News of Marathon Digital’s $138 Million Fine for Breach of Non-Disclosure Agreement Triggers a Bearish 2.5% of Its MARA Stock
Marathon Digital Holdings, the world’s largest Bitcoin mining company by market cap, recently found itself in hot water. According to a recent press statement, the company has been slapped with a huge $138 million fine due to a breach of a non-disclosure or non-circumvention agreement—a type of contract that protects parties in a transaction from being bypassed.
— RexFinance (@Rex_Finance) July 20, 2024
JUST IN: A federal court jury *unanimously* ruled in favor of Michael Ho against $MARA @MarathonDH for $138M after finding that MARA breached a non-disclosure/non-circumvention agreement.
Not good. If you cut corners you end up getting cut yourself.https://t.co/v1S2YoXbpp
The lawsuit was brought forward by Michael Ho, a former co-founder of US Bitcoin Corp and currently the chief strategy officer of another mining rig, Hut 83.
The Breach of Agreement and Jury Verdict in Ho’s Favor
In 2020, Michael Ho, former co-founder of US Bitcoin Corp and chief strategy officer of mining company Hut 8, developed a growth strategy for Marathon Digital. The plan was to set up a big Bitcoin mining center in North America. However, Marathon Digital allegedly implemented Ho’s strategy without compensating him for his efforts. Thus, violating the non-circumvent agreement between the two parties.
The court decided in favor of Ho, and Marathon Digital was fined a whopping $138 million. This ruling shows how important it is to honor contractual obligations and maintain professional relationships within the crypto space. As Ho’s defendant, David Affeld, a partner at Affeld England & Johnson LLP, reportedly puts it, “…ethical business practices are not optional; they are essential” for the industry’s integrity.
Impact and Bitcoin Miner Capitulation and Recovery
Following the legal judgment, Marathon Digital’s stock (NASDAQ: MARA) experienced a decline. On Monday, the stock dropped by 3%, and the downtrend continued with an additional 2.5% decrease in Tuesday’s pre-market trading session. Investors are watching closely, and the company must work hard to regain their trust.
Despite this problem, Marathon Digital Holdings is still a big player in Bitcoin mining. With a value of $6.77 billion, it’s way ahead of its nearest rival, CleanSpark, valued at $4.13 billion. Recently, Marathon has doubled its mining power to 26.3 exahashes per second, mainly because of improvements at its Ellendale center. In June alone, the company’s mining pool found 158 blocks, a 10% increase from last year.
In the same way, the wider Bitcoin mining industry is getting back on its feet. Well-known Bitcoin analyst Willy Woo thinks that the worst times for miners are over. Usually, the lowest points happen when miners are making the least money.
The recent introduction of new-generation mining hardware, such as the M66s and S21 Pros, has contributed to the recovery of both BTC price and hash rate.
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