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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

 

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): November 8, 2023

 

MARATHON DIGITAL HOLDINGS, INC.

(Exact Name of Registrant as Specified in Charter)

 

Nevada   001-36555   01-0949984

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

 

101 NE Third Avenue, Suite 1200

Fort Lauderdale, FL

  33301
(Address of principal executive offices)   (Zip Code)

 

Registrant’s telephone number, including area code: (800) 804-1690

 

 

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
   
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
   
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
   
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class   Trading Symbol(s)   Name of each exchange on which registered
Common Stock   MARA   The Nasdaq Capital Market

 

 

 

 

 

 

FORWARD-LOOKING STATEMENTS

 

This Form 8-K and other reports filed by Registrant from time to time with the Securities and Exchange Commission (collectively, the “Filings”) contain or may contain forward-looking statements and information that are based upon beliefs of, and information currently available to, Registrant’s management as well as estimates and assumptions made by Registrant’s management. When used in the Filings the words “anticipate,” “believe,” “estimate,” “expect,” “future,” “intend,” “plan” or the negative of these terms and similar expressions as they relate to Registrant or Registrant’s management identify forward-looking statements. Such statements reflect the current view of Registrant with respect to future events and are subject to risks, uncertainties, assumptions and other factors relating to Registrant’s industry, Registrant’s operations and results of operations and any businesses that may be acquired by Registrant. Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended or planned.

 

Although Registrant believes that the expectations reflected in the forward-looking statements are reasonable, Registrant cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, Registrant does not intend to update any of the forward-looking statements to conform these statements to actual results.

 

ITEM 2.02 Results of Operations and Financial Condition

 

On November 8, 2023, Marathon Digital Holdings, Inc. issued a press release announcing its financial results for the fiscal quarter ended September 30, 2023. A copy of the press release is furnished as Exhibit 99.1 to this report.

 

In accordance with General Instruction B.2 of Form 8-K, the information in this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

 

ITEM 9.01 Exhibits

 

99.1   Press Release dated November 8, 2023
104   Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

Date: November 9, 2023

 

  MARATHON DIGITAL HOLDINGS, INC.
     
  By: /s/ Zabi Nowaid
  Name:  Zabi Nowaid
  Title: General Counsel and Corporate Secretary

 

 

 

Exhibit 99.1

 

Marathon Digital Holdings Reports Third Quarter 2023 Results

 

Fort Lauderdale, FL – November 8, 2023 – Marathon Digital Holdings, Inc. (NASDAQ: MARA) (“Marathon” or “Company”), a leader in supporting and securing the Bitcoin ecosystem, reported its financial and operational results for the quarter ended September 30, 2023.

 

Third Quarter 2023 Financial Results

 

The Company recorded net income of $64.1 million, or $0.35 per diluted share, during the three months ended September 30, 2023, compared to a net loss of $72.5 million, or $0.62 loss per share, in the same period last year.

 

Revenues were $97.8 million for the quarter, significantly above third quarter 2022 revenues of $12.7 million, as a 467% increase in bitcoin production was amplified by 32% higher average bitcoin prices during the current year period.

 

Gains on digital assets were $31.7 million in the quarter as the Company sold 66% of the bitcoin produced in the quarter to fund operating costs. Realized gains were partially offset by higher impairment in the carrying value of digital assets, $11.9 million versus $1.4 million in the prior-year period. This quarter also uniquely benefited from a $82.6 million gain from the extinguishment of debt while the year-ago period included a $29.8 million gain on sale of equipment, a $25.0 million legal reserve, and a $39.0 million impairment due to vendor bankruptcy, all of which did not reoccur in 2023.

 

Adjusted EBITDA was $43.7 million in the current year period compared with a loss of $6.1 million in the prior year period. The year-over-year increase was primarily due to improving profitability as total margin, excluding depreciation and amortization, improved to $38.2 million, up from a loss of $1.1 million in the year-ago period. Reported adjusted EBITDA also benefited from $19.8 million of bitcoin gains net of impairment losses versus a $1.4 million impairment loss in the third quarter of 2022.

 

 
 

 

Third Quarter 2023 Production Highlights

 

   Year-over-Year Comparison   Quarter-on-Quarter Comparison 
Metric1  Q3-23   Q3-22   % Δ   Q3-23   Q2-23   % Δ 
BTC Produced   3,490    616    467%   3,490    2,926    19%
Average Bitcoin Produced per Day   37.9    6.7    467%   37.9    32.2    18%
Share of available miner rewards   4.0%   0.7%   457%   4.0%   3.3%   24%
Energized Hash Rate (EH/s)   19.1    3.8    403%   19.1    17.7    8%
Avg Operational Hash Rate (EH/s)   14.2    NA         14.2    12.1    18%
Installed Hash Rate (EH/s)   23.1    3.8    508%   23.1    21.8    6%

 

Management Commentary

 

“We made significant progress on our 2023 strategic priorities in the third quarter,” said Fred Thiel, Marathon’s chairman and CEO. “First, we grew our energized hash rate 8% quarter-over-quarter to 19.1 exahashes. In addition, our new facility in Garden City started energizing last week and is expected to be fully operational later this month. Second, we experienced significantly higher uptime as optimization efforts helped increase our U.S. average operational hash rate 18% from last quarter to 14.2 exahashes. Third, we energized our first joint venture and our first international location in the UAE. This initial success has helped open new opportunities, and we recently entered into a new joint venture in Paraguay powered by hydroelectricity.

 

“In preparation for next year’s halving, we took proactive measures to strengthen our financial position during the quarter. The $417 million note exchange completed in September reduced our long-term debt by 56% and captured a total of approximately $101 million in cash savings for our shareholders. For the first time in two years, our combined cash and bitcoin holdings exceeded our debt at the quarter’s end.

 

“Looking ahead, we should reach 26 exahash by year-end 2023, and we expect to grow our hash rate by approximately 30% in 2024. We expect to continue strengthening Marathon’s position as one of the largest and most energy-efficient Bitcoin mining operations globally.”

 

Q3 2023 Earnings Webcast and Conference Call

 

Marathon Digital Holdings will hold a webcast and conference call today, November 8, at 4:30 p.m. Eastern time to discuss its financial results for the quarter ended September 30, 2023.

 

 
 

 

To register to participate in the conference call, or to listen to the live audio webcast, please use this link. The webcast will also be broadcast live and available for replay via the investor relations section of the Company’s website.

 

Earnings Webcast and Conference Call Details

 

Date: Wednesday, November 8, 2023

 

Time: 4:30 p.m. Eastern time (1:30 p.m. Pacific time)

 

Registration link: LINK

 

If you have any difficulty connecting with the conference call, please contact Marathon’s investor relations team at ir@mara.com.

 

Investor Notice

 

Investing in our securities involves a high degree of risk. Before making an investment decision, you should carefully consider the risks, uncertainties and forward-looking statements described under “Risk Factors” in Item 1A of our most recent Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on March 16, 2023. If any of these risks were to occur, our business, financial condition or results of operations would likely suffer. In that event, the value of our securities could decline, and you could lose part or all of your investment. The risks and uncertainties we describe are not the only ones facing us. Additional risks not presently known to us or that we currently deem immaterial may also impair our business operations. In addition, our past financial performance may not be a reliable indicator of future performance, and historical trends should not be used to anticipate results in the future. Future changes in the network-wide mining difficulty rate or Bitcoin hash rate may also materially affect the future performance of Marathon’s production of bitcoin. Additionally, all discussions of financial metrics assume mining difficulty rates as of November 2023. See “Forward-Looking Statements” below.

 

Forward-Looking Statements

 

Statements made in this press release include forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements can be identified by the use of words such as “may,” “will,” “plan,” “should,” “expect,” “anticipate,” “estimate,” “continue,” or comparable terminology. Such forward-looking statements are inherently subject to certain risks, trends and uncertainties, many of which the Company cannot predict with accuracy and some of which the Company might not even anticipate and involve factors that may cause actual results to differ materially from those projected or suggested. Readers are cautioned not to place undue reliance on these forward-looking statements and are advised to consider the factors listed above together with the additional factors under the heading “Risk Factors” in the Company’s Annual Reports on Form 10-K, as may be supplemented or amended by the Company’s Quarterly Reports on Form 10-Q. The Company assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events, new information or otherwise.

 

About Marathon Digital Holdings

 

Marathon is a digital asset technology company that focuses on supporting and securing the Bitcoin ecosystem. The Company is currently in the process of becoming one of the largest and most sustainably powered Bitcoin mining operations in North America.

 

Marathon Digital Holdings Company Contact:

 

Telephone: 800-804-1690

Email: ir@mara.com

 

Marathon Digital Holdings Media Contact:

 

Email: marathon@wachsman.com

 

 
 

 

MARATHON DIGITAL HOLDINGS, INC.

CONSOLDATED CONDENSED STATEMENTS OF OPERATIONS (unaudited)

(In thousands, except share and per share amounts)

 

   Three months ended Sept 30,   Nine months ended Sept 30, 
   2023   2022 (restated)   2023   2022 (restated) 
                 
Total revenues  $97,849   $12,690   $230,740   $89,336 
                     
Costs and expenses                    
Cost of revenues                    
Energy, hosting and other costs  $(59,628)  $(13,773)  $(148,227)  $(42,981)
Depreciation and amortization   (53,548)   (26,295)   (108,556)   (64,882)
Total cost of revenues   (113,176)   (40,068)   (256,783)   (107,863)
Operating expenses:                    
General and administrative expenses   (20,141)   (12,144)   (55,977)   (38,127)
Impairment of digital assets   (11,885)   (1,375)   (26,399)   (156,500)
Gains on digital assets and gains (losses) on digital asset loan receivable   31,720    -    72,689    (14,460)
Losses on digital assets held within investment fund   -    -    -    (85,017)
Gain on sale of equipment, net of disposals   -    29,819    -    83,879 
Legal reserves   -    (24,960)   -    (24,960)
Impairment of deposits due to vendor bankruptcy filing   -    (7,987)   -    (7,987)
Impairment of patents   -    -    -    (919)
Total operating expenses   (306)   (16,647)   (9,687)   (244,091)
Operating loss   (15,633)   (44,025)   (35,730)   (262,618)
Net gain from extinguishment of debt   82,600    -    82,267    - 
Equity in net earnings of unconsolidated affiliate   (647)   -    (647)   - 
Impairment of loan and investment due to vendor bankruptcy filing   -    (31,013)   -    (31,013)
Interest expense   (2,536)   (3,752)   (9,136)   (10,314)
Other non-operating income   426    238    1,366    620 
Income (loss) before income taxes   64,210    (78,552)   38,120    (303,325)
Income tax (expense) benefit   (73)   6,090    (351)   901 
Net income (loss)  $64,137   $(72,462)  $37,769   $(302,424)
Deemed dividend on Series A Preferred Stock   -    -    (2,121)   - 
Net income (loss) attributable to common shareholders  $64,137   $(72,462)  $35,648   $(302,424)
                     
Net income (loss) per share, basic:  $0.36   $(0.62)  $0.21   $(2.76)
Net income (loss) per share, diluted:   0.35   $(0.62)  $0.21   $(2.76)
Weighted average shares outstanding, basic:   179,602,722    116,533,816    169,162,821    109,492,865 
Weighted average shares outstanding, diluted:   189,506,521    116,533,816    169,162,821    109,492,865 

 

 
 

 

Supplemental Information:  Three months ended Sept 30,   Nine months ended Sept 30, 
(in thousands unless otherwise indicated)  2023   2022 (restated)   2023   2022 (restated) 
Operating Metrics:                    
Bitcoin production during the period (in bitcoin)   3,490    616    8,610    2,582 
Average bitcoin production per day   37.9    6.7    31.5    9.5 
Total margin (revenues less total costs of revenues)  $(15,327)  $(27,378)  $(26,043)  $(18,527)
Total margin excluding depreciation and amortization   38,221    (1,083)   82,513    46,355 
General and administrative expenses excluding stock-based compensation   (14,630)   (8,721)   (42,070)   (19,251)
Installed Hash Rate (EH/s) at end of period1   23.1    3.8           
Energized Hash Rate (EH/s) at end of period1   19.1    3.8           
                     
Adjusted EBITDA2                    
Net income (loss)  $64,137   $(72,462)  $37,769   $(302,424)
Exclude: Interest expense   2,536    3,752    9,136    10,314 
Exclude: Income tax expense (benefit)   73    (6,090)   351    (901)
EBIT   66,746    (74,800)   47,256    (293,011)
Exclude: Depreciation and Amortization   54,032    26,295    109,040    64,882 
EBITDA   120,778    (48,505)   156,296    (228,129)
Adjustments for non-cash and non-recurring items:                    
Stock compensation expense, net of withholding tax   5,511    3,423    13,907    18,876 
Net gain on extinguishment of debt   (82,600)   -    (82,267)   - 
Impairment of loan and investment due to vendor bankruptcy filing   -    31,013    -    31,013 
Impairment of deposits due to vendor bankruptcy filing   -    7,987    -    7,987 
Impairment of patents   -    -    -    919 
Adjusted EBITDA  $43,689   $(6,082)  $87,936   $(169,334)

 

 
 

 

(1) The Company defines the Share of Available Miner Rewards as the total amount of block rewards including transaction fees that Marathon earned during the period divided by the total amount of block rewards and transaction fees awarded by the Bitcoin network during the period. The company defines Energized Hash Rate as the total hash rate that could theoretically be generated if all mining rigs that have been operational / energized are currently in operation and running at 100% of the manufacturers’ specifications (includes mining servers that are offline for maintenance or similar reasons). The Company uses this metric as an indicator of progress in bringing rigs on-line. The Company defines Avg. Operational Hash Rate as the average hash rate that was actually generated during the period from all operational miners. The Company uses this metric as an indicator of its operational progress. The Company defines Installed Hash Rate as the sum of Energized Hash Rate and hash rate that has been installed but is not yet operational (e.g. mining rigs that have been installed, but are not yet energized and in operation). The Company uses this metric as an indicator of progress in deploying mining rigs at its production sites. Hash rates are estimates based on the manufacturers’ specifications. All figures are estimates and rounded.

 

The Company believes that these metrics are useful as an indicator of potential bitcoin production. However, these metrics cannot be tied directly to any production level expected to be actually achieved as (a) there may be delays in the energization of Installed Hash Rate (b) the Company cannot predict when installed and energized rigs may be offline for any reason, including curtailment or machine failure and (c) the Company cannot predict Global Hash Rate (and therefore the Company’s share of the Global Hash Rate), which has significant impact on the Company’s ability to generate bitcoin in any given period.

 

(2) Non-GAAP Financial Measures

 

In addition to our results determined in accordance with GAAP, the Company also provides adjusted EBITDA and total margin excluding depreciation and amortization, which are non-GAAP measures. The Company provides investors with reconciliations from net loss to adjusted EBITDA and total margin to total margin excluding depreciation and amortization as components of Management’s Discussion and Analysis. The Company defines adjusted EBITDA as (a) GAAP net income (loss) plus (b) adjustments to add back the impacts of (1) depreciation and amortization, (2) interest expense, (3) income tax expense (benefit) and (4) adjustments for non-cash and non-recurring items which currently include (i) stock compensation expense, (ii) impairments of patents and (iii) gains and losses from extinguishment of debt. The Company defines total margin excluding depreciation and amortization as (a) GAAP total margin less (b) depreciation and amortization.

 

Adjusted EBITDA and total margin excluding depreciation and amortization are not financial measures of performance under GAAP and, as a result, these measures may not be comparable to similarly titled measures of other companies. Non-GAAP financial measures are subject to material limitations as they are not in accordance with, or a substitute for, measurements prepared in accordance with GAAP. These non-GAAP measures are not meant to be considered in isolation and should be read only in conjunction with our Interim Reports on Form 10-Q and our Annual Reports on Form 10-K as filed with the Securities and Exchange Commission. Management uses adjusted EBITDA, total margin excluding depreciation and amortization, and the supplemental information provided herein as a means of understanding, managing, and evaluating business performance and to help inform operating decision making. The Company relies primarily on our condensed consolidated financial statements to understand, manage, and evaluate our financial performance and use the non-GAAP financial measures only supplementally.

 

 

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