Bitcoin mining firm Marathon Digital Holdings has recently reported receiving a subpoena from the U.S. Securities and Exchange Commission (SEC) regarding potential violations of federal securities laws. Specifically, transactions with related parties were mentioned in the subpoena, as well as Marathon’s data center facility in Hardin, Montana. Marathon, which first disclosed an SEC subpoena in November 2021, has reassured that it is cooperating with the agency on the matter.
Interestingly, Marathon has admitted that there were material weaknesses in its disclosure controls and procedures, which were not effective as of March 31, 2023. This raises concerns about the possibility of material misstatements in the firm’s consolidated financial statements or disclosures not being detected or prevented on a timely basis. The weaknesses reportedly stem from four specific accounting areas: consolidation, impairment of digital assets, disposal of property and equipment, and principal versus agent considerations in revenue recognition.
In conjunction with disclosing the SEC filing, Marathon also released its first-quarter financial results for 2023. The company reported a net loss of $7.2 million, or $0.05 per share, for the fiscal quarter ending on March 31, 2023. Contrasting this with the previous year’s quarter reveals an improvement, as the net loss then was $12.9 million or $0.12 per share. Revenue for the quarter came in at $51.1 million, a slight decrease from $51.7 million in the prior-year period, with Marathon attributing the dip to increased Bitcoin production being offset by lower Bitcoin prices.
On a positive note, Marathon boasted a hash rate of 15.4 EH/s and produced a record 2,195 Bitcoin in Q1 2023. This marks a 74% increase from the 1,259 Bitcoin mined in the first quarter of 2022. Additionally, the company reported gains on the sale of Bitcoin totaling $17.6 million, resulting from a program aimed at funding operating costs.
Marathon’s chairman and CEO, Fred Thiel, maintained an optimistic outlook for 2023, touting the company’s resilience following a turbulent 2022. Thiel cited growth in hash rate, reduced mining costs and an improved balance sheet as positive signs for the first quarter of the year. Marathon is also reportedly on track to achieve its goal of a 23 EH/s hash rate by mid-year.
While the SEC investigation clearly presents challenges for Marathon, the company’s first-quarter results do offer some reasons for enthusiasm, highlighting its strong start in 2023. However, given the ongoing legal issues and potential violations, it is essential to follow this developing story and consider both the potential rewards and risks associated with Marathon Digital Holdings.
Source: Decrypt
