SEC Serves Bitcoin Mining Firm Marathon Digital With Subpoena, Again

Bitcoin mining firm Marathon Digital Holdings said it received a subpoena from the U.S. Securities and Exchange Commission (SEC) related to alleged violations of securities laws.

“The Company received an additional subpoena from the SEC on April 10, 2023, relating to, among other things, transactions with related parties,” Marathon said in a filing Wednesday. “We understand that the SEC may be investigating whether or not there may have been any violations of the federal securities law.”

Marathon said that it's “cooperating with the SEC” on the matter, which relates to its data center facility in Hardin, Montana.

The company first revealed that it had received a subpoena from the SEC in November 2021.

Marathon has specified that its “disclosure controls and procedures were not effective at the reasonable assurance level as of March 31, 2023,” with discovered material weaknesses creating “a reasonable possibility that a material misstatement to our consolidated financial statements or disclosures would not be prevented or detected on a timely basis.”

According to the company, those material weaknesses are related to “four specific accounting areas, including consolidation, impairment of digital assets, disposal of property and equipment, and principal versus agent considerations in revenue recognition.”

Marathon declined to comment.

Marathon’s Q1 2023 financial results

Along with the SEC filing, Marathon has also released its first-quarter financial results.

The company said it recorded a net loss of $7.2 million, or $0.05 per share, during the fiscal quarter ended March 31, 2023, an upshot compared to a net loss of $12.9 million, or $0.12 per share, in the prior-year period ended March 31, 2022.

Marathon’s revenue was $51.1 million for the quarter, slightly below $51.7 million in the previous year, with the firm saying that the “increase in Bitcoin production was more than offset by lower Bitcoin prices in the current year period.”

Overall, currently boasting a hash rate of 15.4 EH/s, Marathon produced a record 2,195 Bitcoin in Q1 2023, a 74% increase from 1,259 Bitcoin in the first quarter of 2022, while also reporting gains on the sale of Bitcoin of $17.6 million as a result of the program aimed at funding the firm’s operating costs.

“After weathering a tumultuous 2022 that tested the resilience of our entire industry, this year is off to a strong start as we grew our hash rate, reduced our cost to mine, and improved our balance sheet during the first quarter,” Fred Thiel, Marathon’s chairman and CEO, said in a statement.

The company added that it “remains on track” to reach the 23 EH/s hash rate goal, hoping to reach it “near the middle of this year.”

Marathon's stock (MARA) was up almost 9% at $10.22 at the closing bell Wednesday.