MARA Holdings, Inc. (formerly Marathon Digital Holdings, Inc.) — Q1 2024 Form 10-Q
Reporting period: Three months ended March 31, 2024; financial statements are unaudited. The company mines and holds bitcoin and also operates data-center hosting services. Figures below are in U.S. dollars; financial amounts are rounded to millions unless stated otherwise.
Financial performance and position
| Metric | Q1 2024 | Q1 2023 / prior period |
|---|---|---|
| Revenue | $165.2 million | $51.1 million; up 223% |
| Net income | $337.2 million | $118.7 million |
| Diluted EPS | $1.26 | $0.72 |
| Operating cash flow | $(88.3) million | $(91.5) million |
| Investing cash flow | $(416.6) million | $(9.4) million |
| Financing cash flow | $471.9 million | $113.2 million |
- Revenue growth reflected higher bitcoin prices and production, plus $20.8 million of hosting revenue from the January acquisition. The company produced 2,811 bitcoin versus 2,195 in Q1 2023.
- Net income included a $488.8 million gain from marking bitcoin holdings to fair value, compared with $137.4 million a year earlier. It also included $38.1 million of income tax expense.
- GAAP total margin—revenue less cost of revenue—was negative $3.0 million, versus approximately breakeven in Q1 2023. Cost of revenue included $78.0 million of depreciation and amortization. Company-reported adjusted EBITDA was $528.8 million, versus $144.5 million; the reported measure includes the substantial digital-asset fair-value gain.
- Cash and cash equivalents were $324.3 million at quarter-end, down $33.0 million from year-end. Bitcoin holdings were 17,320 BTC, valued at $1.235 billion; management reported combined cash and bitcoin value of $1.559 billion.
- Total assets were $2.957 billion and stockholders’ equity was $2.477 billion. Notes payable had a carrying value of $326.1 million; principal due at maturity is approximately $330.7 million in November 2026. The notes bear 1% interest.
Material changes and business developments
- On January 12, 2024, the company acquired two mining sites in Texas and Nebraska with 390 MW of operational capacity for approximately $189.6 million of total consideration. The sites contributed $20.8 million in revenue and a $42.5 million pretax loss during the quarter, including depreciation.
- The company recorded $22.1 million in early-termination expenses to exit hosting arrangements at the acquired sites, including a $13.5 million termination fee and forgiveness of $8.6 million of customer receivables. It intends to transition the sites to self-mining as customer agreements expire or are ended.
- After quarter-end, on April 2, the company acquired a Garden City, Texas site for $87.3 million. The April 19 bitcoin halving reduced the block subsidy from 6.25 to 3.125 BTC per block; Q1 results predate that event.
- Shares outstanding increased during the quarter. The company raised $489.3 million net through its 2023 at-the-market offering, which was substantially exhausted by quarter-end. A new ATM program authorized up to $1.5 billion; subsequent to quarter-end, the company sold 3.85 million shares under it.
Outlook, risks, contingencies and unusual items
- No specific financial or production guidance is provided in the filing. Management expects liquidity from cash, bitcoin sales and access to capital markets to support operations and growth, and expects bitcoin holdings generally to increase, subject to operating and market conditions.
- Management identifies bitcoin price and production declines—including halving effects—higher electricity costs, execution challenges, reduced capital-market access and adverse macroeconomic or banking conditions as liquidity risks. Revenue and mining output were also affected by equipment failures, transmission-line maintenance and weather-related curtailments.
- Near-term commitments include minimum hosting payments of approximately $182.8 million for the remainder of 2024 and $708.9 million across 2025–2027, plus variable power and service charges. Mining-equipment purchase agreements total $517.3 million for expected 2024 deliveries; $261.1 million had been paid.
- Management concluded disclosure controls were not effective at March 31, 2024 because of an unresolved material weakness involving information-technology controls or alternative manual controls over revenue. Remediation is ongoing, with no assurance it will be successful.
- Legal matters include a pending SEC subpoena/investigation concerning, among other things, related-party transactions; shareholder securities and derivative litigation; and the Ho v. Marathon matter, for which a trial was expected around July 2024. The company says it is cooperating with the SEC and cannot predict certain litigation outcomes.
- Other earnings-sensitive items include a $15.3 million loss on the acquired electricity swap’s fair-value change and a $2.3 million realized loss on bitcoin hedging. The filing states no bitcoin hedges were outstanding at quarter-end.
Key facts for investors to verify
- How bitcoin prices, network difficulty, transaction fees and the post-halving reward affect production, realized revenue and the value of the bitcoin treasury.
- Whether acquired sites deliver expected efficiencies and self-mining capacity, and how transition costs, downtime and hosting commitments evolve.
- The sustainability of liquidity and growth funding, including further ATM share issuance, dilution and the company’s ability to meet equipment and hosting commitments.
- The assumptions and volatility behind bitcoin fair-value gains, deferred taxes, acquisition valuations and derivative marks; reported profit and adjusted EBITDA are materially affected by non-cash valuation changes.
- Progress remediating the revenue-control material weakness, and developments in the SEC matter and pending litigation.