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CORRESP
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filename1.htm

August
8, 2023

Securities
and Exchange Commission

Division
of Corporation Finance

100
F Street, NE

Washington,
D.C. 20549-4561

    Attn:
    Melissa
    Walsh

    Stephen
    Krikorian

    Re:
    Marathon
    Digital Holdings, Inc.

    Form
    10-K for the Fiscal Year Ended December 31, 2022

    Form
    10-Q for the Quarterly Period Ended March 31, 2023

    File
    No. 001-36555

Dear
Ms. Walsh and Mr. Krikorian:

This
letter constitutes the response (“Response”) of Marathon Digital Holdings, Inc. (the “Company”) to your comment
letter dated July 12, 2023 (the “Letter”) to the Chief Financial Officer of the Company, relating to the Company’s
Annual Report on Form 10-K for the fiscal year ended December 31, 2022 (the “2022 10-K”) and the Company’s Quarterly
Report on Form 10-Q for the quarterly period ended March 31, 2023 (the “2023 10-Q”). Unless otherwise indicated, capitalized
terms used herein have the meanings ascribed to them in the 2022 10-K and/or 2023 10-Q. For ease of reference, we have copied each comment
verbatim from your Letter and have placed our response immediately below each comment.

Form
10-K for the Fiscal Year ended December 31,

2022
Risk Factors, page 12

    1.
    We
    note your proposed risk factor disclosure in response to prior comment 2 and the risk factor included on page 37 of your Form 10-Q
    for the quarterly period ended March 31, 2023. Despite the complexity of the projection, please revise to disclose your current estimate
    of the minimum bitcoin price that you would turn off your miners assuming all other costs remain unchanged, along with the assumptions
    used in the computation of such estimate such as electricity and hosting prices, or disclose that such an estimate is not practicable.

Response:
Due to the complexity of the analysis and multiple variables involved in determining this theoretical price, such an estimate is
not practicable. We have articulated the following reasons, which constitute the most salient reasons and some of which we have previously
discussed:

    ●
    The
    Company believes the analysis to try to determine such a minimum price to be competitive business information, the disclosure of
    which would be detrimental to our business and competitive position.

    ●
    Estimating
    the minimum bitcoin price is very challenging due to factors such as global hash rate vs. our hash rate, difficulty factor and the
    reliability of those estimations.

U.S.
Securities and Exchange Commission

August
8, 2023

Page
2

    ●
    The
    Company has certain contracts with fixed costs that will be incurred irrespective of whether it shuts down operations or continues
    to produce bitcoin, so this factors significantly into whether there is an optimal shut down price.

    ●
    The
    Company discloses non-GAAP measure of marginal cost of revenue without depreciation and amortization in the Management Discussion
    and Analysis section of the Form 10-K. The users of the financial statements may use that information to determine a theoretical
    breakeven price under those historical variables. The Company’s marginal cost of revenue without depreciation and amortization
    per bitcoin for the year ended December 31, 2022, was approximately $17,500 and for the three months ended March 31, 2023, was approximately
    $15,900.

Because
there has been limited precedent set for financial accounting of bitcoin, page 29

    2.
    We
    note your response to prior comment 8. As previously requested, please also tell us what consideration you gave to revising or removing
    the disclosure on page 29 that “no official guidance has yet been provided by the Financial Accounting Standards Board.”
    In this regard, we note from your response that the intent of your disclosures was to communicate that there is not currently any
    explicit GAAP that refers to crypto or other digital assets.

Response:
The Company acknowledges to the Staff that its disclosure that “no official guidance has yet been provided by the Financial
Accounting Standards Board” was incorrect and is summarized in responses to the Staff’s comments below regarding current
revenue recognition policies. The Company will revise the disclosure in the proposed Amendment No. 1 to its Form 10-K for the year ended
December 31, 2022 (the “10-K/A”) to remove the statement which will be filed subsequent to our submission of this comment
response letter. The Company has also removed the statement from its first quarter Form 10-Q for the period ended March 31, 2023 and
its second quarter Form 10-Q for the period ended June 30, 2023.

Consolidated
Statements of Other Comprehensive Income (Loss), page 55

    3.
    We
    note your proposed revision to the caption, “Unrealized gains (losses) on digital assets loan receivable and realized gains
    on digital assets.” Please explain why you refer to the gains (losses) on digital assets loan receivable as only unrealized.
    In this regard, we note that the digital assets were returned in June 2022.

Response:
The Company acknowledges the Staff’s comment and will revise the nomenclature of the account to reflect “Gains on digital
assets and gains (losses) on digital assets loan receivable” in the Form 10-K/A to be filed subsequent to submission of this comment
letter response. The Company will also reflect the revision in its second quarter Form 10-Q for the period ended June 30, 2023.

U.S.
Securities and Exchange Commission

August
8, 2023

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3

Consolidated
Statements of Cash Flows, page 57

    4.
    Please
    revise to include the correct amounts for cash flows from the sale of digital assets in Investment Fund in 2022 and 2021.

Response:
The Company acknowledges the Staff’s comment and will correct the presentation error for the sale of digital assets in the
Consolidated Statements of Cash Flows in the Form 10-K/A to be filed subsequent to our submission of this comment response letter.

Note
3 - Summary of Significant Accounting Policies

Revenues
from Contracts with Customers, page 69

    5.
    We
    note your response to prior comment 18. As we continue to evaluate your Operator accounting policy disclosure, please further clarify
    when you recognize revenue. We note that you measure the fair value of bitcoin earned using the daily quoted closing U.S.
    dollar spot rate, but you indicate in your proposed revised disclosure, and your revised disclosure in your Form 10-Q for the three
    months ended March 31, 2023, that you earn revenue at the point in time that you satisfy your lone performance obligation of providing
    transaction verification services by successfully mining a block.

Response:
The Company acknowledges the Staff’s comment and further clarifies that as an Operator, the Company earns revenue at the point
in time that it satisfies the lone performance obligation of providing transaction verification services by successfully mining a block.
Consistent with ASC 606, revenue should be measured at the time the Company satisfies the obligation and not at the daily quoted closing
U.S. dollar spot rate. We will revise our Operator accounting policy disclosure in our second quarter Form 10-Q for the period ended
June 30, 2023, as discussed in our responses below.

    6.
    You
    acknowledge in response to prior comment 19 that your measurement accounting convention as an Operator is not in accordance with
    ASC 606. Notwithstanding that the impact is quantitatively and qualitatively immaterial to the historical periods presented, please
    revise your accounting to comply with U.S. GAAP.

Response:
The Company acknowledges the Staff’s comment. As noted in the response to comment 5 above, the Company will revise its Operator
accounting policy to measure the revenue earned using the quoted spot rate for bitcoin at the time that it successfully mines the respective
block. As the Company has acknowledged to the Staff in prior comment responses, the impact of the change is quantitatively and qualitatively
immaterial to the financial statements. For example, the first quarter ended March 31, 2023, the impact of the change in the Operator
accounting policy was a reduction in the reported revenue of approximately $40 thousand out of the total reporting revenues of $33,256
thousand. The Company will revise its accounting as an Operator and record an out-of-period adjustment for the impact of the change effective
January 1, 2023, in our second quarter Form 10-Q for the period ended June 30, 2023.

U.S.
Securities and Exchange Commission

August
8, 2023

Page
4

    7.
    In
    response to prior comment 20, you refer to more than one third-party mining pool in which you participate. As we continue to evaluate
    your accounting policy as a pool participant, please tell us the name of the pools you participated in during each of the periods
    presented, along with the percentage of revenue and payout methodologies attributable to each.

Response:
Per the Staff’s request, the table below summarizes by third-party mining pool, the percentage of third-party mining pool revenue
to total reported revenue for the years ended December 31, 2021, December 31, 2022, and the first quarter ended March 31, 2023:

    Year
                                            Ended

 December
                                            31,

 2021

    Year
                                            Ended

 December
                                            31,

 2022

    Quarter
                                            Ended

 March
                                            31,

 2023

    Quarter
                                            Ended

 June
                                            30,

 2023

    ViaBTC
      2 %
      -
      -
      -

    F2
    Pool
      11 %
      -
      -
      -

    Braiins
    (fka Slush) Pool
      -
      -
      -
      -

    Foundry
      -
      -
      35 %
      4 %

    3rd
    Party Pool Revenue
      13 %
      4 %
      35 %
      4 %

The
following are the payout methodologies employed by each of the above-listed third-party pools:

    ●
    ViaBTC
    Pay-Per-Share
    (PPS) Model

    ●
    F2
    Pool
    Pay-Per-Share
    (PPS) Model

    ●
    Braiins
    (fka Slush) Pool
    Fractional
    Share Payment Structure

    ●
    Foundry

    Full
    Pay-Per-Share (FPPS) Model

Of
the four third-party pools that we have participated in, the Braiins pool is the only pool that pays rewards only when it successfully
mines a block. The Company’s fractional share of the successfully mined block and transaction fee is based on the proportion of
computing power the Company contributed to the mining pool operator as compared to the total computing power contributed by all mining
pool participants in solving the block.

The
ViaBTC, F2 and Foundry pools pay rewards based on the hash rate provided by the Company to the mining pool as a percentage of total network
hash rate, together with other inputs. Unlike the Braiins pool, the Company is entitled to consideration even if a block is not successfully
placed by the mining pool operator.

U.S.
Securities and Exchange Commission

August
8, 2023

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    8.
    We
    continue to evaluate your response to prior comment 21 and may have further comments.

Response:
The Company acknowledges that the Staff may have further comments.

    9.
    You
    indicate in response to prior comment 22 that, as a pool participant, you do not have visibility into exactly when a block is won.
    Please tell us why you do not have this information considering it appears to be publicly available information published by your
    pool operators.

Response:
The Company acknowledges the Staff’s comment that visibility into exactly when a block is won or the earned reward for participating
in third-party pools is publicly available information. We researched the available information for the third-party Braiins pool and
acknowledge that visibility to when the pool wins a block and our fractional share of the block and transaction fee is available on a
daily basis. The Company further acknowledges to the Staff that when the Company participates in PPS and FPPS pools (Foundry, F2, ViaBTC)
where the reward is based on a contractual formula, which primarily calculates the hash rate provided by the Company to the mining pool
as a percentage of total network hash rate, and other inputs, the Company has the ability to estimate the consideration earned on a daily
basis based on its contributed hash rate, and other inputs.

    10.
    We
    note your response to prior comment 22 explaining why, as a pool participant, you do not have visibility into transaction fees earned
    for each block and the Company’s proportional contribution of computing power. As previously requested, please tell us how
    much transaction fees and your proportional contribution of computing power to the pool actually vary from block to block during
    a single 24-hour period. In this regard, you indicated in your March 10, 2023 response to comment 6 that one of the factors you considered
    in assessing whether it is probable that a significant revenue reversal could occur is that “There are always a broad range
    of possible consideration amounts to which the Company could be entitled because the transaction fees vary from block to block, as
    does the Company’s proportional contribution of computing power to the pool.” In addition, you indicate in your proposed
    revised accounting policy disclosure and your disclosure in the Form 10-Q for the three months ended March 31, 2023 that the fact
    your fractional share substantively varies from block to block is one of the reasons for constraining variable consideration.

Response:
The Company acknowledges the Staff’s comment and as noted in the response to comment 9 above, the Company does have visibility
when it participates in the Braiins pool into exactly when a block and transaction fee is won, and can estimate rewards when it participates
in FPPS and PPS pools based on contributed hash rate.

The
Company respectfully advises the Staff that it will revise its Participant accounting policies for block rewards and transaction fees
as summarized below. As the Company has acknowledged to the Staff in prior comment responses, the impact of the change is quantitatively
and qualitatively immaterial to the financial statements. For example, the first quarter ended March 31, 2023, the impact of the change
in the Participant accounting policy was a reduction in the reported revenue of approximately $200 thousand out of the total reporting
revenues of $33,256 thousand. The Company will record an out-of-period adjustment for the impact of the change effective January 1, 2023,
in our second quarter Form 10-Q for the period ended June 30, 2023.

U.S.
Securities and Exchange Commission

August
8, 2023

Page
6

PPS
and FPPS Model pools – reward based on a contractual formula

Current
policy: Recognize revenue upon settlement (when reward is received in our wallet) measured using the end of day spot rate of bitcoin.

Revised
policy: Recognize revenue, which is earned when the Company provides computing power to the pool operator on a daily basis based
on the contractual payout formula. The Company’s contribution of computing power to FPPS and PPS pools occur only when it is unable
to mine in its company-owned pool (as Operator) and as such the amount of contributed hash rate can be intermittent during a given day.
To align to the variable contribution of hash rate on a daily basis, the Company will measure the daily reward using the average daily
spot price of bitcoin.

Fractional
Share Payment Structure pools – reward only when the pool successfully mines a block

Current
policy: Recognize revenue upon settlement (when reward is received in our wallet) measured using