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SEC Targets Bitcoin Miner Marathon in Latest Action Against The Industry

SEC Targets Bitcoin Miner Marathon in Latest Action Against The Industry

Marathon Digital Holdings, a Bitcoin mining firm, has been issued another subpoena by the SEC with regards to its Montana data center. The regulator believes that the center may have violated securities laws. The company has confirmed that it is cooperating with the SEC following the initial subpoena it received on April 10, which was related to “transactions with related parties.” Marathon Digital was also issued a subpoena in September 2021 regarding documents related to its Hardin, Montana, data center. Bloomberg reports that the firm did acknowledge “accounting errors” in its financial statements following scrutiny by the SEC.

“We understand that the SEC may be investigating whether or not there may have been any violations of the federal securities law,” it stated.

It is unclear how a Bitcoin mining company could violate securities laws. Nonetheless, the SEC is relentless in its attack on the crypto industry.

Marathon Reports $7M Net Loss

Marathon reported a net loss of $7.2 million, or $0.05 per share, during Q1 of 2023. This is a decrease from the $12.9 million net loss it reported in Q1 2022. The company reported revenue of $51.1 million for the quarter, slightly lower than the previous year’s revenue of $51.7 million. However, a 74% increase in Bitcoin production was offset by lower BTC prices in the current year period.

Marathon share prices have risen by almost 200% this year, outperforming Bitcoin and crypto markets. On the day of the announcement of the net loss, company stock (MARA) increased by 9% in after-hours trading to reach $10.15.

Fred Thiel, Marathon chairman, and CEO, commented on the company’s Q1 performance:

“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.”

Mining Revenue Spikes

The BRC-20 memecoin and ordinals craze led to a surge in network transactions and fees, resulting in an increase in Bitcoin miner profitability or hash price, which reached its highest level in almost a year at $0.127 on May 9. The peak in daily BTC transactions of over 580,000 and an increase in average fees to above $20 coincided with the move.