What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-02-28 compared with 2023-03-16 · 912 added, 2527 removed, 232 unchanged (94% of the section changed)

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

DIGITAL HOLDINGS, INC.

FINANCIAL STATEMENTS

to Consolidated Financial Statements

REPORTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMS (PCAOB ID No.

CONSOLIDATED BALANCE SHEETS (Restated)

CONSOLIDATED STATEMENTS OF OPERATIONS (Restated)

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

CONSOLIDATED STATEMENTS OF CASH FLOWS (Restated)

FINANCIAL STATEMENTS AND SUPPLEMENTARY

Index to Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm (PCAOB ID No.

Consolidated Balance Sheets as of December 31, 2023 and 2022

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 Cash Flows for the years ended December 31, 2023, 2022 and 2021

Notes to the Consolidated Financial Statements

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMS

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

& Subsidiaries

on the Financial Statements

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

& Subsidiaries (the Company) as of December

31, 2020, and the related consolidated statements of operations, stockholders’ equity, and cash flows for the period in the year

ended December 31, 2020, and the related notes (collectively referred to as the consolidated financial statements).

In our opinion, the

consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31,

2020, and the consolidated results of its operations and its cash flows for the period in the year ended December 31, 2020, in conformity

with accounting principles generally accepted in the United States of America.

consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion

on the Company’s consolidated financial statements based on our audit.

We are a public accounting firm registered with the Public

Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance

with the U.S.

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.

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):

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

Basis for Opinion

These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain

reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audit,

we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion

on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or

fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding

the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles used and significant

estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provides

a reasonable basis for our opinion.

Audit Matters:

audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be

communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements, and

(2) involved our especially challenging, subjective, or complex judgments.

determined that there are no critical audit matters.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(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 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

As disclosed in Note 3 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.

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 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 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.

/s/ Marcum LLP

We have served as the Company’s auditor since 2021 .

Las Vegas, NV

March 16, 2021

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

the Shareholders and Board of Directors of Marathon Digital Holdings, Inc.

on the Financial Statements

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

(the “Company”) as of December

31, 2022, and 2021, the related consolidated statements of operations, stockholders’ equity and cash flows for each of the two

years in the period ended December 31, 2022, 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, 2022, and 2021, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2022,

in conformity with accounting principles generally accepted in the United States of America.

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, 2022, 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 [·], 2023 , expressed an adverse opinion on the effectiveness of the Company’s internal control over financial

reporting because of the existence of material weaknesses.

of Previously Issued Financial Statements

discussed in Note 2 to the financial statements, the Company has restated its financial statements as of December 31, 2021 and for the

year then ended to correct certain misstatements.

in Accounting Principle

discussed in Note 3 to the financial statements, the Company retrospectively changed its accounting for crypto lending arrangements.

financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s

financial statements based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent

with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities

and Exchange Commission and the PCAOB.

conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain

reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud,

and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts

and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates

made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a

reasonable basis for our opinion.

Audit Matters

critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated

or required to be communicated to the audit committee and that:

(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 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.

disclosed in Note 2 to the financial statements, the Company recognizes revenue in accordance with ASC 606, Revenue from Contracts

with Customers .

The Company provides computing power in crypto asset transaction verification services to the blockchain network.

The transaction consideration received by the Company, if any, is a non-cash consideration, which the Company measures at fair value

on the date received.

principal consideration for our determination that performing procedures related to revenue recognition is a critical audit matter is

due to the complexities involved in auditing completeness and occurrence of the revenue recognized by the Company particularly in light

of material weakness identified in the design and effectiveness of certain internal controls over the IT environment for certain financially

relevant systems.

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

These procedures included, among others, (i) performing site visitations of the Company’s facility where the mining

hardware is located, which included an observation of the physical and environmental controls and mining equipment inventory, (ii) independently

confirming certain financial and performance data directly with the blockchain network, (iii) performing certain substantive analytical

procedures using hashing power data and electricity consumption data to determine the completeness and occurrence of digital assets rewarded

to the Company as consideration for services rendered, (iv) independently confirming the completeness and accuracy of digital assets

rewarded to the Company as consideration of providing computing power to third-party mining pools, and (v) confirming the digital asset

balances directly with the custodian of the Company’s wallets.

of Property and Equipment and Advances to Vendors

disclosed in Note 4 to the financial statements, the Company impaired certain property and equipment and advances to vendors and recognized

a charge of approximately $332 million during the year ended December 31, 2022.

principal consideration for our determination that auditing impairment of property and equipment and advances to vendors is a critical

audit matter is due to the degree of complexity and judgment used by management in developing the fair value measurement, which led to

a high degree of audit judgment and subjectivity and significant effort in performing procedures relating to fair value measurement

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

These procedures included, among others, (i) evaluating the appropriateness of the method used by management to determine

the fair value of the asset group, (ii) evaluating the reasonableness of the assumptions used to estimate the fair value measurement

of each asset within the asset group;

and (iii) testing the completeness, accuracy and relevance of underlying data used in the impairment

have served as the Company’s auditor since 2021 .

DIGITAL HOLDINGS, INC.

Costa Mesa, CA

February 28, 2024

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

MARATHON DIGITAL HOLDINGS, INC.

AND SUBSIDIARIES

BALANCE SHEETS

December 31, 2021

CONSOLIDATED BALANCE SHEETS

December 31, December 31,

(in thousands, except share and per share data) 2023 2022

December 31, 2022

Current assets:

2 unchanged sentences

Digital assets 639,660 121,842

Digital assets held in Fund

Other receivable

Other receivables 2,091 18

Deposits 7,240 2,350

Prepaid expenses and other current assets 23,499 40,833

Total current assets 1,029,803 277,548

Other assets:

Property and equipment (net of accumulated depreciation of $ 16,622 and $ 21,313 , respectively)

Property and equipment, net 671,772 273,026

Advances to vendors 95,589 488,299

Investments 106,292 37,000

Long-term deposits 59,790 40,903

2 unchanged sentences

Digital assets, restricted — 68,875

Intangible assets (net of accumulated amortization of $ 280 at December 31, 2021)

Total other assets

Total long-term assets 961,170 917,696

TOTAL ASSETS $ 1,990,973 $ 1,195,244

LIABILITIES AND STOCKHOLDERS’ EQUITY

4 unchanged sentences

Operating lease liabilities 124 326

Current portion of accrued interest

Accrued interest 276 1,011

Total current liabilities 33,758 26,115

1 unchanged sentence

Notes payable 325,654 732,289

Term loan — 49,882

Operating lease liabilities 354 1,017

3 unchanged sentences

Stockholders’ Equity:

Preferred stock, 0.0001 par value, 50,000,000 shares authorized, no shares issued and outstanding at December 31, 2022 and December 31, 2021, respectively

Common stock, 0.0001 par value, 200,000,000 shares authorized;

145,565,916 and 102,733,273 issued and outstanding at December 31, 2022 and December 31, 2021, respectively

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

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

242,829,391 shares and 145,565,916 shares issued and outstanding at December 31, 2023 and December 31, 2022, respectively

Additional paid-in capital 2,183,537 1,226,267

Accumulated other comprehensive loss

Accumulated deficit ( 567,640 ) ( 840,341 )

1 unchanged sentence

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

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

DIGITAL HOLDINGS, INC.

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

MARATHON DIGITAL HOLDINGS, INC.

AND SUBSIDIARIES

STATEMENTS OF OTHER COMPREHENSIVE INCOME (LOSS)

(in thousands, except share and per share data)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Year Ended December 31,

8 unchanged sentences

General and administrative expenses ( 95,230 ) ( 56,739 ) ( 174,356 )

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

331,484 ( 14,460 ) 2,157

Legal reserves — ( 26,131 ) —

3 unchanged sentences

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

Realized and unrealized gains (losses) on digital assets loan receivable and

digital assets

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

Realized and unrealized gains (losses) on digital assets held within Investment Fund

Gains (losses) on digital assets held within investment fund

— ( 85,017 ) 74,696

Total operating expenses 236,254 ( 639,872 ) ( 119,755 )

Operating income (loss)

Other non-operating income (loss)

220,911 ( 673,543 ) ( 2,988 )

Net gain from extinguishment of debt

Loss on hedge instruments

( 17,421 ) — —

Equity in net earnings of unconsolidated affiliate ( 617 ) — —

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

Interest expense ( 10,350 ) ( 14,981 ) ( 1,569 )

Other non-operating income (loss)

2,809 1,283 ( 288 )

Income (loss) before income taxes

277,599 ( 718,254 ) ( 4,845 )

Income tax benefit (expense)

( 16,426 ) 24,232 ( 24,968 )

Net income (loss)

$ 261,173 $ ( 694,022 ) $ ( 29,813 )

Net loss per share, basic and diluted:

Weighted average shares outstanding, basic and diluted:

Series A preferred stock accretion to redemption value

( 2,121 ) — —

Net income (loss) attributable to common stockholders

$ 259,052 $ ( 694,022 ) $ ( 29,813 )

Net income (loss) per share of common stock - basic

$ 1.41 $ ( 6.12 ) $ ( 0.30 )

Weighted average shares of common stock - basic

183,855,570 113,467,837 99,337,587

Net income (loss) per share of common stock - diluted

$ 1.06 $ ( 6.12 ) $ ( 0.30 )

Weighted average shares of common stock - diluted

192,293,277 113,467,837 99,337,587

Other comprehensive income (loss)

Series A preferred stock accretion to redemption value

Foreign currency translation adjustments — — ( 451 )

1 unchanged sentence

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

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

DIGITAL HOLDINGS, INC.

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

MARATHON DIGITAL HOLDINGS, INC.

AND SUBSIDIARIES

STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands, except share and per share data)

Preferred Stock

Comprehensive

Stockholders’

(in thousands, except share and per share data)

Balance as of December 31, 2019

$ ( 105,608 )

Stock-based compensation

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

Common stock issued for purchase of mining servers

Common stock issued for note conversion

Common stock issued for long term service contract

Issue common stock and warrant for cash

Warrant exercised for cash

Options exercised for cash

Balance as of December 31, 2020

$ ( 116,056 )

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

4 unchanged sentences

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

Net loss (Restated)

Balance as of December 31, 2021 (Restated)

$ ( 153,603 )

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

Balance at December 31, 2021 102,733,273 $ 10 $ 835,694 $ ( 146,319 ) $ — $ 689,385

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

1 unchanged sentence

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

Balance as of December 31, 2022

$ ( 840,343 )

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

DIGITAL HOLDINGS, INC.

Net loss — — — ( 694,022 ) — ( 694,022 )

Balance at December 31, 2022 145,565,916 $ 15 $ 1,226,267 $ ( 840,341 ) $ — $ 385,941

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

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

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

Exchange of convertible notes for common stock 31,722,417 3 318,768 — — 318,771

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

Other — — — 45 — 45

Net income — — — 261,173 — 261,173

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

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

MARATHON DIGITAL HOLDINGS, INC.

AND SUBSIDIARIES

STATEMENTS OF CASH FLOWS

For the Years Ended December 31,

CONSOLIDATED STATEMENTS OF CASH FLOWS

Year Ended December 31,

(in thousands) 2023 2022 2021

CASH FLOWS FROM OPERATING ACTIVITIES

Adjustments to reconcile net loss to net cash used in operating activities:

Net income (loss)

$ 261,173 $ ( 694,022 ) $ ( 29,813 )

Adjustments to reconcile net income (loss) to net cash used in operating activities:

Depreciation and amortization 179,513 78,709 14,904

1 unchanged sentence

Gain on sale of equipment, net of disposals

— ( 83,879 ) —

Deferred tax expense (benefit)

Realized and unrealized gains (losses) on digital assets held within Investment Fund

Realized and unrealized gains (losses) on digital assets loan receivable and

digital assets

15,286 ( 24,968 ) 24,968

(Gains) losses on digital assets held within investment fund

— 85,017 ( 74,696 )

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

( 331,484 ) 14,460 ( 2,157 )

Impairment of digital assets — 182,891 22,252

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

Loss on hedge instruments

Stock-based compensation 32,644 24,595 160,786

Amortization of debt issuance costs 3,168 3,945 —

Equity in net earnings of unconsolidated affiliate 617 — —

Impairment of patents — 919 —

Impairment of assets related to vendor bankruptcy filing

Impairment of deposits due to vendor bankruptcy filing — 55,674 —

Gain on extinguishment of debt, net

( 82,267 ) — —

Other adjustments from operations, net 484 1,030 1,069

Changes in operating assets and liabilities:

Digital assets

Revenues from digital assets production ( 385,959 ) ( 117,747 ) ( 150,513 )

Deposits ( 23,777 ) ( 24,469 ) —

Prepaid expenses and other assets ( 1,881 ) ( 48,887 ) 987

3 unchanged sentences

Net cash used in operating activities

( 315,651 ) ( 176,478 ) ( 18,964 )

CASH FLOWS FROM INVESTING ACTIVITIES

2 unchanged sentences

Purchase of property and equipment ( 27,611 ) ( 41,108 ) ( 273,851 )

Sales of property and equipment

Sale of digital currencies

Sale of property and equipment — 178,371 —

Proceeds from sale of digital assets 264,945 — —

Payments on hedge settlements

( 2,004 ) — —

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

Investment in joint venture ( 71,795 ) — —

Purchase of equity investments — ( 44,000 ) ( 3,000 )

Deconsolidation of Investment Fund

Deconsolidation of fund — ( 500 ) —

Sale of digital assets in investment fund — 849 780

Net cash used in investing activities

Net cash provided by (used in) investing activities

4,595 ( 390,228 ) ( 891,136 )

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from issuance of common stock, net of issuance costs 608,365 361,486 312,196

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

Redemption of Series A preferred stock

( 15,750 ) — —

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

Proceeds received on issuance of note payable

Borrowings from revolving credit agreement

— 120,000 77,500

Repayments of revolving credit agreement

( 50,000 ) ( 120,000 ) ( 77,500 )

Value of shares withheld for taxes ( 380 ) ( 81 ) ( 4,714 )

1 unchanged sentence

Net cash provided by financing activities

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

555,864 410,655 1,037,333

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

244,808 ( 156,051 ) 127,233

Cash, cash equivalents and restricted cash — beginning of period 112,505 268,556 141,323

Cash, cash equivalents and restricted cash — end of period $ 357,313 $ 112,505 $ 268,556

Supplemental Information

Cash paid during the year for:

Supplemental schedule of non-cash investing and financing activities:

Receivable due to share issuance

Digital assets transferred from Investment Fund

Common stock issued for purchase of mining servers

Reduction of share commitment for purchase of mining servers

Common stock issued for note conversion

Warrants exercised into common stock

Operating lease assets obtained in exchange for new operating lease liabilities

Collection of loan denominated in Bitcoin

Issuance of loan denominated in Bitcoin

Reclassifications from advances to vendor to property and equipment upon receipt of equipment

Common stock issued for service and license agreements

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

DIGITAL HOLDINGS, INC.

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

MARATHON DIGITAL HOLDINGS, INC.

AND SUBSIDIARIES

to Consolidated Financial Statements

1 - ORGANIZATION AND DESCRIPTION OF BUSINESS

Company commenced mining bitcoin in 2018 and is solely focused on the mining of bitcoin and ancillary opportunities within the Bitcoin

ecosystem which is consistently evolving.

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,

2 – RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS

previously disclosed in the Current Report on Form 8-K filed by the Company with the Securities and Exchange Commission on February

28, 2023, certain of the Company’s previously filed interim unaudited and annual audited Consolidated Financial Statements

should no longer be relied upon and a restatement is required for these previously issued Consolidated Financial Statements.

The Consolidated Financial Statements for the year ended December 31, 2022 include restated Consolidated Financial Statements for the year ended December 31, 2021.

addition, we have restated our Unaudited Quarterly Financial Data for the interim periods within the years 2021 and 2022 as

presented in NOTE 16 – QUARTERLY FINANCIAL DATA (UNAUDITED) .

of financial information and prior periods presented was necessary to correct for the following:

(i) Revenue Recognition –

Principal versus Agent, (ii) Impairment of Digital Assets, (iii) NYDIG Digital Assets Fund III, LP – Consolidation Gross

versus Net Presentation, (iv) NYDIG Digital Assets Fund III, LP – Financial Statement Reclassification (v)

Disposal of Assets (vi) Other Adjustments, and (vii) the income tax adjustments due to the forementioned errors .

Recognition – Principal versus Agent

Company corrected its previous conclusion that as the operator of Marapool (“Operator”), third-party mining pool

participants (“pool participants”) are its customer.

The Company previously viewed such pool participants as principal

to the delivery of transaction verification services to the network and requester and therefore recognized revenue net of amount

remitted to pool participants’ pro rata entitlement to block rewards and transaction fees.

The Company has since corrected its

revenue recognition policy and concluded that the Company’s customers are the transaction requestor and the blockchain

network, and that the Company controls the transaction verification services as an Operator.

This results in recognition of all

transaction fees and block rewards earned from transaction verification services performed by the Company in its role as an

Operator of MaraPool as revenue from contracts with customers under Topic 606, with the portion of the transaction fees and block

rewards remitted to MaraPool participants as cost of revenues.

impacts of the Revenue Recognition – Principal versus Agent correction are as follows:

ERROR CORRECTION OF REVENUE RECOGNITION

(in thousands)

September 30,

Three months ended (unaudited)

(in thousands)

September 30,

Consolidated Statements of Comprehensive Income (Loss) Impact

Total revenues

Cost of revenues - energy, hosting and other

Net income (loss) impact

(in thousands)

September 30,

Three months ended (unaudited)

(in thousands)

September 30,

Consolidated Statements of Comprehensive Income (Loss) Impact

Total revenues

Cost of revenues - energy, hosting and other

Net income (loss) impact

of Digital Assets

The Company corrected its calculation of impairment on digital assets that used the U.S.

Dollar bitcoin spot rate at a standard cutoff

time instead of the lowest U.S.

Dollar bitcoin spot rate at any point in time during the day.

The Company’s correction of this calculation results in it

recognizing impairment in an amount by which the carrying value exceeds the fair value of the digital assets at any point in time during

impacts of the Impairment of Digital Assets correction are as follows:

ERROR CORRECTION OF DIGITAL ASSETS

As of (unaudited)

(in thousands)

March 31, 2022

June 30, 2022

September 30, 2022

December 31, 2022

Consolidated Balance Sheets Impact

Digital assets

Digital assets, restricted - Current assets

Digital assets, restricted - Other assets

(in thousands)

September 30,

Three months ended (unaudited)

(in thousands)

September 30,

Consolidated Statements of Comprehensive Income (Loss) Impact

Impairment of digital assets

Net income (loss) impact

of (unaudited)

Balance Sheets Impact

(in thousands)

September 30,

Three months ended (unaudited)

(in thousands)

September 30,

Consolidated Statements of Comprehensive Income (Loss) Impact

Impairment of digital assets

Net income (loss) impact

Digital Assets Fund III, LP – Consolidation Gross versus Net Presentation

accounted for its investment in the NYDIG Digital Assets Fund III, LP (“Fund”) at fair value with changes in fair value

recognized in net income, resulting in the recognition of the Fund’s assets net of liabilities, and unrealized and realized

gains net of expenses.

Management subsequently determined that the Company should have consolidated the Fund under the voting

interest model and therefore should have presented assets of the Fund, liabilities, gains, and expenses on a gross basis.

previously revised certain period amounts included in it’s Form 10-Q for interim period ended September 30, 2022 as stated

within NOTE 16 – QUARTERLY FINANCIAL DATA (UNAUDITED).

However, the error has been reflected throughout this document for

purposes of comparability within the restatement adjustments.

Digital Assets Fund III, LP – Financial Statement Reclassification

and unrealized gains (losses) on digital assets held in investment fund were incorrectly classified as other non-operating income.

reclassification was required to correctly classify realized and unrealized gains (losses) on digital assets held in investment fund

as operating income for all periods presented.

impacts of the Fund errors are as follows:

CORRECTION OF FUNDS

(in thousands)

March 31, 2022

June 30, 2022

September 30, 2022

December 31, 2022

As of (unaudited)

(in thousands)

March 31, 2022

June 30, 2022

September 30, 2022

December 31, 2022

Consolidated Balance Sheets Impact

Cash and cash equivalents

Digital assets held in Fund

Accrued expenses

(in thousands)

September 30,

Three months ended (unaudited)

(in thousands)

September 30,

Consolidated Statements of Comprehensive Income (Loss) Impact

General and administrative expenses

Realized and unrealized gains (losses) on digital assets held within Investment Fund

Change in fair value of digital assets held in Fund

Net income (loss) impact

(in thousands)

March 31, 2021

June 30, 2021

September 30, 2021

December 31, 2021

As of (unaudited)

(in thousands)

March 31, 2021

June 30, 2021

September 30, 2021

December 31, 2021

Consolidated Balance Sheets Impact

Cash and cash equivalents

Digital assets held in Fund

Accrued expenses

Three months ended (unaudited)

(in thousands)

September 30,

Consolidated Statements of Comprehensive Income (Loss) Impact

General and administrative expenses

Realized and unrealized gains (losses) on digital assets held within Investment Fund

Change in fair value of digital assets held in Fund

Net income (loss) impact

The Company identified an error in its calculation

on gain on sale of mining equipment due to exclusion of capitalized shipping and customs costs that should have been allocated to the

sold mining equipment.

This error if uncorrected would have resulted in an over-impairment of remaining mining equipment (not sold) when such mining equipment was subsequently

The impacts of this error are as follows:

ERROR CORRECTION OF DISPOSAL OF ASSETS

(in thousands)

March 31, 2022

June 30, 2022

September 30, 2022

December 31, 2022

As of (unaudited)

(in thousands)

March 31, 2022

June 30, 2022

September 30, 2022

December 31, 2022

Consolidated Balance Sheets Impact

Property and equipment, net

(in thousands)

September 30,

Three months ended (unaudited)

(in thousands)

September 30,

Consolidated Statements of Comprehensive Income (Loss) Impact

Gain on sale of equipment, net of disposals

Net income (loss) impact

Company corrected other errors relating to (i) accruals for legal expenses, (ii) valuation of bifurcated derivatives related to the

SAFE investments, (iii) accumulated comprehensive income and other income, and (iv) classification of prepaid expenses between

short-term and long-term, as follows:

ERROR CORRECTION OF OTHER ADJUSTMENTS

(in thousands)

March 31, 2022

June 30, 2022

September 30, 2022

December 31, 2022

As of (unaudited)

(in thousands)

March 31, 2022

June 30, 2022

September 30, 2022

December 31, 2022

Consolidated Balance Sheets Impact

Prepaid expenses and other current assets

Long term prepaids

Accrued expenses

Accumulated other comprehensive loss

(in thousands)

September 30,

Three months ended (unaudited)

(in thousands)

September 30,

Consolidated Statements of Comprehensive Income (Loss) Impact

General and administrative expenses

Other non-operating income (loss)

Net income (loss) impact

(in thousands)

March 31, 2022

June 30, 2022

September 30, 2022

December 31, 2022

As of (unaudited)

(in thousands)

March 31, 2021

June 30, 2021

September 30, 2021

December 31, 2021

Consolidated Balance Sheets Impact

Prepaid expenses and other current assets

Accounts payable

Accrued expenses

Accumulated other comprehensive loss

(in thousands)

September 30,

Three months ended (unaudited)

(in thousands)

March 31, 2021

September 30, 2021

December 31, 2021

Consolidated Statements of Comprehensive Income (Loss) Impact

General and administrative expenses

Net income (loss) impact

Foreign currency translation adjustments

Comprehensive income (loss)

Tax Adjustments

a result of the adjustments to the restated financial statements presented, our income tax expense decreased by approximately $ 781

thousand for the year ended December 31, 2021,

primarily due to changes in deferred taxes as a result of the cumulative impact of the restatement.

See NOTE 7 – INCOME TAXES ,

for additional details regarding income taxes.

CORRECTION OF INCOME TAX EFFECT

(in thousands)

March 31, 2022

June 30, 2022

September 30, 2022

December 31, 2022

As of (unaudited)

(in thousands)

March 31, 2022

June 30, 2022

September 30, 2022

December 31, 2022

Consolidated Balance Sheets Impact

Accrued expenses

Deferred tax liabilities

(in thousands)

September 30,

Three months ended (unaudited)

(in thousands)

March 31, 2022 (Restated)

2022 (Restated)

September 30, 2022 (Restated)

December 31, 2022

Consolidated Statements of Comprehensive Income (Loss) Impact

Income tax benefit (expense)

Net income (loss) impact

(in thousands)

March 31, 2021

June 30, 2021

September 30, 2021

December 31, 2021

As of (unaudited)

(in thousands)

March 31, 2021

June 30, 2021

September 30, 2021

December 31, 2021

Consolidated Balance Sheets Impact

Deferred tax liabilities

(in thousands)

September 30,

Three months ended (unaudited)

(in thousands)

March 31, 2021

September 30, 2021

December 31, 2021

Consolidated Statements of Comprehensive Income (Loss) Impact

Income tax benefit (expense)

Net income (loss) impact

Policy Adjustments

Company also recorded adjustments to the Consolidated Financial Statements relating to the full retrospective adoption of crypto loan

derecognition guidance issued by the SEC in December 2022, which includes considerations under ASU 2016-13, “Financial Instruments

- Credit Losses (ASC 326) Measurement of Credit Losses on Financial Instruments”.

See further discussion in NOTE 3 – SUMMARY

OF SIGNIFICANT ACCOUNTING POLICIES and NOTE 5 – DIGITAL ASSET LOAN RECEIVABLE, NET OF ALLOWANCE .

Consolidated Financial Statements

the restated year ended December 31, 2021, the following tables shows the effects, by financial statement line item, on the

Company’s Consolidated Balance Sheets, Consolidated Statements of Other Comprehensive Income (Loss) and Consolidated Statements

of Cash Flows of:

1) the corrections as described above, and 2) the full retrospective adoption of crypto loan derecognition

guidance issued by the SEC in December 2022, which includes considerations under ASU 2016-13, “ Financial Instruments - Credit

Losses (ASC 326) Measurement of Credit Losses on Financial Instruments”.

SCHEDULE OF RESTATEMENTS

Consolidated Balance Sheets (in thousands)

Restatement Adjustments

Accounting Policy Adjustments

As of December 31, 2021

(in thousands)

Restatement Adjustments

Accounting Policy Adjustments

Current assets:

Cash and cash equivalents

Digital assets

Digital assets held in Fund

Other receivable

Digital assets, restricted

Prepaid expenses and other current assets

Total current assets

Other assets:

Property and equipment, net

Advances to vendors

Long term prepaids

Intangible assets, net

Total other assets

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable

Accrued expenses

Current portion of accrued interest

Total current liabilities

Long-term liabilities:

Notes payable

Deferred tax liabilities

Total long-term liabilities

Commitments and Contingencies

Stockholders’ Equity:

Preferred stock

Additional paid-in capital

Accumulated other comprehensive loss

Accumulated deficit

Total stockholders’ equity

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

Consolidated Statements of Other Comprehensive Income (Loss)

(in thousands, except share and per share data)

Restatement Adjustments

Accounting Policy Adjustments

Year ended December 31, 2021

(in thousands, except share and per share data)

Restatement Adjustments

Accounting Policy Adjustments

Total revenues

Costs and expenses

Cost of revenues

Cost of revenues - energy, hosting and other

Cost of revenues - depreciation and amortization

Total cost of revenues

Operating expenses

General and administrative expenses

Impairment of digital assets

Realized and unrealized gains (losses) on digital assets loan receivable and digital assets

Realized and unrealized gains (losses) on digital assets held within Investment Fund

Total operating expenses

Operating income (loss)

Change in fair value of digital assets held in Fund

Other non-operating income (loss)

Interest expense

Income (loss) before income taxes

Income tax benefit (expense)

Net income (loss)

Net loss per share, basic and diluted:

Weighted average shares outstanding, basic and diluted:

Other comprehensive income (loss)

Foreign currency translation adjustments

Comprehensive income (loss)

Consolidated Statements of Cash Flows (in thousands)

(in thousands, except share and per share data)

Restatement Adjustments

Accounting Policy Adjustments

Year ended December 31, 2021

(in thousands)

Restatement Adjustments

Accounting Policy Adjustments

CASH FLOWS FROM OPERATING ACTIVITIES

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization

Deferred tax expense (benefit)

Realized and unrealized losses (gains) on digital assets held within Investment Fund

Realized and unrealized gains (losses) on digital assets loan receivable and digital assets

Change in fair value of digital assets held in Investment Fund

Impairment of digital assets

Stock-based compensation

Other adjustments from operations, net

Changes in operating assets and liabilities:

Digital assets

Prepaid expenses and other assets

Accounts payable and accrued expenses

Accrued interest

Net cash used in operating activities

CASH FLOWS FROM INVESTING ACTIVITIES

Advances to vendors

Loan receivable

Purchase of property and equipment

Purchase of digital assets in Fund

Purchase of equity investments

Sale of digital assets in Fund

Net cash used in investing activities

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from issuance of common stock, net of issuance costs

Proceeds from issuance of convertible debt, net of issuance costs

Borrowings from revolving credit agreement

Repayments of revolving credit agreement

Value of shares withheld for taxes

Proceeds received on exercise of options and warrants

Net cash provided by financing activities

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

Cash, cash equivalents and restricted cash — beginning of period

Cash, cash equivalents and restricted cash — end of period

3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

of Presentation and Principles of Consolidation

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

Notes to Consolidated Financial Statements

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.

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.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation

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.

of Estimates and Assumptions

preparation of financial statements in conformity with US 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 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.

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.

Actual results could differ from those estimates.

Reclassifications

prior period amounts have been reclassified to conform to the current period presentation.

These reclassifications have no effect on

the reported financial position, results of operations, or cash flows.

Previously reported compensation and related taxes, consulting

fees, and professional fees have now been reclassified within general and administrative expenses.

In addition, previously reported change

in fair value of warrant liability and interest income have now been reclassified as other non-operating income and realized and unrealized

gains (losses) on digital assets held in investment fund has now been reclassified as operating income.

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 in assessing performance.

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

Certain prior period amounts have been reclassified to conform to the current period presentation.

These reclassifications have no effect on the reported financial position, results of operations, or cash flows.

The impact on any prior period disclosures were immaterial.

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 Company’s ASICs mining rigs are located in the United

States, and the Company has employees only in the United States and views its operations as one operating segment as the CODM reviews

financial information on a consolidated basis in making decisions regarding resource allocations and assessing performance.

and Cash Equivalents

Company considers all highly liquid debt instruments and other short-term investments with maturity of three months or less, when purchased,

to be cash equivalents.

The Company maintains cash and cash equivalent balances at one financial institution that is insured by the Federal

Deposit Insurance Corporation (“FDIC”).

For the years ended December 31, 2022 and 2021, the Company’s bank balances

exceeded the FDIC limit of $ 250 thousand

in amount of $ 111,505 thousand and $ 267,635

thousand, respectively.

To reduce its risk associated with the failure of such financial institution, the Company evaluates at least

annually the rating of the financial institution in which it holds deposits.

As of December 31, 2022 and 2021, the Company had cash equivalents

thousand and $ 266,635

thousand, respectively.

cash represents cash balances that support commercial letters of credit and are restricted from withdrawal.

The following table provides

a reconciliation of the total cash, cash equivalents and restricted cash reported on the Consolidated Balance Sheets to the corresponding

amounts reported on the Consolidated Statements of Cash Flows.

SCHEDULE OF RESTRICTED CASH

(in thousands)

As of December 31,

(in thousands)

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.

Cash and Cash Equivalents

The Company considers all highly liquid investments and other short-term investments with a maturity of three months or less, when purchased, to be cash equivalents.

The Company maintains cash and cash equivalent balances at financial institutions that are insured by the Federal Deposit Insurance Corporation (“FDIC”).

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.

Restricted Cash

Cash, cash equivalents and restricted cash

assets and Digital assets, restricted

assets are included in current and other assets in the Consolidated Balance Sheets.

Digital assets are accounted for as indefinite-lived

intangible assets, and are initially measured at cost, in accordance with ASC 350 – “Intangibles-Goodwill and Other”

Digital assets, restricted represent collateral for long-term loans and as such, are classified as a non-current

digital assets are not amortized, but are 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.

exchange-traded price of digital assets declines below its carrying value, the Company has determined that an impairment exists and

records impairment equal to the amount by which the carrying value exceeds the fair value.

following tables presents the activities of the digital assets and digital assets, restricted for the years

ended December 31, 2022 and 2021:

SCHEDULE OF ACTIVITIES OF DIGITAL ASSETS

Restricted cash as of December 31, 2022, 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.

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.

Property and Equipment

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

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 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 .

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.

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.

Refer to Note 12 – Stockholders' Equity, for further information.

Impairment of Long-lived Assets

Management reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

The recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to undiscounted future cash flows expected to be generated by the asset.

If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets.

The Company recognizes revenue under ASC 606 – Revenue from Contracts with Customers .

The core principle of the revenue standard is that a reporting entity should recognize revenues to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

Refer to Note 3 – Revenues, for further information.

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.

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date.

A valuation allowance is required to the extent any deferred tax assets may not be realizable.

ASC 740 - Income Taxes , also clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.

For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities.

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

Recently Issued Accounting Pronouncements

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

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.

On December 14, 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“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.

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.

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.

NOTE 3 – REVENUES

The Company recognizes revenue in accordance with ASC 606.

The core principle of the revenue standard is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services.

The following five steps are applied to achieve that core principle:

Identify the contract with the customer;

Identify the performance obligations in the contract;

Determine the transaction price;

Allocate the transaction price to the performance obligations in the contract;

Recognize revenue when the Company satisfies a performance obligation.

In order to identify the performance obligations in a contract with a customer, an entity must assess the promised goods or services in the contract and identify each promised good or service that is distinct.

A performance obligation meets ASC 606’s definition of a “distinct” good or service (or bundle of goods or services) if both of the following criteria are met:

• The customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer (i.e., the good or service is capable of being distinct);

• The entity’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract (i.e., the promise to transfer the good or service is distinct within the context of the contract).

If a good or service is not distinct, the good or service is combined with other promised goods or services until a bundle of goods or services is identified that is distinct.

The transaction price is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer.

The consideration promised in a contract with a customer may include fixed amounts, variable amounts, or both.

When determining the transaction price, an entity must consider the effects of all of the following:

• Variable consideration

• Constraining estimates of variable consideration

• The existence of a significant financing component in the contract

• Noncash consideration

• Consideration payable to a customer

Variable consideration is included in the transaction price only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized under the accounting contract will not occur when the uncertainty associated with the variable consideration is subsequently resolved.

The transaction price is allocated to each performance obligation on a relative standalone selling price basis.

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

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”).

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

Year ended December 31,

(in thousands) 2023 2022 2021

Revenues from contracts with customers

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

Participant 25,101 4,652 20,903

Total revenues from contracts with customers 57,699 9,883 24,220

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

Total revenues $ 387,508 $ 117,753 $ 159,163

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

Transaction verification services are an output of the Company’s ordinary activities;

therefore, the Company views the transaction requestor as a customer and recognizes the transaction fees as revenue from contracts with customers under ASC 606.

The bitcoin network is not an entity such that it may not meet the definition of a customer;

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

The Company assessed the following factors in the determination of the inception and duration of each individual contract to validate a block and satisfaction of its performance obligation as follows:

• For each individual contract, the parties’ rights, the transaction price, and the payment terms are fixed and known as of the inception of each individual contract.

• The transaction requestor and the bitcoin network each have a unilateral enforceable right to terminate their respective contracts at any time without penalty.

• For each of these respective contracts, contract inception and completion occur simultaneously upon block validation;

that is, the contract begins upon, and the duration of the contract does not extend beyond, the validation of an individual blockchain transaction;

and each respective contract contains a single performance obligation to perform a transaction validation service and this performance obligation is satisfied at the point-in-time when a block is successfully validated.

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 pool participants entered into contracts with the Company as Operator;

they did not directly enter into contracts with the network or the requester and were not known verifiers of the transactions assigned to the pool.

As Operator, the Company delegated mining work to the pool participants utilizing software that algorithmically assigned work to each individual miner.

By virtue of its selection and operation of the software, the Company as Operator controlled delegation of work to the pool participants.

This indicated that the Company directed the mining pool participants to contribute their hash calculations to solve in areas that the Company designated.

Therefore, the Company determined that it controlled the service of providing transaction verification services to the network and requester.

Accordingly, the Company recorded all of the transaction fees and block rewards earned from transactions assigned to MaraPool as revenue, and the portion of the transaction fees and block rewards remitted to MaraPool participants as cost of revenues.

In accordance with ASC 606-10-32-21, the Company measures the estimated fair value of the non-cash consideration (block reward and transaction fees) at contract inception, which is at the time the performance obligation to the requester and the network is fulfilled by successfully validating a block.

The Company measures the non-cash consideration which is fixed as of the inception of each individual contract using the quoted spot rate for bitcoin determined using the Company’s primary trading platform for bitcoin at the time the Company successfully validates a block.

Expenses associated with providing bitcoin transaction verification services, such as hosting fees, electricity costs, and related fees are recorded as cost of revenues.

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

The Company participates in third-party operated mining pools.

When the Company is a Participant in a third-party operated mining pool, the Company provides a service to perform hash calculations to the third-party pool operators.

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.

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.

As such, the duration of a contract is less than a day and may be continuously renewed multiple times throughout the day.

The implied renewal option is not a material right because there are no upfront or incremental fees in the initial contract and the terms, conditions, and compensation amount for the renewal options are at the then market rates.

The Company is entitled to non-cash compensation based on the pool operator’s payout model.

The payout methodologies differ depending on the type of third-party operated mining pool.

Full-Pay-Per-Share (“FPPS”) pools pay block rewards and transaction fees, less mining pool fees and Pay-Per-Share (“PPS”) pools pay block rewards less mining pool fees but no transaction fees.

For FPPS and PPS pools, the Company is entitled to non-cash consideration even if a block is not successfully validated by the mining pool operators.

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 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.

FPPS Mining Pools

The Company primarily participates in mining pools that use the FPPS payout method for the year ended December 31, 2023.

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 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 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.

• 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.

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 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.

PPS Mining Pools

The Company participates in PPS pools that provide non-cash consideration similar to the FPPS pools except PPS pools do not include transaction fees, therefore, the non-cash consideration received by the Company is made up of block rewards less mining pool fees.

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 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.

Success-based Mining Pools

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.

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.

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

The Company constrains the variable consideration at contract inception because it is not probable that a significant reversal in the amount of revenue recognized from the contract will not occur when the uncertainty is subsequently resolved.

Once a block is successfully validated, the constraint is lifted.

The Company recognizes the non-cash consideration on the same day that control is transferred, which is the same day as contract inception.

The Company’s policy was to measure non-cash consideration based on the spot rate of bitcoin at the time the pool successfully validates a block, which was not in accordance with ASC 606-10-32-21 which requires measurement to coincide with contract inception.

Additionally, this measurement was not consistent with the measurement of non-cash consideration for FPPS and PPS pools.

During the three months ended December 31, 2023, the Company corrected this error and changed its measurement of non-cash consideration to the simple average daily spot rate of bitcoin determined using the Company’s primary trading platform for bitcoin on the date of contract inception, which is the same day that control of the contracted service (hash calculations) is transferred to the pool operator.

The change in measurement did not have a material impact to the results of operations for any of the periods presented.

Expenses associated with providing hash calculation services to third-party operated mining pools, such as hosting fees, electricity costs, and related fees, are recorded as cost of revenues.

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

NOTE 4 – 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:

(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

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

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

Additions of digital assets

Impairment of digital assets

Derecognition of loaned digital assets

Cumulative effect of the adoption of ASU 2023-08

Beginning Balance:

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

Addition of digital assets

Disposition of digital assets ( 264,945 )

Digital assets and digital assets, restricted at December 31, 2021 (Restated)

Realized gain (loss) on digital assets

Unrealized gain (loss) on digital assets

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 117,557

4 unchanged sentences

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

December 31, 2022, the Company held approximately 12,232 bitcoin

with a carrying value of $ 190,717 thousand.

The 7,816 bitcoin

were classified on the Consolidated Balance Sheets as digital assets with a carry value of approximately $ 121,842 thousand

and digital assets, restricted of 4,416 bitcoin

with a carrying value of approximately $ 68,875 thousand.

At December 31, 2022, the fair market value of the Company’s bitcoin holdings was approximately $ 202,409

thousand, including digital assets and digital assets, restricted.

Digital assets, restricted is comprised of bitcoins held as

collateral for the term loan.

At December 31, 2021, the Company held approximately 2,721 bitcoin

with a carrying value of $ 95,225 thousand

and a fair value of $ 126,000 thousand.

assets held in Fund

January 25, 2021, the Company entered into a limited partnership agreement with NYDIG Digital Assets Fund III, LP

(“Fund”) wherein the Fund purchased 4,813

bitcoin in an aggregate purchase price of $ 150,000

The Company owned 100 %

of the limited partnership interests and consolidated the Fund under a voting interest model.

The consolidated assets in the

investment fund are included in current assets in the Consolidated Balance Sheets under the caption digital assets held in

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” (“ASC 946”), 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 digital assets held by the Fund were traded on a number of active markets globally,

including the over-the-counter market and digital asset exchanges.

A fair value measurement under ASC 820 - “Fair Value

Measurement” (“ASC 820”) for an asset assumes that the asset is exchanged in an orderly transaction between market

participants either in the principal market for the asset or, in the absence of a principal market, the most advantageous market for

the asset (ASC 820-10-35-5).

The fair value of the assets within the Fund were determined using the price of bitcoin provided by the

OTC market, the Fund’s principal market for bitcoin as of 11:59:59 p.m.

in New York for financial reporting purposes.

purposes of continuous (daily) fair value measurement, such assets within the Fund were measured using the daily price of bitcoin

provided by the OTC market at 4:00 p.m.

Any changes in the fair value of the assets were recorded in the Consolidated

Statements of Other Comprehensive Income (Loss) under the caption realized and unrealized gains (losses) on digital assets held within investment

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 $ 137,844 thousand .

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” (“ASC

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

Subsequent to the transfer, the bitcoin transferred to the Company’s digital wallet has been accounted for at cost less

impairment in line with its digital assets measurement policy as described under “Digital assets and Digital assets, restricted ”.

The activity in the Fund for the twelve months ended December 31, 2022 and twelve months ended December 31, 2021 was as follows:

SCHEDULE OF DIGITAL CURRENCIES HELD IN FUND

Digital assets held in Fund at December 31, 2020

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.

(in thousands)

Purchase of digital assets held in Fund

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 )

Digital assets held in Fund at December 31, 2021 (Restated)

Unrealized depreciation on digital assets held in Fund

Disposition of digital assets held in Fund

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

1 unchanged sentence

Digital assets held in Fund at December 31, 2022

Company contracts with other service providers for hosting of its mining rigs and operational support in data centers where the company’s

mining rigs are deployed.

These arrangements also call for advance payments to be made to vendors in conjunction with the contractual

obligations associated with these services.

We classify these payments as Deposits on the balance sheet.

of December 31, 2022 and December 31, 2021, such deposits totaled approximately $ 43,253 thousand and $ 34,458 thousand, respectively.

Company evaluates its financing and service arrangements to determine whether certain arrangements contain features that qualify as embedded

derivatives requiring bifurcation in accordance with ASC 815 - “Derivatives and Hedging” (“ASC 815”).

derivatives that are required to be bifurcated from the host instrument or arrangements are accounted for and valued as separate financial

For derivatives that are assets or liabilities, the derivative instrument is initially recorded at its fair value and is

then remeasured at each reporting date with changes in the fair value reported in the statements of operations.

Derivative assets or

liabilities are classified 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 Consolidated Balance Sheets date.

and Equipment

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

useful lives.

Accordingly, the Company applies the group method of depreciation on a straight-line basis for its bitcoin mining rigs.

will assess and adjust the estimated useful lives of its mining rigs when there are indicators that the productivity of the mining assets

are higher or lower than the assigned estimated useful lives.

Company contracts with bitcoin mining equipment manufacturers in procuring mining rigs necessary for the operation of its bitcoin mining

A typical agreement calls for a certain percentage 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.

We account for these payments as Advances to vendors on the balance sheet.

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 evaluated the need for an impairment write-down of its contracts with bitcoin mining equipment

manufacturers.

The Company compared the prices of the miner rigs under contract to the fair value of mining rigs as of December 31,

2022, and determined that an impairment loss should be recognized.

Accordingly, the Company recognized an impairment charge of

$ 208,622 thousand

on its mining rigs and reduced its Advances to vendors for purchase of mining rigs by $ 124,311 on the Consolidated Balance

Sheets for the year ended December 31, 2022.

of December 31, 2022 and December 31, 2021, advances to vendors was $ 488,299 thousand

and $ 466,255

thousand, respectively.

See also discussion regarding property and equipment impairment in NOTE 4 - PROPERTY AND EQUIPMENT.

which may be made from time to time for strategic reasons (and not to engage in the business of investments) 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” (“ASC 321”).

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”) agreements.

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.

December 21, 2021 and December 31, 2021, the Company entered into two separate SAFE agreements classified on the Consolidated Balance Sheets as non-current

SAFE agreements are accounted for as equity securities without readily determinable fair value at cost minus impairment, as adjusted

for observable price changes in orderly transactions for identical or similar investment of the same issue pursuant to ASC 321.

February 3, 2022, the Company invested approximately $ 10,000

thousand in convertible preferred stock of Compute

North Holdings, Inc.

The acquisition of convertible preferred stock was accounted for as investments in equity securities without readily

determinable fair value at cost minus impairment, as adjusted for observable price changes in orderly transactions for identical or similar

investment of the same issuer pursuant to ASC 321.

This investment was subject to an impairment of $ 10,000

thousand following Compute North’s chapter

11 Bankruptcy filing in September 2022 (See NOTE 9 – COMPUTE NORTH BANKRUPTCY ).

May 3, 2022, the Company converted $ 2,000

thousand from a SAFE

investment into preferred stock while purchasing an additional $ 3,500

thousand of preferred

stock in Auradine, Inc.

along with entering into a commitment to acquire $ 30,000

thousand of additional shares of preferred stock.

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

September 27, 2022, the Company increased its investment in the preferred stock of Auradine, Inc.

by $ 30,000 thousand, bringing its total

carrying amount of investment in Auradine, Inc.

preferred stock to $ 35,500 thousand.

The preferred stock is accounted for as investments

in equity securities without a readily determinable fair value at cost minus impairment, as adjusted for observable price changes in

orderly transactions for identical or similar investments from the same issuer pursuant to ASC 321.

During 2022, there were no noted

impairments or other adjustments (See NOTE 15 –

RELATED PARTY TRANSACTIONS ).

of December 31, 2022, the Company has one remaining SAFE investment with a carrying value of $ 1,000 thousand, with no noted impairments

or other adjustments.

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 and forfeiture rates.

The Company estimates the fair value of stock option grants using the Black-Scholes option

pricing model and the assumptions used in calculating the fair value of stock-based awards represent management’s best estimates

and involve inherent uncertainties and the application of management’s judgment.

These assumptions are the expected stock volatility,

the risk–free interest rate, the expected life of the option, the dividend yield on the underlying stock and the expected forfeiture

Expected volatility is calculated based on the historical volatility of the Company’s common stock over the expected term

of the option.

Risk–free interest rates are calculated based on continuously compounded risk–free rates for the appropriate

of Long-lived Assets

reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may

not be recoverable.

Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to undiscounted

future cash flows expected to be generated by the asset.

If such assets are considered to be impaired, the impairment to be recognized

is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets.

the year ended December 31, 2022 , we impaired the mining patent intangible asset and recorded an impairment charge of $ 919 thousand.

We also impaired certain mining rigs and recorded an impairment charge of $ 208,622 thousand

(see NOTE 4 – PROPERTY AND EQUIPMENT ).

From Contracts with Customers

Company recognizes revenue in accordance with ASC Topic 606 – “Revenue from Contracts with Customers” (“ASC

The core principle of the revenue standard is that a company should recognize revenue to depict the transfer of

promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in

exchange for those goods or services.

The following five steps are applied to achieve that core principle:

Identify the contract with the customer

Identify the performance obligations in the contract

Determine the transaction price

Allocate the transaction price to the performance obligations in the contract

Recognize revenue when the Company satisfies a performance obligation

order to identify the performance obligations in a contract with a customer, a company must assess the promised goods or services in

the contract and identify each promised good or service that is distinct.

A performance obligation meets ASC 606’s definition of

a “distinct” good or service (or bundle of goods or services) if both of the following criteria are met:

customer can benefit from the good or service either on its own or together with other resources

that are readily available to the customer (i.e., the good or service is capable of being

entity’s promise to transfer the good or service to the customer is separately identifiable

from other promises in the contract (i.e., the promise to transfer the good or service is

distinct within the context of the contract).

a good or service is not distinct, the good or service is combined with other promised goods or services until a bundle of goods or services

is identified that is distinct.

transaction price is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods

or services to a customer.

The consideration promised in a contract with a customer may include fixed amounts, variable amounts, or both.

When determining the transaction price, an entity must consider the effects of all of the following:

consideration

● Constraining

estimates of variable consideration

existence of a significant financing component in the contract

consideration

● Consideration

payable to a customer

consideration is included in the transaction price only to the extent that it is probable that a significant reversal in the amount of

cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved.

transaction price is allocated to each performance obligation on a relative standalone selling price basis.

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.

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

Company’s ongoing major or central operation is to provide computing power to collectives of third-party bitcoin miners (such collectives,

“mining pools”) as a participant (“Participant”) and bitcoin transaction verification services to the bitcoin

network through a Company-operated mining pool as the operator and a participant in a private pool (“Operator”) (such activity

as Participant and Operator, collectively, “mining”).

The Company currently mines in a self-operated pool, which was previously

open to third-party pool participants from September 2021 until May 2022.

following table presents revenue of the Company disaggregated for those arrangements in which the Company is the Operator and Participant:

SCHEDULE OF DISAGGREGATION OF REVENUE

(in thousands)

Year ended December 31,

(in thousands)

Revenues from contracts with customers

Operator - Transaction fees

Other revenue

Operator - Block rewards

Total revenue

Operator, the Company provides transaction verification services.

Transaction verification services are an output of the

Company’s ordinary activities;

therefore, the Company views the transaction requestor as a customer and accounts for the

transaction fees its earns as revenue from a contract with a customer under ASC 606.

The bitcoin network is not an entity such that

it may not meet the definition of a customer;

however, the Company has concluded it is appropriate to apply ASC 606 by analogy to

block rewards earned from the network.

A contract exists under ASC 606 at the point the Company successfully validates a

transaction to the distributed ledger.

At this point, the performance obligation to validate the requested transaction has been

satisfied and a contract is deemed to exist as follows:

transaction requester, the bitcoin network and the Company have approved the contract and have evidenced they are committed to the

transaction at the point of successfully validating and adding the transaction to the distributed ledger.

The parties’ rights,

the consideration to be transferred, and the payment terms are clear.

The transaction has commercial substance and collection of the

block reward and transaction fees to which the Company is entitled is probable because they are transferred to the Company as part

of closing a successful block.

By successfully mining a block, the Company

satisfies its lone performance obligation of providing transaction verification services and, thus, recognizes revenue

at that point in time.

The amount to which the Company is entitled for successfully validating a block of transactions is fixed at the

point in time the contract is deemed to exist and the performance obligation is satisfied.

Thus, there is no variable consideration.

Company also, from time to time, engages unrelated third-party mining enterprises (“pool participants”) to contribute computing

power, and in exchange, remits transaction fees and block rewards to pool participants on a pro rata basis according to each respective

pool participant’s contributed computing power ( hash rate).

The MaraPool wallet (owned by the Company as Operator) is recorded

on the distributed ledger as the proof of work winner and assignee of all validations and, therefore, the transaction verifier of record.

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

they do not directly enter into contracts with the network or

the requester and are not known verifiers of the transactions assigned to the pool.

As Operator, the Company delegates mining work to

the pool participants utilizing software that algorithmically assigns work to each individual miner.

By virtue of its selection and operation

of the software, the Company as Operator controls delegation of work to the pool participants.

This indicates that the Company directs

the mining pool participants to contribute their hash rate to solve in areas that the Company designates.

Therefore, the Company determined

that it controls the service of providing transaction verification services to the network and requester.

Accordingly, the Company records

all of the transaction fees and block rewards earned from transactions assigned to MaraPool as revenue, and the portion of the transaction fees and block rewards remitted to MaraPool participants as cost of revenues.

The Company operated a mining pool, Marapool, that engaged third-party pool participants from September 2021

until May 2022.

ASC 606-10-32-21 requires entities to measure the estimated fair value of noncash consideration at contract inception, which is the same time the block reward and transaction fee is earned and the performance obligation to the requester and the network is fulfilled by

successfully validating the applicable block of transactions.

For reasons of operational practicality, the Company applies an accounting

convention to use the daily quoted closing U.S.

dollar spot rate of bitcoin each day to determine the fair value of bitcoin earned as

transaction fees and block rewards in the Company’s wallet during that day.

This accounting convention does not result in materially

different revenue recognition from using the fair value of the bitcoin earned at contract inception (i.e., the moment a block is solved)

and has been consistently applied in all periods presented.

associated with providing the bitcoin transaction verification services to the Customers, such as rent, electricity cost, and transaction

fees and block rewards are recorded as cost of revenues.

Depreciation on digital asset mining equipment is recorded as a component of

cost of revenues.

When the Company is a Participant in a third-party operated mining pool, the Company provides computing power (hash rate) that is an output

of the Company’s ordinary activities in exchange for consideration.

The Company considers the third-party mining pool operators

its customer under Topic 606.

These contracts are period-to-period contracts because they are terminable at any time by either party without

compensation.

A new contract is determined to exist each period that neither the Company, nor the pool operator, terminates the arrangement.

The provision of computing power is the only performance obligation under our arrangements with third-party mining pool operators.

transaction consideration the Company receives is non-cash (i.e., bitcoin) and entirely variable as it is unknown at each contract inception

whether the Company will earn any consideration during the period, and if it does become entitled to consideration, how much consideration

it will be entitled to.

In accordance with FASB ASC 606-10-32-11 and 32-12, the Company constrains the variable consideration to which it is entitled and does

not recognize revenue for such amounts until it receives confirmation of the amount , usually via the settlement of the fractional share

of block reward and transaction fee in the Company’s digital wallet (i.e., at that point, the variability is resolved and there

is no longer the reasonable possibility of significant reversal of revenue).

Before settlement occurs, estimation of the variable consideration

to which the Company is entitled, which depends on inputs unknowable to the Company, carries the risk of a significant revenue reversal

from mis-estimation.

Settlement of consideration typically occurs within 24 hours of when a block is won unless such block is won over

a weekend or holiday, in which case settlement can take up to 72 hours.

The Company uses its accounting convention to recognize revenue using the daily quoted closing U.S.

dollar spot rate of bitcoin on the

day the transaction fees and block rewards are settled in the Company’s wallet.

However, this accounting convention does not result

in materially different revenue recognition from using the fair value of the bitcoin earned at contract inception and has been consistently

applied in all periods presented.

associated with providing computing power services to third-party operated mining pools, such as rent and electricity cost are recorded

as cost of revenues.

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

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.

Deferred tax assets and liabilities are measured using

enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered

The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that

includes the enactment date.

A valuation allowance is required to the extent any deferred tax assets may not be realizable.

740 - “Income Taxes ” (“ASC 740”), also clarifies the accounting for uncertainty in income taxes recognized

in an enterprise’s financial statements and prescribes a recognition threshold and measurement process for financial statement

recognition and measurement of a tax position taken or expected to be taken in a tax return.

For those benefits to be recognized, a tax

position must be more-likely-than-not to be sustained upon examination by taxing authorities.

ASC 740 also provides guidance on derecognition,

classification, interest and penalties, accounting in interim periods, disclosure and transition.

Accounting Pronouncements

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

When it is determined that a new accounting

pronouncement affects the Company’s financial reporting, the Company undertakes a study to determine the consequences of the change

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.

December 2022, the Securities Exchange Commission (“SEC”) provided additional guidance on accounting for loaned digital assets.

The Company has therefore adopted the following accounting policy with retrospective application for arrangements where the Company loans

digital assets to a borrower for a specific period of time in exchange for a fee akin to an interest rate.

adoption, the Company first evaluates whether to derecognize loaned crypto assets based on an evaluation of all relevant control and

asset derecognition considerations.

Such considerations include whether the borrower has the right to use the digital assets at its sole

discretion (e.g.,to sell, pledge digital assets to a third party) and whether the lender has transferred present rights to economic benefits

associated with the digital asset for a different right to receive digital assets in the future.

derecognition of the underlying loaned digital assets is appropriate, the Company will derecognize the loaned digital asset it no longer

controls, and recognize a right to receive back in the future the loaned digital asset (“digital asset loan receivable”).

digital asset loan receivable is recorded at the then-current (i.e., time of transfer) fair value of the loaned crypto assets with any

difference between the fair value of the loaned crypto assets and their pre-transfer carrying amount recognized as a gain in the Consolidated Statements of Other Comprehensive Income (Loss).

Throughout the loan period, the digital asset loan receivable will continue to be measured at the fair value of the underlying

loaned digital asset with changes recorded in operating income (loss).

loan commencement and throughout the loan period, the Company considers and accounts for credit risk of the borrower (i.e., risk the

borrower will not return the loaned crypto assets), using the principles in Topic 326 to measure

any credit impairment.

The digital asset loan receivable is presented net of any allowance for credit losses on the Company’s Consolidated Balance Sheets.

When the digital assets on loan are returned to the Company, such loaned digital assets are re-recorded on the Company’s

Consolidated Balance Sheets at the carrying value of the digital asset loan receivable immediately prior to derecognition with no gain or loss realized at the end of the loan.

4 – PROPERTY AND EQUIPMENT

components of property and equipment as of December 31, 2022 and 2021 are:

OF COMPONENTS OF PROPERTY AND EQUIPMENT

(in thousands, except useful life)

NOTE 5 – 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.

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

As of December 31, 2023 and 2022, such advances totaled approximately $ 95.6 million and $ 488.3 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.

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

NOTE 6 – PROPERTY AND EQUIPMENT

The components of property and equipment as of December 31, 2023 and 2022 are:

(in thousands, except useful life) Useful life (Years) December 31, 2023 December 31, 2022

Mining rigs 3 $ 862,055 $ 116,634

Containers 10 5,676 1,614

Other 7 242 206

Construction in progress — — 171,194

Gross property, equipment

Total gross property, equipment 867,973 289,648

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

Property and equipment, net $ 671,772 $ 273,026

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.

Company’s depreciation expense related to property and equipment for the years ended December 31, 2022 and December 31, 2021 was

$ 78,709 thousand and $ 14,904 thousand, respectively.

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, TX facility.

In conjunction with its exit from the Hardin, MT facility, the Company also sold bitcoin mining rigs to various third parties.

cash proceeds from these sales of assets for the year ended December 31, 2022 were $ 178,371 thousand and gains resulting from the asset

sales totaled $ 83,880 thousand in the current-year period.

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.

connection with the exit from the Hardin, MT facility (“Hardin”) in September 2022, the Company recorded additional

depreciation expense related to approximately 1,800 bitcoin mining rigs that were previously deployed at Hardin that 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.

These assets had a book value of approximately $ 12,358

thousand as of September 30, 2022.

accordance with ASC 360 - “Impairment and Disposal of Long-Lived Assets” (“ASC 360”), 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 first determined that the carrying

value of its bitcoin miners is not recoverable.

As its bitcoin mining rigs further had a carrying value in excess of fair value, the Company recognized an impairment charge for its bitcoin mining rigs of approximately $ 208,622

thousand 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 $ 265,000

thousand (Level 2).

a result of the above impairment charge for its asset group of 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.

of December 31, 2022, the Company had $ 488,299 thousand,

net of a $ 124,311 thousand

impairment charge per below, of Advances to vendors for the purchase of mining rigs on the consolidated balance sheet.

December 31, 2021, the Company had $ 466,255 thousand

of Advances to vendors for purchase of mining rigs on the consolidated balance sheet.

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 evaluated the need for an impairment write-down of its contracts with bitcoin mining equipment manufacturers.

Company compared the prices of the miner rigs under contract to the fair value of mining rigs as of December 31, 2022, and determined

that an impairment loss should be recognized.

Accordingly, the Company recognized an impairment charge of $ 124,311 thousand and reduced

its Advances to vendors on the consolidated balance sheet for the year ended December 31, 2022.

5 - DIGITAL ASSET LOAN RECEIVABLE, NET OF ALLOWANCE

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.

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 $ 27,241 thousand, and adjusted for expected credit losses, with changes in fair value

recorded as unrealized gains and losses in the Consolidated Statements of Other 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 limited size and nature of the Company’s digital asset loan receivables, the Company utilized the probability of default (“PD”)

loss given default (“LGD”) approach to estimating the allowance for credit loss (“ACL”) at origination and subsequent

reporting periods.

In order to apply the PD LGD approach, management considered the lifetime of the digital asset loan receivable, the

reasonable and supportable forecast period, and the PD LGD.

The contractual maturity of each digital asset loan receivable was one year from

As such, the Company used each instrument’s life of loan period for estimating

current expected credit losses, unadjusted by any prepayment risk as any risk would be immaterial

to either the repayment in kind or the accrued loan fee receivable that is due in cash on

a monthly basis.

and supportable forecast period:

Given the relatively short term nature of the loans, the

Company set the reasonable and supportable period to the life of loan.

As such, no reversion

or post-reversion methodology was required.

quality information and associated probability of default of NYDIG:

In order to assess the

credit risk of the borrower, Marathon estimated a NYDIG synthetic credit rating as of March 31, 2022 and December

31, 2021 using an Ordinal Logistic Regression Model (“Regression

The Regression Model is a widely used statistical model to classify a company

into credit ratings and to estimate PD based on certain business metrics, including total

assets, total debt, revenues, EBIT, and net income.

Based on the Regression Model results,

the Company estimated NYDIG’s synthetic credit rating of “CCC-” as of March 31, 2022 and “B” as of December

The associated probability of default

was approximately 2.9 % and 7.4 % , respectively.

of losses given default:

Given no collateral was posted, the Company assumed a loss given

default of 100.0% of the original and subsequent reporting digital asset loan receivable and

the accrued loan fee.

addition, the accrued loan fee receivable is reported separately from the digital asset loan receivable and its carrying amount is de

minimis at the reporting date.

As a result, the reported ACL includes only the impact of any unpaid accrued loan fee receivable at the

reporting date.

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, 2022.

As such, the Company recorded an allowance for loan losses as of December 31, 2021 with an initial provision

expense of approximately $851 thousand.

As of December 31, 2022 the company recognized a corresponding provision benefit of

approximately $851 thousand for the June 2022 repayment in full, resulting in $0 remaining allowance for loan losses at the

end of the year.

6 - FAIR VALUE MEASUREMENT

Company measures at fair value certain of its financial and non-financial assets and liabilities by using a fair value hierarchy that

prioritizes the inputs to valuation techniques used to measure fair value.

Fair value is the price that would be received to sell an

asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, essentially an exit

price, based on the highest and best use of the asset or liability.

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.

NOTE 8 – FAIR VALUE MEASUREMENT

The Company measures certain financial and non-financial assets and liabilities at fair value on a recurring or non-recurring basis.

The Company uses a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, essentially an exit price, based on the highest and best use of the asset or liability.

The levels of the fair value hierarchy are:

prices in active markets for identical assets or liabilities that are accessible at the measurement date;

other than quoted prices in active markets for identical assets and liabilities included within Level 1 that are observable for the

asset or liability, either directly or indirectly, and

Inputs that are generally unobservable for the asset or

carrying amounts reported in the Consolidated Balance Sheets for cash and cash equivalents, restricted cash, other receivable,

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

to the significant increase in current market interest rates for convertible notes and the high conversion price of our notes in relation

to our current stock price, the carrying value of our convertible notes are significantly above the current fair value.

The estimated

fair value of our convertible notes as of December 31, 2022, is approximately $ 173,200 thousand

compared to a carrying value less unamortized debt discount of $ 732,289 thousand.

carrying value of our 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.

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.

The Company measures the fair value of its marketable securities by taking into consideration valuations

obtained from third-party pricing sources.

The pricing services utilize industry standard valuation models, including both income and

market-based approaches, for which all significant inputs are observable, either directly or indirectly, to estimate fair value.

inputs included reported trades of and broker-dealer quotes on the same or similar securities, issuer credit spreads, benchmark securities

and other observable inputs.

following tables present information about the Company’s assets and liabilities measured at fair value on a recurring basis and

the Company’s estimated level within the fair value hierarchy of those assets and liabilities as of December 31, 2022 and 2021,

respectively:

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

Fair value measured at December 31, 2022

(in thousands)

Money Market Accounts

Fair value measured at December 31, 2021 (Restated)

(in thousands)

Significant other observable inputs

Significant unobservable inputs

Money Market Accounts

Other receivable 1

Digital assets held in Fund

(1) Includes digital

assets loan receivable that was initially and subsequently measured at fair value using quoted prices for the underlying digital assets.

December 31, 2021, the Company had 600 bitcoin as a loan to NYDIG.

This loan of bitcoin was recorded as a digital asset loan receivable

within other receivable.

(see NOTE 5 – DIGITAL ASSET LOAN RECEIVABLE, NET OF ALLOWANCE ).

The 600 bitcoin were returned to the Company on June 10, 2022.

The digital assets loaned represent the fair value of the 600 bitcoin

underlying the loan as Level 2 inputs for the year ended December 31, 2021 as bitcoin prices can be determined

based on several exchange prices.

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

As a result, the Company will no longer receive “mark-to-market” accounting for the bitcoin formerly held in

the Fund and the 4,769

bitcoin will now be classified as digital assets on the Consolidated Balance Sheets and subject to impairment analysis as an

indefinite-lived intangible.

Company’s investments (see NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ) are classified within Level 3 of

the fair value hierarchy because the fair value is determined using the Monte Carlo Simulation Model and by utilizing significant

unobservable inputs including probability of financing events, subordinated recovery rate, and credit spread of the investees.

The Company will update its assumptions each reporting period based on new developments and record such

amounts at fair value based on the revised assumptions.

December 31, 2022, the Company had an outstanding warrant liability in the amount of $ 0 associated

with warrants that were issued in January 2017 and warrants issued related to the convertible notes issued in August and September

The fair value of the warrant liabilities are marked-to-market each reporting period and changes in fair value are recorded

as a non-operating gain or loss in our Consolidated Statements of Other Comprehensive Income (Loss), until they are completely exercised.

The fair value is determined

each reporting period using the Black-Scholes option pricing model and is affected by changes in inputs to that model including our

stock price, expected stock price volatility, dividends, interest rates and expected term.

following table provides a reconciliation of the beginning and ending balances of our recurring fair value measurements, using significant

unobservable inputs (Level 3).

The Company did not make any transfers into or out of Level 3 of the fair value hierarchy during the years

ended December 31, 2022 and 2021:

SCHEDULE OF RECONCILIATION OF THE BEGINNING AND ENDING BALANCES OF OUR RECURRING FAIR VALUE MEASUREMENTS

(in thousands)

Investment in Preferred Stock

Investment in SAFEs

Carrying value at December 31, 2020

Impairment and change in fair value

Carrying value at December 31, 2021 (Restated)

Impairment and change in fair value

Carrying value at December 31, 2022

Non-recurring

measurement of Fair Value

Company accounts for its digital assets as indefinite-lived intangible assets in accordance with ASC 350 - “Intangibles

– Goodwill and Other” (“ASC 350”).

The Company’s digital assets are initially recorded at fair value

upon receipt (or “carrying value”).

On a quarterly basis, they are measured at carrying value, net of any impairment

losses incurred since receipt.

Pursuant to guidance from ASC 820 , the Company is required to determine the nonrecurring fair

value measurement used to determine impairment of the digital assets held on the Consolidated Balance Sheets.

The Company will

record impairment losses as the fair value falls below the carrying value of the digital

The digital assets can only be marked down when impaired and not marked up when their value increases.

The resulting

carrying value represents the fair value of the asset.

The last impairment date for the digital assets was December 31, 2022.

Company had an outstanding carrying balance of digital assets of approximately $ 190,717

thousand, and fair value net of impairment losses incurred of $ 173,215

thousand for the year ended December 31, 2022.

As of December 31, 2022, the fair value of the bitcoin held as digital assets was

approximately $ 202,409

thousand (Level 2).

accordance with ASC 360 - “Impairment and Disposal of Long-Lived Asset s ” (“ASC 360”), 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 it’s bitcoin miners.

In accordance with ASC 360-10, the Company determined that its bitcoin miners had a carrying value in excess

of fair value, and accordingly, the Company recognized an impairment charge for its bitcoin rigs of approximately $ 208,622 thousand

for the year ended December 31, 2022.

The fair value of the bitcoin rigs determined primarily using observable prices for similar assets

as of December 31, 2022 was $ 202,409 thousand (Level 2).

7 - INCOME TAXES

Company accounts for income taxes under ASC 740 - “Income Taxes” (“ASC 740”), which requires the recognition

of deferred tax assets and liabilities for both the expected impact of differences between the financial statements and the tax basis

of assets and liabilities, and for the expected future tax benefit to be derived from tax losses and tax credit carry-forwards.

additionally requires the establishment of a valuation allowance to reflect the likelihood of realization of deferred tax assets.

tax expense (benefit) attributable to income from continuing operations was $ 21,838

thousand and $ 22,576

thousand for the years ended December 31, 2022 and 2021, respectively, and differed from the amounts computed by applying the U.S.

federal income tax rate of 21 % %

to pretax income from continuing operations as a result of the following:

OF PRETAX INCOME FROM CONTINUING OPERATIONS

Observable inputs such as quoted market prices in active markets for identical assets or liabilities

Observable market-based inputs or unobservable inputs that are corroborated by market data

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.

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.

The Company measures the fair value of its marketable securities and investments by taking into consideration valuations obtained from third-party pricing sources.

The pricing services utilize industry standard valuation models, including both income and market-based approaches, for which all significant inputs are observable, either directly or indirectly, to estimate fair value.

These inputs included reported trades of and broker-dealer quotes on the same or similar securities, issuer credit spreads, benchmark securities and other observable inputs.

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

(Level 1) Significant other observable inputs

(Level 2) Significant unobservable inputs

Cash and cash equivalents (1)

$ 201,688 $ 201,688 $ — $ —

Digital assets 639,660 639,660 — —

Recurring fair value measured at December 31, 2022

(in thousands) Total carrying value 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.

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

(Level 1) Significant other observable inputs

(Level 2) Significant unobservable inputs

Notes payable

$ 325,654 $ 269,725 $ — $ —

Non-recurring fair value measured at December 31, 2022

(in thousands) Total carrying value 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

732,289 173,200 — —

(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.

NOTE 9 – INCOME TAXES

The Company accounts for income taxes under ASC 740 - Income Taxes , which requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statements and the tax basis of assets and liabilities, and for the expected future tax benefit to be derived from tax losses and tax credit carry-forwards.

ASC 740 additionally requires the establishment of a valuation allowance to reflect the likelihood of realization of deferred tax assets.

Income tax expense (benefit) attributable to income from continuing operations was $ 16.4 million, $( 24.2 ) million, and $ 25.0 million for the years ended December 31, 2023, 2022, and 2021, respectively, and differed from the amounts computed by applying the U.S.

federal income tax rate of 21% to pretax income from continuing operations as a result of the following:

(in thousands, except percentage data) 2023 2022 2021

Federal income tax expense (benefit) at the statutory rate 21.0 % $ 58,296 ( 21.0 ) % $ ( 150,785 ) ( 21.0 ) % $ ( 1,097 )

$ ( 148,801 )

State income taxes, net of federal tax expense 0.9 % 2,559 ( 1.6 ) % ( 11,495 ) 150.7 % 7,876

4 unchanged sentences

Prior year true-ups 1.2 % 3,346 — % 127 81.9 % 4,281

Other, net — % ( 128 ) — % ( 198 ) ( 2.8 ) % ( 144 )

Income tax expense (benefit) from continuing operations 5.9 % $ 16,426 ( 3.4 ) % $ ( 24,232 ) 477.7 % $ 24,968

components of the provision for income taxes are as follows:

OF PROVISION FOR INCOME TAXES

(in thousands)

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)

Federal $ — $ — $ —

State 1,140 733 2

Total current income tax expense 1,140 733 2

Deferred expense

Federal 66,129 ( 143,598 ) 31,569

State 1,659 ( 11,829 ) 7,874

Total deferred tax expense (benefit) 67,788 ( 155,427 ) 39,443

2 unchanged sentences

Income tax provision (benefit) $ 16,426 $ ( 24,232 ) $ 24,968

tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at

December 31, 2022 and 2021 are presented below:

OF DEFERRED TAX ASSETS AND LIABILITIES

(in thousands)

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2023 and 2022 are presented below:

(in thousands) December 31, 2023

December 31, 2022

Deferred tax assets:

9 unchanged sentences

Impairment loss 36,100 36,397

Capital losses

Gain on hedge instruments

Total gross deferred tax assets 216,901 154,915

3 unchanged sentences

Unrealized gains — ( 2,494 )

Prepaid service contracts

Property and equipment

Property and equipment, net ( 117,094 ) ( 21,959 )

Digital assets

Total gross deferred liabilities ( 154,227 ) ( 24,453 )

Net deferred tax liability $ ( 15,286 ) $ —

valuation allowance for deferred tax assets as of December 31, 2022 and 2021 was $ 130,527 thousand and nil , respectively.

The net change

in the total valuation allowance was an increase of $ 130,527 thousand in the year ended December 31, 2022.

year ended December 31, 2022, 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.

December 31, 2022, the Company has net operating loss carryforwards for federal income tax purposes of $ 217,503

thousand, which are available to offset future

taxable income.

The Company has net operating loss carryforwards for state income tax purposes of $ 46,983

thousand which are available to offset future

state taxable income.

The Company has interest carryforward in the amount of $ 10,076

thousand which has no expiration.

382 and Section 383 of the Internal Revenue Code limit the utilization of U.S.

tax attribute carryforwards following a change of control.

Based on the Company’s analysis under Section 382, approximately $ 86,000 thousand of tax attributes is limited by Section 382/383

as of December 31, 2022.

The Section 382/383 limitation in conjunction with the twenty-year carryforward limitation caused $ 33,500 thousand

of attributes to be deemed worthless, which resulted in a write-off of the related deferred tax assets in 2021.

addition, the Company has the following attributes and credit carryforwards:

OF ATTRIBUTES AND CREDIT CARRYFORWARDS

(in thousands)

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.

At December 31, 2023 , the Company has federal and state net operating loss carryforwards of $ 772.1 million, which are available to offset future taxable income.

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

The Company has the following attributes and credit carryforwards:

(in thousands) Gross Amount Expiring

Federal net operating loss carryforwards $ 3,314 2034-2035

Federal net operating loss carryforwards - indefinite life

State net operating loss carryforwards

Interest carryforwards

reconciliation of the beginning and ending amount of total unrecognized tax benefits for the tax years ended December 31, 2022, and 2021

is as follows:

OF UNRECOGNIZED TAX BENEFITS ROLL FORWARD

(in thousands)

Federal net operating loss carryforwards 651,476 Indefinite

State net operating loss carryforwards 117,286 Various

Interest expense carryforwards 14,189 Indefinite

Federal tax credit carryforwards 477 2040-2043

State tax credit carryforwards 40 Indefinite

Section 382 and Section 383 of the Internal Revenue Code limit the utilization of U.S.

tax attribute carryforwards following a change of control.

Based on the Company’s analysis under Section 382, approximately $ 85.5 million of tax attributes are limited by Section 382/383 as of December 31, 2023.

The Section 382/383 limitation in conjunction with the twenty-year carryforward limitation caused $ 33.5 million of attributes to be deemed worthless, which resulted in a write-off of the related deferred tax assets in 2021.

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

(in thousands) December 31, 2023

December 31, 2022

December 31, 2021

Balance, beginning of year $ 5,252 $ 44 $ —

Increase related to prior year tax positions

Increase (decrease) related to prior year tax positions

Increase related to current year tax positions 75 5,187 19

Balance, end of year $ 5,296 $ 5,252 $ 44

Company has established a reserve against its federal R&D tax credits generated in 2022 and previous years.

The Company has also

established a reserve related to its executive compensation deduction limitation in 2022.

addition, the Company has the following attributes and credit carryforwards:

OF NET OPERATING LOSS CARRYFORWARDS

(in thousands)

Federal net operating loss carryforwards

Federal net operating loss carryforwards - indefinite life

of December 31, 2022, the total amount of unrecognized tax benefits was $ 5,252 thousand, all of which was offset against deferred tax

If the unrecognized tax benefits were recognized as of December 31, 2022, there would be a $ 5,252 thousand 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 Other Comprehensive Income (Loss).

Interest and penalty

expense amounted to nil and nil, respectively, in 2022 and 2021.

accrued interest and penalties were nil and nil, respectively, in 2022.

The Company does not currently expect any of its remaining unrecognized

tax benefits to be recognized in the next twelve months.

Company files federal and state income tax returns.

The 2018-2021 tax years generally remain subject to examination by the IRS and various

state taxing authorities, although the Company is not currently under examination in any jurisdiction.

8 - NET LOSS PER SHARE

loss per common share is calculated in accordance with ASC 260 - “Earnings Per Share” (“ASC 260”).

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

computation of diluted net loss per share does not include dilutive common stock equivalents in the weighted average shares outstanding,

as they would be anti-dilutive.

that could potentially dilute loss per share in the future that were not included in the computation of diluted loss per share at December

31, 2022 and 2021 are as follows:

SCHEDULE OF ANTIDILUTIVE SECURITIES EXCLUDED FROM COMPUTATION OF EARNINGS PER SHARE

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

As of December 31, 2023, the total amount of unrecognized tax benefits was $ 5.3 million, all of which was offset against deferred tax assets.

If the unrecognized tax benefits were recognized as of December 31, 2023, there would be a $ 5.3 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, 2023 and 2022.

The Company does not currently expect any of its remaining unrecognized tax benefits to be recognized in the next twelve months.

The Company files federal and state income tax returns.

The 2019-2022 tax years generally remain subject to examination by the IRS and various state taxing authorities, although the Company is not currently under examination in any jurisdiction.

NOTE 10 – NET INCOME (LOSS) PER SHARE

Net income (loss) per share is calculated in accordance with ASC 260 - Earnings Per Share .

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,

Warrants to purchase common stock

2023 2022 2021

324,375 324,375 326,779

Restricted stock units — 1,255,648 642,094

Convertible notes to exchange common stock

Convertible notes

— 9,812,955 9,812,955

Series A Preferred Stock 322,654 — —

Total dilutive shares 647,029 11,392,978 10,781,828

following table sets forth the computation of basic and diluted loss per share:

SCHEDULE OF COMPUTATION OF BASIC AND DILUTED LOSS PER SHARE

The following table sets forth the computation of basic and diluted income (loss) per share:

For the year ended December 31,

Net loss attributable to common shareholders

(in thousands, except share and per share data) 2023 2022

Basic earnings per share of common stock:

Net income (loss) per share of common stock - basic

$ 259,052 $ ( 694,022 ) $ ( 29,813 )

Weighted average common shares - basic and diluted

Loss per common share - basic and diluted

9 – COMPUTE NORTH BANKRUPTCY

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.

Weighted average shares of common stock - basic

183,855,570 113,467,837 99,337,587

Net income (loss) per share of common stock - basic

$ 1.41 $ ( 6.12 ) $ ( 0.30 )

Diluted earnings per share of common stock:

Net income (loss) per share of common stock - basic

$ 259,052 $ ( 694,022 ) $ ( 29,813 )

Notes interest expense, net of tax 7,421 — —

Gain from extinguishment of debt, net of tax

( 62,909 ) — —

Net income (loss) per share of common stock - diluted

$ 203,564 $ ( 694,022 ) $ ( 29,813 )

Weighted average shares of common stock - basic

183,855,570 113,467,837 99,337,587

Restricted stock units 330,928 — —

Convertible notes 8,106,779 — —

Weighted average shares of common stock - diluted

192,293,277 113,467,837 99,337,587

Net income (loss) per share of common stock - diluted

$ 1.06 $ ( 6.12 ) $ ( 0.30 )

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.

Code (11 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

thousand in Convertible Preferred Stock of Compute North Holdings, Inc.

● Approximately

$ 21,000 thousand related to an unsecured Senior Promissory note with Compute North LLC.

● Approximately

$ 50,000 thousand in operating deposits with Compute North primarily related to the King Mountain

and Wolf Hollow hosting facilities.

Company’s financial exposure to Compute North on the date of the Bankruptcy was approximately $ 81,000

During the third quarter t he Company assessed

the impairment of these assets given the bankruptcy proceedings and estimated that the preferred stock, the unsecured loan, and approximately

thousand in deposits were fully impaired.

As a result, the company recorded an impairment charge

thousand during the third quarter of 2022.

During the fourth quarter of 2022, the company estimated

that an additional $ 16,674

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 has been fixed at $ 40,000 thousand as an unsecured claim to be paid out according to the timing and percentages within the approved

Debtor’s plan.

10 - STOCKHOLDERS’ EQUITY

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

On February 11, 2022, the Company

entered into an At-The-Market Offering Agreement, or sales agreement, with H.C.

Wainwright & Co., LLC (“Wainwright”)

relating to shares of its common stock.

In accordance with the terms of the sales agreement, the Company may offer and sell shares

of our common stock having an aggregate offering price of up to $ 750,000

thousand from time to time through Wainwright acting as its sales agent.

As of December 31, 2022, the Company had sold 42,142

thousand shares of common stock for an aggregate purchase price of $ 361,482

thousand, net of offering costs pursuant to this At-The-Market Offering Agreement.

Stock Warrants

summary of the Company’s issued and outstanding stock warrants and changes during the year ended December 31, 2022 and 2021 is

SUMMARY OF OUTSTANDING STOCK WARRANTS

Life (in years)

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 12 – STOCKHOLDERS' EQUITY

On July 27, 2023, the Company’s shareholders approved an amendment to the Company’s articles of incorporation that increased the amount of common stock authorized for issuance to 500,000,000 with a par value of 0.0001 per share.

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

Outstanding as of December 31, 2021 (Restated)

Forfeited ( 2,404 ) 52.00 —

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

Warrants exercisable as of December 31, 2022

aggregate intrinsic value of warrants outstanding and exercisable at December 31, 2022 and 2021 was $ 0

and $ 2,500 thousand, respectively.

summary of the restricted stock award activity (represented by restricted stock units (RSUs) for the year ended December 31, 2022 and

2021, as follows:

summary of the RSUs as of December 31, 2022 and 2021, respectively and changes during the period are presented below:

SUMMARY OF RESTRICTED STOCK AWARD ACTIVITY

Average Grant

Date Fair Value

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

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;

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:

Number of RSUs Weighted Average Grant Date Fair Value

Nonvested at December 31, 2021 642,094 $ 35.93

( 8,237,595 )

Nonvested at December 31, 2021 (Restated)

Granted 1,167,339 19.35

Forfeited ( 60,000 ) 42.19

Vested ( 493,785 ) 29.87

Nonvested at December 31, 2022 1,255,648 22.60

of December 31, 2022, unrecognized stock-based compensation expense of approximately $ 15,000 thousand

remains to be recognized over the weighted average period of approximately 2.3 years.

11 – ACCRUED EXPENSES

of December 31, 2022 and 2021, the Company’s accrued expenses consisted of the following:

OF ACCRUED LIABILITIES

Granted 6,258,700 8.73

Forfeited ( 309,337 ) 9.85

Vested ( 1,439,482 ) 17.90

Nonvested at December 31, 2023 5,765,529 9.40

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.

NOTE 13 – ACCRUED EXPENSES

As of December 31, 2023 and 2022, the Company’s accrued expenses consisted of the following:

(in thousands) 2023 2022

Interest $ 276 $ 1,011

Non-income taxes 6,926 14,509

Payroll and related expenses

Other 8,740 4,430

Total accrued expenses $ 22,015 $ 22,295

consists of the following:

SCHEDULE OF DEBT

(in thousands, except for interest rate data)

Maturity Date

Interest Rate

Convertible note

December 1, 2026

NOTE 14 – 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

Revolving credit line

August 5, 2024 *

Term loan (1)

August 5, 2024

Variable — 50,000

unamortized deferred fees — ( 118 )

Total loans and debt

Total 325,654 782,171

current portion — —

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

During the year ended December 31, 2022 and 2021, there was amortization of debt issuance costs of $ 3,945

thousand and $ 0

thousand, respectively.

Interest expense was

$ 14,980 thousand

and $ 1,570 thousand

for the years ended December 31, 2022 and 2021, respectively.

following summarizes the Company’s repayments due on the Term loan and Convertible Note in each of the next 5 years, and thereafter

(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)

OF REPAYMENTS DUE ON THE TERM LOAN AND CONVERTIBLE NOTE

Repayment Amount

and Term Loan facilities

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 $ 100,000 thousand on

a revolving basis.

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 ,000 thousand on a revolving basis pursuant to the terms of the Agreement.

This facility refinanced and

replaced an existing $ 100 ,000 thousand facility the Company had in place with the Bank.

the same date the Company also entered into a $ 100,000 thousand principal term loan facility

(the “Term Loan”).

The terms of the facilities set forth in the RLOC and the Term Loan are as follows:

is on August 5, 2024 .

of the facilities:

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

its closing date up to and including the termination date of the Agreement.

Company may borrow up to $ 100.0 million on the term loan, with $ 50.0 million to be made as of the Closing Date (the “Initial

Draw”), and $ 50.0 million to be made, at Borrower’s request, on or before April 25, 2023 (the “Delayed Draw”),

and subject to satisfaction of the conditions set forth in the Term Loan Agreement.

0.35 % of the Loan Commitment to the Bank (or $ 350 thousand);

due at RLOC closing (and on each anniversary if the RLOC continues for

more than one year).

An origination fee of $ 150 thousand and a contingent draw fee in the amount of $ 250 thousand (the, “Contingent Draw Fee”)

upon the execution of the Term Loan Agreement.

This Contingent Draw Fee will be refunded to the Company if it borrows the Delayed

Draw by no later than November 25, 2022.

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

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

(i) Company makes a

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

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

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

by the Bank in its sole and absolute discretion.

Rate and Payments

the facilities:

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

The interest rate is defined as the higher of (i) the Floor

Rate and (ii) Prime Rate plus the Applicable Margin.

“Floor Rate” shall mean, as of any date of determination:

for any days during an Interest Period the Loan to Value (“LTV”) Ratio is less than 40%, (b) six percent (6.00%) for

any days during an Interest Period the LTV Ratio is greater than or equal to 40% and less than 55%, and (c) 6.75% for any day the

LTV Ratio is greater than or equal to 55%.

The Applicable Margin means at any time:

(a) 1.25% for any days during an Interest Period

the LTV Ratio is less than 40%, (b2.00% for any days during an Interest Period the LTV Ratio is greater than or equal to40% and less

than 55%, and (c) 2.75% for any days during an Interest Period the LTV Ratio is greater than or equal to 55%.

Interest, which shall be due on the principal amount of the loan, at the higher of 5.75 % and the Prime Rate plus 1.75 %, only

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

for the facilities:

RLOC and term loan facilities are secured by a pledge of a sufficient amount of Company’s right, title and interest in and

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

The Bank will establish

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

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

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

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

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

The Company bears the risk of loss from market

value declines of its collateral pursuant to its obligation to pledge additional bitcoin if its market value declines such that outstanding

borrowings under the RLOC are undercollateralized.

The Company may also withdraw its collateral from the Collateral Account if market

value of bitcoin increases and outstanding borrowings under the RLOC are overcollateralized or if such borrowings are repaid in whole

Advance Rates

the facilities:

origination, the Company must ensure the Collateral Account balance has sufficient bitcoin to cause the LTV ratio to equal 65 % (or

less) (“Minimum Advance Rate”) on the unpaid principal balance of the facilities.

If at any time the LTV ratio exceeds

75 %, the Company must bring the rate of advance to the Minimum Advance Rate.

for the facilities:

Company must maintain a minimum adjusted net worth of $ 350.0 million.

The Company must maintain a minimum unrestricted and unencumbered

cash of $ 25.0 million.

November 18, 2021, the Company issued $ 650,000

thousand principal of its 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 ”).

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

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

to purchase up to an additional $ 97,500

thousand principal of Notes, which additional Notes were purchased on November 23, 2021, for an aggregate principal amount of Notes purchased

All references in this disclosure to “Notes” includes the Notes issued on both November 18, 2021 and November 23,

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

future senior, unsecured indebtedness;

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

expressly subordinated to the Notes;

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

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

and (iv) structurally subordinated to all existing and future

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

if any, of the Company’s subsidiaries.

Notes accrue interest at a rate of 1.00 %

per annum, payable semi-annually in arrears on June 1 and December 1 of each year, beginning on June 1, 2022.

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 $ 1 thousand principal

amount of Notes, which represents an initial conversion price of approximately $ 76.17

per share of common stock.

The conversion rate and conversion price will be subject to customary adjustments upon the occurrence of

certain events.

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

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

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

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

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

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

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

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

and (2) the trading

day immediately before the date the Company sends such notice .

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

unless at least $ 100,000 thousand aggregate principal amount of Notes are outstanding and not called for redemption as of the time the Company

sends the related redemption notice.

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

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

if it is converted during the related redemption conversion period.

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

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

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

repurchase date.

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

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

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

the following:

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

subject to a 30-day cure period);

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

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

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

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

(iv) a default by the Company

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

is given in accordance with the Indenture;

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

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

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

or any of its significant subsidiaries.

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

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

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

If any other Event

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

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

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

However, notwithstanding the foregoing,

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

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

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

February 2016, the FASB issued ASU No.

2016-02 - “Leases” (“ASC 842”), and has since issued amendments thereto,

related to the accounting for leases.

ASC 842 establishes a right-of-use, or 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 Other Comprehensive Income (Loss).

Effective January 1, 2019, the Company adopted

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.

Company leases office space in the United States under operating lease agreements.

Office space is the Company’s only material

underlying asset class under operating lease agreements.

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.

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 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).

NOTE 15 – 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 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.

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.

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.

Aren’t required to give exact

addresses – up to us

June 1, 2018, the Company rented its corporate office at 1180 North Town Center Drive, Suite 100, Las Vegas, Nevada 89144, on a month-to-month

February 14, 2022, the Company rented an office located at Tower 101, 101 NE Third Avenue, Fort Lauderdale, Florida, 33301, for a term

of 63 months.

March 1, 2022, the Company rented an office located at 300 Spectrum Center Drive, Irvine CA, 92618, for a term of 24 months.

May 1, 2022, the Company rented warehouse space located at 3306 5 th Street SE, East Wenatchee, Washington, 98802, for a term

of 24 months.

September 21, 2022, the Company rented warehouse space located at 512 N.

Douglas Ave., Oklahoma City, OK, 73106, for a term of 36 months.

of December 31, 2022, the Company’s right-of-use (“ROU”) assets and total lease liabilities were $ 1,276 thousand and

$ 1,343 thousand, respectively for leases in the United States.

As of December 31, 2021, the Company’s ROU assets and total lease

liabilities were nil.

The Company has amortized the right-of-use assets totaling $ 110 thousand for the year ended December 31, 2022.

lease costs are recorded on a straight-line basis within operating expenses.

The Company’s total lease expense is comprised of

the following:

SCHEDULE OF COMPONENTS OF LEASE COST

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:

For the year ended December 31,

4 unchanged sentences

Short-term lease rent expense 36 29 31

Variable lease cost 80,108 — —

Total rent expense $ 80,459 $ 356 $ 31

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

SUMMARY OF MINIMUM LEASE PAYMENTS

Additional information regarding the Company’s leasing activities is as follows:

For the year ended December 31,

(in thousands, except term and discount rate data)

2023 2022 2021

Operating cash flows from operating leases $ ( 32 ) $ 67 $ —

1 unchanged sentence

Weighted-average discount rate – operating leases 5 % 5 % — %

OF LEASE LIABILITY MATURITY

The following table presents the Company’s future minimum operating lease payments as of December 31, 2023:

(in thousands)

1 unchanged sentence

Present value of lease liability $ 478

Company entered into an arrangement with Applied Blockchain for the use of an energized cryptocurrency mining facility under which the

Company pays for electricity per megawatt based on usage.

The Company has determined that it has a lease of one of the facilities governed

by this arrangement (Ellendale) as the Company has contracted to take substantially all of the output of such facility.

This lease is

expected to commence in the first quarter of 2023.

14 - LEGAL PROCEEDINGS

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

(“Complaint”) against the Company and 10 Doe Defendants.

NOTE 16 - LEGAL PROCEEDINGS

Compute North Bankruptcy

On September 22, 2022, Compute North Holdings, Inc.

(currently d/b/a Mining Project Wind Down Holdings, Inc.) and certain of its affiliates (collectively, “Compute North”) filed for chapter 11 bankruptcy protection.

Compute North provided operating services to the Company and hosted its mining rigs at multiple facilities.

The Company delivered miners to Compute North, which then installed the mining rigs at those facilities, operated and maintained the mining rigs, and provided energy to keep the miners operating.

During the course of the chapter 11 cases,

Compute North sold substantially all of their assets in a series of 363 sale transactions, including Compute North’s ownership interests in non-debtor entities that own or partially own facilities that house the Company’s miners.

On November 23, 2022, the Company and certain of its affiliates timely filed proofs of claim asserting various claims against Compute North, including:

(i) claims arising under hosting agreements between the Company and Compute North LLC;

(ii) claims arising under that certain Senior Promissory Note, dated as of July 1, 2022, by and between the Company, as Lender, and Compute North LLC, as Borrower;

(iii) claims arising from the breach of a letter of intent between us and Compute North LLC;

and (iv) claims for daily lost revenue, profits and other damages against Compute North.

On February 9, 2023, the Bankruptcy Court approved a settlement stipulation between the Company and Compute North, pursuant to which the proofs of claim filed by the Company and certain of its affiliates were resolved, and the Company received a single allowed unsecured claim against Compute North LLC in the amount of $ 40.0 million and its Preferred Equity Interests in Compute North Holdings, Inc.

in the amount of 39,597 shares of Series C Preferred Stock was confirmed.

In exchange, the Company agreed to vote in favor of Compute North’s chapter 11 plan.

On February 16, 2023, the Bankruptcy Court confirmed Compute North’s chapter 11 plan (the “Plan”), pursuant to which Compute North will liquidate its remaining assets and distribute proceeds arising therefrom in accordance with the waterfall set forth in the Plan.

In its disclosure statement filed on December 19, 2022, the Compute North Debtors projected that holders of allowed general unsecured claims could recover anywhere between 8 % to 65 % on their claims, while holders of preferred equity interests are expected to recover nothing on their interests.

The Plan became effective on March 31, 2023.

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.

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 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 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

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.

The defendants’ time to respond has been extended until after the appointment of a lead plaintiff.

To date, no lead plaintiff has been appointed.

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.

The Company received an additional subpoena from the SEC on April 10, 2023, relating to, among other things, transactions with related parties.

The Company understands that the SEC may be investigating whether or not there may have been any violations of the federal securities law.

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:

3 unchanged sentences

4) Services Rendered;

(5) Intentional Interference

with Prospective Economic Relations;

and (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, 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 Mr.

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.

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 $ 150,000 thousand 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.

Trial is scheduled

for May 2023.

October 6, 2020, the Company entered into a series of agreements with multiple parties to design and build a data center for up to 100-megawatts

in Hardin, MT.

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

The 8-K disclosed that,

pursuant to a Data Facility Services Agreement, the Company issued 6,000,000 shares of restricted common stock, in transactions exempt

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

During the quarter ended September 30, 2021, the Company

and certain of its executives received a subpoena to produce documents and communications concerning the Hardin, Montana data center

facility described in our Form 8-K dated October 13, 2020.

We understand that the SEC may be investigating whether or not there may have

been any violations of the federal securities law.

We are cooperating with the SEC.

Class Action Complaint

December 17, 2021, 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.

The complaint alleges securities fraud related to the disclosure of an SEC investigation

previously made by the Company on November 15, 2021.

Plaintiff Tad Schlatre served the complaint on the Company on March 1, 2022.

September 12, 2022, the court appointed Carlos Marina as lead plaintiff.

On October 21, 2022, lead plaintiff voluntarily dismissed the

complaint without prejudice.

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

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

The complaint is based on allegations substantially

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

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

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

4, 2022, the defendants moved to dismiss the complaint.

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 of directors 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.

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.

the year ended December 31, 2022, the Company recorded a $ 26,000

thousand legal reserve charge related to the fair value of certain stock grants used for personal income tax reporting purposes during

The majority of this reserve was related to a claim made by the Company’s former Chairman and CEO.

In working on this initial

claim, the Company discovered that seven other individuals were also impacted by the same issue, including one current board member and

the current Chairman and CEO.

The total amount of this portion of the reserve amounted to approximately $ 2,000

Legal settlements that were accrued but remained unpaid as of December 31, 2022 of $ 1,171

thousand were classified as “legal reserve payable”.

North Bankruptcy

September 22, 2022, Compute North filed for chapter 11 bankruptcy protection.

Compute North provides operating services to the Company

and hosts our mining rigs in multiple facilities.

We delivered miners to Compute North, which then installed the mining rigs in several

facilities, operated and maintained the mining rigs, and provides energy to keep the miners operating.

In chapter 11, Compute North is

currently seeking to sell substantially all of its assets, including its direct and indirect ownership interests in the facilities that

house the Company’s miners.

Compute North may also seek to assume and assign the Compute North agreements to which the Company

is party to one or more third-party purchasers of Compute North’s assets or it may seek to reject such agreements.

Compute North’s chapter 11 cases could cause a disruption in services provided by Compute North to us and, therefore, could have

an adverse effect on our operations in the facilities managed by Compute North.

this stage of Compute North’s chapter 11 cases, it is difficult to predict whether Marathon will receive any meaningful recovery

on account of its claims.

15 - RELATED PARTY TRANSACTIONS

are considered related to the Company if the parties, directly or indirectly, through one or more intermediaries, control, are controlled

by, or are under common control with the Company.

Related parties also include principal owners of the Company, its management, members

of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if

one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting

parties might be prevented from fully pursuing its own separate interests.

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.

NOTE 17 - RELATED PARTY TRANSACTIONS

Parties are considered related to the Company if the parties, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company.

Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests.

The Company discloses all related party transactions.

September 23, 2022, the Company made an incremental 30,000

thousand investment in Auradine, Inc., bringing its total holdings in Auradine to $ 35,500

thousand based upon a previously issued and disclosed SAFE instrument.

Said Ouissal, a director of the Company, owns approximately 10 %

of the issued and outstanding shares of Auradine, and Fred Thiel, the Company’s Chairman and CEO, sits on Auradine’s Board

of Directors.

On November 3, 2022, the Company’s Board met and determined that Said Ouissal is no longer deemed to be an independent

director of the Company.

As a result, Mr.

Ouissal stepped down from the Audit and Compensation Committees.

16 – QUARTERLY FINANCIAL DATA (UNAUDITED)

following tables present the impacts of the restatement adjustments, as described in NOTE 2 – RESTATEMENT OF CONSOLIDATED

FINANCIAL STATEMENT .

Restated Consolidated Statements of Stockholders’ Equity are not presented as all impacted items on

those statements, net income (loss), accumulated deficit, and total stockholders’ equity, are presented within the following

This quarterly information has been prepared on the same basis as the Consolidated Financial Statements and includes all

adjustments necessary to state fairly the information for the interim periods presented, which management considers necessary for a

fair presentation when read in conjunction with the Consolidated Financial Statements and notes.

We believe these comparisons of

consolidated quarterly selected financial data are not necessarily indicative of future performance.

Interim Consolidated Balance Sheets

following Unaudited Interim Consolidated Balance Sheets tables present the impacts of the restatement adjustments as of the periods

ended March 31, 2021 and 2022, June 30, 2021 and 2022, and September 30, 2021 and 2022.

For the impacts of the restatement

adjustments for the Consolidated Balance Sheets as of December 31, 2021 refer to NOTE 2 – RESTATEMENT OF CONSOLIDATED

FINANCIAL STATEMENT .

The period ended December 31, 2022 was not subject to restatement and is presented in Part I of ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

SCHEDULE OF UNAUDITED INTERIM BALANCE SHEET

(in thousands)

March 31, 2021

(in thousands)

Current assets:

Cash and cash equivalents

Restricted cash

Digital assets

Digital assets held in Fund

Other receivable

Loan receivable

Digital assets, restricted

Prepaid expenses and other current assets

Total current assets

Other assets:

Property and equipment, net

Assets held for sale

Advances to vendors

Digital assets, restricted

Long term deposits

Long term prepaids

Right-of-use assets

Intangible assets, net

Total other assets

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable

Accrued expenses

Legal reserve payable

Warrant liability

Short term borrowings - revolving credit line

Operating lease liabilities

Current portion of accrued bond interest

Total current liabilities

Long-term liabilities:

Notes payable

Operating lease liabilities

Deferred tax liabilities

SBA PPP loan payable

Total long-term liabilities

Commitments and Contingencies

Stockholders’ Equity:

Preferred stock

Additional paid-in capital

Accumulated other comprehensive loss

Accumulated deficit

Total stockholders’ equity

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

(in thousands)

June 30, 2021

(in thousands)

Current assets:

Cash and cash equivalents

Digital assets

Digital assets held in Fund

Prepaid expenses and other current assets

Total current assets

Other assets:

Property and equipment, net

Long term prepaids

Intangible assets, net

Total other assets

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable

Accrued expenses

Warrant liability

Total current liabilities

Commitments and Contingencies

Stockholders’ Equity:

Preferred stock

Additional paid-in capital

Accumulated other comprehensive loss

Accumulated deficit

Total stockholders’ equity

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

(in thousands)

September 30, 2021

(in thousands)

Current assets:

Cash and cash equivalents

Digital assets

Digital assets held in Fund

Other receivable

Digital assets, restricted

Prepaid expenses and other current assets

Total current assets

Other assets:

Property and equipment, net

Long term prepaids

Intangible assets, net

Total other assets

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable

Accrued expenses

Warrant liability

Total current liabilities

Commitments and Contingencies

Stockholders’ Equity:

Preferred stock

Additional paid-in capital

Accumulated other comprehensive loss

Accumulated deficit

Total stockholders’ equity

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

(in thousands)

March 31, 2022

(in thousands)

Current assets:

Cash and cash equivalents

Restricted cash

Digital assets

Digital assets held in Fund

Other receivable

Digital assets, restricted

Prepaid expenses and other current assets

Total current assets

Other assets:

Property and equipment, net

Advances to vendors

Long term prepaids

Right-of-use assets

Total other assets

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable

Accrued expenses

Operating lease liabilities

Current portion of accrued interest

Total current liabilities

Long-term liabilities:

Notes payable

Operating lease liabilities

Deferred tax liabilities

Total long-term liabilities

Commitments and Contingencies

Stockholders’ Equity:

Preferred stock

Additional paid-in capital

Accumulated other comprehensive loss

Accumulated deficit

Total stockholders’ equity

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

(in thousands)

June 30, 2022

(in thousands)

Current assets:

Cash and cash equivalents

Restricted cash

Digital assets

Digital assets, restricted

Prepaid expenses and other current assets

Total current assets

Other assets:

Property and equipment, net

Assets held for sale

Advances to vendors

Long term prepaids

Right-of-use assets

Total other assets

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable

Accrued expenses

Short term borrowings - revolving credit line

Operating lease liabilities

Current portion of accrued interest

Total current liabilities

Long-term liabilities:

Notes payable

Operating lease liabilities

Deferred tax liabilities

Total long-term liabilities

Commitments and Contingencies

Stockholders’ Equity:

Preferred stock

Additional paid-in capital

Accumulated other comprehensive loss

Accumulated deficit

Total stockholders’ equity

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

(in thousands)

September 30, 2022

(in thousands)

Current assets:

Cash and cash equivalents

Restricted cash

Digital assets

Other receivable

Prepaid expenses and other current assets

Total current assets

Other assets:

Property and equipment, net

Advances to vendors

Long term deposits

Long term prepaids

Right-of-use assets

Digital assets, restricted

Total other assets

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable

Accrued expenses

Legal reserve payable

Operating lease liabilities

Current portion of accrued interest

Total current liabilities

Long-term liabilities:

Notes payable

Operating lease liabilities

Deferred tax liabilities

Total long-term liabilities

Commitments and Contingencies

Stockholders’ Equity:

Preferred stock

Additional paid-in capital

Accumulated other comprehensive loss

Accumulated deficit

Total stockholders’ equity

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

Consolidated Interim Statements of Other Comprehensive Income (Loss)

following Unaudited Interim Statements of Other Comprehensive Income (Loss) tables present the impacts of the restatement adjustments for the periods ended March

31, 2021 and 2022, June 30, 2021 and 2022, and September 30, 2021 and 2022.

For the impacts of the restatement adjustments for the Statements

of Other Comprehensive Income (Loss) for the period ended December 31, 2021 refer to NOTE 2 – RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENT .

The Statements of Other Comprehensive Income (Loss) for the period ended December 31, 2022 was not subject to restatement and is presented in Part I of ITEM

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

SCHEDULE OF UNAUDITED INTERIM STATEMENT OF OPERATIONS

(in thousands, except share and per share data)

For the three months ended

March 31, 2021

(in thousands, except share and per share data)

Total revenues

Costs and expenses

Cost of revenues

Cost of revenues - energy, hosting and other

Cost of revenues - depreciation and amortization

Total cost of revenues

Operating expenses

General and administrative expenses

Legal reserves

Impairment of deposits due to vendor bankruptcy filing

Impairment of digital assets

Impairment of patents

Impairment of mining equipment and advances to vendors

Realized and unrealized gains (losses) on digital assets

Realized and unrealized gains (losses) on digital assets held within Investment Fund

Gain on sale of equipment, net of disposals

Total operating expenses

Operating loss

Impairment of loan and investment due to vendor bankruptcy filing

Change in fair value of digital assets held in Fund

Other non-operating income (loss)

Interest expense

Income before income taxes

Income tax benefit (expense)

Net income (loss)

Net income (loss) per share, basic:

Net income (loss) per share, diluted:

Weighted average shares outstanding, basic:

Weighted average shares outstanding, diluted:

Other comprehensive income (loss)

Foreign currency translation adjustments

Comprehensive income (loss)

(in thousands, except share and per share data)

For the three months ended

June 30, 2021

(in thousands, except share and per share data)

Total revenues

Costs and expenses

Cost of revenues

Cost of revenues - energy, hosting and other

Cost of revenues - depreciation and amortization

Total cost of revenues

Operating expenses

General and administrative expenses

Impairment of digital assets

Realized and unrealized gains (losses) on digital assets loan receivable and digital assets

Realized and unrealized gains (losses) on digital assets held within Investment Fund

Total operating expenses

Operating income (loss)

Change in fair value of digital assets held in Fund

Other non-operating income (loss)

Interest expense

Income (loss) before income taxes

Income tax benefit (expense)

Net income (loss)

$ ( 108,885 )

$ ( 110,829 )

Net loss per share, basic and diluted:

Weighted average shares outstanding, basic and diluted:

Other comprehensive income (loss)

Foreign currency translation adjustments

Comprehensive income (loss)

(in thousands, except share and per share data)

For the six months ended

June 30, 2021

(in thousands, except share and per share data)

Total revenues

Costs and expenses

Cost of revenues

Cost of revenues - energy, hosting and other

Cost of revenues - depreciation and amortization

Total cost of revenues

Operating expenses

General and administrative expenses

Impairment of digital assets

Realized and unrealized gains (losses) on digital assets loan receivable and digital assets

Realized and unrealized gains (losses) on digital assets held within Investment Fund

Total operating expenses

Operating income (loss)

Change in fair value of digital assets held in Fund

Other non-operating income (loss)

Interest expense

Income (loss) before income taxes

Income tax benefit (expense)

Net income (loss)

Net loss per share, basic and diluted:

Weighted average shares outstanding, basic and diluted:

Other comprehensive income (loss)

Foreign currency translation adjustments

Comprehensive income (loss)

(in thousands, except share and per share data)

For the three months ended

September 30, 2021

(in thousands, except share and per share data)

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

Costs and expenses

Cost of revenues

Cost of revenues - energy, hosting and other

Cost of revenues - depreciation and amortization

Total cost of revenues

Operating expenses

General and administrative expenses

Impairment of digital assets

Realized and unrealized gains (losses) on digital assets loan receivable and digital assets

Realized and unrealized gains (losses) on digital assets held within Investment Fund

Total operating expenses

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

Change in fair value of digital assets held in Fund

Other non-operating income (loss)

Income (loss) before income taxes

Income tax benefit (expense)

Net income (loss) 118,699 ( 8,962 ) ( 390 ) 151,826

Net loss per share, basic and diluted:

Weighted average shares outstanding, basic and diluted:

Other comprehensive income (loss)

Foreign currency translation adjustments

Comprehensive income (loss)

(in thousands, except share and per share data)

For the nine months ended

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,

(in thousands, except share and per share data)

Total revenues

Costs and expenses

Cost of revenues

Cost of revenues - energy, hosting and other

Cost of revenues - depreciation and amortization

Total cost of revenues

Operating expenses

General and administrative expenses

Impairment of digital assets

Realized and unrealized gains (losses) on digital assets loan receivable and digital assets

Realized and unrealized gains (losses) on digital assets held within Investment Fund

Total operating expenses

Operating income (loss)

Change in fair value of digital assets held in Fund

Other non-operating income (loss)

Interest expense

Income (loss) before income taxes

Income tax benefit (expense)

Net income (loss)

Net loss per share, basic and diluted:

Weighted average shares outstanding, basic and diluted:

Other comprehensive income (loss)

Foreign currency translation adjustments

Comprehensive income (loss)

(in thousands, except share and per share data)

For the three months ended

December 31, 2021

(in thousands, except share and per share data)

Total Revenues

Costs and expenses

Cost of revenues

Cost of revenues - energy, hosting and other

Cost of revenues - depreciation and amortization

Total cost of revenues

Operating expenses

General and administrative expenses

Impairment of digital assets

Realized and unrealized gains (losses) on digital assets loan receivable and

digital assets

Realized and unrealized gains (losses) on digital assets held within Investment Fund

Total operating expenses

Operating income (loss)

Change in fair value of digital assets held in Fund

Other non-operating income (loss)

Interest expense

Income (loss) before income taxes

Income tax benefit (expense)

Net income (loss)

Net income per share, basic:

Net income per share, diluted:

Weighted average shares outstanding, basic:

Weighted average shares outstanding, diluted:

Other comprehensive income (loss)

Foreign currency translation adjustments

Comprehensive income (loss)

(in thousands, except share and per share data)

For the three months ended

March 31, 2022

(in thousands, except share and per share data)

Total revenues

Costs and expenses

Cost of revenues

Cost of revenues - energy, hosting and other

Cost of revenues - depreciation and amortization

Total cost of revenues

Operating expenses

General and administrative expenses

Impairment of digital assets

Impairment of patents

Realized and unrealized gains (losses) on digital assets loan receivable and digital assets

Realized and unrealized gains (losses) on digital assets held within Investment Fund

Total operating expenses

Operating income ( loss)

Change in fair value of digital assets held in Fund

Other non-operating income (loss)

Interest expense

Income (loss) before income taxes

Income tax benefit (expense)

Net income (loss)

Net loss per share, basic and diluted:

Weighted average shares outstanding, basic and diluted:

Other comprehensive income (loss)

Foreign currency translation adjustments

Comprehensive income (loss)

(in thousands, except share and per share data)

For the three months ended

June 30, 2022

(in thousands, except share and per share data)

Total revenues

Costs and expenses

Cost of revenues

Cost of revenues - energy, hosting and other

Cost of revenues - depreciation and amortization

Total cost of revenues

Operating expenses

General and administrative expenses

Impairment of digital assets

Realized and unrealized gains (losses) on digital assets loan receivable and digital assets

Gain on sale of equipment, net of disposals

Realized and unrealized gains (losses) on digital assets held within Investment Fund

Total operating expenses

Operating income (loss)

Change in fair value of digital assets held in Fund

Other non-operating income (loss)

Interest expense

Income (loss) before income taxes

Income tax benefit (expense)

Net income (loss)

$ 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 )

Net loss per share, basic and diluted:

Weighted average shares outstanding, basic and diluted:

Other comprehensive income (loss)

Foreign currency translation adjustments

Comprehensive income (loss)

(in thousands, except share and per share data)

For the six months ended

June 30, 2022

(in thousands, except share and per share data)

Total revenues

Costs and expenses

Cost of revenues

Cost of revenues - energy, hosting and other

Cost of revenues - depreciation and amortization

Total cost of revenues

Operating expenses

General and administrative expenses

Impairment of digital assets

Impairment of patents

Realized and unrealized gains (losses) on digital assets loan receivable and digital assets

Gain on sale of equipment, net of disposals

Realized and unrealized gains (losses) on digital assets held within Investment Fund

Total operating expenses

Operating income (loss)

Change in fair value of digital assets held in Fund

Other non-operating income (loss)

Interest expense

Income (loss) before income taxes

Income tax benefit (expense)

Net income (loss)

Operating loss

( 20,216 ) ( 198,151 ) ( 44,025 ) ( 410,925 )

1 unchanged sentence

Net loss per share - basic and diluted:

Weighted average shares outstanding, basic and diluted:

Other comprehensive income (loss)

Foreign currency translation adjustments

Comprehensive income (loss)

(in thousands, except share and per share data)

For the three months ended

September 30, 2022

(in thousands, except share and per share data)

Total revenues

Costs and expenses

Cost of revenues

Cost of revenues - energy, hosting and other

Cost of revenues - depreciation and amortization

Total cost of revenues

Operating expenses

General and administrative expenses

Legal reserves

Impairment of deposits due to vendor bankruptcy filing

Impairment of digital assets

Gain on sale of equipment, net of disposals

Total operating expenses

Operating income (loss)

Impairment of loan and investment due to vendor bankruptcy filing

Change in fair value of digital assets held in Fund

Other non-operating income (loss)

Interest expense

Income (loss) before income taxes

Income tax benefit (expense)

Net income (loss)

Net loss per share, basic and diluted:

Weighted average shares outstanding, basic and diluted:

Other comprehensive income (loss)

Foreign currency translation adjustments

Comprehensive income (loss)

(in thousands, except share and per share data)

For the nine months ended

September 30, 2022

(in thousands, except share and per share data)

Total revenues

Costs and expenses

Cost of revenues

Cost of revenues - energy, hosting and other

Cost of revenues - depreciation and amortization

Total cost of revenues

Operating expenses

General and administrative expenses

Legal reserves

Impairment of deposits due to vendor bankruptcy filing

Impairment of digital assets

Impairment of patents

Realized and unrealized gains (losses) on digital assets loan receivable and digital assets

Gain on sale of equipment, net of disposals

Realized and unrealized gains (losses) on digital assets held within Investment Fund

Total operating expenses

Operating income (loss)

Change in fair value of digital assets held in Fund

Other non-operating income (loss)

Impairment of loan and investment due to vendor bankruptcy filing

Interest expense

Income (loss) before income taxes

Income tax benefit (expense)

Net income (loss)

( 0.17 ) ( 1.94 ) ( 0.62 ) ( 3.12 )

$ ( 294,014 )

Net loss per share, basic and diluted:

Weighted average shares outstanding, basic and diluted:

Other comprehensive income (loss)

Foreign currency translation adjustments

Comprehensive income (loss)

For the three months ended

(in thousands, except share and per share data)

December 31, 2022

Total revenues

Costs and expenses

Cost of revenues

Cost of revenues - energy, hosting and other

Cost of revenues - depreciation and amortization

Total cost of revenues

Operating expenses

General and administrative expenses

Legal reserves

Impairment of deposits due to vendor bankruptcy filing

Impairment of digital assets

Impairment of mining equipment and advances to vendors

Total operating expenses

Operating income (loss)

Other non-operating income (loss)

Interest expense

Income (loss) before income taxes

Income tax benefit (expense)

NOTE 19 – SUPPLEMENTAL CONSOLIDATED FINANCIAL INFORMATION

The following table provides supplemental disclosure of Consolidated Statements of Cash Flows information:

Year Ended December 31,

2023 2022 2021

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

Net loss per share, basic:

Weighted average shares outstanding, basic and diluted:

Weighted average shares outstanding, basic:

Interim Consolidated Statements of Cash Flows

following Unaudited Interim Consolidated Statement of Cash Flow tables present the impacts of the restatement adjustments for the

periods ended March 31, 2021 and 2022, June 30, 2021 and 2022, and September 30, 2021 and 2022.

For the impacts of the restatement

adjustments for the Consolidated Statement of Cash Flows for the period ended December 31, 2021 refer to NOTE 2 –

RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENT .

The Consolidated Statements of Cash Flows for the period ended December 31, 2022 was not

subject to restatement and is presented in Part I of ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

SCHEDULE OF UNAUDITED INTERIM STATEMENT OF CASH FLOWS

(in thousands)

For the three months ended

March 31, 2021

(in thousands)

Cash flows from operating activities

Adjustments to reconcile net less to net cash used in operating activities:

Realized and unrealized losses (gains) on digital assets held within Investment Fund

Change in fair value of digital assets held in Investment Fund

Impairment of digital assets

Other adjustment from operations, net

Proceeds from sale of digital currencies in fund

Realized and unrealized gains (losses) on digital assets loan receivable and digital assets

Other adjustment from operations, net

Realized gain (loss) on sale of digital currencies

Deferred tax expense

Impairment of digital currencies

Gain on Sale of Asset, net of disposals

Realized and unrealized losses (gains) on digital currencies held in fund

Changes in operating assets and liabilities:

Prepaid expenses and other assets

Accounts payable and accrued expenses

All other adjustments to reconcile net loss to net cash used in operating activities

Net cash used in operating activities

Cash flows from investing activities

Deconsolidation of Fund

All other adjustments to reconcile net loss to net cash used in investing activities

Net cash used in investing activities

Cash flows from financing activities

All other adjustments to reconcile net loss to net cash used in financing activities

Net cash used in financing activities

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

Cash, cash equivalents, and restricted cash — beginning of period

Cash, cash equivalents, and restricted cash — end of period

(in thousands)

For the six months ended

June 30, 2021

(in thousands)

Cash flows from operating activities

Adjustments to reconcile net less to net cash used in operating activities:

Realized and unrealized losses (gains) on digital assets held within Investment Fund

Change in fair value of digital assets held in Investment Fund

Impairment of digital assets

Other adjustment from operations, net

Changes in operating assets and liabilities:

Accounts payable and accrued expenses

All other adjustments to reconcile net loss to net cash used in operating activities

Net cash used in operating activities

Cash flows from investing activities

All other adjustments to reconcile net loss to net cash used in investing activities

Net cash used in investing activities

Cash flows from financing activities

All other adjustments to reconcile net loss to net cash used in financing activities

Net cash used in financing activities

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

Cash, cash equivalents, and restricted cash — beginning of period

Cash, cash equivalents, and restricted cash — end of period

(in thousands)

For the nine months ended

September 30, 2021

(in thousands)

Cash flows from operating activities

Adjustments to reconcile net less to net cash used in operating activities:

Realized and unrealized losses (gains) on digital assets held within Investment Fund

Realized and unrealized gains (losses) on digital assets loan receivable and digital assets

Change in fair value of digital assets held in Investment Fund

Impairment of digital assets

Other adjustment from operations, net

Changes in operating assets and liabilities:

Prepaid expenses and other assets

Accounts payable and accrued expenses

All other adjustments to reconcile net loss to net cash used in operating activities

Net cash used in operating activities

Cash flows from investing activities

All other adjustments to reconcile net loss to net cash used in investing activities

Net cash used in investing activities

Cash flows from financing activities

All other adjustments to reconcile net loss to net cash used in financing activities

Net cash used in financing activities

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

Cash, cash equivalents, and restricted cash — beginning of period

Cash, cash equivalents, and restricted cash — end of period

(in thousands)

For the three months ended

March 31, 2022

(in thousands)

Cash flows from operating activities

Adjustments to reconcile net less to net cash used in operating activities:

Deferred tax benefit

Realized and unrealized losses (gains) on digital assets held within Investment Fund

Realized and unrealized gains (losses) on digital assets loan receivable and digital assets

Change in fair value of digital assets held in Investment Fund

Impairment of digital assets

Other adjustment from operations, net

Changes in operating assets and liabilities:

Prepaid expenses and other assets

Accounts payable and accrued expenses

All other adjustments to reconcile net loss to net cash used in operating activities

Net cash used in operating activities

Cash flows from investing activities

All other adjustments to reconcile net loss to net cash used in investing activities

Net cash used in investing activities

Cash flows from financing activities

All other adjustments to reconcile net loss to net cash used in financing activities

Net cash used in financing activities

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

Cash, cash equivalents, and restricted cash — beginning of period

Cash, cash equivalents, and restricted cash — end of period

(in thousands)

For the six months ended

June 30, 2022

(in thousands)

Cash flows from operating activities

Adjustments to reconcile net less to net cash used in operating activities:

Gain on sale of assets

Deferred tax expense

Realized and unrealized losses (gains) on digital assets held within Investment Fund

Realized and unrealized gains (losses) on digital assets loan receivable and digital assets

Change in fair value of digital assets held in Investment Fund

Impairment of digital assets

Other adjustment from operations, net

Changes in operating assets and liabilities:

Prepaid expenses and other assets

All other adjustments to reconcile net loss to net cash used in operating activities

Net cash used in operating activities

Cash flows from investing activities

Deconsolidation of Fund

All other adjustments to reconcile net loss to net cash used in investing activities

Net cash used in investing activities

Cash flows from financing activities

All other adjustments to reconcile net loss to net cash used in financing activities

Net cash used in financing activities

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

Cash, cash equivalents, and restricted cash — beginning of period

Cash, cash equivalents, and restricted cash — end of period

(in thousands)

For the nine months ended

September 30, 2022

(in thousands)

Cash flows from operating activities

Adjustments to reconcile net less to net cash used in operating activities:

Gain on Sale of Asset, net of disposals

Deferred tax expense

Realized and unrealized losses (gains) on digital currencies held within Investment Fund

Realized and unrealized gains (losses) on digital assets loan receivable and digital assets

Change in fair value of digital assets held in Investment Fund

Impairment of digital currencies

Other adjustment from operations, net

Changes in operating assets and liabilities:

Prepaid expenses and other assets

Accounts payable and accrued expenses

All other adjustments to reconcile net loss to net cash used in operating activities

Net cash used in operating activities

Cash flows from investing activities

Deconsolidation of Fund

All other adjustments to reconcile net loss to net cash used in investing activities

Net cash used in investing activities

Cash flows from financing activities

All other adjustments to reconcile net loss to net cash used in financing activities

Net cash used in financing activities

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

Cash, cash equivalents, and restricted cash — beginning of period

Cash, cash equivalents, and restricted cash — end of period

17 – SUBSEQUENT EVENTS

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

Entity”), whose purpose shall be to jointly (a) establish and operate one or more mining facilities for digital assets;

mine digital assets.

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

Dhabi, and the initial equity ownership in the ADGM Entity shall be 80% FSI and 20% the Company , and capital contributions will be made,

subject to the satisfaction or waiver of certain conditions, during the 2023 development period in those proportions, consisting of both

cash and in kind, in amounts of approximately $ 406,000 thousand in aggregate.

On February 6, 2023, the Company

provided Silvergate Bank with the required 30-day notice stating the Company’s intent to prepay the outstanding balance on its

term loan facility as well as the Company’s intent to terminate the term loan facility.

The Company and Silvergate

subsequently agreed to also terminate the revolving line of credit (“RLOC”) facility.

On March 8, 2023, the term loan

prepayment was completed, and the Company’s term loan and RLOC facilities with Silvergate Bank were terminated.

On March 12, 2023, Signature Bank

was closed by its state chartering authority, the New York State Department of Financial Services.

On the same date the Federal

Deposit Insurance Corporation (“FDIC”) was appointed as receiver and transferred all customer deposits and substantially all of the

assets of Signature Bank to Signature Bridge Bank, N.A., a full-service bank that is being operated by the FDIC.

Company automatically became a customer of Signature Bridge Bank, N.A.

as part of this action.

The Company held approximately $ 142,000

thousand cash deposits at Signature Bridge Bank, N.A.as of March 12, 2023.

Normal banking activities resumed on Monday, March 13,

Supplemental information

Cash paid during the year for:

Income taxes $ 723 $ 7 $ —

Interest 7,392 11,432 —

Supplemental schedule of non-cash investing and financing activities:

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 —

Reclassifications from advances to vendor to property and equipment upon receipt of equipment 551,418 337,485 —

Common stock issued for service and license agreements — 4,577 11,135

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

NOTE 20 – 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.

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