 67

Weighted-average remaining lease term – operating leases 3.2 3.9 0

Weighted-average discount rate – operating leases 5 % 5 % — %

The following table presents the Company’s future minimum operating lease payments as of December 31, 2023:

Financing cash flows from finance lease $ 163 $ — $ —

Weighted-average remaining lease term (in years):

Operating leases 9.1 3.2 3.9

Finance lease 96.3 — —

Weighted-average discount rate:

Operating leases 7.0 % 5.0 % 5.0 %

Finance lease 7.2 % — % — %

The following table presents the Company’s future minimum lease payments as of December 31, 2024:

(in thousands)

Year Operating Leases Finance Lease

2025 $ 1,855 $ 168

2026 2,478 173

2027 4,233 178

2028 4,180 183

2029 3,993 189

Thereafter 17,433 88,907

Total 34,172 89,798

Imputed interest ( 10,956 ) ( 85,921 )

Present value of lease liability

$ 23,216 $ 3,877

NOTE 19 - LEGAL PROCEEDINGS

The Company, and its subsidiaries, from time to time may be subject to various claims, lawsuits and legal proceedings that arise from the ordinary course of business.

In accordance with ASC 450 - Contingencies , if a loss contingency associated with the following legal matters are probable to be incurred and the amount of loss can be reasonably estimated, an accrual is recorded on the Consolidated Balance Sheets.

As of December 31, 2024, the Company has determined that the liabilities associated with certain litigation matters are not expected to have a material impact on the Company’s Financial Statements.

The Company will continue to monitor each related legal issue and adjust accruals as new information and developments occur.

Compute North Bankruptcy

17 unchanged sentences

At this time, the Company cannot predict the quantum of its potential recovery on account of its allowed general unsecured claim and preferred equity interests or the timing of when it would receive any distributions under the Plan on account of its claims and interests.

On March 30, 2023, a putative class action complaint was filed in the United States District Court for the District of Nevada, against the Company and present and former senior management, alleging claims under Section 10(b) and 20(a) of the Exchange Act arising out of the Company’s announcement of accounting restatements on February 28, 2023.

On March 29, 2024, the court appointed lead plaintiffs and counsel.

On June 4, 2024, lead plaintiffs filed an amended class action complaint, styled as Langer et al.

Marathon et al .

The allegations in the amended class action complaint are substantially similar to those in the March 30, 2023 putative class action complaint.

On August 5, 2024, the defendants moved to dismiss the amended class action complaint.

On December 6, 2024, the motion to dismiss the amended class action complaint was fully briefed.

On March 3, 2025, the United States District Court for the District of Nevada will hear the Company’s motion to dismiss the second amended class action complaint.

Derivative Complaints

On 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 (the “Board”) and senior management.

The complaint is based on allegations substantially similar to the allegations in the December 2021 putative class action complaint, related to the Company’s disclosure of an SEC investigation the Company previously made on November 15, 2021.

On March 4, 2022, the Company was served the complaint.

On April 4, 2022, the defendants moved to dismiss the complaint.

On May 5, 2022, a second 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 and senior management.

The second shareholder derivative complaint is based on allegations substantially similar to the allegations in the February 18, 2022 derivative complaint.

On May 11, 2022, the defendants moved to dismiss the second shareholder derivative complaint.

On June 1, 2022, the Court entered an order consolidating the two derivative actions.

A June 13, 2022 scheduling order provided for plaintiffs to file a consolidated complaint and for renewed motions to dismiss the consolidated shareholder derivative complaint.

On November 22, 2022, before a consolidated complaint was due, plaintiffs voluntarily dismissed both actions without prejudice.

On November 23, 2022, both actions were closed.

On June 22, 2023, a shareholder derivative complaint was filed in the Circuit Court of the 17th Judicial Circuit for Broward County, Florida, against current members of the Company’s Board and senior management, alleging claims for breach of fiduciary duty and unjust enrichment based on allegations substantially similar to the allegations in the March 30, 2023 putative class action complaint.

On July 8, 2023, a second 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 and senior management, alleging claims under Sections 14(a), 10(b), and 21D of the Securities Exchange Act of 1943 (the “Exchange Act”), and for breach of fiduciary duty, unjust enrichment, and waste of corporate assets, based on allegations substantially similar to the allegations in the March 30, 2023 putative class action complaint.

On July 12, 2023, a third 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 and senior management, alleging claims under Section 14(a) of the Exchange Act and for breach of fiduciary duty, based on allegations substantially similar to the allegations in the March 30, 2023 putative class action complaint.

On July 13, 2023, a fourth shareholder derivative complaint was filed in the Circuit Court of the 17th Judicial Circuit for Broward County, Florida, against current members of the Company’s Board and senior management,

alleging claims for breach of fiduciary duty, unjust enrichment, and waste of corporate assets, based on allegations substantially similar to the allegations in the March 30, 2023 putative class action complaint.

On July 8, 2023, a second 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 and senior management, alleging claims under Sections 14(a), 10(b), and 21D of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and for breach of fiduciary duty, unjust enrichment, and waste of corporate assets, based on allegations substantially similar to the allegations in the March 30, 2023 putative class action complaint in Moreno .

On July 13, 2023, a fourth shareholder derivative complaint was filed in the Circuit Court of the 17th Judicial Circuit for Broward County, Florida (together with the complaint filed on June 22, 2023, the “Florida Derivative Actions”), against current members of the Company’s Board and senior management, alleging claims for breach of fiduciary duty, unjust enrichment, and waste of corporate assets, based on allegations substantially similar to the allegations in the March 30, 2023 putative class action complaint in Moreno .

On August 14, 2023, the two derivative actions pending in the United States District Court for the District of Nevada were consolidated (the “Nevada Derivative Action”).

On April 1, 2024, the United States District Court for the District of Nevada appointed co-lead counsel for plaintiffs in the Nevada Derivative Action.

On June 25, 2024, plaintiffs filed an amended consolidated complaint alleging breaches of fiduciary duties, unjust enrichment, waste of corporate assets, claims under Section 14(a) of the Exchange Act, and for contribution under Sections 10(b) and 21D of the Exchange Act.

On August 9, 2024, the defendants moved to dismiss the amended complaint.

On October 16, 2023, the parties to the derivative actions pending in the Circuit Court of the 17th Judicial Circuit for Broward County, Florida filed an agreed order to stay both actions pending completion of the Nevada Derivative Action.

Putative Class Action Complaint

The defendants’ time to respond has been extended until after the appointment of a lead plaintiff.

To date, no lead plaintiff has been appointed.

On July 25, 2024, the Florida Derivative Actions were administratively closed.

On November 7, 2024, the motion to dismiss the amended complaint was fully briefed.

On February 20, 2025, the United States District Court for the District of Nevada heard the Company’s motion to dismiss the amended complaint and, while granting the Company motion to dismiss, the court also granted the plaintiff thirty days to amend its complaint to avoid a permanent dismissal.

Information Subpoena

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, Montana.

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

Such Current Report of Form 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(the “Securities Act”).

During the quarter ended September 30, 2021, the Company and certain of its executives received a subpoena to produce documents and communications concerning the Hardin, Montana data center facility described in the Company’s Current Report on Form 8-K dated October 13, 2020.

In conjunction therewith, the Company filed a Current Report on Form 8-K on October 13, 2020 disclosing that, pursuant to a Data Facility Services Agreement, the Company issued 6,000,000 shares of restricted common stock, in transactions exempt from registration under Section 4(a)(2) of the Securities Act of 1933, as amended.

During the quarter ended September 30, 2021, the Company and certain of its executives received a subpoena to produce documents and communications concerning the Hardin, Montana data center facility.

The Company received an additional subpoena from the SEC on April 10, 2023, relating to, among other things, transactions with related parties.

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The Company is cooperating with the SEC.

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

The Complaint alleges six causes of action against the Company:

1) Breach of Written Contract;

2) Breach of Implied Contract;

3) Quasi-Contract;

4) Services Rendered;

5) Intentional Interference with Prospective Economic Relations;

6) Negligent Interference with Prospective Economic Relations, which is the one plead against “all Defendants” and is most likely to involve later named defendants.

The claims arise from the same set of facts where Ho alleges that the Company profited from commercially-sensitive information he shared with the Company and then it refused to compensate him for his role in securing the acquisition of a supplier of energy for the Company.

On February 22, 2021, the Company responded to the Complaint with a general denial and the assertion of applicable affirmative defenses.

Then, on February 25, 2021, the Company removed the action to the United States District Court in the Central District of California, where the action remains pending.

The Company filed a motion for summary judgment/adjudication of all causes of action.

On February 11, 2022, the Court granted the motion and dismissed Ho’s 2nd, 5th and 6th causes of action.

Discovery is substantially closed.

The Court held a pre-trial conference on February 24, 2022, where it vacated the March 3, 2022 trial date and ordered the parties to meet and confer on a new trial date.

The Court discussed the various theories of damages maintained by the parties.

In its ruling on the summary judgment motion and at the pre-trial conference on February 24, 2022, the Court noted that a jury is more likely to accept $ 0.2 million as an appropriate damages amount if liability is found, as opposed to the various theories espoused by Ho that result in multi-million-dollar recoveries.

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

however, after consulting legal counsel, the Company is confident that it will prevail in this litigation, since it did not have a contract with Mr.

Ho and he did not disclose any commercially-sensitive information under any mutual

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

The trial is likely to commence on or around April 8, 2024.

On January 14, 2021, plaintiff Michael Ho (“Ho”) filed a civil complaint (the “Complaint”) in which he alleged, among other things, that the Company breached the terms of a non-disclosure agreement, profited from commercially sensitive information he shared with the Company, and refused to compensate him for his role in securing the Company’s acquisition of an energy supplier.

The Complaint initially alleged six causes of action:

(1) breach of written contract, (2) breach of implied contract, (3) quasi-contract, (4) services rendered, (5) intentional interference with prospective economic relations, and (6) negligent interference with prospective economic relations.

On February 22, 2021, the Company responded to the Complaint with a general denial of the claims and asserted certain affirmative defenses.

On February 25, 2021, the Company removed the action to the United States District Court in the Central District of California (the “Court”).

The Company subsequently filed a motion for summary judgment with respect to each of the causes of action.

As a result of the Court’s summary judgment ruling and Ho’s voluntary dismissal of certain claims, the only remaining cause of action at the time of verdict was breach of written contract.

On July 8, 2024, the Court commenced a jury trial with respect to the sole remaining claim.

On July 18, 2024, the jury determined that the Company had breached the non-disclosure agreement and returned a verdict in the amount of $ 138.8 million.

On September 18, 2024, the Court entered a judgment of the same amount, plus post-judgment interest.

The Company has not paid any portion of the award.

On October 16, 2024, the Company filed a renewed motion for judgment as a matter of law (or in the alternative for a new trial and remittitur), which seeks to overturn, or at a minimum significantly reduce, the damage award.

Also on October 16, 2024, the Company filed a motion to correct the post-judgment interest rate set forth in the judgment, and Ho filed a motion requesting an award of pre-judgment interest.

In the fourth quarter of 2024, the Company acquired a surety bond for the amount owing.

Company intends to defend its positions vigorously and assert its various legal arguments to challenge both the verdict and the amount of the award.

The Court has scheduled a hearing on March 28, 2025 related to the aforementioned motions filed by the Company and Ho.

NOTE 20 - RELATED PARTY TRANSACTIONS

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During September 2023, the Company entered into an agreement with Auradine to secure certain rights to future purchases by the Company from Auradine for which the Company paid $ 15.0 million.

Said Ouissal, a director of the Company, currently owns approximately 5 % of the issued and outstanding shares of Auradine, and Fred Thiel, the Company’s Chairman and CEO, is a member of Auradine’s Board of Directors.

NOTE 18 – QUARTERLY FINANCIAL DATA (UNAUDITED)

The following table presents summarized unaudited quarterly financial data from the Consolidated Statements of Comprehensive Income (Loss) for each of the quarters in the periods ended December 31, 2023, based on the Company’s early adoption of ASU 2023-08, as described in Note 4 – Digital Assets.

The operating results for any quarter are not necessarily indicative of the results for any subsequent quarter.

Basic and diluted net income (loss) per share of common stock calculations for each quarter is based on the weighted average diluted shares outstanding for that quarter and may not sum to the full year total amount presented on our Consolidated Statements of Comprehensive Income (Loss).

(in thousands, except per share data) March 31, June 30, September 30, December 31,

Total revenues $ 51,132 $ 81,759 $ 97,849 $ 156,768

Total margin (total revenues less total cost of revenues) 22 ( 10,738 ) ( 15,327 ) 10,700

Operating income (loss) 122,076 ( 6,068 ) ( 80,160 ) 185,063

Net income (loss) 118,699 ( 8,962 ) ( 390 ) 151,826

Net income (loss) per share of common stock - basic 0.75 ( 0.07 ) — 0.67

Net income (loss) per share of common stock - diluted 0.72 ( 0.05 ) ( 0.34 ) 0.66

Additionally, the following table presents summarized unaudited quarterly financial data from the Consolidated Statements of Comprehensive Loss for each of the quarters in the periods ended December 31, 2022, based on the Company’s voluntary change in accounting principle from LIFO to FIFO.

The operating results for any quarter are not necessarily indicative of the results for any subsequent quarter.

Basic and diluted net loss per share calculations for each quarter is based on the weighted average diluted shares outstanding for that quarter and may not sum to the full year total amount presented on our Consolidated Statements of Comprehensive Loss.

(in thousands, except per share data)

September 30,

Total revenues

$ 51,723 $ 24,923 $ 12,690 $ 28,417

Total margin (total revenues less total cost of revenues)

25,324 ( 16,473 ) ( 27,378 ) ( 15,144 )

Operating loss

( 20,216 ) ( 198,151 ) ( 44,025 ) ( 410,925 )

( 17,109 ) ( 212,626 ) ( 72,462 ) ( 391,598 )

Net loss per share - basic and diluted:

( 0.17 ) ( 1.94 ) ( 0.62 ) ( 3.12 )

During the third quarter of 2024, the Company purchased additional shares of Auradine preferred stock with a purchase price of $ 0.8 million, bringing the Company’s total investment holdings in Auradine to $ 50.7 million based upon previous purchases of additional preferred stock and a SAFE instrument.

In addition, during the year ended December 31, 2024, the Company made advances of $ 84.5 million for future purchases.

As of December 31, 2024 total advances to Auradine, net of property and equipment placed into service, was $ 40.7 million.

The Company holds one seat on Auradine’s Board of Directors.

NOTE 21 – SUPPLEMENTAL CONSOLIDATED FINANCIAL INFORMATION

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2024 2023 2022

Cash and cash equivalents

$ 391,771 $ 357,313 $ 103,705

Restricted cash

12,000 — 8,800

Total cash, cash equivalents and restricted cash

$ 403,771 $ 357,313 $ 112,505

Supplemental information:

Cash paid during the year for:

Income taxes $ 723 $ 7 $ —

Interest 7,392 11,432 —

Cash paid for income taxes

$ 1,148 $ 723 $ 7

Cash paid for interest

678 7,392 11,432

Supplemental schedule of non-cash investing and financing activities:

Series A Preferred Stock accretion to redemption value $ — $ 2,121 $ —

Operating lease assets obtained in exchange for new operating lease liabilities — — 1,539

Collection of loan denominated in Bitcoin — — 27,784

Issuance of loan denominated in Bitcoin — — ( 27,784 )

Digital currencies transferred from fund — 137,844 —

Digital assets transferred to digital assets - receivable, net

668,640 — 137,844

Reclassifications from advances to vendor to property and equipment upon receipt of equipment 784,155 551,418 337,485

Reclassifications from advances to vendor to other assets 4,016 — —

Common stock issued for service and license agreements — — 4,577

Warrants exercised into common stock — — 1,371

Exchange of convertible notes for common stock — 318,771 —

Dividends received from equity method investment

Series A preferred stock accretion to redemption value

29,715 2,161 —

NOTE 22 – SUBSEQUENT EVENTS

On January 12, 2024, the Company, through its wholly owned subsidiary MARA USA Corporation, completed its acquisition of 100 % of the issued and outstanding equity interests (the “Transaction”) of GC Data Center Equity Holdings, LLC, pursuant to which the Company acquired two operational bitcoin mining sites, for an aggregate 390 megawatts of operational capacity for $ 179.0 million cash consideration, subject to customary working capital adjustments.

In February 2024, we intend to commence the 2024 ATM pursuant to the ATM Agreement, under which we may offer and sell shares of our common stock from time to time through Wainwright having an aggregate offering price of up to $ 1.5 billion.

On January 8, 2025, the Company designated 13 million shares of its undesignated preferred stock as Series X Preferred Stock, par value $ 0.0001 per share (the “Series X Preferred Stock”), and issued all 13 million shares of the Series X Preferred Stock to the Company’s lead independent director, in a private placement, for an aggregate purchase price of $ 1,300 , and cancelled on February 21, 2025.

On February 19, 2025, the Company held a special meeting of stockholders that approved an amendment to our Restated Article of Incorporation to increase the number of shares of common stock authorized from 500,000,000 shares to 800,000,000 shares.

On February 14, 2025, the Company completed an acquisition with Great Plains Wind Park Holdings, LLC, pursuant to which the Company acquired a wind farm located in Hansford County, Texas with 114 megawatts of nameplate wind capacity for a $ 50.0 million cash consideration, subject to customary working capital adjustments.

Subsequent to December 31, 2024, the Company issued an aggregate 5,428,548 shares of common stock under the 2024 ATM, concluding the offering.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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 8. Financial Statements and Supplementary Data