SecProbe.io

CORRESP
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filename1.htm

October
12, 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 June 30, 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 September 29, 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 June 30, 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, the Company has copied
each comment verbatim from your Letter and has placed our response immediately below each comment.

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

Notes
to Consolidated Financial Statements

Note
3 - Summary of Significant Accounting Policies

Revenues
from Contracts with Customers, page 69

1. We
                                            note from your response to prior comment 7 that 11% of total reported revenue for the year
                                            ended December 31, 2021 was generated through F2 Pool. As previously requested, please provide
                                            us with a copy of the related written agreement of the terms and conditions of this arrangement.
                                            If the terms of service are publicly available, you may provide us with the URL address,
                                            but please ensure your response adequately considers any relevant prior versions, if applicable.
                                            In addition to the written terms and conditions agreement, if the parties have approved any
                                            other agreements that you considered when identifying the contract with the customer in accordance
                                            with ASC 606, please provide copies of any such written agreements or a description of any
                                            agreements that were approved orally or in accordance with other customary business practices.

Response:
The Company acknowledges the Staff’s comment and in response, provides the following URL address to an archival copy of the
F2Pool “Terms of Service” that was in effect during 2021 (https://web.archive.org/web/20211019154138/http://www.f2pool.com/terms).
The Company operated as a participant in the F2 Pool in 2021 in accordance with the Terms of Service stated by the F2 Pool and did not
approve any other agreements orally or in accordance with other customary business practices that we considered when identifying the
contract with the customer in accordance with ASC 606. The Company has not participated in the F2 Pool since the year ended December
31, 2021.

U.S.
Securities and Exchange Commission

October
12, 2023

Page
2

2. You
                                            continue to indicate in your revised Participant policy in your Form 10-Q for the quarterly
                                            period ended June 30, 2023 that the transaction consideration the Company receives is entirely
                                            variable. Please revise to clarify your disclosure. In this regard, we note from your response
                                            to prior comment 9 that you have the ability to estimate the consideration earned on a daily
                                            basis based on your contributed hash rate and other inputs for the PPS and FPPS pools and
                                            you have visibility as to when the pool wins a block and your fractional share of the block
                                            and transaction fee is available on a daily basis for the Braiins pool.

Response:
The Company acknowledges the Staff’s comment and proposes to clarify its disclosure regarding variable consideration as follows.

In
its prior response to the Staff, the Company acknowledged that it has visibility into when a block is won when it participates in third-party
pools that pay rewards only when the pool successfully mines a block. For these pools (i.e. Braiins pool), the transaction consideration
remains variable and cannot be reliably estimated without risk of significant revenue reversal until the pool successfully mines a block.
Therefore, revenue is constrained until the block is won at which point in time, the Company recognizes revenue for the fractional share
of the bitcoin to which it is entitled to for its contribution to the pool’s successful mining efforts.

The
Company also participates in PPS and FPPS pools, which pay rewards based on a contractual formula, regardless of whether the pool successfully
mines any blocks during the period of time the Company is contributing computing power to the pool’s mining efforts. For these
pools, the Company earns revenue based on the contributed hash rate and other inputs. The transaction consideration the Company earns
for its provision of computing power to the pool is variable based on the hash rate contributed as a proportion of total hash rate produced
by the pool. In these PPS and FPPS pools, however, such transaction consideration can be estimated and therefore is recognized over the
period that hash rate is being contributed. Accordingly, the Company will revise its Participant policy disclosures in its Form 10-Q
for the period ended September 30, 2023, to be filed in November 2023 as follows to clarify its revenue recognition policy depending
on the type of third-party pool that it participates in:

Providing
computing power on mining rigs to solve complex cryptographic algorithms in support of blockchain mining (in a process known as “solving
a block”) is the primary output of the Company’s ordinary activities. The provision of computing power is the only performance
obligation under the Company’s arrangements with third-party mining pool operators. The transaction consideration the Company receives
is non-cash (i.e., bitcoin) and variable. For third-party pools that pay rewards only when the pool successfully mines a block, the consideration
to which the Company will be entitled to for its efforts remain variable and is not estimable until the pool successfully solves a block,
at which point in time the Company can then estimate its fractional share of the bitcoin to which it is entitled to for its contribution
to the pool’s successful efforts. For PPS and FPPS pools, which pay rewards based on a contractual formula that does not depend
on the pool successfully mining any blocks during the period in which the Company contributes computing power, the Company can reasonably
estimate the variable consideration to which it will be entitled to for providing computing power as such power is being provided based
on the contributed hash rate and other inputs.

U.S.
Securities and Exchange Commission

October
12, 2023

Page
3

3. We
                                            continue to evaluate your responses to prior comments regarding your revenue recognition
                                            policy and may have further comments.

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

Form
10-Q for the Quarterly Period Ended June 30, 2023

Notes
to Condensed Consolidated Financial Statements

Note
2 – Voluntary Change in Accounting Principle, page 7

4. We
                                            note your disclosure of the impacts of the change in accounting principle on the financial
                                            statements for the three ended March 31, 2022 and six months ended June 30, 2022. Please
                                            revise to also disclose the effect of the change in accounting principle on the current period
                                            and any prior periods retrospectively adjusted, as well as the cumulative effect of the change
                                            on accumulated deficit as of the earliest period presented. Refer to ASC 250-10-50-1(b).

Response:
The Company acknowledges the Staff’s comment. The change in accounting principle impacted the accounting for loaned bitcoin
which occurred in the third and fourth quarter of 2021 and returned when the loan was terminated in the second quarter of 2022. The Company
will present the requested revised disclosure in the notes to the condensed consolidated financial statements in the Company’s
Form 10-Q for the period ended September 30, 2023, to be filed in November 2023.

Note
4 - Property and Equipment, page 15

5. We
                                            note from your disclosure on page 74 in the Form 10-K for the fiscal year ended December
                                            31, 2022 that you reduced the estimated useful life for the asset group of mining rigs from
                                            5 to 3 years, effective January 1, 2023. Please revise to provide the disclosures required
                                            by ASC 250-10-50-4.

Response:
The Company acknowledges the Staff’s comment. Per ASC 250-10-50-4, “If a change in estimate does not have a material
effect in the period of change but is reasonably certain to have a material effect in later periods, a description of that change in
estimate shall be disclosed whenever the financial statements of the period of change are presented.” ASC 250-10-50-4 further states,
“The effect on income from continuing operations, net income (or other appropriate captions of changes in the applicable net assets
or performance indicator), and any related per-share amounts of the current period shall be disclosed for a change in estimate that affects
several future periods, such as a change in service lives of depreciable assets.” Accordingly, we will add required disclosure
in Management’s Discussion and Analysis section of the Form 10-K/A which will be filed subsequent to the Company’s submission
of this comment response letter.

U.S.
Securities and Exchange Commission

October
12, 2023

Page
4

Management’s
Discussion and Analysis of Financial Condition and Results of Operations Critical Accounting Policies and Estimates

Digital
Assets, page 32

6. We
                                            note in response to prior comment 12 that you have determined that the appropriate classification
                                            for the proceeds from sale of digital assets is in investing activities. Please revise your
                                            disclosure indicating that sales of digital assets are included within operating activities.

Response:
The Company acknowledges the Staff’s comment and will present the following revised disclosure in the Company’s Management’s
Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Estimates, under the
subtitle Digital Assets in the Form 10-Q for the period ended September 30, 2023, to be filed in November 2023:

The
sales of digital assets are included within investing activities in the accompanying condensed consolidated statements of cash flows
and any gains or losses from such sales are included in operating expenses in the condensed consolidated statements of operations.

Legal
Proceedings

Ho
v. Marathon, page 47

7. Consistent
                                            with your response to prior comment 13 and your disclosure on page 28, please revise to indicate
                                            that the Court noted that a jury is more likely to accept $150,000 as an appropriate damages
                                            amount if liability is found. In this regard, your disclosure indicates the amount is $150.

Response:
The Company respectfully directs the Staff to page 7 of the Company’s Form 10-Q for the quarterly period ended June 30, 2023,
where the Company noted in the heading for the notes to condensed consolidated financial statements that dollars in the document are
in thousands:

MARATHON
DIGITAL HOLDINGS, INC. AND SUBSIDIARIES

NOTES
TO CONDENSED CONSOLIDTED FINANCIAL TATEMENTS

(Dollars
in thousands, except per share and per bitcoin amounts)

U.S.
Securities and Exchange Commission

October
12, 2023

Page
5

In
connection with responding to the Staff’s comments, the Company acknowledges that (i) it is responsible for the adequacy and accuracy
of the disclosure in its filing; (ii) Staff comments or changes to disclosure in response to Staff comments do not foreclose the Commission
from taking any action with respect to the filing; and (iii) it may not assert Staff comments as a defense in any proceeding initiated
by the Commission or any person under the federal securities laws of the United States.

We
hope you find that these responses adequately address the Staff’s questions, but please contact the undersigned at salman.khan@mara.com
and Jolie Kahn, Esq., at joliekahnlaw@sbcglobal.net, if you have any further questions or would like to discuss our responses.

    Sincerely,

    /s/
    Salman Khan

    Salman
    Khan

    Chief
    Financial Officer

    Cc:
    Jolie Kahn, Esq.