August 1, 2022

Division of Corporate Finance

United States Securities and Exchange

Commission

Washington, DC 20549

Gentlepersons:

We are in receipt of your letter dated June 24, 2022, regarding our response, dated June 13, 2022, to your prior comment letter. Unless the context otherwise applies, we reference the comments in your June 24^th letter as “comments” and comments in your prior comment letters as “prior comments”. For ease of reference, we have set forth each of your comments below in bold with our response to each comment set forth immediately below each such comment. Please note that responses to comments 3, 11, 12 and 13 are currently in the final review stages and we will provide complete responses to those comments no later than Friday, August 5, 2022. In the interest of time and further to our previous correspondence with the staff, all other responses are outlined below.

Form 10-K for the Fiscal Year Ended December 31, 2021

Consolidated Statements of Operations, page F-5

For the years ended December 31, 2021 and 2020, the Company recorded realized gains related to the sale of digital currencies of $14 thousand and $15 thousand, respectively. The Company acknowledges that the authoritative guidance does indeed require an entity to report gain on sales of non-financial assets as a component of income from operations, while it classified the gains in non-operating income. However, based on our SAB 99 analysis and the materiality thresholds therein, the Company concluded that the amounts involved were considered to be immaterial from both a quantitative and qualitative perspective. On a prospective basis, the Company will present similar gains or losses as a component of income or loss from operations with prior comparative periods reclassified to conform to the current classification.

Notes to Consolidated Financial Statements

Note 1 - Organization and Description of Business

Organization, page F-8

Comprehensive accounting analysis on loaned BTC:

During the period in question, the Company loaned 600 BTC to NYDIG under Master Securities Loan Agreements (“MSLA”). This included a physical transfer of BTC from the Company’s wallet to a separate wallet at NYDIG. The MSLA states that either party may terminate the loan by providing notice to the other party. Upon termination pursuant to paragraph 6.2 of the MSLA, the borrower is required to immediately return borrowed BTC to the Company; this is, in effect, a call option for the Company on its loaned BTC.

The Company accounts for its BTC as an intangible asset, and therefore the loan thereof is outside the scope of ASC 842, and is derecognized pursuant to ASC 350-10-40-1, which in turn refers to ASC 610-20. ASC 610-20 refers to control indicators in ASC 606-10-25-25 and 25-30 to determine whether control of the lent units have been transferred to the borrower upon transfer. This includes the repurchase agreements guidance in ASC 606-10-55-66 through 55-73 (note: Example 2 Case B in Subtopic 610-20 illustrates that this implementation guidance applies equally to transfers of nonfinancial assets subject to ASC 610-20 as it does to those under ASC 606). The Company concluded that the loan did not meet this derecognition criterion (i.e., control transfer) in ASC 606 because the Company held a repurchase right in the form of a call option under ASC 606 10-55-67(b) and therefore retained control per ASC 606-10-55-68. The Company further concluded that the call option was substantive per ASU 2014-09 BC426 which states that “However, the Boards observed that if the call option is non-substantive, that option should be ignored in assessing whether and when the customer obtains control of a good or service (to be consistent with the general requirement for any non-substantive term in a contract).” The call option is substantive because the Company may call the digital assets back at its market value without having to expend additional resources. The Company exercised this call option on June 13, 2022 and terminated the loan as part of its treasury management process. The BTC loaned has been returned by to the Company by NYDIG.

Given the similarity of the Company’s MSLA arrangement to the fact pattern outlined in Q&A #25 of the AICPA Digital Assets Accounting Guide dated June 2022, the Company considered the outlined accounting pattern therein in concluding that the loaning of the BTC would not be derecognized (since the Company retains control pursuant to the existence of a substantive purchase right under ASC 606-10-55-67(b) as discussed above), and no gain/loss should be recognized upon transfer of the BTC under ASC 610-20. Loaned BTC were accordingly classified as “Digital currencies, restricted” on the December 31, 2021 balance sheet, providing useful information about the restrictions on them versus our BTC not loaned. In addition, as outlined in question 25 of the AICPA Digital Assets Accounting Guide, we noted that the loaned fees earned should not be accounted for under ASC 835, but rather, is a fee received in exchange for the service of permitting the borrower to use the Company’s BTC, consistent with Q&A #25 in the AICPA Digital Assets Accounting Guide.

We are aware that there are further developments and considerations around the conclusions in Q&A #25 in the AICPA Digital Assets Accounting Guide that have arisen in the last month (July 2022), whose details we are not privy to. However, in developing our accounting and disclosure for our most recent Annual Report on form 10-K, we believe that we followed the appropriate authoritative and interpretive guidance available at the time and that our accounting and disclosure were consistent therewith.

Interest received on loaned BTC:

Amounts comprising interest received on the loan were $129 thousand for the year ended December 31, 2021. There were no such BTC loans in 2020 or 2019. Such amounts were received in cash, but remained in a digital asset account at NYDIG. We included this as a source of cash in the caption “Changes in operating assets and liabilities – digital currencies” in the Statements of Cash Flows. Regarding the line item “Interest received from digital currencies, restricted” - this line item should not have been included in Statements of Cash Flows with zero for the year ending December 31, 2021. This was a classification mistake that we concluded was immaterial. Nonetheless, we will reclassify such amounts prospectively to conform any comparable prior period amounts with current period classification.

Collateral for loaned BTC:

The Staff further inquired as to why the Company disclosed that no collateral was transferred although the MLSA calls for the transfer of collateral. As stated in Section 2.2 of the MLSA, collateral is to be transferred to the Company by NYDIG unless otherwise agreed upon by the parties. In this particular case, the parties specifically agreed that no collateral was to be transferred. We will revise disclosure prospectively to clarify that collateral is required unless the parties agree otherwise and that the parties, in this specific case, agreed that collateral was not required.

A draft of the proposed disclosure follows, with additional disclosure underlined and deleted disclosure stricken-though:

On August 27, 2021, Marathon Digital Holdings, Inc. (the “Company”) entered into a Master Securities Loan Agreement (the “Agreement”) with NYDIG Funding, LLC (“NYDIG”). Pursuant to the Agreement, the Company will loan its bitcoin (“BTC”) to NYDIG with an interest rate of three percent (3%) per annum. Interest accrues daily and is payable monthly. The Agreement provides that the Company may recall its BTC at any time. The parties have the option, but not the obligation, to require the loan to be collateralized by BTC. If the parties agree that collateral is to be utilized, NYDIG shall, prior to or concurrently with the transfer of the of the BTC to NYDIG, but in no case later than the close of business on the day of such transfer, transfer to the Company collateral with a market value at least equal to 100% of the market value of the loaned BTC, and the Company is granted a first priority lien on such collateral. As of December 31, 2021, the Company loaned 300 BTC to NYDIG. The parties agreed that collateral was not required for this loan. The caption describing the loan balance for prior periods has been renamed as “loans of digital currencies” on the balance sheet.

The Company’s response to this comment is under final internal review. Our full response will be provided by Friday, August 5, 2022.

Note 2 - Summary of Significant Accounting Policies

Digital Currencies, page F-13

The Company considers its digital currencies to be indefinite lived intangible assets as the digital currencies do not meet the definitions under US GAAP to be considered financial instruments or cash. As such, the Company is accounting for its digital currencies pursuant to ASC 350 “Intangible Goodwill and Other”. Pursuant to ASC 350-30-35-18 an intangible asset that is not subject to amortization shall be tested for impairment annually and more frequently if events or changes in circumstances indicate that it is more likely than not that the asset is impaired.

We note in your comment the italicized “at any time” and wish to specifically address the comment with this phrase in mind. BTC prices update continually on public exchanges 24 hours per day, 365 days per year. Given the continuous nature of BTC pricing there are numerous points during any day that could be an indication that it is more likely than not that an asset is impaired, including declines in value measured using daily lows, daily averages, or daily closing prices. However, it is impossible to make a determination of impairment in real time since the markets are always moving. Given these circumstances, the company reviews its BTC for impairment daily, looking back on these indicators and recording an impairment based on the daily closing price of BTC as defined by Yahoo Finance (https://finance.yahoo.com/quote/BTC-USD) and published daily at 23:59 GMT. Note that this is the same price utilized for revenue recognition purposes as outlined in our response to comment 11 which follows. The Company applies this methodology as a practical expedient in applying ASC 350-30-35-18 in that it enables us to look back on the various data points of the day (i.e., the “events or circumstances”) as we are making the determination whether it is more likely than not that the asset has become impaired. The Company believes that this method of measuring impairment is consistent with predominant industry practice.

Our BTC holdings subject to impairment and classified as “Digital Currencies and Digital Currencies – restricted” at December 31, 2021 and December 31, 2020 totaled $123.2 million and $2.3 million, respectively using the methodology described above. Based on the Staff’s comments, we looked back at the intra-day low price as the basis for evaluating impairment. Had we used this basis, the reported balances would have been $120.4 million and $2.2 million, respectively.

The Company believes that our methodology enables us to accurately determine if it is more likely than not that an asset has been impaired, is aligned with industry standards as a practical expedient, and results in a materially accurate calculation of the carrying value of digital currencies and any resulting impairment. However, if the Staff advises that in its view it is more appropriate to use the daily low price in determining impairment, we are certainly amenable to changing our methodology on a prospective basis.

The Company followed ASC 230-10 in its classification of cash flows. Regarding the sale of digital currencies on the statement of cash flows in 2019 and 2020, these amounts relate to the actual sale of BTC to raise cash (USD) to fund operational expenditures. These sales of BTC for USD are included in investing activities in the statement of cash flows. The cash payments (in USD) that were made to satisfy the obligations for goods and services are included within operating activities in the statement of cash flows. The disposition in 2021 relates to a payment to a third party blockchain developer in BTC for services rendered. This amount is included in “Changes in Operating Assets and Liabilities – Digital Currencies” within operating activities in the statement of cash flows as it represents payments directly to suppliers for goods and services.

As previously discussed, we have terminated the BTC MLSA as of June 13, 2022 and are not otherwise loaning BTC at this time. We have not entered any other contracts involving our BTC other than the now-terminated MLSA. Regarding the May 2, 2022 article, the Company’s CEO was asked a question about the Company generating yield on its BTC. To that end, the CEO discussed a potential future strategy of yield generation through the purchase and sale of BTC call options. To be clear, this was a forward-looking statement, and the Company has not implemented this or any other hedging strategy.

Investment Fund, page F-15

The Company has re-evaluated its accounting for its limited partnership interest in the NYDIG Digital Assets Fund III, LP, as follows:

ASC 810 Consolidation Scope Exceptions:

The NYDIG Digital Assets Fund III LP (“Fund”) is a legal entity. However, as none of the consolidation or variable interest entities (“VIE”) scope exceptions in ASC 810-10-15-12 or 15-17 apply, the Company evaluated whether the Fund is considered a VIE.

Variable Interest Entity Determination:

The Fund’s equity at risk is comprised of its limited partnership (“LP”) interest held by the Company as the sole LP. Such LP interest is equity at-risk per ASC 810-10-15-14(a) given it:

The $150 million equity at risk is sufficient to allow the Fund to finance its activities of investing in and paying the management fee for the investment of digital assets and digital assets-related financial instruments. Therefore, the Fund does not meet the first criterion to be a VIE under ASC 810-10-15-14(a).

The general partner of the Fund (the “GP”), who is an unrelated party who holds no ownership interest in the Fund, manages and makes decisions over all the activities undertaken by the Fund. The Company, as sole LP and 100% partnership interest holder of the Fund, has the ability to withdraw or redeem up to all its LP interests at any time without a substantive barrier to exercise such withdrawal or redemption right. The Company previously stated in the response to comment 13 dated April 22, 2022 that withdrawing its sole LP investment in the Fund would not necessitate dissolution of the Fund and that such withdrawal right is not a substantive lock-out right. The Company has since reconsidered the substance of this withdrawal right in light of the actual outcome of our recent withdrawal of BTC from the fund and our additional review of interpretive guidance from Questions 4.4.160 (consideration of withdrawal rights as lock-out rights under the VIE definition), 5.2.160 (consideration of withdrawal rights as lock-out rights in a limited partnership under the voting interest model), and specifically, 6.4.90 of KPMG’s Consolidation Handbook dated May 2022 that states:

“…withdrawal rights may implicitly require liquidation of a legal entity. These may function similarly to substantive lock-out rights given their ability to force a liquidation. For example, consider the following withdrawal right: […] one investor holds a substantial portion of the investment interests in the fund; the investor has the right to withdraw its entire investment upon notifying the fund; a withdrawal by the investor would compel the fund to liquidate all its investments to satisfy the withdrawal right. If there were no significant barriers to exercise, this withdrawal right would be similar to a substantive liquidation right, and therefore equivalent to a substantive lock-out right.”

Accordingly, while the Fund has the ability to continue existing as a legal entity after such withdrawal, the Company has revised its views and believes that the withdrawal of 100% of the equity at risk of the Fund as akin to a liquidation right which is in turn, viewed as a unilaterally exercisable substantive kickout right over the general partner of the Fund. The Company’s in-substance kickout right over the GP who is the decision maker over all activities of the Fund indicates that the Company has the power over the activities that most significantly impact the economics of the Fund As such, the Fund does not meet the second criterion to be a VIE under ASC 810-10-15-14(b)(1).

The Company has the rights to receive 100% return of its at-risk LP interest in addition to all the capital appreciation or net capital depreciation and expenses attributable to such interests upon withdrawal from the Fund. Accordingly, the Company, as the sole LP and equity-at risk holder of the Fund does not lack the obligation to absorb the expected losses or right to receive the expected residual returns of the Fund. Therefore, the Fund does not meet the third and fourth criteria to be a VIE under ASC 810-10-15-14(b)(2) and 15-14(b)(3).

The Company as the sole LP and 100% equity-at risk holder of the Fund also possesses 100% voting rights over the Fund through its substantive unilateral kickout right and the activities of the Fund are conducted primarily for the benefit of the Company. Therefore, the Fund does not meet the fifth criterion to be a VIE under ASC 810-10-15-14(c).

Consolidation of a voting interest entity:

Given the Fund does not meet any of the criteria of a VIE under ASC 810-10-15-14 and has 100% voting interest over the Fund through its unilaterally exercisable substantive kickout right, the Company has reconsidered its accounting conclusions and determined that it has a controlling financial interest in the Fund and therefore consolidates the Fund under the voting interest model. This revised accounting conclusion differs primarily due to the reconsideration of the Company’s withdrawal right as sole LP with that withdrawal right representing, in-substance, a lock-out right. Such substantive lock-out right gives the Company majority controlling financial interests as limited partners owning the majority of a partnership’s kickout rights is presumed to have the controlling financial interest when the only other party in the Fund (the general partner) does not have substantive participating rights to prevent the Company’s withdrawal as LP.

Evaluation of the Fund as an Investment Company:

The Company further evaluated whether the Fund meets the definition of an investment company per ASC 946-10-15-6 to determine whether it should retain the industry-specific fair-value accounting principles of an investment company in consolidation as provided for in ASC 810-10-25-15.

In our April 22, 2022 response to comment 13 in the letter from the Staff dated April 8, 2022, the Company analyzed and concluded that the fundamental characteristics of an investment company as described in ASC 946-10-15-6 are met and that three of the five typical characteristics of an investment company as described in ASC 946-10-15-7 are also met. Therefore, the Company determined that the Fund possesses the characteristics of an investment company and, given the Company holds a controlling financial interest with 100% of the voting interest through its LP interest, the Company will consolidate the Fund and account for its investments as prescribed by ASC 946 at fair value in accordance with the principles in ASC 820.

The Company previously accounted for its investment in the Fund at fair value, which was determined based on the fair value of the underlying assets in the Fund. In consideration of the revised conclusion above that the Company will consolidate the Fund under the voting interest model, the Company will now account for the investments within the Fund at fair value, which results in no measurement difference in the Company’s balance sheet or income statement. The Company acknowledges that its disclosures are unclear as to whether it is presenting its investment in the Fund or the underlying assets in the Fund and therefore will prospectively clarify its revised accounting policy that it will consolidate the Fund and its basis of accounting for assets within the Fund in Note 2 – Summary of Significant Accounting Policies, Investment Fund as follows with underlined text representing proposed added disclosure, and stricken text representing proposed deleted disclosure:

“…On January 25, 2021, the Company entered into a limited partnership agreement with NYDIG Digital Assets Fund III, LP (“Fund”) whereas the Fund purchased 4,812.66 BTC in an aggregate purchase price of $150 million. The Company owns 100% of the limited partnership interest and consolidates the Fund under a voting interest model. The consolidated assets in the investment fund are included in current assets in the consolidated balance sheets under the caption “Digital currencies held in investment fund”.

The Fund qualifies and operates as an investment company for accounting purposes pursuant to the accounting and reporting guidance under ASC 946, Financial Services – Investment Companies, which requires fair value measurement of the Fund’s investments in digital assets. The digital assets held by the Fund are traded on a number of active markets globally, including the over the counter (“OTC”) market and digital asset exchanges. A fair value measurement under ASC 820 for an asset assumes that the asset is exchanged in an orderly transaction between market participants either in the principal market for the asset or, in the absence of a principal market, the most advantageous market for the asset (ASC 820-10-35-5). The fair value of the assets within the Fund are determined at the end of each reporting period based on pricing obtained from CoinDesk Bitcoin Price Index at approximately 4pm New York time. Any changes in the fair value of the assets are recorded in the Consolidated Statement of Operations under the caption “Change in fair value of investment in NYDIG fund.” An entity must have access to the principal (or most advantageous) market at the measurement date (ASC 820-10-35-6A).”

As described in the response to comment 7 above, the Company has determined the Fund should be consolidated under the voting interest model. As the Fund meets the definition of an investment company per ASC 946, the Company initially and subsequently measures the assets held within the Fund at fair value on the Company’s consolidated balance sheet as described by ASC 946-325-35-1.

As of December 31, 2021, the only investment in the Fund was approximately 4,794 BTC. Management considered whether bitcoin held in the Fund meets the criteria in ASC 820-10-15-4 and notes that notwithstanding that the Fund is an investment company within the scope of Topic 946, the bitcoin held as investment in the Fund has a readily determinable fair value given its sales prices are published on the CoinDesk Bitcoin Price Index.

Accordingly, the fair value of the assets held in Fund is disclosed in accordance with ASC 820-10-50-2 for all classes of assets and liabilities as disclosed in Note 2 – Significant Accounting Policies – Fair Value of Financial Instruments under the caption “Investment Fund” and Note 2 – Significant Accounting Policies – Digital Currencies. Further disclosures required by ASC 820-10-50-6A for investments in the scope of ASC 820-10-15-4 are not applicable given the Company is not applying the net asset value practicability exception as described in ASC 820-10-15-4 through 15-5.

As described in the response to comment 7 above, the Company has revised its accounting for the Fund and consolidates the Fund under the voting interest model. Therefore, the Company respectfully acknowledges the Staff’s comment and has determined that the requested explanations are no longer applicable.

As described in the response to comment 7 above, the Company has revised its accounting for the Fund and consolidates the Fund under the voting interest model. Therefore, the Company respectfully acknowledges the Staff’s comment and has determined that the requested analysis over de facto agency is no longer applicable.

Revenue Recognition, page F-15

The Company’s response to this comment is under final internal review. Our full response will be provided by Friday, August 5, 2022.

The Company’s response to this comment is under final internal review. Our full response will be provided by Friday, August 5, 2022

The Company’s response to this comment is under final internal review. Our full response will be provided by Friday, August 5, 2022.

Note 5 - Debt, Commitments and Contingencies

Revolving Credit Line, page F-27

The facts and circumstances of this comment are similar to those discussed in response to comment 2 above with two exceptions:

The lending process includes a physical transfer of BTC from the Company’s wallet to a separate collateral wallet at a Custodian. The BTC collateral required to support any RLOC borrowings are required, by agreement among the parties, to be valued in excess of the amount of the advances (in USD) received by the Company. Once in the collateral account, this BTC is restricted from use by the Company.

The Company referenced ASC 610-20 which refers to control indicators in ASC 606-10-25-25 and 25-30 in determining whether control of the BTC had been transferred to the lender. Despite the transfer of physical control of the BTC into a collateral account, the Company concluded that it retains the rights and risks of ownership of this collateralized BTC given the following fact pattern:

These facts and circumstances support that the Company maintains contractual control over the BTC in the collateral account and that said BTC is restricted from use by the Company. Note that there were no borrowings outstanding or collateral posted as of December 31, 2021.

Finally, the reference to ASC 805 in our previous response was a scrivener’s error.

Form 10-Q for the Quarterly Period Ended March 31, 2022

Consolidated Condensed Statement of Operations, page 4

The line item of total other (expenses) income excludes interest expense. We are revising our statements of operations on a prospective basis to address this comment.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Recent Developments, page 15

In addressing this question, we both respond to your specific question and also address this issue in terms of the disclosure we intend to provide in our Form10-Q for the quarter ended June 30, 2022, related to Hardin.

The assets at Hardin are long-lived assets and as such are evaluated for impairment under ASC 360-35-21, which calls for a trigger-based assessment of recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. Management concluded that the agreement to exit Hardin by August 15, 2022 constituted such a trigger event in that it created an expectation that it was more likely than not that significant components of this long-lived asset group would be disposed of before the end of their previously estimated useful life.

The Company first identified the asset group as (1) the Hardin data center infrastructure, (2) the prepaid service contract created pursuant to the Data Facility Services Agreement, and (3) BTC mining servers located within the data center. The Company determined that the primary asset (per ASC 360-10-35-31) in this asset grouping was the BTC mining servers, which make up the most significant component asset from which the asset group derives its cash flow generating capacity.

The Company evaluated the asset group for impairment using the recoverability method using the remaining life of the the primary asset (the BTC mining servers) as the period in which it evaluated the undiscounted cash flows. Unlike the data center infrastructure, the BTC mining servers can be relocated such that the anticipated exit from Hardin did not impact their estimated useful life. The undiscounted cash flow forecast was therefore not significantly impacted by the decision to exit Hardin. As a result of this analysis, we concluded at March 31, 2022 that the asset group was not impaired. However, given our impending exit from the facility we revised the estimated useful life of the data center infrastructure and the prepaid service contract to the remaining 4 ½ month term of our operating agreement at Hardin. This resulted in a significant increase in depreciation and amortization expense in the second quarter of 2022. The estimated useful life of the BTC mining servers remained unchanged.

On June 11, 2022, a severe storm passed through Hardin damaging the power generating facility that supplies the data center with power. As a result, the Company’s bitcoin production at the plant was significantly reduced. Anticipated repairs to the plant were persistently delayed until July 14, at which point the plant resumed operations at reduced power levels and operating capacity. The Company again evaluated the asset group for impairment using the recoverability method given this triggering event. The revised undiscounted cash flow forecast in this analysis were again relatively unchanged, given that the useful life of the primary asset was not impacted by this event and had, in fact only been reduced by about 2 ½ months given the passage of time from the March 31 evaluation. As a result, we again concluded that despite the outage at Hardin, the asset group still passed the recoverability test given the expected cash flow over the useful life of the primary asset.

Additional outages occurred at the plant throughout July and the Company decided to accelerate its exit from Hardin. On July 28, 2022 we executed agreements with the facility operator to essentially abandon the data center infrastructure and the prepaid service contract and remove all BTC mining servers from the site. As a result, the Company shortened the estimated useful life of the data center infrastructure and the prepaid service contract again (this time reducing it from August 15 to July 28) and recorded all the remaining depreciation and amortization related to these assets during the month of July.

As of July 31, 2022 the data center infrastructure assets have been fully depreciated and the prepaid service contract has been fully amortized. The BTC mining servers are currently being inventoried and removed from the facility and will be redeployed or sold. This information will be disclosed as a subsequent event in the upcoming report on form 10-Q for June 30, 2022.

Non-GAAP Financial Measures, page 17

Please address the following:

We thank the staff for your consideration of our perspective as outlined in our previous responses; nonetheless, in order to comply with your position, we will remove the adjustment related to changes in market value of the NYDIG Fund from the calculation of Adjusted EBITDA in all future filings and amounts for prior comparative periods will be reclassified to conform to current period classification. Management also intends to eliminate “Adjusted Net Income” as a non-GAAP measure on a prospective basis as a means of streamlining our non-GAAP disclosure.

We thank the staff for your engagement on this issue and for considering our perspective as outlined in our previous responses. In order to comply with your position, we will remove the adjustment related to the impairment of digital currencies from our calculation of Adjusted EBITDA in all future filings and amounts for prior comparative periods will be reclassified to conform to current period classification.

We thank the staff for your engagement on this issue and for considering our perspective as outlined in our previous responses. This consideration consisted of 6 million shares of stock valued at $11.2 million and it does relate to the operation of the Hardin Facility pursuant to the Data Facility Services Agreement. Amortization of this prepaid contract was classified as cost of revenues in prior periods. In our upcoming report on form 10-Q, we are planning to segregate cost of revenues into two components, including (1) “cost of revenues – energy, hosting & other” and (2) “cost of revenues – depreciation and amortization”. Given your additional comments, we will include this expense as a component of “cost of revenues – energy, hosting & other” in our statements of operations in all future filings and we will remove the adjustment related to this item from the calculation of Adjusted EBITDA. All amounts for comparable prior periods will be reclassified to conform to current period classification.

Rule 100(b) of Regulation G prohibits the use of a non-GAAP financial measure that is misleading when viewed in context with the information accompanying that measure and any other accompanying discussion of that measure. We believe that the non-GAAP measure of Adjusted EBITDA, as described above, coupled with our proposed disclosure language outlined below, complies with Rule 100(b) because this measure is a logical and simple adjustment to the numbers which we have fully disclosed in a straightforward and easily comprehensible manner.

The proposed revised disclosure for our non-GAAP measure “Adjusted EBITDA” follows:

We provide investors with a reconciliation from net income to the non-GAAP measure Adjusted EBITDA as a component of Management’s Discussion and Analysis. We define Adjusted EBITDA as GAAP net income (or loss) for the period with adjustments to add back the impacts of (1) depreciation and amortization (2) interest expense (3) income tax expense and (4) adjustments for non-cash and non-recurring items which currently include (i) stock compensation expense, net of withholding taxes and (ii) impairments of patents (if applicable for the period presented).

Adjusted EBITDA is not a measurement of financial performance under generally accepted accounting principles in the United States (“GAAP”) and, as a result, this measure may not be comparable to similarly titled measures of other companies. Non-GAAP financial measures are subject to material limitations as they are not in accordance with, or a substitute for, measurements prepared in accordance with GAAP. Adjusted EBITDA is not meant to be considered in isolation and should be read only in conjunction with our Quarterly Reports on Form 10-Q and our Annual Reports on Form 10-K as filed with the Securities and Exchange Commission. Management uses both Adjusted EBITDA and the supplemental information provided herein as a means of understanding, managing, and evaluating business performance and to help inform operating decision making. We rely primarily on our Consolidated Condensed Financial Statements to understand, manage, and evaluate our financial performance and use the non-GAAP financial measures only supplementally.

In connection with responding to the staff’s comments, the Company acknowledges that (i) it is responsible for the adequacy and accuracy of the disclosure in its filing; (ii) staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filing; and (iii) it may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.

We hope you find that these responses adequately address the staff’s questions, but please contact the undersigned at hugh@marathondh.com or our counsel, Jolie Kahn, Esq., at joliekahnlaw@sbcglobal.net, if you have any further questions or would like to discuss our responses.

Cc: Jolie Kahn, Esq.