Bitcoin (BTC-USD) miner Marathon Digital (NASDAQ:MARA) will restate its full-year and quarterly results for 2021 and for the first three quarters of 2022 due to certain accounting errors that were identified after the company received a comment letter from the Securities and Exchange Commission (SEC). Consequently, Marathon postponed its Q4 2022 and full-year results that were scheduled to be announced on Tuesday.
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Marathon received a comment letter from the Corporation Finance Staff of the SEC on February 22. On February 27, the audit committee of the board of directors concluded that the annual report on form 10-K for 2021, quarterly reports (10-Qs) for the first three quarters of 2021 and 2022, and the related earnings releases “should no longer be relied upon,” as the company intends to correct the errors and restate its financial statements.
Impact of the Restatement
The errors resulted from the company’s method of calculating impairment on digital assets and its determination of acting as an agent, rather than a principal, in operating a Bitcoin mining pool that included third-party participants.
Marathon estimates that both its revenues and cost of revenues for 2021 were “understated due to these errors. These and certain other metrics are estimated to increase for 2021 upon completion of the restatement. Further, the company expects “minor increases” to revenues and cost of revenues and other items in previously issued interim financial statements for both 2021 and 2022.
Nonetheless, the restatement is not expected to impact the overall margin, operating income, or net income in 2021 or any of the interim periods in 2021 or 2022. Marathon also stated that it no longer operates a pool that includes third parties.
Is Mara a Good Stock to Buy?
Wall Street is cautiously optimistic about Marathon Digital, with a Moderate Buy consensus rating based on two Buys and one Hold. The average MARA stock price target of $12 implies 69% upside potential. Shares have skyrocketed over 108% year-to-date.
