US Regulators Probe Bitcoin Miner Marathon for Potential Violation of Securities Laws in Internal Transactions
Marathon Digital Holdings (MARA), a major crypto mining company in North America, announced a smaller-than-expected loss in the first quarter. The company’s move towards profitability was supported by the higher price of bitcoin and improved production.
Marathon Digital Holdings also revealed that it received a new request for information from the US Securities and Exchange Commission (SEC). The SEC is investigating potential violations of federal securities laws, specifically related to transactions involving parties connected to the company. Marathon stated that it is fully cooperating with the investigation.
Marathon reported a net loss of $0.05 per share, which was better than the expected average estimate of $0.08, as per FactSet data. The loss has decreased compared to the previous quarter’s loss of $3.14 and the same period last year’s loss of $0.12, as stated in a filing on Wednesday. The company’s revenue increased to $51.1 million from $28.4 million in the previous three months, remaining relatively stable compared to the same period last year. Analysts had predicted revenue of $48.8 million for the quarter.
Despite facing challenges in construction and operations last year, including the bankruptcy of one of its hosting partners called Compute North, Marathon has managed to boost its production. The company’s operational hashrate, a measure of mining power, increased by 64% compared to the previous quarter, reaching 11.5 exahash/second (EH/s). As a result, Marathon achieved a record-breaking bitcoin production of BTC 2,195 (equivalent to $80 million) in the quarter. This impressive performance aligns with the significant 70% surge in the price of bitcoin during the first quarter.
Marathon’s Chairman and CEO, Fred Thiel, expressed that the company had a challenging year in 2022, which tested the strength of the entire industry. However, he highlighted that the company has made a robust start to this year by increasing its hash rate (mining power), lowering its mining costs, and improving its financial position during the first quarter.
Marathon’s shares experienced a decline of over 2% in pre-market Nasdaq trading on Thursday. This drop came after the company received another subpoena from the SEC. The subpoena is related to a previous one concerning the issuance of 6 million shares of common stock associated with Marathon’s facility in Hardin, Montana.
Marathon is currently focused on expanding its operations into the Middle East. Recently, the company made an announcement about forming a partnership with an investment firm supported by Abu Dhabi’s sovereign wealth fund. Together, they plan to establish a 200-megawatt (MW) immersion cooled facility in the emirate. (announced)
Along with other miners, Marathon sold almost all of its mined bitcoin in February, ending a long-time strategy to hold onto its production.
Marathon has actively taken steps to decrease its debt levels, which were among the highest compared to other publicly traded mining companies. In March, the company successfully ended a credit arrangement with Silvergate Bank and, prior to that, had already paid $30 million to the now-closed bank.
