In a recent development, Marathon Digital, a leading Bitcoin mining firm, finds itself in the crosshairs of the U.S. Securities and Exchange Commission (SEC). It is the latest move in the SEC’s broadening crackdown on cryptocurrency.
SEC Subpoenas Linked to Montana Data Center
Marathon Digital Holdings has once again been served a subpoena by the SEC. This summons is tied to the company’s data center in Montana, which the regulatory body alleges may violate securities laws.
The firm has acknowledged working in harmony with the SEC following an initial subpoena on April 10. This initial inquiry pertained to potential “transactions with related parties.”
“Recognizing that the SEC may be investigating potential breaches of federal securities laws, we are fully cooperative,” the company said in a statement.
Previous Run-Ins for Marathon Digital
In September 2021, the SEC issued a subpoena to Marathon Digital demanding documentation associated with its Hardin, Montana-based data center.
Upon SEC’s closer examination, the company conceded to identifying “accounting errors” within its financial reports, as reported by Bloomberg.
The financial watchdog continues pursuing potential irregularities within the cryptocurrency sector. However, it remains to be seen how a Bitcoin mining firm could contravene securities laws.
Marathon Digital’s Financial Performance Amidst SEC Scrutiny
Marathon reported a net loss of $7.2 million, or $0.05 per share, during the first fiscal quarter of 2023 on May 10. Interestingly, this improved the $12.9 million net loss reported in Q1, 2022.
The firm’s revenue for the quarter stood at $51.1 million, slightly lower than the previous year’s revenue of $51.7 million. Despite a 74% surge in Bitcoin production, the lower BTC prices in the current fiscal period more than offset the gains.
Fred Thiel, Marathon’s Chairman, and CEO, remarked, “Following a challenging 2022, this year has begun on a promising note. We have increased our hash rate, cut mining costs, and fortified our balance sheet in the first quarter.”
Marathon’s stock (MARA) saw a 9% increase, reaching $10.15 in after-hours trading. Marathon’s share prices have skyrocketed by nearly 200% this year, outshining Bitcoin and the overall crypto markets.
Bitcoin Miner Profitability on the Rise
Interestingly, the profitability of Bitcoin miners, also known as a hash price, saw a surge this month. This increase is primarily due to the BRC-20 memecoin and ordinals craze, which has led to a rise in network transactions and fees.
Measured in dollars per terahash per second per day, the hash price soared to its highest level in nearly a year at $0.127 on May 9.
This surge coincided with a daily BTC transaction peak of over 580,000 and an increase in average fees to above $20.
As the SEC’s intensifying scrutiny continues to shape the crypto industry’s landscape, Marathon Digital stands at a critical juncture. While the company continues to show resilience in the face of regulatory challenges, its future trajectory will likely be influenced by its ability to successfully navigate these complex regulatory waters.
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