SecProbe.io

CORRESP
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filename1.htm

February
26, 2024

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 September 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 February 23, 2024 (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 September 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, we have copied each comment
verbatim from your Letter and have placed our response immediately below each comment.

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

Notes
to Condensed Consolidated Financial Statements

Note
4 - Revenue From Contracts With Customers, page 11

    1.
    In
    your Operator revenue policy, the statement in the third bullet that “Contract inception occurs at the same point in time the
    Company validates a block” as well as the last two bullets appear to be repetitive considering your other revised disclosures.
    Please remove these statements and consider disclosing that the transaction price is fixed as of the inception of each individual
    contract in the paragraph discussing the measurement of noncash consideration.

    Response:
    The Company acknowledges and agrees with the Staff’s comment. Please see attached exhibit to this letter of our revised
    revenue recognition policy footnote that will be included in the Form 10-K for the year ended December 31, 2023, reflecting the requested
    revision.

    2.
    We
    note your proposed revisions in response to prior comment 9. In your Participant revenue policy, please further elaborate on the
    description of the payout formulas to address the following:

    ●
    Clarify
                                            how daily earnings are calculated from midnight-to-midnight UTC time without double-counting
                                            contracts occurring at 24:00 UTC. Revise to disclose, if true, that the measurement period
                                            for the underlying variables used to calculate the payout is for the 24-hour period beginning
                                            at midnight UTC daily. Also revise to describe the measurement period for the underlying
                                            variables used to calculate the payout from third-party mining pools that pay rewards only
                                            when the pool successfully validates a block; and

    ●
    Describe
    each of the components of the FPPS and PPS payout formulas and how they are computed, including a description of the computation
    of the block reward, transaction fee, and pool fee inputs, as applicable. Clarify, if true, that the PPS calculation of the block
    reward is the same as the FPPS calculation of the block reward. Provide a similar description of the inputs to how your fractional
    share of the successfully mined block and transaction fees are computed for third-party mining pools that pay rewards only when the
    pool successfully validates a block.

    Response:
    The Company acknowledges and agrees with the Staff’s comment. Please see attached exhibit to this letter of our revised
    revenue recognition policy footnote that will be included in the Form 10-K for the year ended December 31, 2023, reflecting the requested
    revision.

    3.
    You
    indicate that your Participant revenue policy is to aggregate the individual contracts that renew multiple times throughout the day
    in a 24-hour period. Please revise as not to imply that your contracts are combined based on the guidance in ASC 606-10-25-9.

    Response:
    The Company acknowledges and agrees with the Staff’s comment. Please see attached exhibit to this letter of our revised
    revenue recognition policy footnote that will be included in the Form 10-K for the year ended December 31, 2023, reflecting the requested
    revision.

    4.
    We
    note your proposed revised disclosures in response to prior comment 13. As previously requested, please revise your Participant revenue
    policy to reference in your disclosure the threshold for application of the constraint for variable consideration articulated in
    ASC 606-10-32-11. In this regard, your proposed revised disclosures indicate that variable consideration is not constrained because
    amounts are determined and settled by the pool operator within one day of completing the contract so you have the ability to estimate
    the variable consideration with reasonable certainty. Revise to indicate, if true, that the variable consideration is estimated and
    it is not constrained 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.

    Response:
    The Company acknowledges and agrees with the Staff’s comment. Please see attached exhibit to this letter of our revised
    revenue recognition policy footnote that will be included in the Form 10-K for the year ended December 31, 2023, reflecting the requested
    revision.

    5.
    In
    your proposed revised Participant revenue policy when you participate in third-party mining pools that pay rewards only when the
    pool successfully mines a block, you indicate that noncash consideration varies based upon whether the third-party mining pool successfully
    validates a block. Revise to also indicate the formula inputs that create variability in the amount of noncash consideration.

    Response:
    The Company acknowledges and agrees with the Staff’s comment. Please see attached exhibit to this letter of our revised
    revenue recognition policy footnote that will be included in the Form 10-K for the year ended December 31, 2023, reflecting the requested
    revision.

    6.
    In
    your proposed revised Participant revenue policy when you participate in third-party mining pools that pay rewards only when the
    pool successfully mines a block, you indicate that you determined that variable consideration is not constrained. You previously
    represented to us and disclosed that, upon the performance of hash calculations, the transaction consideration remained variable
    and could not be reliably estimated without risk of significant revenue reversal until the pool operator successfully mined a block
    and, therefore, variable consideration was constrained until the block was won, at which point in time, the constraint was lifted.
    Please clarify whether variable consideration is constrained when you participate in third-party mining pools that pay rewards only
    when the pool successfully mines a block. If not, please provide a comprehensive analysis of the basis for the change in your determination.

    Response:
    The Company acknowledges and agrees with the Staff’s comment. Please see attached exhibit to this letter of our revised
    revenue recognition policy footnote that will be included in the Form 10-K for the year ended December 31, 2023, reflecting the requested
    revision.

    7.
    We
    note your proposed revised disclosures in your Participant revenue policy in response to prior comment 11 indicating that you measure
    noncash consideration on the date of contract inception (when you commence providing hash calculation services) based on the simple
    average daily spot rate of bitcoin. As previously requested, please clarify in your disclosure whether this average is computed using
    the spot prices on the same day of contract inception. That is, revise to state, if true, that the estimated fair value of noncash
    consideration is measured using the simple average daily spot rate of bitcoin on the date of contract inception. In addition, in
    regard to noncash consideration measurement, rather than stating that the date of contract inception is when you commence
    providing hash calculation services, please revise to clarify that the date of contract inception is the day you commence
    providing hash calculation services. Refer to the guidance in ASC 606-10- 32-21 indicating that the estimated fair value of the noncash
    consideration should be measured on the date of contract inception.

    Response: The
    Company acknowledges and agrees with the Staff’s comment. Please see attached exhibit to this letter of our revised revenue
    recognition policy footnote that will be included in the Form 10-K for the year ended December 31, 2023, reflecting the requested
    revision.

    8.
    In
    response to prior comment 12, you indicate that the change in how noncash consideration is measured for your participation in pools
    that only pay rewards when the pool successfully mines a block would not have a material impact on your results of operations based
    on the immateriality of revenue from such pools. Please revise to disclose the error, how you are addressing the error, and the impact
    of the change on results of operations.

    Response:
    The Company acknowledges and agrees with the Staff’s comment. Please see attached exhibit to this letter of our revised
    revenue recognition policy footnote that will be included in the Form 10-K for the year ended December 31, 2023, reflecting the requested
    revision.

    9.
    In
    response to prior comment 14, we note your proposed revised disclosures in your Participant revenue policy indicating that you recognize
    noncash consideration within a 24-hour period that control of the contracted service transfers to the mining pool operator. Clarify
    whether “within a 24-hour period” is the same day that control is transferred or the day after control is transferred.
    That is, tell us and disclose whether revenue is recognized on the same day that control of the contracted service transfers to the
    mining pool operator, which is the same day as contract inception. In this regard, you previously represented to us in your October
    12, 2023 response to comment 2 that revenue is recognized at the point in time that the block is won for mining pools that pay rewards
    only when the pool successfully mines a block or over the period that hash rate is being contributed for mining pools that pay rewards
    based on a contractual formula. Please clarify when revenue is recognized and how that relates to the date on which control of the
    contracted service transfers and the date of contract inception.

    Response:
    The Company acknowledges and agrees with the Staff’s comment. Please see attached exhibit to this letter of our revised
    revenue recognition policy footnote that will be included in the Form 10-K for the year ended December 31, 2023, reflecting the requested
    revision.

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 Zabi Nowaid, Esq., at zabi.nowaid@mara.com, if you have any further questions or would like to discuss our responses.

    Sincerely,

    /s/
    Salman Khan

    Salman
    Khan

    cc:
    Zabi Nowaid, Esq.
    Chief
    Financial Officer

Exhibit

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:

    ●
    Step
    1: Identify the contract with the customer;

    ●
    Step
    2: Identify the performance obligations in the contract;

    ●
    Step
    3: Determine the transaction price;

    ●
    Step
    4: Allocate the transaction price to the performance obligations in the contract; and

    ●
    Step
    5: 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); and

    ●
    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 pool