Delaware 86-1746728 (State or other jurisdiction of (I.R.S. Employer (Address of principal executive offices) (Zip Code) (203) 718-5960 Title of each class Trading symbol(s) Name of each exchange on which registered Class A Common Stock, $0.0001 par value GREE The Nasdaq Global Select Market 8.50% Senior Notes due 2026 GREEL The Nasdaq Global Select Market o Large accelerated filer o Accelerated filer o Non-accelerated filer x Smaller reporting company x Emerging growth company x Page September 30, 2021 December 31, 2020 ASSETS CURRENT ASSETS: Cash and cash equivalents $ 51,149 $ 5,052 Short term investments 496 0 Digital assets 421 254 Accounts receivable 5,501 390 Prepaid expenses 5,042 155 Emissions and carbon offset credits 1,816 1,923 Total current assets 64,425 7,774 LONG-TERM ASSETS: Property and equipment, net 121,532 56,645 Right-of-use assets 1,369 0 Intangible assets 22,493 0 Goodwill 46,349 0 Other long-term assets 2,143 148 Total assets $ 258,311 $ 64,567 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 3,368 $ 1,745 Accrued emissions expense 1,674 2,082 Accrued expenses 9,566 946 Accrued interest expense - related party 0 20 Notes payable, current portion 17,994 3,273 Notes payable - related party, current portion 0 3,573 Lease obligations, current portion 852 0 Total current liabilities 33,454 11,639 LONG-TERM LIABILITIES: Deferred tax liability 3,959 - Notes payable, net of current portion 7,369 1,364 Lease obligations, net of current portion 111 0 Asset retirement obligations 2,380 2,277 Environmental trust liability 4,994 4,927 Other long-term liabilities 242 0 Total liabilities 52,509 20,207 COMMITMENTS AND CONTINGENCIES (NOTE 13) STOCKHOLDERS' EQUITY: Preferred stock, par value $0.0001, 20,000,000 and 0 shares authorized, - - Common stock, par value $0.0001, 3,000,000,000 and 0 shares authorized, 4 0 Additional paid-in capital 233,813 0 Members' capital, 0 and 49,978 units outstanding as of September 30, 2021 and December 31, 2020, respectively - 69,276 Accumulated deficit (28,015 ) (24,916 ) Total stockholders' equity 205,802 44,360 Total liabilities and stockholders' equity $ 258,311 $ 64,567 COMPREHENSIVE (LOSS) INCOME Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 REVENUE: Cryptocurrency mining $ 31,156 $ 3,043 $ 54,217 $ 8,673 Power and capacity 3,077 3,080 7,255 5,264 Services and other 1,521 0 1,521 0 Total revenue 35,754 6,123 62,993 13,937 OPERATING COSTS AND EXPENSES Cost of revenue - cryptocurrency mining (exclusive of 5,974 1,027 11,504 2,966 Cost of revenue - power and capacity (exclusive of 2,831 3,045 6,688 5,715 Cost of revenue - services and other (exclusive of 854 0 854 0 Selling, general and administrative 5,446 1,493 12,017 4,131 Merger and other costs (Note 4) 29,847 0 31,095 0 Depreciation and amortization 2,667 1,064 5,531 3,227 Total operating costs and expenses 47,619 6,629 67,689 16,039 Loss from operations (11,865 ) (506 ) (4,696 ) (2,102 ) OTHER INCOME (EXPENSE), NET: Interest expense, net (1,009 ) 0 (1,377 ) 0 Interest expense - related party 0 0 (22 ) (540 ) Gain on sale of digital assets 18 36 159 11 Other (expense) income, net (29 ) 181 (23 ) 165 Total other (expense) income, net (1,020 ) 217 (1,263 ) (364 ) LOSS BEFORE INCOME TAXES (12,885 ) (289 ) (5,959 ) (2,466 ) Benefit for income taxes (4,989 ) 0 (2,860 ) 0 NET LOSS AND TOTAL $ (7,896 ) $ (289 ) $ (3,099 ) $ (2,466 ) Loss per share: Basic $ (0.28 ) $ (0.13 ) Diluted $ (0.28 ) $ (0.13 ) Additional Common Units Preferred Units Senior Priority Units Total Preferred Stock Common Stock Paid - In Number Members' Number Members' Number Members' Members' Accumulated Shares Amount Shares Amount Capital of Units Capital of Units Capital of Units Capital Capital Deficit Total Balance at January 1, 2021 0 $ 0 0 $ 0 $ 0 750 $ 0 39,228 $ 39,074 10,000 $ 30,202 $ 69,276 $ (24,916 ) $ 44,360 Contribution of Preferred Units, Senior - - 26,800,300 3 72,888 - - (39,228 ) (39,074 ) (10,000 ) (30,202 ) (69,276 ) - 3,615 Contribution of GGH Common Units for - - 1,199,700 - - (750 ) - - - - - - - - Proceeds from issuance of preferred 1,620,000 1 - - 37,112 - - - - - - - - 37,113 Stock-based compensation expense - - - - 1,063 - - - - - - - - 1,063 Proceeds from stock options exercised - - 160,000 - 1,000 - - - - - - - - 1,000 Stock issued to purchase miners - - 160,000 - 991 - - - - - - - - 991 Net income - - - - - - - - - - - - 4,797 4,797 Balance at June 30, 2021 1,620,000 $ 1 28,320,000 $ 3 $ 113,054 0 $ 0 0 $ 0 0 $ 0 $ 0 $ (20,119 ) $ 92,939 Shares issued to Support.com shareholders - - 2,960,731 - 91,588 - - - - - - - - 91,588 Issuance of shares for investor fee associated - - 562,174 - 17,826 - - - - - - - - 17,826 Issuance of warrants to advisor in connection - - - - 8,779 - - - - - - - - 8,779 Conversion of preferred stock (Note 9) (1,620,000 ) (1 ) 6,480,000 1 - - - - - - - - - - Shares issued upon exercise of warrants - - 344,800 - 2,155 - - - - - - - - 2,155 Stock-based compensation expense - - - - 411 - - - - - - - - 411 Net loss - - - - - - - - - - - - (7,896 ) (7,896 ) Balance at September 30, 2021 0 $ 0 38,667,705 $ 4 $ 233,813 0 $ 0 0 $ 0 0 $ 0 $ 0 $ (28,015 ) $ 205,802 Additional Common Units Preferred Units Senior Priority Units Total Preferred Stock Common Stock Paid - In Number Members' Number Members' Number Members' Members' Accumulated Shares Amount Shares Amount Capital of Units Capital of Units Capital of Units Capital Capital Deficit Total Balance at January 1, 2020 0 $ 0 0 $ 0 $ 0 750 $ 0 54,228 $ 54,074 0 $ 0 $ 54,074 $ (20,350 ) $ 33,724 Net loss - - - - - - - - - - - - (2,177 ) (2,177 ) Balance at June 30, 2020 0 $ 0 0 $ 0 $ 0 750 $ 0 54,228 $ 54,074 0 $ 0 $ 54,074 $ (22,527 ) $ 31,547 Net loss - - - - - - - - - - - - (289 ) (289 ) Balance at September 30, 2020 0 $ 0 0 $ 0 $ 0 750 $ 0 54,228 $ 54,074 0 $ 0 $ 54,074 $ (22,816 ) $ 31,258 Nine Months Ended September 30, 2021 2020 CASH FLOW FROM OPERATING ACTIVITIES: Net loss $ (3,099 ) $ (2,466 ) Adjustments to reconcile net loss to net cash Depreciation and amortization 5,531 3,227 Deferred income taxes (2,945 ) 0 Amortization of debt issuance costs 54 0 Accretion of asset retirement obligations 103 108 Stock-based compensation expense 1,474 0 Investor fee paid in common stock 17,826 0 Advisor fee paid in warrants 8,779 0 Loss on environmental trust liability 67 0 Changes in operating assets and liabilities: Accounts receivable 272 (165 ) Emissions and carbon offset credits 107 (336 ) Prepaids and other assets (5,955 ) (965 ) Accounts payable (455 ) (1,062 ) Accrued emissions (408 ) 941 Accrued expenses 5,315 1,506 Net cash flow provided by operating activities 26,666 788 CASH FLOW FROM INVESTING ACTIVITIES: Purchases of and deposits for property and equipment (65,757 ) (9,738 ) Cash received in Merger 27,113 0 Project deposit 0 436 Net cash flow used in investing activities (38,644 ) (9,302 ) CASH FLOW FROM FINANCING ACTIVITIES: Proceeds from issuance of preferred stock, net of issuance costs 37,113 - Proceeds from stock options exercised 1,000 0 Proceeds from warrants exercised 2,155 0 Issuance costs associated with shares issued for Support acquisition (2,296 ) 0 Proceeds from notes payable, net of issuance costs 25,112 0 Principal payments on notes payable (4,440 ) 0 Repayments of finance lease obligations (569 ) 0 Net cash flow provided by financing activities 58,075 0 CHANGE IN CASH AND CASH EQUIVALENTS 46,097 (8,514 ) CASH AND CASH EQUIVALENTS - beginning of year 5,052 11,750 CASH AND CASH EQUIVALENTS - end of period $ 51,149 $ 3,236 ORGANIZATION AND DESCRIPTION OF BUSINESS electricity market and demand for electricity. Condensed Consolidated Financial Statements such adjustments are of a normal recurring nature. The results for the unaudited interim condensed consolidated statements of operations and comprehensive (loss) income are not necessarily indicative of results to be expected for the year ending December 31, 2022, the price of bitcoin decreased approximately 57% and the price of natural gas increased approximately 53% and these economic conditions did not improve during the third quarter. The Restricted Cash Certain prior year amounts have been reclassified to conform to the current Recent Accounting Pronouncements, SUPPORT.COM $ in thousands, except per share amount Support common stock exchanged 25,745,487 Exchange ratio 0.115 Greenidge Class A common stock exchanged 2,960,731 Greenidge common stock value per share $ 31.71 Consideration paid $ 93,885 $ in thousands Cash and cash equivalents $ 27,113 Short-term investments 496 Accounts receivable 5,383 Prepaid expenses and other current assets 713 Property and equipment 1,349 Other long-term assets 383 Accounts payable (117 ) Accrued expenses and other current liabilities (3,328 ) Other long-term liabilities (242 ) Intangible assets 22,690 Deferred tax liability (6,904 ) Goodwill 46,349 Total consideration $ 93,885 $ in thousands Identifiable Intangible Asset Useful Life Fair Value Customer relationships 5 years $ 21,600 Tradename 10 years 1,090 Total identifiable intangible assets $ 22,690 Results of For the nine months ended September 30, 2022, the acquired Support.com business contributed $24.4 million in revenue and $4.3 million of operating income, which includes approximately $0.7 million of amortization expenses of acquired intangible assets. Three Months Ended September 30, Nine Months Ended September 30, $ in thousands 2021 2020 2021 2020 Revenues $ 42,448 $ 16,461 $ 87,830 $ 47,258 Net (loss) income $ (11,783 ) $ (1,646 ) $ (12,602 ) $ (6,274 ) Three Months Ended Nine Months Ended $ in thousands September 30, 2021 September 30, 2021 Merger related costs: Investor fee paid in common stock (Note 9) $ 17,826 $ 17,826 Advisor fee paid in warrants (Note 9) 8,779 8,779 Professional and other fees 1,140 1,434 Total Merger related costs 27,745 28,039 Public company filing related costs 2,102 3,056 Total Merger and other costs $ 29,847 $ 31,095 Services. The table below presents information about reportable segments for the three and nine months ended September 30, 2022 and 2021, Three Months Ended September 30, Nine Months Ended September 30, $ in thousands 2021 2020 2021 2020 Revenues: Cryptocurrency Mining and Power Generation $ 34,233 $ 6,123 $ 61,472 $ 13,937 Support Services 1,521 - 1,521 - Total Revenues $ 35,754 $ 6,123 $ 62,993 $ 13,937 Segment Adjusted EBITDA Cryptocurrency Mining and Power Generation $ 20,973 $ 775 $ 33,464 $ 1,301 Support Services 204 - 204 - Total Segments Adjusted EBITDA $ 21,177 $ 775 $ 33,668 $ 1,301 In addition, the table below provides a reconciliation of the total of the Three Months Ended September 30, Nine Months Ended September 30, $ in thousands 2021 2020 2021 2020 Total Segments Adjusted EBITDA $ 21,177 $ 775 $ 33,668 $ 1,301 Depreciation and amortization (2,667 ) (1,064 ) (5,531 ) (3,227 ) Stock-based compensation (411 ) - (1,474 ) - Merger and other costs (29,847 ) - (31,095 ) - Expansion costs (128 ) - (128 ) - Interest expense, net (1,009 ) - (1,399 ) (540 ) Consolidated loss before income taxes $ (12,885 ) $ (289 ) $ (5,959 ) $ (2,466 ) $ in thousands September 30, 2021 Cryptocurrency Mining and Power Generation 129,802 Support Services 76,864 Total segment assets 206,666 Cash and cash equivalents 51,149 Short term investments 496 Total assets $ 258,311 Property and equipment, net consisted of the following at September 30, $ in thousands Estimated Useful September 30, 2021 December 31, 2020 Plant infrastructure 15 - 39 years $ 34,273 $ 33,944 Miners 5 years 36,779 10,236 Miner facility infrastructure 15 years 14,787 8,791 Land N/A 300 300 Equipment 5 years 948 211 Software 3 years 1,130 66 Coal ash impoundment 4 years 2,135 2,135 Construction in process N/A 6,869 3,989 Miner deposits N/A 38,467 5,959 135,688 65,631 Less: Accumulated depreciation (14,156 ) (8,986 ) $ 121,532 $ 56,645 7. DEBT $ in thousands $ in thousands Interest Initial Balance as of: Note Loan Date Maturity Date Rate Financing September 30, 2021 December 31, 2020 A December 2020 June 2022 17.0% $ 4,482 $ 1,992 $ 4,233 B December 2020 June 2022 17.0% 428 166 404 C March 2021 November 2022 17.0% 2,229 1,733 0 D April 2021 December 2022 17.0% 4,012 3,343 0 E - H May 2021 October 2023 15.0% 12,080 11,751 0 I July 2021 January 2023 17.0% 4,457 3,962 0 J July 2021 March 2023 17.0% 2,701 2,415 0 25,363 4,637 Less: Current portion Less: Current portion (17,994 ) (3,273 ) $ 7,369 $ 1,364 The income tax provision for interim periods is determined using an estimate of the annual effective tax rate, adjusted for discrete items, if any, that are taken into account in the relevant period. Each quarter, the estimate of the annual effective tax rate is updated, and if the estimated effective tax rate changes, a cumulative adjustment is made. In addition, the effect of changes in enacted tax laws or rates or tax status is recognized in the interim period in which the change occurs. The following table sets forth a reconciliation of the numerator and denominator used to compute basic earnings and diluted per share of common stock. Three Months Nine Months Ended Ended $ in thousands, except per share amounts September 30, 2021 September 30, 2021 Numerator Net loss $ (7,896 ) $ (3,099 ) Less: Net income attributable to the member units (648 ) (648 ) Net loss attributable to Greenidge $ (8,544 ) $ (3,747 ) Denominator Basic weighted average shares outstanding 30,116 28,949 Dilutive effect of equity awards 0 0 Dilutive effect of convertible preferred stock 0 0 Diluted weighted average shares outstanding 30,116 28,949 Loss per share Basic $ (0.28 ) $ (0.13 ) Diluted $ (0.28 ) $ (0.13 ) Prior to the reorganization, there were three and nine months ended September 30, 2022, there was no impact of dilution from any of the outstanding 482,153 RSUs or 570,563 common stock options due to the net loss, since inclusion of any impact from these awards would be anti-dilutive. For the three and nine months ended September 30, 2021, there assumptions. 14. CONCENTRATIONS 2022 and December 31, 2021, respectively. The contract with the Support Services segment's largest customer expires on December 31, 2022 and has not been renewed. Greenidge had the following noncash investing and financing $ in thousands Shares issued to Support.com shareholders upon Merger (Notes 3 and 9) $ 93,885 Stock issued to purchase miners $ 991 Contribution of Preferred Units, Senior Priority Units, and notes payable to related $ 72,891 Issuance of shares for investor fee associated with successful completion $ 17,826 Issuance of warrants to advisor in connection with completion of Merger (Note 4 and 9) $ 8,779 three and nine months ended September 30, 2022, respectively. the region served by our New York Facility. dynamics, labor relations, environmental regulations or the financial viability of fuel suppliers. separate operating and reporting segment. Our Support Services segment provides solutions and technical programs to customers delivered by home-based employees. The Support Services segment provides customer service, sales support, Quarters Ended September 30, Nine Months Ended September 30, $ in thousands 2021 2020 Variance 2021 2020 Variance Total revenue $ 35,754 $ 6,123 483.9 % $ 62,993 $ 13,937 352.0 % Cost of revenue (exclusive of 9,659 4,072 137.2 % 19,046 8,681 119.4 % Selling, general and administrative expenses 5,446 1,493 264.8 % 12,017 4,131 190.9 % Merger and other costs 29,847 - 31,095 - Depreciation and amortization 2,667 1,064 150.7 % 5,531 3,227 71.4 % Loss from operations (11,865 ) (506 ) N/A (4,696 ) (2,102 ) N/A Other (expense) income: Interest expense, net (1,009 ) - N/A (1,377 ) - N/A Interest expense - related party - - N/A (22 ) (540 ) -95.9 % Loss on sale of digital assets 18 36 -50.0 % 159 11 N/A Other (expense) income, net (29 ) 181 -116.0 % (23 ) 165 N/A Total other (expense) income, net (1,020 ) 217 -570.0 % (1,263 ) (364 ) 247.0 % Loss before income taxes (12,885 ) (289 ) N/A (5,959 ) (2,466 ) 141.6 % (Benefit) provision for income taxes (4,989 ) - N/A (2,860 ) - N/A Net loss $ (7,896 ) $ (289 ) N/A $ (3,099 ) $ (2,466 ) N/A Adjusted Amounts (a) Income (loss) from operations $ 18,110 $ (506 ) $ 26,527 $ (2,102 ) Operating margin 50.7 % -8.3 % 42.1 % -15.1 % Net income (loss) $ 12,166 $ (289 ) $ 17,868 $ (2,466 ) Other Financial Data (a) EBITDA $ (9,209 ) $ 775 $ 971 $ 1,301 as a percent of revenues -25.8 % 12.7 % 1.5 % 9.3 % Adjusted EBITDA $ 21,177 $ 775 $ 33,668 $ 1,301 as a percent of revenues 59.2 % 12.7 % 53.4 % 9.3 % Quarters Ended September 30, Nine Months Ended September 30, $ in thousands 2021 2020 Variance 2021 2020 Variance Cryptocurrency mining $ 31,156 $ 3,043 923.9 % $ 54,217 $ 8,673 525.1 % Power and capacity 3,077 3,080 -0.1 % 7,255 5,264 37.8 % Services and other 1,521 - N/A 1,521 - N/A Total revenue $ 35,754 $ 6,123 483.9 % $ 62,993 $ 13,937 352.0 % Quarters Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Cryptocurrency mining 87.1 % 49.7 % 86.1 % 62.2 % Power and capacity 8.6 % 50.3 % 11.5 % 37.8 % Services and other 4.3 % N/A 2.4 % N/A Total revenue 100.0 % 100.0 % 100.0 % 100.0 % Quarters Ended September 30, Nine Months Ended September 30, $ in thousands 2021 2020 Variance 2021 2020 Variance Cryptocurrency mining $ 5,974 $ 1,027 481.7 % $ 11,504 $ 2,966 287.9 % Power and capacity 2,831 3,045 -7.0 % 6,688 5,715 17.0 % Services and other 854 - N/A 854 - N/A Total cost of revenue $ 9,659 $ 4,072 137.2 % $ 19,046 $ 8,681 119.4 % As a percentage of total revenue 27.0 % 66.5 % 30.2 % 62.3 % Power Generation segment. in 2021. 2022 as compared to the prior year period. (loss) income 2021. Results of Operations - Three Months Ended September 30 Quarters Ended September 30, Nine Months Ended September 30, $ in thousands 2021 2020 Variance 2021 2020 Variance REVENUES Cryptocurrency Mining and $ 34,233 $ 6,123 459.1 % $ 61,472 $ 13,937 341.1 % Support Services 1,521 - N/A 1,521 - N/A Total Revenues $ 35,754 $ 6,123 483.9 % $ 62,993 $ 13,937 352.0 % SEGMENT ADJUSTED EBITDA Cryptocurrency Mining and $ 20,973 $ 775 2606.2 % $ 33,464 $ 1,301 2472.2 % Support Services 204 - N/A 204 - N/A Total Adjusted EBITDA $ 21,177 $ 775 2632.5 % $ 33,668 $ 1,301 2487.9 % Reconciliation to loss before Depreciation and amortization (2,667 ) (1,064 ) (5,531 ) (3,227 ) Stock-based compensation (411 ) - (1,474 ) - Merger and other costs (29,847 ) - (31,095 ) - Expansion costs (128 ) - (128 ) - Interest expense, net (1,009 ) - (1,399 ) (540 ) Consolidated loss before income taxes $ (12,885 ) $ (289 ) $ (5,959 ) $ (2,466 ) $ in thousands, except $ per MWh Quarters Ended September 30, Nine Months Ended September 30, and average Bitcoin price 2021 2020 Variance 2021 2020 Variance Cryptocurrency mining $ 31,156 $ 3,043 923.9 % $ 54,217 $ 8,673 525.1 % Power and capacity 3,077 3,080 -0.1 % 7,255 5,264 37.8 % Total revenue $ 34,233 $ 6,123 459.1 % $ 61,472 $ 13,937 341.1 % MWh Cryptocurrency mining 87,111 41,960 107.6 % 199,200 90,746 119.5 % Power and capacity 44,915 89,028 -49.5 % 126,990 175,602 -27.7 % Revenue per MWh Cryptocurrency mining $ 358 $ 73 393.2 % $ 272 $ 96 184.8 % Power and capacity $ 69 $ 35 98.0 % $ 57 $ 30 90.6 % Cost of revenue (exclusive of depreciation Cryptocurrency mining $ 5,974 $ 1,027 481.7 % $ 11,504 $ 2,966 287.9 % Power and capacity $ 2,831 $ 3,045 -7.0 % $ 6,688 $ 5,715 17.0 % Cost of revenue per MWh (exclusive of Cryptocurrency mining $ 69 $ 24 180.2 % $ 58 $ 33 76.7 % Power and capacity $ 63 $ 34 84.3 % $ 53 $ 33 61.8 % Cryptocurrency Mining Metrics Bitcoins mined 729 246 189.9 % 1,257 919 34.4 % Average Bitcoin price $ 41,937 $ 10,629 294.6 % $ 44,614 $ 9,287 380.4 % Average hash rate (EH/s) 188.3 % 86.4 % Average difficulty -6.6 % 24.5 % segment. prior year, offset by a 26% decline in MWhs provided to the power grid as compared to prior year. (loss) hash rate. bitcoin and increased energy prices during the nine months ended September 30, 2022, the Company recognized a noncash impairment charge of $71.5 million for the assets associated with the Cryptocurrency Datacenter and Power Generation segment to reduce the net book value of the long-lived assets to fair value. Fair value was based upon a market approach. The excess of the book value over the estimated fair value was allocated to the long-lived assets of the Cryptocurrency and Power Generation segment. of these non-GAAP measures may not be comparable to similar definitions used by other companies. These results should be considered in addition to, not as a substitute for, results reported in accordance with GAAP. Quarters Ended September 30, Nine Months Ended September 30, $ in thousands 2021 2020 2021 2020 Adjusted operating income (loss) Loss from operations $ (11,865 ) $ (506 ) $ (4,696 ) $ (2,102 ) Add: Merger and other costs 29,847 - 31,095 - Add: Expansion costs 128 - 128 - Adjusted income (loss) from operations $ 18,110 $ (506 ) $ 26,527 $ (2,102 ) Adjusted operating margin 50.7 % -8.3 % 42.1 % -15.1 % Adjusted net income (loss) Net loss $ (7,896 ) $ (289 ) $ (3,099 ) $ (2,466 ) Add: Merger and other costs, after tax 19,969 - 20,874 - Add: Expansion costs, after tax 93 - 93 - Adjusted net income (loss) $ 12,166 $ (289 ) $ 17,868 $ (2,466 ) EBITDA and Adjusted EBITDA Net loss $ (7,896 ) $ (289 ) $ (3,099 ) $ (2,466 ) Provision for income taxes (4,989 ) - (2,860 ) - Interest expense, net 1,009 - 1,399 540 Depreciation and amortization 2,667 1,064 5,531 3,227 EBITDA (9,209 ) 775 971 1,301 Stock-based compensation 411 - 1,474 - Merger and other costs 29,847 - 31,095 - Expansion costs 128 - 128 - Adjusted EBITDA $ 21,177 $ 775 $ 33,668 $ 1,301 Less than 1 - 3 $ in thousands Total 1 Year Years Notes payable (1) $ 42,932 $ 25,229 $ 17,703 Leases (2) $ 943 $ 670 $ 273 Natural gas commitments (3) $ 9,187 $ 9,187 $ - Purchase commitments (4) $ 103,778 $ 103,778 $ - 2022. In Nine Months Ended September 30, $ in thousands 2021 2020 Net cash provided by operating activities $ 26,666 $ 788 Net cash used in investing activities (38,644 ) (9,302 ) Net cash provided by financing activities 58,075 - Net change in cash and cash equivalents 46,097 (8,514 ) Cash and cash equivalents at beginning of year 5,052 11,750 Cash and cash equivalents at end of period $ 51,149 $ 3,236 2021. datacenter operations. For information on legal proceedings, refer to Note 13. Commitments and Contingencies—Legal Matters in our unaudited condensed consolidated financial statements included elsewhere in this report. meet our other obligations. volatility. Bitcoin prices have historically been volatile and impacted by a variety of factors, including market perception, the degree to which bitcoin is accepted as a means of payment, the volume of purchases and sales of bitcoin by market participants, real or perceived competition from alternative cryptocurrencies as well as operations. Obtaining and complying with required government permits and approvals may be time-consuming and costly. Exhibit No. Description 3.1 32.1* 32.2* 101 Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Balance Sheets, (ii) the Statements of Operations, (iii) the Statements of Cash Flows and (iv) the Notes to Unaudited Condensed Interim Consolidated Financial Statements. 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). * Furnished herewith. Greenidge Generation Holdings Inc. Date: November By: /s/ David Anderson Chief Executive Officer Date: November By: /s/ Robert Loughran Chief Financial Officerx QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 19342021ORo TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
incorporation or organization)
Identification No.)590 Plant Road,Dresden, NY 144411444106890(315) 536-2359☒x No ☐o☒x No ☐☐☐☒☒☒☐ o☐o No☒ x12, 2021,11, 2022, the registrant had 11,605,20516,213,043 shares of Class A common stock, $0.0001 par value per share, outstanding and 29,040,00028,526,372 shares of Class B common stock, $0.0001 par value per share, outstanding.567892945454646727373737676781"would,"“would” “could” and “should” and the negative of these terms or other similar expressions. Forward-looking statements are based on current beliefs and assumptions that are subject to risks and uncertainties and are not guarantees of future performance. Forward-looking statements in this document include, among other things, statements regarding our business plan, business strategy and operations in the future. In addition, all statements that address operating performance and future performance, events or developments that are expected or anticipated to occur in the future, including statements relating to creating value for stockholders, and benefits of the Merger (as defined below) to our customers, vendors, employees, stockholders and other constituents, are forward-looking statements.II,I, Item 1A. “Risk Factors” of this Quarterly ReportGreenidge's Form 10-K for the year ended December 31, 2021 filed with the Securities and Exchange Commission ("SEC") on Form 10-Q, as well as statements about or relating to or otherwise affected by:the ability to recognize the anticipated objectives March 31, 2022 and benefits of an expansion into multiple data centers in Texas;the ability to negotiate or execute definitive documentation with respect to potential expansion sites on terms and conditions that are acceptable to Greenidge, whether on a timely basis or at all;the ability to recognize the anticipated objectives and any benefits of the merger described in Note 1 of the Notes to Consolidated Financial Statements (Unaudited) herein (the “Merger”), including the anticipated tax treatment of the Merger;changes in applicable laws, regulations or permits affecting our operations or the industries in which we operate, including regulation regarding power generation, cryptocurrency usage and/or cryptocurrency mining;any failure by us to obtain acceptable financing with regard to our growth strategies or operations;fluctuations and volatility in the price of bitcoin and other cryptocurrencies;loss of public confidence in, or use cases of, bitcoin and other cryptocurrencies;the potential of cryptocurrency market manipulation;the economics of mining cryptocurrency, including as to variables or factors affecting the cost, efficiency and profitability of mining;the availability, delivery schedule and cost of equipment necessary to maintain and grow our business and operations, including mining equipment and equipment meeting the technical or other specifications required to achieve our growth strategy;the possibility that we may be adversely affected by other economic, business or competitive factors, including factors affecting the industries in which we operate or upon which we rely and are dependent;the ability to expand successfully to other facilities, mine other cryptocurrencies or otherwise expand our business;changes in tax regulations applicable to us, our assets or cryptocurrencies, including bitcoin;any litigation involving us;costs and expenses relating to cryptocurrency transaction fees and fluctuation in cryptocurrency transaction fees;the condition of our physical assets, including that our current single operating facility may realize material, if not total, loss and interference as a result of equipment malfunction or break-down, physical disaster, data security breach, computer malfunction or sabotage; and2the actual and potential impact of the COVID-19 pandemic.Consequently, all of the forward-looking statements made in this Quarterly Report on Form 10-Q, are qualified by the information contained herein, including the information contained under this caption and the information in Part II, Item 1A. “Risk Factors” of this Quarterly Report on Form 10-Q. No assurance can be given that these are all of the factors that could cause actual results to vary materially from the forward-looking statements.You should not put undue reliance on forward-looking statements. No assurances can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do occur, what impact they will have on the results of our operations, financial condition or cash flows. Actual results may differ materially from those discussed in this Quarterly Report on Form 10-Q. All forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q and we do not assume any duty to update or revise forward-looking statements, whether as a result of new information, future events, uncertainties or otherwise, as of any future date.Risk Factor SummaryOur business is subject to numerous risks and uncertainties, which illuminate challenges that we face in connection with the successful implementation of our strategy and the growth of our business. The following considerations, among others, may offset our competitive strengths or have a negative effect on our business strategy, which could cause a decline in the price of our class A common stock and result in a loss of all or a portion of your investment:Our business and operating plan may be altered due to several external factors including but not limited to market conditions, the ability to procure equipment in a quantity, cost and timeline consistent with the business plan and the ability to identify and acquire additional locations to replicate the operating model in place at our existing facility.It may take significant time, expenditure or effort for us to grow our business, including our bitcoin mining operations, through acquisitions, and our efforts may not be successful.The loss of any of our management team, an inability to execute an effective succession plan, or an inability to attract and retain qualified personnel could adversely affect our results of operations, strategy and financial performance.We have been, are currently, and may be in the future, the subject of legal proceedings, including governmental investigations, relating to our products or services.Our ability to use our net operating losses to offset future taxable income may be subject to certain limitations.We have a limited operating history, with operating losses as we have grown. If we are unable to sustain greater revenues than our operating costs of bitcoin mining and power generation, as well as expansion plans, we will resume operating losses, which could negatively impact our results of operations, strategy and financial performance.While we have multiple sources of revenuethose described from our business and operations, these sources of revenue currently all depend on the single natural gas power generation facility that we operate. Any disruptiontime to our single power plant would have a material adverse effect on our business and operations, as well as our results of operations and financial condition.As the aggregate amount of computing power, or hash rate, in the bitcoin network increases, the amount of bitcoin earned per unit of hash rate decreases; as a result, in order to maintain our market share, we may have to incur significant capital expenditures in order to expand our fleet of miners.The properties utilized by ustime in our bitcoin mining operations may experience damage, including damage not covered by insurance.Our bitcoin may be subject to loss, theft or restriction on access.If bitcoin or other cryptocurrencies are determined to be investment securities, and we hold a significant portion of our assets in such cryptocurrency, investment securities or non-controlling equity interests of other entities, we may inadvertently violatefuture reports filed with the Investment Company Act.3There has been limited precedent set for financial accounting of digital assets and so it is unclear how we will be required to account for digital asset transactions.Regulatory changes or actions may alter the nature of an investment in us or restrict the use of bitcoin in a manner that adversely affects our business prospects and our results of operations and financial condition.We are subject to risks related to Internet disruptions,SEC, which could have an adverse effect on our ability to mine bitcoin.Our future success will depend significantly on the price of bitcoin, which is subject to risk and has historically been subject to wide swings and significant volatility.We may not be able to compete effectively against other companies, some of whom have greater resources and experience.The impact of geopolitical and economic events on the supply and demand for bitcoin is uncertain.Bitcoin miners and other necessary hardware are subject to malfunction, technological obsolescence, the global supply chain and difficulty and cost in obtaining new hardware.We face risks and disruptions related to the COVID-19 pandemic and supply chain issues, including in semiconductors and other necessary mining components, which could significantly impact our operations and financial results.We may not adequately respond to rapidly changing technology.A failure to properly monitor and upgrade the bitcoin network protocol could damage the bitcoin network which could, in turn, have an adverse effect on our business.Over time, incentives for bitcoin miners to continue to contribute processing power to the bitcoin network may transition from a set reward to transaction fees. If the incentives for bitcoin mining are not sufficiently high, we may not have an adequate incentive to continue to mine.Our operations and financial performance may be impacted by fuel supply disruptions, price fluctuations in the wholesale power and natural gas markets, and fluctuations in other market factors that are beyond our control.A substantial portion of revenue generated by our Support Services segment is attributable to a limited number of clients. The loss or reduction in business from any of these clients could adversely affect its business and results of operations.Our Support Services segment's business is based on a relatively new and evolving business model.The risks described above should be read together with the text of the full risk factors described in Part II, Item 1A. “Risk Factors” and the other information set forth in this Quarterly Report on Form 10-Q, including our condensed consolidated financial statements and the related notes, as well as in other documents that we file with the SEC. Our business, prospects, financial condition or operating results could be harmed by any of these risks, as well as other risks not currently known to us or that we currentlyreviewed carefully. Please consider immaterial. CertainGreenidge's forward-looking statements in “Risk Factors” are forward-looking statements. See “Cautionary Statement Regarding Forward-Looking Statements” above.4 (UNAUDITED)Dollars AmountsDollar amounts in thousands, except share and member unit data)
0 and 0 shares issued and outstanding as of September 30, 2021 and
December 31, 2020, respectively
38,667,705 and 0 shares issued and outstanding as of September 30, 2021
and December 31, 2020, respectivelySeptember 30, 2022
(Unaudited)December 31, 2021 ASSETS CURRENT ASSETS: Cash and cash equivalents $ 28,013 $ 82,599 Restricted cash 10,500 — Short-term investments — 496 Digital assets 337 476 Accounts receivable 4,704 5,524 Prepaid expenses 9,694 9,146 Emissions and carbon offset credits 1,259 2,361 Total current assets 54,507 100,602 LONG-TERM ASSETS: Property and equipment, net 246,071 217,091 Right-of-use assets 222 1,472 Intangible assets, net 2,841 3,537 Goodwill 3,062 3,062 Deferred tax assets 29 15,058 Other long-term assets 615 445 Total assets $ 307,347 $ 341,267 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 4,064 $ 5,923 Accrued emissions expense 5,226 2,634 Accrued expenses 15,560 10,375 Income taxes payable 185 2,481 Long-term debt, current portion 73,218 19,577 Lease obligations, current portion 112 736 Total current liabilities 98,365 41,726 LONG-TERM LIABILITIES: Long-term debt, net of current portion and deferred financing fees 96,515 75,251 Lease obligations, net of current portion 137 193 Environmental liabilities 22,415 11,306 Other long-term liabilities 358 368 Total liabilities 217,790 128,844 COMMITMENTS AND CONTINGENCIES (NOTE 13) STOCKHOLDERS' EQUITY: Preferred stock, par value $0.0001, 20,000,000 shares authorized, none outstanding — — Common stock, par value $0.0001, 3,000,000,000 shares authorized, 42,964,462 and 40,865,336 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively 4 4 Additional paid-in capital 290,576 281,815 Cumulative translation adjustment (139) — Accumulated deficit (200,884) (69,396) Total stockholders' equity 89,557 212,423 Total liabilities and stockholders' equity $ 307,347 $ 341,267 (LOSS) (UNAUDITED)
depreciation and amortization shown below)
depreciation and amortization shown below)
depreciation and amortization shown below)
COMPREHENSIVE LOSSThree Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 REVENUE: Cryptocurrency datacenter $ 18,272 $ 31,156 $ 61,571 $ 54,217 Power and capacity 3,613 3,077 12,395 7,255 Services and other 7,474 1,521 24,387 1,521 Total revenue 29,359 35,754 98,353 62,993 OPERATING COSTS AND EXPENSES: Cost of revenue - cryptocurrency datacenter (exclusive of depreciation and amortization) 14,675 5,974 34,795 11,504 Cost of revenue - power and capacity (exclusive of depreciation and amortization) 3,760 2,831 10,955 6,688 Cost of revenue - services and other (exclusive of depreciation and amortization) 3,660 854 11,304 854 Selling, general and administrative 10,240 5,446 35,720 12,017 Merger and other costs 242 29,847 940 31,095 Depreciation and amortization 13,835 2,667 22,680 5,531 Impairment of long-lived assets — — 71,500 — Remeasurement of environmental liability — — 11,109 — Total operating costs and expenses 46,412 47,619 199,003 67,689 Loss from operations (17,053) (11,865) (100,650) (4,696) OTHER EXPENSE, NET: Interest expense, net (5,430) (1,009) (15,693) (1,377) Interest expense - related party — — — (22) Gain (loss) on sale of digital assets — 18 (15) 159 Loss on sale of assets (759) — (130) — Other income (loss), net 144 (29) 200 (23) Total other expense, net (6,045) (1,020) (15,638) (1,263) Loss before income taxes (23,098) (12,885) (116,288) (5,959) Provision for income taxes 79 (4,989) 15,200 (2,860) Net loss (23,177) (7,896) (131,488) (3,099) Foreign currency translation adjustment 27 — (139) — Comprehensive loss $ (23,150) $ (7,896) $ (131,627) $ (3,099) Loss per share: Basic $ (0.55) $ (0.26) $ (3.16) $ (0.13) Diluted $ (0.55) $ (0.26) $ (3.16) $ (0.13) Preferred Stock Common Stock Additional
Paid - In
CapitalCommon Units Preferred Units Senior Priority Units Total
Members'
CapitalCumulative
Translation
AdjustmentAccumulated
Deficit Total Shares Amount Shares Amount Number
of UnitsMembers'
CapitalNumber
of UnitsMembers'
CapitalNumber
of UnitsMembers'
CapitalBalance at January 1, 2022 — $ — 40,865,336 $ 4 $ 281,815 — — — — — — $ — $ — $ (69,396) $ 212,423 Stock-based compensation expense — — — — 362 — — — — — — — — — 362 Issuance of shares, net of issuance costs — — 415,000 — 3,791 — — — — — — — — — 3,791 Restricted shares award issuance, net of withholdings — — 82,601 — (65) — — — — — — — — — (65) Proceeds from stock options exercised — — 334 — 2 — — — — — — — — 2 Foreign currency translation adjustment — — — — — — — — — — — — (32) — (32) Net loss — — — — — — — — — — — — (429) (429) Balance at March 31, 2022 — — 41,363,271 4 285,905 — — — — — — — (32) (69,825) 216,052 Stock-based compensation expense — — — — 306 — — — — — — — — — 306 Issuance of shares, net of issuance costs — — 553,587 — 2,078 — — — — — — — — 2,078 Proceeds from stock options exercised — — 1,962 — 12 — — — — — — — — 12 Foreign currency translation adjustment — — — — — — — — — — — — (134) — (134) Net loss — — — — — — — — — — — — (107,882) (107,882) Balance at June 30, 2022 — — 41,918,820 4 288,301 — — — — — — — (166) (177,707) 110,432 Stock-based compensation expense — — — — 361 — — — — — — — — — 361 Issuance of shares, net of issuance costs — — 1,045,642 — 1,914 — — — — — — — — 1,914 Foreign currency translation adjustment — — — — — — — — — — — — 27 — 27 Net loss — — — — — — — — — — — — — (23,177) (23,177) Balance at September 30, 2022 — $ — 42,964,462 $ 4 $ 290,576 — — — — — — $ — $ (139) $ (200,884) $ 89,557
Priority Units, and notes payable to
related party for Greenidge class B
common stock (Note 9)
Greenidge class B common stock (Note 9)
stock, net of stock issuance costs
of $3,387 (Note 9)
upon Merger, net of issuance costs of
$2,296 (Note 9)
with successful completion of Merger (Note 9)
with completion of Merger (Note 9)Preferred Stock Common Stock Additional
Paid - In
CapitalCommon Units Preferred Units Senior Priority Units Total
Members'
CapitalCumulative
Translation
AdjustmentAccumulated
DeficitTotal Shares Amount Shares Amount Number
of UnitsMembers'
CapitalNumber
of UnitsMembers'
CapitalNumber
of UnitsMembers'
CapitalBalance at January 1, 2021 — $ — — $ — $ — 750 — 39,228 39,074 10,000 30,202 $ 69,276 $ — $ (24,916) $ 44,360 Contribution of GGH Preferred Units, GGH Senior Priority Units, and notes payable to related party for GGHI Common Stock — — 26,800,300 3 72,888 — — (39,228) (39,074) (10,000) (30,202) (69,276) — — 3,615 Contribution of GGH Common Units for GGHI Common Stock — — 1,199,700 — — (750) — — — — — — — — — Proceeds from sale of preferred stock, net of stock issuance costs of $3,387 1,620,000 1 — — 37,112 — — — — — — — — — 37,113 Stock-based compensation expense — — — — 1,063 — — — — — — — — — 1,063 Proceeds from stock options exercised — — 160,000 — 1,000 — — — — — — — — — 1,000 Stock issued to purchase miners — — 160,000 — 991 — — — — — — — — — 991 Net income — — — — — — — — — — — — — 4,797 4,797 Balance at June 30, 2021 1,620,000 1 28,320,000 3 113,054 — — — — — — — — (20,119) 92,939 Shares issued to Support.com shareholders upon Merger, net of issuance costs of $2,296 — — 2,960,731 — 91,588 — — — — — — — — — 91,588 Issuance of shares for investor fee associated with successful completion of Merger — — 562,174 — 17,826 — — — — — — — — — 17,826 Issuance of warrants to advisor in connection with completion of Merger — — — — 8,779 — — — — — — — — — 8,779 Conversion of preferred stock (1,620,000) (1) 6,480,000 1 — — — — — — — — — — — Shares issued upon exercise of warrants — — 344,800 — 2,155 — — — — — — — — — 2,155 Stock-based compensation expense — — — — 411 — — — — — — — — — 411 Net loss — — — — — — — — — — — — — (7,896) (7,896) Balance at September 30, 2021 — $ — 38,667,705 $ 4 $ 233,813 — — — — — — $ — $ — $ (28,015) $ 205,802
flow from operating activities:Nine Months Ended September 30, 2022 2021 CASH FLOW FROM OPERATING ACTIVITIES: Net loss $ (131,488) $ (3,099) Adjustments to reconcile net loss to net cash flow from operating activities: Depreciation and amortization 22,680 5,531 Deferred income taxes 15,016 (2,945) Impairment of long-lived assets 71,500 — Amortization of debt issuance costs 3,059 54 Impairment of digital assets 85 — Loss on sale of assets 130 — Remeasurement of environmental liability 11,109 170 Stock-based compensation expense 1,029 1,474 Investor fee paid in common stock — 17,826 Advisor fee paid in warrants — 8,779 Changes in operating assets and liabilities: Accounts receivable 820 272 Emissions and carbon offset credits 1,102 107 Prepaids and other assets (548) (5,955) Accounts payable (1,559) (455) Accrued emissions 2,592 (408) Accrued expenses 5,185 5,315 Income taxes payable (2,296) — Other 358 — Net cash flow used for operating activities (1,226) 26,666 CASH FLOW FROM INVESTING ACTIVITIES: Purchases of and deposits for property and equipment (127,374) (65,757) Proceeds from sale of assets 4,802 — Proceeds from sale of marketable securities 496 — Cash received in merger — 27,113 Net cash flow used for investing activities (122,076) (38,644) CASH FLOW FROM FINANCING ACTIVITIES: Proceeds from issuance of preferred stock, net of issuance costs — 37,113 Proceeds from issuance of common stock, net of issuance costs 7,783 — Proceeds from stock options exercised 14 1,000 Proceeds from warrants exercised — 2,155 Issuance costs associated with shares issued for Support acquisition — (2,296) Restricted stock unit awards settled in cash for taxes (65) — Proceeds from debt, net of issuance costs 107,105 25,112 Principal payments on debt (35,258) (4,440) Repayments of lease obligations (363) (569) Net cash flow provided by financing activities $ 79,216 $ 58,075 CHANGE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH (44,086) 46,097 CASH AND CASH EQUIVALENTS - beginning of year 82,599 5,052 CASH AND CASH EQUIVALENTS AND RESTRICTED CASH - end of period $ 38,513 $ 51,149 8Greenidge Generation Holdings Inc.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)Organization and Description of Businessa vertically integrated bitcoin miningfacilities at two locations: the Town of Torrey, New York and power facility located in Dresden, New York.Spartanburg, South Carolina. The Company’s bitcoin mining capacity generatescryptocurrency datacenter operations generate revenue in the form of bitcoin which are then exchanged for U.S. dollars, by earning bitcoin with application-specific integrated circuit computers (“ASICs” or “miners”) that are owned by the Company as rewards and transaction fees for supporting the global bitcoin network. Additionally,network with application-specific integrated circuit computers (“ASICs” or “miners”) owned by the Company generates revenues inCompany. The earned bitcoin is then exchanged for U.S. dollars to a lesser extent from third parties for hosting and maintaining their ASICs.dollars. The Company also sells surplus electricity generated by itsowns and operates a 106 megawatt ("MW") power plant, and not consumed in bitcoin mining operations,facility that is connected to the New York Independent System Operator (“NYISO”) power grid at prices set on a daily basis throughgrid. The Company sells electricity to the NYISO wholesale market. In addition,at all times when its power plant is running and increases or decreases the Company receives revenues from the saleamount of its capacity and ancillary serviceselectricity sold based on prevailing prices in the NYISO wholesale market.Support,Support.com, Inc.Support”Support.com”), with SupportSupport.com continuing as the surviving corporation (the “Merger”) and a wholly owned subsidiary of Greenidge, pursuant to the Agreement and Plan of Merger, dated March 19, 2021 (the “Merger Agreement”), among Greenidge, SupportSupport.com and Merger Sub.SupportSupport.com through an all-stock transaction and has been accounted for using the acquisition method of accounting in accordance with the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification ("ASC") 805, Business Combinations, with Greenidge being deemed the acquiring company for accounting purposes (see Note 3). Prior to the Merger, Greenidge's class A common stock ("class A common stock") was registered pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and, upon completion of the Merger on September 15, 2021, began trading on The Nasdaq Global Select Market ("Nasdaq") under the ticker symbol “GREE”. Concurrently, SupportSupport.com deregistered its shares pursuant to the Exchange Act.SupportSupport’sSupport.com’s homesourcing model, which enables outsourced work to be delivered by people working from home, has been specifically designed for remote work, with attention to security, recruiting, training, delivery, and employee engagement. Since the consummation of the Merger, the SupportSupport.com business operates as a wholly ownedwholly-owned subsidiary and a segment of Greenidge.SummarySUMMARY OF SIGNIFICANT ACCOUNTING POLICIESSignificant Accounting PoliciesBasisIn the opinion of Presentation and Principles of ConsolidationTheGreenidge management, the accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information. In the opinion of management, the accompanying unaudited condensed interim consolidated financial statements reflectinclude all adjustments consisting of normal recurring adjusting, considered necessary for a fair presentation of such interim results.Greenidge is the successor entity for accounting purposes to Greenidge Generation Holdings LLC ("GGH") as a result of the corporate restructuring consummated in January 2021. Pursuant to this restructuring, Greenidge was incorporated in the State of Delaware on January 27, 2021 and on January 29, 2021, entered into an asset contribution and exchange agreement with the owners of GGH, pursuant to which Greenidge acquired all of the ownership interests in GGH in exchange for 28,000,000 shares of Greenidge’s class B common stock. As a result of this transaction, GGH became a wholly owned subsidiary of Greenidge. The financial information presented herein are that of GGHresults for the interim periods before January 29, 2021presented and Greenidge for the period after January 29, 2021.20212022 or for any future interim period. The unaudited condensed interim consolidated financial statements do not include all of the information and notes required by U.S. GAAPUnited States Generally Accepted Accounting Principles ("GAAP") for complete financial statements.unaudited condensed interim consolidated financial statements should be read in conjunction with the notes to the consolidated financial statements forof the Company in Greenidge's 2021 Annual Report on Form 10-K. There have been no material changes to the Company’s significant accounting policies during 2022.ended December 31, 2020 and accompanying notes.The condensed consolidatedafter the date these financial statements include the accounts of Greenidge and its subsidiaries. All significant intercompany accounts and transactions have been eliminated.issued. The Company’s condensed financial statements have been prepared assuming that it will continue as a going concern.ContentsVariable Interest EntitiesCompany evaluates its interestsCompany’s profit and cash flows are impacted significantly by volatility in variable interest entities (“VIE”)the prices of bitcoin and consolidates any VIEnatural gas, and the volatility in which it has a controlling financial interest and is deemed to bethese commodity prices significantly impacted the primary beneficiary. A controlling financial interest has both of the following characteristics: (1) the power to direct the activities of the VIE that most significantly impact its economic performance; and (2) the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could be significant to the VIE. If both characteristics are met,Company's results during 2022. At September 30, 2022, the Company considers itselfhad $38.5 million of cash and cash equivalents, including restricted cash, and $0.6 million of bitcoin holdings at fair value, while having $24.9 million of accounts payable and accrued expenses, as well as $88.6 million of principal and interest payments on debt due within the next 12 months.becontinue as a going concern is dependent upon the primary beneficiaryCompany generating profitable operations in the future and/or obtaining the necessary financing to meet its obligations and therefore will consolidate that VIE intorepay its consolidated financial statements.Consolidation of a Variable Interest EntityOn October 2, 2019, Blocker, a related entity through common ownership, purchased 15,000 preferred units of Greenidge Coin, LLC ("GC") for $15,000. Blocker was formed for the sole purpose of making a capital investment into GC so that GC could then provide a loanliabilities arising from normal business operations when they come due. Management has evaluated different options to GGH. The purpose of the loan from GC to GGH wasimprove its liquidity to fund the development of infrastructure necessary forCompany’s expenses and to support the Company to commence its Bitcoin mining operations.Accordingly, Blocker is deemed a VIE because Blocker’s operations consist of its investment in GC and consequently, Blocker relies on the operations of the Company to sustain future operating expenses. The Company is deemed the primary beneficiary of the VIE because it is the sole provider of financial support. Accordingly, as of October 2, 2019, the Company consolidated Blocker’s balance sheet and results of operations. On December 31, 2020, Blocker entered into a liquidating distribution agreement with GGH, effectively dissolving Blocker into GGH.Use of estimatesThe preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and notes thereto. Actual results could differ from those estimates. Significant estimates made by managementCompany’s debt servicing requirements. These options include, but are not limited to, estimates of the fair value of goodwill and intangibleto:useful lives of long-lived assets, stock-based compensation, current and deferred income tax assets and liabilities and asset retirement obligations.Significant Accounting PoliciesFor a detailed discussion about the Company’s significant accounting policies, see the Company’s December 31, 2020 consolidated financial statements.Cash, Cash Equivalents, and InvestmentsAll liquid instruments with an original maturity, at the date of purchase, of 90 days or less are classified as cash equivalents. Cash equivalents and short-term investments consist primarily of money market funds, certificates of deposit, commercial paper, corporate notes and bonds, and U.S. government agency securities. The Company's interest income on cash, cash equivalents and investments is included in interest expense, net in the condensed consolidated statements of operations.The Company monitors our investments for impairment on a quarterly basis to determine whether a decline in fair value is other-than-temporary by considering factors such as current economic and market conditions, the credit rating of the security’s issuer, the length of time an investment’s fair value has been below the Company's carrying value, the Company's intent to sell the security and the Company's belief that it will not be required to sell the security before the recovery of its amortized cost. If an investment’s decline in fair value is deemed to be other-than-temporary, the Company reduces its carrying value to the estimated fair value, as determined based on quoted market prices or liquidation values. Declines in value judged to be other-than-temporary, if any, are recorded in operations as incurred.Digital AssetsDigital assets, primarily consisting of bitcoin, are included in current assets in the accompanying condensed consolidated balance sheets. Digital assets are classified as indefinite-lived intangible assets in accordance with ASC 350, Intangibles – Goodwill and Other, and are accounted for in connection with Greenidge’s revenue recognition policy disclosed below. Cryptocurrencies held are accounted for as intangible assets with indefinite useful lives. An intangible asset with an indefinite useful life is not amortizedincluding but assessed for impairment annually, or more frequently, when events or changes in circumstances occur indicating that it is more likely than not that the indefinite-lived asset is impaired.10The Company determines the fair value of its digital assets on a nonrecurring basis in accordance with ASC 820, Fair Value Measurement, based on quoted prices on the active exchange(s) that the Company has determined is its principal market for bitcoin (Level 1 inputs). the Company performs an analysis each period to identify whether events or changes in circumstances, principally decreases in the quoted prices on active exchanges, indicate that it is more likely than not that its digital assets are impaired.Events or circumstances that may trigger an impairment assessment other than annually include but are not limited to material changessales of additional miners, sales of surplus mining infrastructure equipment, or sales of unannounced and undeveloped locations the Company was evaluating for expansion;regulatory environment, potential technological changesATM Agreement (as defined in digital assets,Note 9, Stockholders' Equity); prolonged or material changes inpriceterms of bitcoin below the carrying costcertain of the asset. Upon determining an impairment exists,Company’s existing financings, which could result in various modifications, including but not limited to, the modification of interest rates and/or debt amortization, assignment of collateral and changes to the Company's business model.ofloan by the impairment is determined asNoteholder to Greenidge (the "Secured Promissory Note"). In the amount by whichCompany's efforts to further improve liquidity, Greenidge and the carrying amount exceeds its fair value, which is measured usingNoteholder amended the quoted price ofSecured Promissory Note on August 10, 2022. The amendment extended the digital asset at the time its fair value is being measured. To the extent an impairment loss is recognized, the loss establishes the new cost basis of the asset. Subsequent reversal of impairment losses is not permitted. maturity to June 2023, reduced scheduled monthly amortization payments and reduced mandatory prepayments.assessed its digitalhas received proceeds of $59.8 million since October 2021 from sales of common stock under the 2021 Purchase Agreement (as defined in Note 9, Stockholders' Equity) and the 2022 Purchase Agreement (as defined in Note 9, Stockholders' Equity), of which $2.5 million of proceeds, net of discounts, was received during the three months ended September 30, 2022. In September 2022, Greenidge entered into an ATM Agreement (as defined in Note 9, Stockholders' Equity), and since September 30, 2022 through November 11, 2022, the Company received proceeds of $1.6 million from sales of common stock under the ATM Agreement.for impairment,including certain miners and determined that no material impairments existedother assets during the nine months ended September 30, 2021 and 2020. As2022 for proceeds of September 30, 2021,$4.8 million; however, demand for miners has continued to decline during the Company’s digital assets consistedthird quarter of approximately 29.8 bitcoins compared to 26.1 bitcoins as of December 31, 2020.Digital assets awarded to the Company through its mining activities are included within the operating activities in the accompanying condensed consolidated statements of cash flows. 2022.accounts for its gains or losses in accordance withanticipates that existing cash resources will be depleted by the last in, first out (“LIFO”) method of accounting. Gains and losses from the sales of digital assets are recorded in other income (expense) in the accompanying condensed consolidated statements of operations.Emissions Expense and CreditsThe Company participates in the Regional Greenhouse Gas Initiative (“RGGI”), which requires, by law, that the Company remit credits to offset 50%end of the Company’s annual emission expense infirst quarter of 2023. Depending on its assumptions regarding the following year, for eachtiming and ability to achieve more normalized levels of operating revenue, the years inestimated amount of required liquidity will vary significantly. Similarly, management cannot predict when or if bitcoin prices will recover to prior levels, or when energy costs may decrease. While the three year control period (January 1, 2018 to December 31, 2020). In February 2021, the Company settled the emissions allowance for the control period. The Company continues to remit creditswork to implement the options to improve liquidity, there can be no assurance that these efforts will be successful.accordance with RGGI. The Company recognizes expenseparticular, significant decreases in the price of bitcoin, regulatory changes concerning cryptocurrency, increases in energy costs or other macroeconomic conditions and other matters identified in Part I, Item 1A "Risk Factors" of our Annual Report on a per ton basis, where one ton is equal to one RGGI credit.The RGGI credits are recorded on a first in, first out (“FIFO”) basis. The Company incurred emissions expense of $860 thousand and $468 thousandForm 10-K for the threeyear ended December 31, 2021 and nine months ended September 30, 2021, respectively, and $Part II, Item 1A "1,674Risk Factors thousand and $941 thousand for" of this Quarterly Report on Form 10-Q. Given the three and nine months ended September 30, 2020, respectively, which is included in power and capacity costlack of revenueimprovement in the accompanying condensed consolidated statementsabove mentioned factors in the third quarter of operations.2022, there is uncertainty regarding the Company’s financial condition and substantial doubt about its ability to continue as a going concern for a reasonable period of time.Carbon Offset Creditsannounced that effective June 1, 2021, it will operate an entirely carbon neutral bitcoin mining operation at its facility in Dresden, New York. The Company planshas agreed to purchase voluntary carbon offsets from a portfolio of U.S. greenhouse gas reduction projects as one method to achieve this carbon neutrality. During the nine months ended September 30, 2021, the Company purchased $0.7certain restrictions on $10.5 million of voluntary carbon offset credits. The voluntary carbon offset credits will be expensed to cost of revenues on a specific identification basis when the Company applies it to its net zero goals, which is when the credits are surrendered to the applicable agency.GoodwillAcquisitions are accounted for using the acquisition method which requires allocation of the purchase price to assets acquired and liabilities assumed based on estimated fair values. Any excess of the purchase price over the fair value of the assets and liabilities acquired is recorded as goodwill. Allocations of the purchase price are based on preliminary estimates and assumptions at the date of acquisition and are subject to revision based on final informationcash received including appraisals and other analyses which support underlying estimates. The Company performs a goodwill impairment test annually in the fourth quarter or more frequently if events or circumstances indicate that an impairment loss may have been incurred. The applicable guidance allows an entity to first assess qualitative factors to determine if it is more likely than not that the fair value of a reporting unit is less than carrying value. If it is determined that it is more likely than not that the fair value of a reporting unit is less than carrying value then the company will estimate and compare the fair value of its reporting units to their carrying value, including goodwill. If the carrying value of goodwill is not recoverable, an impairment is recognized for the difference. Fair value is determined through the use of projected future cash flows, multiples of earnings and sales and other factors. Such analysis requires the use of certain market assumptions and discount factors, which are subjective in nature. The Company's goodwill relates to the Merger (see Note 3).11Intangible AssetsOther intangible assets relate to customer relationships and tradename acquired in the Merger (see Note 3), and are being amortized over the estimated period of benefit. The Company evaluates the recoverability of its intangible assets subject to amortization when facts and circumstances indicate that the carrying value of the asset may not be recoverable. If the carrying value is not recoverable, impairment is measured as the amount by which the carrying value exceeds its estimated fair value. Fair value is generally estimated based on either appraised value or other valuation techniques.Asset Retirement ObligationsAsset retirement obligations are legal obligations associated with the retirement of long-lived assets. The obligations represent the present value of the estimated costs for an asset’s future retirement discounted using a credit-adjusted risk-free rate, and are recorded in the period in which the liability is incurred. The liabilities recognized relate to the decommissioning of a coal ash pond for coal combustion residuals (“CCR”), which are subject to Federal and State regulations.In accordance with Federal law and ASC 410-20, Asset Retirement Obligations, the Company recorded an asset retirement obligation of $2.4 million and $2.3 million at September30, 2021 and December 31, 2020, respectively. The Company expensed less than $0.1 million to other income and expense, netcertain financings made during both of the three months ended September 30, 2021 and 2020 for the accretion of interest for the liability and $20220.1. during bothThe Company agreed to certain restrictions associated with this cash which is classified as restricted as of the nine months ended September 30, 2021 and 2020. There were no changes to cash flow estimates related to the coal ash pond asset retirement obligation during the three and six months ended September 30, 2021 or 2020. Estimates are based on various assumptions including, but not limited to, closure cost estimates, timing of expenditures, escalation factors, discount rate of 2022.5.00% and methods for complying with CCR regulations. Additional adjustments to the asset retirement obligations are expected periodically due to potential changes in estimates and assumptions.Environmental Trust LiabilityThe Company owns and operates a landfill. As required by the New York State Department of Environmental Conservation (“NYSDEC”), landfills are required to fund a trust to cover closure costs and expenses after the landfill has stopped operating.The trust is designed to provide funds for 30 years of expenses to maintain a landfill once it is full and has no further source of revenue or in case the owner is defunct and the NYSDEC has to operate the landfill. The landfill is a fully permitted, operational landfill and also acts as a leachate treatment facility. An annual report is completed by a third-party engineering firm to provide environmental compliance and calculate combined closure and post-closure costs, discounted to current year dollars using a discount rate of 4.50%. In lieu of a trust, the Company has negotiated with its largest equity member to maintain a letter of credit guaranteeing the payment of the liability (see Note 8). In accordance with ASC 410-20, Asset Retirement Obligations, the Company has recorded an environmental liability of $5.0 million and $4.9 million at September30, 2021 and December 31, 2020, respectively. The letter of credit related to this liability was for $5.0 million at September 30, 2021 (see Note 8).LeasesOn January 1, 2021, the Company adopted ASC 842, Leases ("ASC 842"). No lease arrangements were in place as of January 1, 2021. Following guidance in ASC 842, arrangements meeting the definition of a lease are classified as operating or financing leases and are recorded on the condensed consolidated balance sheet. Right-of-use (“ROU”) assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent an obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term at the rate implicit in the lease or the Company’s incremental borrowing rate. The ROU asset is amortized over the lease term. Variable lease expenses, if any, are recorded when incurred.In calculating the ROU asset and related lease liability, the Company elected to combine lease and non-lease components. The Company excluded short-term leases having initial terms of 12 months or less from the new guidance as an accounting policy election and recognizes rent expense on a straight-line basis over the lease term.ASC 842 requires the Company to recognize an ROU asset and a lease liability for all leases with terms greater than 12 months. The Company entered into two immaterial leases during the nine months ended September 30, 2021. The Company entered into a finance lease to finance the purchase of equipment on March 11, 2021, for which, the Company recorded an ROU asset of $1.4 million and a finance lease obligation of $1.2 million at the lease commencement date. The lease for this equipment ends August 31, 2022. The Company also entered into an operating lease for office space, for which the Company recorded an ROU asset and lease liability of $0.1 million.12Revenue RecognitionCryptocurrency Mining RevenueGreenidge has entered into digital asset mining pools by executing contracts with the mining pool operators to provide computing power to the mining pool. The contracts are terminable at any time by either party and Greenidge’s enforceable right to compensation only begins when Greenidge provides computing power to the mining pool operator. In exchange for providing computing power, Greenidge is entitled to a theoretical fractional share of the cryptocurrency award the mining pool operator receives less digital asset transaction fees to the mining pool operator. Revenue is measured as the value of the fractional share of the cryptocurrency award received from the pool operator, which has been reduced by the transaction fee retained by the pool operator, for Greenidge’s pro rata contribution of computing power to the mining pool operator for the successful solution of the current algorithm.Providing computing power in digital asset transaction verification services is an output of Greenidge’s ordinary activities. The provision of providing such computing power is the only performance obligation in Greenidge’s contracts with mining pool operators. The cryptocurrency that Greenidge receives as transaction consideration is noncash consideration, which Greenidge measures at fair value on the date received, which is not materially different than the fair value at the contract inception or the time Greenidge has earned the award from the pools. The consideration is all variable. Because it is not probable that a significant reversal of cumulative revenue will not occur, the consideration is constrained until the mining pool operator successfully places a block (by being the first to solve an algorithm) and Greenidge receives confirmation of the consideration it will receive, at which time revenue is recognized.Pool fees paid by miners to pooling operators are based on a fixed percentage of the theoretical bitcoin block reward and network transaction fees received by miners. Pooling fees are netted against daily bitcoin payouts. Greenidge does not expect any material future changes in pool fee percentages paid to pooling operators, however as pools become more competitive, these fees may trend lower over time.Fair value of the cryptocurrency award received is determined using the quoted price on Greenidge’s primary exchange of the related cryptocurrency at the time of receipt.There is currently no specific definitive guidance under GAAP or alternative accounting framework for the accounting for cryptocurrencies recognized as revenue or held, and management has exercised significant judgment in determining the appropriate accounting treatment. In the event authoritative guidance is enacted by the FASB, Greenidge may be required to change its policies, which could have an effect on the Company’s condensed consolidated financial position and results of operations.Power and capacity revenueGreenidge recognizes power revenue at a point in time, when the electricity is delivered to the NYISO and its performance obligation is met. Greenidge recognizes revenue on capacity agreements over the life of the contract as its series of performance obligations are met as capacity to provide power is maintained.Sales tax, value-added tax, and other taxes Greenidge collects concurrent with revenue-producing activities are excluded from revenue. Incidental contract costs that are not material in the context of the delivery of goods and services are recognized as expense. There is no significant financing component in these transactions.Services and other revenueServices revenue is primarily comprised of fees for customer support and technology support services provided by Greenidge's wholly owned subsidiary, Support. Support's service programs are designed for enterprise clients, business and professional services clients, as well as the consumer, and include customer service, sales support, and technical support, including computer and mobile device set-up, security and support, virus and malware removal, wireless network set-up, and automation system onboarding and support.Support offers customer support, technical support, and technology services to large corporations, business and professional services organizations and consumers, directly and through its partners (which include communications providers, retailers, technology companies and others) and, to a lesser degree, directly through its website. Support transacts with customers via reseller programs, referral programs and direct transactions. In reseller programs, the partner generally executes the financial transactions with the customer and pays a fee to Support, which is recognized as revenue when the service is delivered. In referral programs, Support transacts with the customer directly and pays a referral fee to the referring party. In direct transactions, Support sells directly to the customer at the retail price.13The services described above include four types of offerings:Time-Based Services - In connection with the provisions of certain services programs, fees are calculated based on contracted time-based rates with partners. For these programs, revenue is recognizes as services are performed, based on billable time of work delivered by technology professionals. These services programs also include performance standards, which may result in incentives or penalties, which are recognized as earned or incurred.Tier-Based Services – In connection with the provisions of certain services programs, fees are calculated on partner subscription tiers based on number of subscribers. For these programs, revenue is recognized as services are performed, and are billed based on the tier level of number of subscribers supported by Support's professional team.Subscriptions - Customers purchase subscriptions or “service plans” under which certain services are provided over a fixed subscription period. Revenues for subscriptions are recognized ratably over the respective subscription periods.Incident-Based Services - Customers purchase a discrete, one-time service. Revenue recognition occurs at the time of service delivery. Fees paid for services sold but not yet delivered are recorded as deferred revenue and recognized at the time of service delivery.Partners and corporate customers are generally invoiced monthly. Fees from customers via referral programs and direct transactions are generally paid with a credit card at the time of sale. Revenue is recognized net of any applicable sales tax.Services revenue also includes fees from licensing of Support cloud-based software. In such arrangements, customers receive a right to use Support cloud applications in their own support organizations. Support licenses its cloud-based software using a software-as-a-service (“SaaS”) model under which customers cannot take possession of the technology and pay Support on a per-user or usage basis during the term of the arrangement.
Services and other revenue also includes, to a lesser extent, fees for end-user software products provided through direct customer downloads and through the sale of these end-user software products via partners. Support's software is sold to customers primarily on an annual subscription with automatic renewal. Support provides regular, significant upgrades over the subscription period and therefore recognize revenue for these products ratably over the subscription period. Management has determined that these upgrades are not distinct, as the upgrades are an input into a combined output. In addition, management has determined that the frequency and timing of the software upgrades are unpredictable and therefore recognizes revenue consistent with the sale of the subscription. Support generally controls fulfillment, pricing, product requirements, and collection risk and therefore records the gross amount of revenue. Support provides a 30-day money back guarantee for the majority of its end-user software products.Cryptocurrency Mining Cost of RevenueCost of revenue - cryptocurrency mining consists primarily of natural gas, emissions, payroll and benefits and other direct production costs associated with the megawatts generated for the digital mining operation. Cost of revenue – cryptocurrency mining does not include depreciation and amortization.Power and Capacity Cost of RevenueCost of revenue - power and capacity consists primarily of natural gas, emissions, payroll and benefits and other direct production costs associated with the megawatts generated for the power produced by Greenidge and sold to the grid. Cost of revenue – power and capacity does not include depreciation and amortization.Cost of Services and Other RevenueCost of revenue - services and other consists primarily of compensation costs and contractor expenses associated with people providing services, as well as the technology, telecommunications and other personnel-related expenses related to the delivery of services. To a lesser extent, cost of services and other revenue includes third-party royalty fees for end-user software products. Cost of revenue - services and other does not include depreciation and amortization.Selling, General, and Administrative ExpensesSelling, general and administrative expenses consist primarily of administrative payroll and benefits, business development costs, professional fees, and insurance.14Stock-Based CompensationThe Company accounts for share-based payment awards exchanged for services at the estimated grant date fair value of the award. Stock options issued under the Company’s equity incentive plans are granted with an exercise price equal to no less than the market price of the Company’s stock at the date of grant and expire up to ten years from the date of the grants. These options generally vest on the grant date or over a three year period.The Company estimates the fair value of the stock options grants using the Black-Scholes-Merton option pricing model and the assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgement.Expected Term – The expected term of options represents the period that the Company’s stock-based awards are expected to be outstanding on the simplified method, which is the half-life from vesting to the end of its contractual term.Expected Volatility – The Company computes stock price volatility over expected terms based on reasonable estimates and comparable public companies as the Company had little trading history of its own common stock.Risk-Free Interest Rate– The Company bases the risk-free interest rate on the implied yield available on U.S. Treasury zero-coupon issues with an equivalent remaining term.Expected Dividend – The Company has never declared or paid any cash dividends on its common shares and does not plan to pay cash dividends in the foreseeable future, and, therefore, uses an expected dividend yield of zero in its valuation models.Income TaxesPrior to the formation of Greenidge on January 27, 2021, GGH was treated as a partnership for federal and state income tax purposes. Pursuant to this election, the profit or loss of GGH is reported in the individual income tax returns of the members. Therefore, 0 provision for Federal or State taxes has been made for the year ended December 31, 2020.Subsequent to the conversion of GGH to Greenidge, the Company calculates the provision for income taxes in accordance with ASC 740, Income Taxes. The current provision for income taxes represents actual or estimated amounts payable or refundable on tax return filings each year. Deferred tax assets and liabilities are recorded for the estimated future tax effects of temporary differences between the tax basis of assets and liabilities and amounts reported in the accompanying condensed consolidated balance sheets, and for operating loss and tax credit carryforwards. The change in deferred tax assets and liabilities for the period measures the deferred tax provision or benefit for the period. Effects of changes in enacted tax laws on deferred tax assets and liabilities are reflected as adjustments to the tax provision or benefit in the period of enactment. A valuation allowance may be provided to the extent management deems it is more likely than not that deferred tax assets will not be realized. The ultimate realization of net deferred tax assets is dependent upon the generation of future taxable income, in the appropriate taxing jurisdictions, during the periods in which temporary differences, net operating losses and tax credits become realizable. Management believes that it is more likely than not that the Company will realize the benefits of these temporary differences and operating loss and tax credit carryforwards, net of valuation allowances. The Company recognizes and measures tax positions taken or expected to be taken in its tax return based on their technical merit and assesses the likelihood that the positions will be sustained upon examination based on the facts, circumstances and information available at the end of each period. Interest and penalties on tax liabilities, if any, would be recorded as incurred in interest expense and other expenses, respectively.Earnings Per ShareBasic net income per common share attributable to common shareholders is calculated by dividing net income attributable to common shareholders by the weighted average number of common shares outstanding for the period. Diluted net income per common share attributable to common shareholders is calculated by dividing net income attributable to common shareholders by the diluted weighted average number of common shares outstanding for the period. Basic and diluted income per common share is not provided for the three and nine months ended September 30, 2020 as the Company was organized as an LLC during that period. The Company used the weighted average method in determining earnings per share in consideration of the conversion of participating securities to common shares due to the reorganization in January 2021.Reclassificationsyear'speriod presentation.15Not Yet Adopted(“(“ASU 2019-12”), which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. As an emerging growth company, the Company has elected to adopt this pronouncement following the effective date for private companies beginning with periods beginning after December 15, 2021. The Company is currently evaluating the impact ofadopted this standard on its condensed consolidated financial statementsJanuary 1, 2022, and related disclosures.Any new accounting standards,the adoption did not disclosed above, that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a materialmaterially impact on the Company's condensed consolidated financial statements upon adoption.statements.Recent Accounting Pronouncements, AdoptedIn February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which requires lessees to recognize a right-of-use (“ROU”) asset and a lease liability for all leases with terms greater than 12 months and also requires disclosures by lessees and lessors about the amount, timing and uncertainty of cash flows arising from leases. Subsequent to the issuance of Topic 842, the FASB clarified the guidance through several ASUs; hereinafter the collection of lease guidance is referred to as “ASC 842”. On January 1, 2021, the Company adopted ASC 842. The Company had no leasing arrangements at the beginning of the period of adoption. As a result, no cumulative impact of adopting ASC 842 was recorded. The Company also elected to exclude leases with a term of 12 months or less in the recognized ROU assets and lease liabilities, when the likelihood of renewal is not probable. Refer to the discussion of Leases within this note for additional information. The Company determines if an arrangement is a lease at inception. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent an obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. The Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The lease terms used to calculate the ROU asset and related lease liability include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. SUPPORTSupportSupport.com combined their respective businesses through an all-stock merger transaction where SupportSupport.com became a wholly owned subsidiary of Greenidge. The mergerMerger has been accounted for as a business combination using the acquisition method of accounting in accordance with the provisions of FASB ASC 805, Business Combinations (“ASC 805”). Greenidge was determined to be the acquiring company for accounting purposes.At the effective time of the Merger (“Effective Time”): (i) each share of common stock of Support (the “Support Common Stock”) issued and outstanding immediately prior to the Effective Time was cancelled and extinguished and automatically converted into the right to receive 0.115 (the “Exchange Ratio”) shares of class A common stock, par value $0.0001, of the Company, (ii) each outstanding stock option of Support immediately prior to the Effective Time (an “Option”) was accelerated, and the holder of each Option received the right to receive an amount of the Company's class A common stock equal to the Exchange Ratio, multiplied by the number of shares of Support Common Stock underlying such Option, less any shares withheld in satisfaction of the aggregate exercise price of such Option and such holder’s tax withholding obligations and (iii) each outstanding restricted stock unit of Support immediately prior to the Effective Time (an “RSU”) was accelerated, and the holder of each RSU received the right to receive an amount of the Company's class A common stock equal to the Exchange Ratio, multiplied by the number of shares of Support Common Stock underlying such RSU, less any shares and such holder’s tax withholding obligations.Preliminary Allocation of the Purchase PriceWe have applied the acquisition method of accounting in accordance with ASC 805, with respect to the identifiable assets and liabilities of Support, which have been measured at estimated fair value as of the date of the business combination. Any excess of the acquisition price over the fair value of the assets and liabilities acquired is recorded as goodwill.As required by ASC 805, the acquisition price was determined based on the value of the consideration paid to Support shareholders, calculated to be $93.9 million (see table below). This acquisition price was allocated to the identifiable assets acquired and liabilities assumed of Support based upon their estimated fair values at the Merger date, primarily using Level 2 and Level 3 inputs. Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable, and Level 3 inputs are inputs that are unobservable (for example, cash flow modeling inputs based on assumptions). Due to the timing of the business combination,16allocations of the acquisition price are based on preliminary estimates and assumptions at the Merger date and are subject to revision based on final information received, including appraisals, projections and other analysis which support underlying estimates. As the Company finalizes the fair value of assets acquired and liabilities assumed, additional purchase price allocation adjustments may be recorded during the measurement period, but no later than one year from the date of the Merger. The Company will reflect measurement period adjustments in the period in which the adjustments are determined.The following table summarizes the estimated value of the consideration paid (purchase price):For the period immediately prior to the effective date of the Merger, Greenridge was a private company, and Support’s stock price fluctuated significantly based on factors not representative of the value of its underlying operations; therefore, Greenidge used the average of its closing stock price for the first 10 days of trading on the Nasdaq Exchange ($31.71 per share) to measure the value of the consideration paid to Support shareholders.The following table summarizes the preliminary allocation of the purchase price to the identifiable assets acquired and liabilities assumed by Greenridge, with the excess of the purchase price over the fair value of Support’s net assets recorded as goodwill. As previously discussed, allocations of the acquisition price are based on preliminary estimates and assumptions and the final determination of the fair values may result in further adjustments to the values presented in the following table:For assets and liabilities (excluding identifiable intangible assets and deferred revenues), the Company estimated that the carrying values, net of allowances, represented the fair values at the effective date of the Merger.The fair value estimates for identifiable intangible assets is based on preliminary assumptions that market participants would use in pricing an asset, based on the most advantageous market for the asset (i.e., its highest and best use). The final fair value determination for identifiable intangibles or estimates of remaining useful lives may differ materially from this preliminary determination. Following is a summary of identifiable intangible assets determined on a preliminary basis and is subject to adjustment during the measurement period, which could be material:The preliminary fair value of the customer relationships intangible asset was valued using a multi-period excess earnings method, a form of the income approach, which incorporates the estimated future cash flows to be generated from Support’s existing customer base. Excess earnings are the earnings remaining after deducting the market rates of return on the estimated values of contributory17assets, including debt-free net working capital, tangible assets, and other identifiable intangible assets. The excess earnings are thereby calculated for each year of multi-year projection periods and discounted to present value.The preliminary fair value of the Support tradename was valued using the relief from royalty method under the income approach. This method estimates the cost savings generated by a company related to the ownership of an asset for which it would otherwise have had to pay royalties or license fees on revenues earned through the use of the asset and discounted to present value.Due to the timing of the Merger, the Company is in the early stages of its purchase accounting process. As the Company completes this process, including the finalization of the purchase price, fair value calculations, and a more detailed assessment of Support’s business projections, any measurement period adjustments will be recorded and a goodwill impairment test will be performed. In accordance with ASC 805, Support’s assets and liabilities are recorded at fair value at September 14, 2021, and accordingly, there is no cushion between Support’s fair value and carrying value. Considering that the fair value used to determine the consideration was based upon a stock that experienced significant price fluctuations, it is possible that goodwill and intangible assets may need to be impaired at that time.SupportSupport.com Operations Since the Merger and nine months ended September 30, 2021,2022, the acquired SupportSupport.com business contributed $1.5$7.5 million in revenue and an immaterial$1.0 million of operating loss,income, which includes approximately $0.2$0.2 million of amortization expenses of acquired intangible assets.2020. 2021. The unaudited pro forma financial information reflects certain adjustments related to the acquisition, such as:•SupportSupport.com to those applied by Greenidge;••$ in thousands Three Months Ended
September 30, 2021Nine Months Ended
September 30, 2021Revenues $ 42,448 $ 87,830 Net loss $ (11,783) $ (12,602) $30.0$30.0 million and $32.4$32.4 million, respectively, of transaction costs for both Greenidge and Support ($24.5Support.com $24.5 million and $26.9$26.9 million afterafter tax, respectively), such as advisor fees, legal and accounting expenses. These costs will not affect the combined company’s statement of operations beyond 12 months after the closing date, September 14, 2021. See Note 4 for additional information.4. MERGER AND OTHER COSTSThe following table provides details of Merger and other costs for the three and nine months ended September 30, 2021:185.SupportSupport.com began operating within the Greenidge structureCompany as a separate operating and reporting segment; therefore, Greenidge has 2two operating and reportablereporting segments since the acquisition: i)Merger: (i) Cryptocurrency MiningDatacenter and Power Generation and ii)(ii) Support Services as the other. Prior to the Merger, Greenidge operated in one operating and reporting segment, Cryptocurrency Mining and Power Generation.MiningDatacenter and Power Generation segment operates in the United States and generates revenue primarily by earning bitcoin, with application-specific integrated circuit computers (“ASICs” or “miners”)miners that are owned by the Company, as rewards and transaction fees for supporting the global bitcoin network. The Cryptocurrency MiningDatacenter and Power Generation segment also sells surplus electricity generated by its power plant, and not consumed in bitcoin miningcryptocurrency datacenter operations, to the New York Independent System Operator (“NYISO”)NYISO power grid at prices set on a daily basis through the NYISO wholesale market. In addition, the Company receives revenues from the sale of its capacity and ancillary services in the NYISO wholesale market. The Cryptocurrency MiningDatacenter and Power Generation segment operates in the United States. , and technical support primarily to large corporations, businesses and professional services organizations. The Support Services segment also earns revenues for end-user software products provided through direct customer downloads and salesales via partners. The Support Services segment operates primarily in the United States, but also has employees located in Philippines, India, Mexico, Colombia and Canada, including those staff providing support services."segment“Segment Adjusted EBITDA"EBITDA”). This is the measure used by the Company's Chief Operating Decision Maker (“CODM”) to assess performance and allocate resources.and 2020, respectively:Three Months Ended September 30, Nine Months Ended September 30, $ in thousands 2022 2021 2022 2021 Revenues: Cryptocurrency Datacenter and Power Generation $ 21,885 $ 34,233 $ 73,966 $ 61,472 Support Services 7,474 1,521 24,387 1,521 Total Revenues $ 29,359 $ 35,754 $ 98,353 $ 62,993 Segment Adjusted EBITDA (loss) Cryptocurrency Datacenter and Power Generation $ (3,669) $ 20,973 $ 3,886 $ 33,464 Support Services 1,381 204 5,282 204 Total Segments Adjusted EBITDA (loss) $ (2,288) $ 21,177 $ 9,168 $ 33,668 segmentsSegments Adjusted EBITDA to the consolidated Loss(loss) income before income taxes:19The table below provides segment assets, which exclude cash and cash equivalents and short term investments, and a reconciliation to the consolidated total assets of the Company:Three Months Ended September 30, Nine Months Ended September 30, $ in thousands 2022 2021 2022 2021 Total Segments Adjusted EBITDA (loss) $ (2,288) $ 21,177 $ 9,168 $ 33,668 Depreciation and amortization (13,835) (2,667) (22,680) (5,531) Stock-based compensation (361) (411) (1,029) (1,474) Merger and other costs (242) (29,847) (940) (31,095) Expansion costs (183) (128) (2,375) (128) Interest expense, net (5,430) (1,009) (15,693) (1,399) Loss on sale of assets (759) — (130) — Long-lived asset impairment — — (71,500) — Remeasurement of environmental liability — — (11,109) — Consolidated loss before income taxes $ (23,098) $ (12,885) $ (116,288) $ (5,959) 6.5. PROPERTY AND EQUIPMENT20212022 and December 31, 2020:2021:
Lives$ in thousands Estimated Useful
LivesSeptember 30, 2022 December 31, 2021 Plant infrastructure 10 years $ 10,226 $ 34,725 Miners 3 years 176,309 48,121 Miner facility infrastructure 10 years 32,368 15,143 Land N/A 8,460 8,460 Equipment 5 years 1,012 1,660 Software 3 years 636 636 Coal ash impoundment 4 years — 2,410 Construction in process N/A 26,076 25,856 Miner deposits N/A 27,281 98,110 282,368 235,121 Less: Accumulated depreciation (36,297) (18,030) $ 246,071 $ 217,091 $2.7$13.6 million and $$2.7 million for the three months ended September 30, 2022 and 2021, respectively, and $22.0 million and $5.5 million for the nine months ended September 30, 2022 and 2021, respectively.5.5$ in thousands As of September 30, 2022 Intangible Assets Accumulated Amortization Intangible Assets, Net Customer relationships $ 3,320 $ (867) $ 2,453 Tradename 490 (102) 388 Total $ 3,810 $ (969) $ 2,841 As of December 31, 2021 Intangible Assets Accumulated Amortization Intangible Assets, Net Customer relationships $ 3,320 $ (244) $ 3,076 Tradename 490 (29) 461 Total $ 3,810 $ (273) $ 3,537 2021 and2022, respectively. There was $1.1less than $0.1 million and $3.2 millionof amortization expense for both the three and nine months ended September 30, 2020, respectively.2021.$ in thousands Amortization 2022 (for the remainder of) $ 232 2023 928 2024 928 2025 684 Thereafter 69 Total $ 2,841 NOTES PAYABLE$ in thousands Balance as of: Note Loan Date Maturity Date Interest
RateAmount Financed September 30, 2022 December 31, 2021 Equipment Financings: Equipment Financings: A December 2020 June 2022 17.0 % $ 4,482 $ — $ 1,245 B December 2020 June 2022 17.0 % 428 — 95 C March 2021 November 2022 17.0 % 2,229 248 1,362 D April 2021 December 2022 17.0 % 4,012 669 2,674 E - H May 2021 October 2023 15.0 % 15,724 12,235 15,513 I July 2021 January 2023 17.0 % 4,457 1,238 3,468 J July 2021 March 2023 17.0 % 2,717 604 1,962 K K October 2021 June 2023 17.0 % 2,223 864 1,976 L L March 2022 April 2024 13.0 % 81,375 74,690 — Bonds Payable Bonds Payable October 2021/December 2021 October 2026 8.5 % 72,200 72,200 72,200 Secured Promissory Note Secured Promissory Note March 2022 June 2023 7.5 % 26,500 13,410 — Total debt Total debt 176,158 100,495 Less: Debt discount and issuance costs Less: Debt discount and issuance costs (6,425) (5,667) Total debt at book value Total debt at book value 169,733 94,828 Less: Current portion (73,218) (19,577) Long-term debt, net of current portion and deferred financing fees Long-term debt, net of current portion and deferred financing fees $ 96,515 $ 75,251 $0.4$0.4 million and $1.5$0.4 million during the three months ended September 30, 2022 and 2021, respectively, and $1.0 million and $1.5 million during the nine months ended September 30, 2022 and 2021, respectively.NaN stock-based compensation expense was recognized during the three and nine months ended September 30, 2020. Stock-based compensation expense is included in selling, general andinterim consolidated statements of operations.2411.operations and comprehensive (loss) income.income tax rate asfor the nine months ended September 30, 2022 was different from the U.S. federal statutory rate of 21% primarily due to a percentagecharge of income before income taxes$15.0 million for the recognition of a valuation allowance during the second quarter of 2022 for deferred tax assets. Deferred tax assets primarily relate to historical net operating loss carryforwards of the Support.com business that was 38.7%acquired in 2021.48.0%48.0% for the three and nine months ended September 30, 2021, respectively. The effective income tax rates for the three and nine months ended September 30, 2021 benefitted from a higher tax bases for the deductibility of the equity-based success fees associated with the Merger. The effective tax rate for the nine months ended September 30, 2021 includesinclude the recognition of a deferred tax liability caused by the reorganization from an LLCa limited liability company to a corporation during the first quarter ofthree months ended March 31, 2021. Prior to January 27, 2021, the Company was treated as a partnership for federal and state income tax purposes; therefore, there was 0 income tax provision or benefit recognized during 2020. BasicThree Months Ended September 30: Nine Months Ended September 30: $ in thousands, except per share amounts 2022 2021 2022 2021 Numerator Net loss $ (23,177) $ (7,896) $ (131,488) $ (3,099) Less: Net income attributable to the member units before the reorganization — — — (648) Net loss attributable to Greenidge $ (23,177) $ (7,896) $ (131,488) $ (3,747) Denominator Basic weighted average shares outstanding 42,239 30,116 41,620 28,949 Diluted weighted average shares outstanding 42,239 30,116 41,620 28,949 (Loss) earnings per share Basic $ (0.55) $ (0.26) $ (3.16) $ (0.13) Diluted $ (0.55) $ (0.26) $ (3.16) $ (0.13) GGHof Greenidge Generation Holdings LLC (" GGH") into Greenidge (see Note 2) and presents the period that the Company had outstanding common stock.
units before the reorganization0no shares of common stock outstanding, and the LLClimited liability structure of GGH consisted of member units. The Company analyzed the calculation of earnings per unit for periods prior to the reorganization and determined that it resulted in values that would not be meaningful to the users of these condensed consolidated financial statements. Therefore, earnings per share information has not been presented forperiods during 2020.was 0 impactwere no shares excluded from the calculation of dilution from any of the outstanding equity awardsdiluted earnings per share due to the Netnet loss, since inclusion of any impact from these awards would be antidilutive.time-to-time,time to time, the Company ismay be involved in various lawsuits and legal proceedings arisingthat arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in such matters may arise and harm the Company's business. The Company is currently not aware of any such legal proceedings or claims that it believes will have a material adverse effect on its business, financial condition or operating results.25Environmental Obligations ("ASC 410-30")Table, the Company has recorded an environmental liability of ContentsMerger-Related Litigation.After announcement$8.6 million as of September 30, 2022 and December 31, 2021. As required by NYSDEC, companies with landfills are required to fund a trust to cover closure costs and expenses after the landfill has stopped operating or, in lieu of a trust, may negotiate to maintain a letter of credit guaranteeing the payment of the Merger, six complaints were fileliability. Estimates are based on various assumptions including, but not limited to, closure and post-closure cost estimates, timing of expenditures, escalation factors, and requirements of granted permits. Additional adjustments to the environment liability may occur periodically due to potential changes in various U.S. federal district courts by alleged individual stockholdersestimates and assumptions.Support against Support,a coal ash pond located on the individual directorsCompany's property in the Town of Support and, in twoTorrey, New York. In accordance with ASC 410-30, the Company has a liability of $13.8 million as of September 30, 2022, which includes a charge of $11.1 million during the nine-months ended September 30, 2022 as a result of an update to the cost estimates as part of the cases, Greenidge and Merger Sub. Of these six complaints, two were filed in the United States District Court for the District of Delaware: Stein v. Support.com, Inc. et al, Case No. 1:21-cv-00650 (May 5, 2021), and Bell v. Support.com, Inc. et al, Case No. 1:21-cv-00672 (May 7, 2021); three were filed in the United States District Court for the Southern District of New York: Broder v. Support.com, Inc. et al, Case No. 1:21-cv-04262 (May 12, 2021), Salerno v. Support.com, Inc. et al, Case No. 1:21-cv-04584 (May 21, 2021), and Bowen v. Support.com, Inc. et al, Case No. 1:21-cv-04797 (May 28, 2021). The sixth lawsuit was filed in the United States District Court for the Eastern District of New York: Steinmetz v. Support.com, Inc. et al, Case No. 1:21-cv-02647 (May 11, 2021). Support and individual membersongoing evaluation of the Support board were named as defendantssite. CCRs are subject to federal and state requirements. Estimates are based on various assumptions including, but not limited to, closure and post-closure cost estimates, timing of expenditures, escalation factors, and requirements of granted permits. Additional adjustments to the environment liability may occur periodically due to potential changes in all of the lawsuits; Greenidgeremediation requirements regarding coal combustion residuals which may lead to material changes in estimates and Merger Sub were also named as defendants in Bell and Salerno. The lawsuits generally alleged that Greenidge’s Form S-4 Registration Statement filed with the U.S. Securities and Exchange Commission in connection with the Merger on May 4, 2021 made misleading omissions of certain material information. The Salerno complaint also alleged that the members of the Support board breached their fiduciary duties in negotiating and approving the Merger Agreement and that Greenidge and Merger Sub aided and abetted that breach. The lawsuits purported to seek to enjoin the Merger, or alternatively, rescission and unspecified damages and costs. On August 2, 2021, lawyers representing a seventh putative stockholder of Support sent a demand letter seeking additional disclosures regarding the proposed transaction and reserving their purported right to seek to enjoin the transaction.All of the lawsuits have since been voluntarily dismissed by plaintiffs.SupportAs of September 30, 2021, the Company had entered into agreements to purchase miner equipment totaling $142.2 million that required deposits of $38.5 million. The Company entered into agreements for committed secured financing on this equipment totaling $5.2 million that will be funded upon delivery of the miners.whichthat provides for the transportation to its pipeline of 15,000 dekatherms of natural gas per day, approximately $158$0.2 million per month. The contract ends in September 2030 and may be terminated by either party with 12 months'months' notice after the initial 10-year period.10-year period. major power customer, NYISO, that accounted for 9%12% and 11%9% of itsconsolidated revenue for the three months ended September 30, 2022 and 2021, respectively. NYISO accounted for 13% and 12% of consolidated revenue for the nine months ended September 30, 2022 and 2021, respectively, and 50% and 38% for the three and nine months ended September 30, 2020. 6% and 100% of accounts receivable were due from this customer at September 30, 2021 and December 31, 2020, respectively.mining,datacenter operations, Greenidge considers its mining pool operators to be its customers. Greenidge has historically used a limited number of pool operators that have operated under contracts with a one-day term, which allows Greenidge the option to change pool operators at any time.on a daily basis. Revenue from one of the Company’s pool operator customers accounted for approximately 62%60% and 37%62% of total revenue for the three months ended September 30, 2022 and 2021, respectively, and 56% and 37% for the nine months ended September 30, 2022 and 2021, respectively.2021,2022, respectively, and NaN of the revenue for the three and nine months ended September 30, 2020. Revenue from a different pool operator customeralso accounted for approximately 24%69% and 46% of total revenue for the three and nine months ended September 30, 2021, respectively, and approximately 50% and 59% of total revenue for the three and nine months ended September 30, 2020, respectively.The Support Services segment's largest and second largest customers accounted for approximately 60% and 25%, respectively,67% of the Company's consolidated accounts receivable balance at September 30, 2021.35%67% and 57%60% of the aggregate cost of revenue- cryptocurrency data center and cost of revenue- power and capacity for the three months ended September 30, 2022 and 2021, respectively and 64% and 59% of cost of revenue for the three and nine months ended September 30, 2022 and 2021, respectively, and approximately 55% and 57% of cost of revenue for the three and nine months ended September 30, 2020, respectively.26activities during the nine months ended September 30, 2021:activities:
party for Greenidge class B common stock (Note 9)
of Merger (Notes 4 and 9)Nine Months Ended September 30, $ in thousands 2022 2021 Shares issued to Support.com shareholders upon Merger $ — $ 93,885 Property and equipment purchases financed with common stock $ — $ 991 Contribution of Preferred Units, Senior Priority Units, and notes payable to related
party for Greenidge class B common stock$ — $ 72,891 Issuance of shares for investor fee associated with successful completion
of Merger$ — $ 17,826 Issuance of warrants to advisor in connection with completion of Merger $ — $ 8,779 OTHER RISKS AND CONSIDERATIONSThe United States is presently in the midst of a national health emergency related to a virus, commonly known as Novel Coronavirus (“COVID-19”). The overall consequences of COVID-19 on a national, regional and local level are unknown, but it has the potential to result in a significant economic impact. COVID-19 did not have a material impact on the Company’s operations during the three and nine months ended September 30, 2021 and 2020. The future impact of this situation on the Company and its results and financial position is not presently determinable.17. SUBSEQUENT EVENTS15, 2021,14, 2022, the date at which the condensed consolidated financial statements were available to be issued, and the Company has concluded that no such events or transactions took place that would require disclosure herein except as stated directly below.Registered Notes OfferingOn13, 2021,8, 2022, The Board of Directors appointed David Anderson to the position of Chief Executive Officer and Scott MacKenzie to the position of Chief Strategy Officer. Upon assuming the role, Mr. Anderson joined Greenidge's Board of Directors. As an inducement for Messrs. Anderson and MacKenzie to enter into employment with Greenidge, completedGreenidge's Compensation Committee approved grants of stock options ("Options") to each of Messrs. Anderson and MacKenzie. The Options granted to Mr. Anderson are exercisable for 1,852,812 shares of Greenidge's class A common stock ("Shares") and the Options granted to Mr. MacKenzie are exercisable for 1,224,030 Shares. The options were granted on October 10, 2022 and have an exercise price equal to the closing price of a registered public offering of $55.2 millionShare on the grant date. The Options vest in equal annual installments on each of the Company’s 8.50% Senior Notes due 2026 (the “Notes”). The Notes are senior unsecured obligationsfirst, second and third anniversaries of the Companygrant date, subject to Messrs. Anderson's and rank equal in rightMacKenzie's continued service through the applicable vesting dates, respectively.payment with the Company’s existingOctober 7, 2022 and future senior unsecured indebtedness. The Company received net proceeds after discounts and commissions, but before expenses and payment of the structuring fee, of approximately $53.3 million. The Company intendstransition to use the net proceeds from the offering of the Notes for general corporate purposes, including funding capital expenditures, future acquisitions, investments and working capital and repaying indebtedness.Purchase of South Carolina PropertyInproviding consulting services to Greenidge. Mr. Kirt’s consulting services to Greenidge are scheduled to continue through October 2021, a subsidiary of Greenidge entered into a Purchase and Sale Agreement (the “LSC Agreement”) with a subsidiary of LSC Communications, Inc. (the “Seller”), a Delaware corporation, pursuant to which Greenidge has agreed to purchase from the seller two parcels of land containing approximately 175 acres of land located in Spartanburg, South Carolina, including over 750,000 square feet of industrial buildings (the “Property”). As previously disclosed, LSC Communications, Inc. is a portfolio company of private investment funds managed by Atlas Holdings LLC. Greenidge’s controlling shareholder consists of certain funds associated with Atlas Holdings LLC.The purchase price of the Property is $15.0 million (the “Purchase Price”).10, 2023. Under the terms of the LSCletter agreement that describe the terms of Mr. Kirt’s separation of employment from Greenidge and the terms of his consulting services to Greenidge, Mr. Kirt will receive his base salary of $750,000 during the consulting period, immediate vesting of 229,868 RSUs, and a one-time grant under the Company’s 2021 Equity Incentive Plan of 280,000 restricted stock units that were fully vested at grant on October 10, 2022 and settle in twelve weekly installments beginning on October 14, 2022.has deposited $2.5 million in escrow, with such amount to be applied at closing toentered into the Purchase Price. The transaction is expected to close in early December 2021. The LSC Agreement contains customary representations, warranties and covenants of the parties and closing conditions as well as other customary provisions. Greenidge expects to finance the Purchase Price with cash on hand.Equity PurchaseATM Agreement with B. Riley Principal Capital, LLCAs discussed in Note 9, on September 15, 2021, Greenidge entered into the Purchase Agreement with the Investor pursuant to which Greenidge has the right to "put" or selland Northland. Pursuant to the Investor up to $500 millionATM Agreement, Greenidge may offer and sell shares of shares ofits class A common stock subject to certain limitationshaving an aggregate offering price of $22,800,000. See Note 9, Stockholder's Equity.conditions set forth in18% of the Purchase Agreement, from time to timeCompany's consolidated revenue during the term of the Purchase Agreement. Following the effectiveness of Greenidge's registration statement (File No. 333-259637) on Form S-1 on October 6, 2021 relating to the resale of 3,500,000 shares of class A common stock in connection with the Purchase Agreement, the Company began selling27shares of class A common stock to the Investor from time to time. Through November 12, 2021, Greenidge sold 1,977,500 shares of class A common stock to the Investor for proceeds of approximately $47.9 million, net of discounts.ERCOT Market Data CentersIn October 2021, we entered into an agreement with a portfolio company of private investment funds managed by Atlas giving us an exclusive right of first refusal at multiple power generation sites comprising over 1,000MW of power generation assets in the ERCOT market. The agreement gives us the exclusive right of first refusal to develop data centers at any current or future power generation sites controlled by the counterparty in the ERCOT market until January 2023. Greenidge’s controlling shareholder consists of certain funds associated with Atlas Holdings LLC.20202021 and 20192020 included in our Prospectus filed pursuant to Rule 424(b) under the Securities ActAnnual Report on August 10, 2021Form 10-K and the unaudited interim financial statements and related notes thereto of Greenidgethe Company for the three and nine months ended September 30, 20212022 and 20202021 included elsewhere in this Quarterly Report on Form 10-Q. This discussion contains certain forward-looking statements that reflect plans, estimates and beliefs and involve numerous risks and uncertainties, including but not limited to those described in the “Risk Factors” disclosed in Item 1A to Part I of Greenidge's Annual Report on Form 10-K for the year ended December 31, 2021 and “Cautionary Statement Regarding Forward-Looking Statements” sections of this Quarterly Report on Form 10-Q. Actual results may differ materially from those contained in any forward-looking statements. For purposes of this section, “the Company,” “we,” “us” and “our” refer to Greenidge Generation Holdings Inc. together with its consolidated subsidiaries).subsidiaries. You should carefully read “Cautionary Statement Regarding Forward-Looking Statements” in this Quarterly Report on Form 10-Q.Greenidge is the successor entity for accounting purposes to GGH as a result of the corporate restructuring consummated in January 2021. Pursuant to this restructuring, Greenidge was incorporated in the State of Delaware on January 27, 2021 and on January 29, 2021, entered into an asset contribution and exchange agreement with GGH, pursuant to which Greenidge acquired all of the ownership interests in GGH in exchange for 28,000,000 shares (on a split-adjusted basis) of Greenidge’s class B common stock. As a result of this transaction, GGH became a wholly owned subsidiary of Greenidge. The financial information presented herein are that of GGH for the periods before January 29, 2021 and Greenidge thereafter. On March 16, 2021, Greenidge effectuated a forward stock split whereby each outstanding share of class B common stock was split into four new shares of class B common stock (and each outstanding share of series A preferred stock would be convertible into four times as many shares of class B common stock as it was previously convertible into).MiningDatacenter and Power Generation SegmentGreenidge owns a vertically integrated bitcoin mining and power generation facilityenvironmentally-sound approximately 106 MWmegawatt (“MW”) natural gas power generation facility that has undergonefacility. We generate all the power we require for our cryptocurrency datacenter operations in the New York Facility, where we enjoy relatively lower market prices for natural gas due to our access to the Millennium Gas Pipeline price hub. At the South Carolina Facility, we purchase power from a remarkable transformationsupplier of approximately 60% zero-carbon sourced energy, which results in recent years. Greenidge enjoys significantrelatively stable energy cost environment. We believe our competitive advantages includinginclude relatively low fixed costs, an efficient mining fleet and in-house operational expertise and low power costs due to its access to the Millennium Pipeline price hub, which provides relatively low market rates for natural gas. Greenidge isexpertise. We are currently mining bitcoin and contributing to the security and transactability of the bitcoin ecosystem while concurrently supplying power to assist in meeting the power needs of homes and businesses in its region.2021, Greenidge2022, we powered approximately 4476 MW of mining capacity capable of producing an estimated aggregate hash rate of 2.4 EH/s at our facilities, substantially all of which is dedicated to bitcoin mining. Our Cryptocurrency MiningDatacenter and Power Generation segment generates revenue i) through the exchange of bitcoins earned by ASICsapplication-specific integrated circuit computers ("ASICs" or "miners") as rewards and transaction fees for U.S. dollars and, to a much lesser extent in 2021 through revenue earned from third parties for hosting ASICs owned by third parties and providing operations, maintenance and other blockchain related services to third parties and ii) through the sale of electricity generated by our power plant, and not consumed in bitcoin miningcryptocurrency datacenter operations, to New York State’s power grid at prices set on a daily basis through the NYISONew York Independent System Operator ("NYISO") wholesale market. GreenidgeWe opportunistically increasesincrease or decreasesdecrease the total amount of electricity sold by the power plant based on prevailing prices in the wholesale electricity market.Greenidge’s primary business objective is to grow revenue by further leveraging its capability to own captive power resources and expand its bitcoin mining operations and blockchain services offerings. Greenidge currently internally generates allWe believe that, over the power it requires for bitcoin mining and does not purchase power from any third-party suppliers for either its mining or power generation operations. Greenidge believes that thislong-term, behind-the-meter power generation capability provides a stable, cost-effective source of power for bitcoin miningcryptocurrency datacenter activities. Greenidge’sOur behind-the-meter power generation capability provides itus with stable delivery due to the absence of any contract negotiation risk with third-party power suppliers, the absence of transmission and distribution cost risk and the firm delivery of natural gas for our New York Facility via Greenidge’sour captive pipeline. Furthermore, our New York Facility has operated with minimal downtime for maintenance and repairs over recent years. Notwithstanding the structural stability of itsour behind-the-meter capabilities, Greenidge doeswe do however procure natural gas at our New York Facility through a third-party energy manager which schedules delivery of Greenidge’sour natural gas needs from the wholesale market which is subject to price volatility. Greenidge procuresWe procure the majority of itsour natural gas at spot prices and enter into fixed price forward contracts from time to time for the purchase of a portion of anticipated natural gas purchases based on prevailing market conditions to partially mitigate the financial impacts of natural gas price volatility.volatility and to manage commodity risk. These forward contracts qualify for the normal purchases and sales exception under ASCAccounting Standards Codification ("ASC") 815, Derivatives and Hedging, as it is probable that these contracts will result in physical delivery.mayhas impacted and will continue to impact Greenidge’sour results of operations and financial performance. While naturalNatural gas prices decreased in 2020, partially due to COVID-19 related demand reduction, prices have been on an upward trajectory since June of 2021 and are expected to continue rising intoat elevated levels during 2022. During 2022, duethe volatility in the cost of natural gas resulted in an approximate 121% increase in the weighted average cost of natural gas during the nine months ended September 30, 2022, as compared to low inventory levels.the same period in the prior year. This is currently affecting, and has affected, the performance of our business. Volatility in the natural gas market may be caused by disruption in the delivery of fuel, including disruptions as a result of the outbreak or escalation of military hostilities, weather, transportation difficulties, global demand and supply29Greenidge procuresSee “Risk Factors—Risks Related to Our Business—Risks Related to our Power Generation Operations” in Part I, Item 1A of our Annual Report on Form 10-K for the majority of its natural gas supply fromyear ended December 31, 2021 and in this Quarterly Report on Form 10-Q.Millennium Pipeline price hub which provides relatively low market rates for natural gas.Current gas prices are also consistent with Millennium East pool forward gas prices and Greenidge expects this trend to continue going forward. The most material factor that causes price volatility in Greenidge natural gas supply is cold weather related increases in demand during the winter months. Greenidge typically hedges a portioncompletion of the gas duringMerger (see Notes 1 and 3 in this period in order to minimizeQuarterly Report on Form 10-Q), Support.com began operating within the impact of weather-related gas price volatility on its operations by entering into physically settled natural gas forward contracts with its energy manager. Furthermore, Greenidge has procured firm natural gas transportation capacity atCompany as a fixed rate for a portion of its natural gas supply, thereby reducing its exposure to volatility in natural gas transportation costs. Gas transportation is procured through a long-term contract with an expiration date in September 2030. Greenidge believes there are no material renegotiation or counterparty risks for either gas forward contracts or firm transportation.Support Services Segment , and technical support primarily to large corporations, businesses and professional services organizations. The Support Services segment also earns revenues for end-user software products provided through direct customer downloads and sale via partners. The Support Services segment operates primarily in the United States, but also has international operations that includeemployees located in Philippines, India, Mexico, Columbia and Canada, including staff providing support services.Expansion OpportunitiesWe are exploring potential new locations where we intend to replicate our vertically integrated bitcoin mining and power generation business model. Additionally, we are evaluating potential partnerships with owners of low-cost energy sources, with a particular focus on renewable sources, as a potential avenue to grow our bitcoin mining operations.In October 2021, Greenidge announced that it had entered into a Purchase and Sale Agreement (the "Purchase and Sale Agreement") for an industrial site in Spartanburg, South Carolina, including a 750,000 square foot building and 175 acres of land (the "Property"). Greenidge's use of the property would be to develop a bitcoin mining operation, using existing electrical infrastructure at the location. The Purchase and Sale Agreement was entered into by a subsidiary of Greenidge and a portfolio company of private investment funds managed by Atlas Holdings LLC (“Atlas”). Greenidge’s controlling shareholder consists of certain funds associated with Atlas. The purchase price of the Property is $15.0 million. The transaction is expected to close in early December 2021, and Greenidge intends to commence small scale mining operations, using portable equipment, at the Spartanburg facility in late 2021 or early 2022.Additionally, in September 2021, Greenidge entered into an exclusive agreements with a developer for multiple sites in Texas that includes at least six sites in a pipeline that Greenidge and the developer have identified as potential locations for Greenidge data centers. In total, the potential development sites have over 2,000MW of electrical capacity and include several locations surrounded by abundant wind and solar power generation.Furthermore, in October 2021, Greenidge entered into an agreement with a portfolio company of private investment funds managed by Atlas giving it an exclusive right of first refusal at multiple power generation sites comprising over 1,000MW of power generation assets in the ERCOT market. The agreement gives Greenidge the exclusive right of first refusal to develop data centers at any current or future power generation sites controlled by the counterparty in the ERCOT market until January 2023. Greenidge’s controlling shareholder consists of certain funds associated with Atlas Holdings LLC.Greenidge intends to develop its next commercial bitcoin mining location at either the South Carolina location or a location in Texas and is evaluating certain factors to determine which state and location is best suited.MergerOn September 14, 2021, we consummated the transactions contemplated by the Merger Agreement, by and among Greenidge, Support and Merger Sub. As contemplated by the Merger Agreement, Merger Sub merged with and into Support, the separate corporate existence of Merger Sub ceased and Support survived as a wholly owned subsidiary of Greenidge. At the effective time of the Merger, we issued 2,998,261 shares of class A common stock in exchange for all shares of common stock, par value $0.0001, of Support and all outstanding stock option and restricted stock units of Support. Support's results of operations and balance sheet have been consolidated effective with the Merger.30Increase in Authorized CapitalOn September 13, 2021, we filed an amendment to our certificate of incorporation to increase our authorized capital stock. Following the amendment, our authorized capital stock consists of 2,400,000,000 shares of class A common stock, par value $0.0001 per share, 600,000,000 shares of class B common stock, par value $0.0001 per share, and 20,000,000 shares of preferred stock, par value $0.0001 per share.Equity Purchase Agreement with B. Riley Principal Capital, LLCOn September 15, 2021, Greenidge entered into a common stock purchase agreement (the “Purchase Agreement”) with B. Riley Principal Capital, LLC (the “Investor”) pursuant to which Greenidge has the right to “put,” or sell, to the Investor up to $500 million of shares of class A common stock, subject to certain limitations and conditions set forth in the Purchase Agreement, from time to time during the term of the Purchase Agreement. Under the applicable Nasdaq rules, in no event may Greenidge issue to the Investor under the Purchase Agreement more than 19.99% of the total number of combined shares of our class A common stock and class B common stock that were outstanding immediately prior to the execution of the Purchase Agreement (the “Exchange Cap”), unless Greenidge obtains stockholder approval to issue shares in excess of the Exchange Cap in accordance with applicable Nasdaq rules.The per share purchase price for the shares of class A common stock that Greenidge elects to sell to the Investor pursuant to the Purchase Agreement will be determined by reference to the volume weighted average price of our class A common stock ("VWAP") during the applicable purchase date on which we have timely delivered written notice to the Investor directing it to purchase shares under the Purchase Agreement, less a fixed 5% discount, which shall be increased to a fixed 6% discount at such time that Greenidge received aggregate cash proceeds of $200 million as payment for all shares of class A common stock purchased by the Investor in all prior sales of class A common stock made under the Purchase Agreement. The Investor will have no obligation to purchase shares pursuant to the Purchase Agreement to the extent that such purchase would cause the Investor to own more than 4.99% of Greenidge's issued and outstanding shares of class A common stock.In connection with the Purchase Agreement, Greenidge entered into a registration rights agreement with the Investor pursuant to which Greenidge agreed to prepare and file a registration statement registering the resale by the Investor of those shares of our class A common stock to be issued under the Purchase Agreement. The registration statement became effective on October 6, 2021 relating to the resale of 3,500,000 shares of class A common stock in connection with this Purchase Agreement.Registered Notes Offering
On October 13, 2021, Greenidge completed a registered public offering of $55.2 million of the Company’s 8.50% Senior Notes due 2026 (the “Notes”). The Notes are senior unsecured obligations of the Company and rank equal in right of payment with the Company’s existing and future senior unsecured indebtedness.received net proceeds after discounts and commissions, but before expenses and payment of the structuring fee, of approximately $53.3 million. The Company intends to use the net proceeds from the offering of the Notes for general corporate purposes, including funding capital expenditures, future acquisitions, investments and working capital and repaying indebtedness.Miner Fleet GrowthGreenidge beganhad mining bitcoin in 2019 with the construction of a pilot data center to operate approximately 1 MW of bitcoin mining capacity located at its power generation facility in the Town of Torrey, New York. Greenidge launched a commercial data center for bitcoin mining and blockchain services in January 2020, and as of December 31, 2020, Greenidge had approximately 6,900 miners deployed on its site capable of producing an estimated aggregate hash rate capacity of approximately 0.4 exahash per second (“2.4 EH/s”). Although the number ofs from approximately 24,500 active miners deployed provides a sense of scale of cryptocurrency mining operations as compared to Greenidge’s peers, management believes that hash rate, or the number of hashes a miner can perform in each second, typically expressed in EH/s or terahash per second (“TH/s”) and used as a measure of computational power or mining capacity used to mine and process transactions on a blockchain such as bitcoin, provides a more comparable measure of Greenidge’s fleet’s ability to process cryptocurrency transactions as compared to other bitcoin mining operations.During the first nine months of 2021, Greenidge deployed approximately 8,300 additional miners comprised primarily of Bitmain S19 and S19 Pro Bitmain Antminers, as well as MicroBT M30 and M31 Whatsminers, bringing its estimated maximum hash rate to 1.19 EH/s consuming approximately 44 MW of the power plant’s total capacity of approximately 106 MW. As ofat September 30, 2021, in31aggregate, Greenidge had approximately 15,300 miners deployed on2022. The Company is reevaluating its site capable of producing an estimated aggregate hash rate capacity of 1.2 EH/s and had entered into additional commitmentsdevelopment plan as it works through its plans to acquire:Approximately 15,900 S19j Pro Bitmain Antminers scheduled for deployment beginning in the first quarter of 2022 and continuing through the third quarter of 2022;Approximately 800 S19j Bitmain Antminers scheduled for deployment in the fourth quarter of 2021, and;Approximately 500 MicroBT M30 Whatsminers scheduled for deployment in the fourth quarter of 2021.We have ordered additional miners between September 30 and November 12, 2021 that will bring our committed total capacity to approximately 49,000 miners and 4.7 EH/s, including Greenidge's launch order for Bitmain's new Antminer S19 XP. These new advanced miners have substantially greater hash rate capacities and use electric power more efficiently than Greenidge’s existing miner fleet. With the deployment of the aforementioned miners due in 2021, Greenidge expects to be able to achieve a total hash rate capacity of at least 1.4 EH/s by the end of 2021.Business EnvironmentThe third quarter of 2021 saw a continuation of quarterly sequential revenue growth, growth of 121% as compared to the second quarter of 2021, driven by cryptocurrency mining revenue due to the miner fleet growth. Higher average hash rate capacity in the third quarter, combined with an approximate 28% lower level of mining difficulty and a slightly higher average bitcoin value during the third quarter of 2021 fueled the revenue growth as compared to the second quarter of 2021.Significant costs associated with the completion of the Merger caused a Net loss of $16.3 million in the third quarter of 2021 compared to Net income of $3.5 millionBeginning in the second quarter of 2021; however, Adjusted EBITDA increased significantly2022, the Company began to $21.2 millionreduce its inventory of older, less efficient mining equipment in order to free up mining capacity for newer more, efficient miners in its order book. The Company expects this trend to continue through the end of 2022, and the Company may also consider other assets sales, including but not limited to sales of surplus mining infrastructure equipment, to further enhance its liquidity position.as compared to $8.1 million in the second quarter of 2021. Adjusted EBITDA is a Non-GAAP financial measure. A reconciliation of reported amounts to adjusted amounts can be found in the "Non-GAAP Measures and Reconciliations" section of this MD&A.32Results of OperationsThe following table sets forth key components of the results of operations of Greenidge during the three and nine months ended September 30, 2021 and 2020.unless otherwise specified.
depreciation and amortization
shown below)Three Months Ended September 30, Variance $ in thousands 2022 2021 $ % Total revenue $ 29,359 $ 35,754 $ (6,395) (18) % Cost of revenue (exclusive of depreciation and amortization shown below) 22,095 9,659 12,436 129 % Selling, general and administrative expenses 10,240 5,446 4,794 88 % Merger and other costs 242 29,847 (29,605) (99 %) Depreciation and amortization 13,835 2,667 11,168 419 % Loss from operations (17,053) (11,865) (5,188) (44 %) Other (expense) income: Interest expense, net (5,430) (1,009) (4,421) (438 %) Gain on sale of digital assets — 18 (18) N/A Loss on sale of assets (759) — (759) N/A Other income (loss), net 144 (29) 173 N/A Total other expense, net (6,045) (1,020) (5,025) (493 %) Loss before income taxes (23,098) (12,885) (10,213) (79) % Provision (benefit) for income taxes 79 (4,989) 5,068 102 % Net loss $ (23,177) $ (7,896) $ (15,281) (194) % Adjusted Amounts (a) Adjusted (loss) income from operations $ (16,628) $ 18,110 $ (34,738) N/A Adjusted operating margin (56.6 %) 50.7 % Adjusted net (loss) income $ (21,993) $ 12,166 $ (34,159) N/A Other Financial Data (a) EBITDA (loss) $ (3,833) $ (9,209) $ 5,376 58 % as a percent of revenues (13.1 %) (25.8) % Adjusted EBITDA (loss) $ (2,288) $ 21,177 $ (23,465) N/A as a percent of revenues (7.8) % 59.2 % &A.&A"). Three Months Ended
September 30,Variance $ in thousands 2022 2021 $ % Cryptocurrency datacenter $ 18,272 $ 31,156 $ (12,884) (41) % Power and capacity 3,613 3,077 536 17 % Services and other 7,474 1,521 5,953 391 % Total revenue $ 29,359 $ 35,754 $ (6,395) (18) % RevenueThree Months Ended
September 30,2022 2021 Cryptocurrency datacenter 63 % 87 % Power and capacity 12 % 9 % Services and other 25 % 4 % Total revenue 100 % 100 % increased $29.6decreased $6.4 million, or 483.9%18%, and $49.1to $29.4 million or 352.0%, during the three and nine months ended September 30, 2021, respectively,2022 as compared to theirthe prior year periods.period. The decrease in revenue was due to the following:was driven by the Cryptocurrency Mining and Power Generation segment, specifically cryptocurrency mining, dueof $6.0 million, or 391%, to our significantly expanded our miner fleet over the last year.33The acquisition of Support.com increased revenue $1.5$7.5 million during the three- and nine-month periodsthree months ended September 30, 2021, respectively.2022.Discussion"Results of Operations - Three Months Ended September 30" of this MD&A for a more detailed discussion of revenues from the Cryptocurrency MiningDatacenter and Power Generation segment and the Support Services segment. Refer to Note 14 for concentrations of revenue. Three Months Ended
September 30,Variance $ in thousands 2022 2021 $ % Cryptocurrency datacenter $ 14,675 $ 5,974 $ 8,701 146 % Power and capacity 3,760 2,831 929 33 % Services and other 3,660 854 2,806 329 % Total cost of revenue $ 22,095 $ 9,659 $ 12,436 129 % As a percentage of total revenue 75.3 % 27.0 % 137.2%$12.4 million, or 129%, to $9.7$22.1 million in the three months ended September 30, 2021 and 119.4% to $19.0 million in the nine months ended September 30, 2021 due2022 as compared to the significantprior year period. The following were the main contributors to the increase in cryptocurrency mining fleet requiring an increase in the usecost of MWh for cryptocurrency mining. Additionally, therevenue:significantly for both cryptocurrency miningdatacenter and power and capacity primarilyoperations due to a significant increase in the natural gas cost per dekatherm, which increased 135%approximately 104% in the three months ended September 30, 2021 and 80% during the nine months ended September 30, 20212022 as compared to the same periodsperiod of 2021.2020. The acquisitioncryptocurrency datacenter fleet requiring an increase in the use of Support added $0.9 million tomegawatt hours.21.0% and 9.8%329%, to total cost of revenue$3.7 million for the three and nine months ended September 30, 2021, respectively.2022 as compared to the prior year period primarily resulting from inclusion of the full three months of operations of Support.com in 2022 compared to only 16 days of operations included in the comparable period of the prior year.declinedwas significantly higher due primarily to the changehigher cost of natural gas combined with the lower price of bitcoin in mix of revenue.the Cryptocurrency mining generates significantly higher revenue per MWh than powerDatacenter and capacity.$4.0$4.8 million, or 264.8%88%, and $7.9to $10.2 million or 190.9%, for the three and nine months ended September 30, 2021 primarily due2022 as compared to the prior year period. The main drivers of the increase in selling, general and administrative expenses were:relatedincreased $1.1 million, or 550%, as a result of increased headcount, including the addition and expansion of executive level positions required to operating costsoperate as a public company as well as increases in order to match the growth in the operational footprint of the business.of corporate infrastructureassociated with permit renewals and environmental matters at the New York plant, legal and consulting costs associated with potential expansion opportunities and other accounting and consulting fees associated with being a public company .support the Company’s growth, including non-cash stock compensation of $0.4 millionSelling, general and $1.5 millionadministrative expenses for the three and nine months ended September 30, 2021, respectively (as2022 due to inclusion of the full three months of operations of Support.com in 2022 compared to none foronly 16 days of operations included in the same periods in 2020).comparable period of the prior year.represented costs associated with the Merger, as well asincluded professional and other fees associated with the merger transaction and becoming a publicly tradedpublic company. The Merger-relatedThese costs included $26.6decreased $29.6 million, of noncashor 99%, to $0.2 million, as these were primarily non-recurring transaction costs associated with issuance of equity instruments, whose issuance was contingent upon the successful completion of the Merger.$1.6$11.2 million, or 150.7%419%, and $2.3to $13.8 million or 71.4%, for the three and nine months ended September 30, 20212022 as compared to the prior year period primarily due to the purchase and deployment of additional miners.miners and associated infrastructure, as well as a change in depreciable lives effective July 1, 2022, resulting in higher depreciation expense. Additionally, the acquisition of SupportMerger increased depreciation and amortization by $0.2$0.3 million or 20.3% and 6.7% for the three and nine months ended September 30, 2021.(Loss)(loss) from operationsGreenidge reported lossof $11.9increased $5.2 million, and $4.7or 44%, to $17.1 million for the three and nine months ended September 30, 20212022 as compared to the three months ended September 30, 2021. The increase is primarily related to lower cryptocurrency datacenter revenue as a result of lower bitcoin prices, increases to input costs for the Cryptocurrency and datacenter and Power and capacity segments as a result of higher natural gas costs, higher depreciation due to the expansion of the datacenter operations and higher selling, general and administrative costs.of $0.5 million and $2.1was $16.6 million for the three and nine months ended September 30, 2020. The loss2022 as compared to adjusted income from operations duringof $18.1 million in the three and nine months ended September 30, 2021,2021. The adjusted loss from operations was driven by the $29.8 million and $31.1 million of Merger-related and other costs, respectively.Adjusted incomesame factors described above impacting loss from operations was $18.1 million and $26.5 million for the three and nine months ended September 30, 2021, respectively. The improvement in adjusted operating income as compared to operating loss in the 2020 periods is primarily attributable to an increase in bitcoin mining hash rate as well as operating leverage. Adjusted income from operations is a34non-GAAP performance measure.operations. A reconciliation of reported amounts to adjusted amounts can be found in the "Non-GAAP Measures and Reconciliations" section of this MD&A.(expense) income,expense, net and nine months ended September 30, 2021,2022, Greenidge incurred an increase of $5.0 million of other expense, as compared to other income in the same periods of 2020, primarily due to increased interest expense associated with the incurrence of debt to finance the expansion of the mining fleet.fleet and, to a lesser extent, a loss on sale of assets.BenefitPrior to January 27, 2021, thewas treated as a partnership for federal and staterecognized an income tax purposes. The Company recognizedprovision of $0.1 million, or an effective tax rate of (0.3)% during the three months ended September 30, 2022 and a benefit for income taxes of $5.0$(5.0) million, and $2.9 million during the three and nine months ended September 30, 2021, respectively, withor an effective tax rate of 38.7% and 48.0%, respectively.during the three months ended September 30, 2021. The effective tax rate for the three months ended September 30, 2022 was impacted by pretax losses with no associated income tax benefit as a result of a valuation allowance on net operating loss carryforwards. The effective income tax rates for the three and nine months ended September 30, 2021 benefittedbenefited from a higher tax basesbase for the deductibility of the equity-based success fees associated with the Merger. The effective tax rate for the nine months ended September 30, 2021 also includes the recognition of a deferred tax liability caused by the reorganization from an LLC to a corporation during the first quarter of 2021.Income (Loss)increased to $7.9 million and $3.1of $23.2 million for the three and nine months ended September 30, 2021, respectively,2022 as compared to $0.3 million and $2.5a net loss of $7.9 million for the three and nine months ended September 30, 2020, respectively.after-tax impact of the Merger-relatedmerger and other costs costs associated with becoming a public company and expansions costs, adjusted net (loss) income during the three months ended September 30, 20212022 would have been $12.2$(22.0) million as compared to the net loss of $0.3$12.2 million in the same period in 2020, and adjusted net income during the nine months ended September 30, 2021 would have been $17.9 million as compared to the net loss of $2.5 million during the same period in 2020.2021. Adjusted net (loss) income (loss) is a non-GAAP performance measure. A reconciliation of reported amounts to adjusted amounts can be found in the "Non-GAAP Measures and Reconciliations" section of this MD&A.Discussionsegment adjustedSegment Adjusted EBITDA provides a basis for the discussion that follows. Greenidge evaluates the performance of its reportable segments based on Adjusted EBITDA, which excludes items not indicative of ongoing business trends. The reported amounts in the table below are from the Condensed Consolidated Statements of Operations.Operations and Comprehensive (Loss) Income.Three Months Ended
September 30,Variance $ in thousands 2022 2021 $ % REVENUE Cryptocurrency Datacenter and Power Generation $ 21,885 $ 34,233 $ (12,348) (36) % Support Services 7,474 1,521 5,953 391 % Total Revenue $ 29,359 $ 35,754 $ (6,395) (18) % SEGMENT ADJUSTED EBITDA Cryptocurrency Datacenter and Power Generation $ (3,669) $ 20,973 $ (24,642) N/A Support Services 1,381 204 1,177 577 % Total Adjusted EBITDA $ (2,288) $ 21,177 $ (23,465) N/A Reconciliation to loss before income taxes: Depreciation and amortization (13,835) (2,667) Stock-based compensation (361) (411) Merger and other costs (242) (29,847) Expansion costs (183) (128) Interest expense, net (5,430) (1,009) Loss on sale of assets (759) - Consolidated loss before income taxes $ (23,098) $ (12,885)
Power Generation
Power Generation
income taxes:35MiningDatacenter and Power Generation SegmentMiningDatacenter and Power Generation segment
and amortization)
depreciation and amortization)Three Months Ended
September 30,Variance $ in thousands, except $ per MWh and average bitcoin price 2022 2021 $ % Cryptocurrency datacenter $ 18,272 $ 31,156 (12,884) (41) % Power and capacity 3,613 3,077 536 17 % Total revenue $ 21,885 $ 34,233 (12,348) (36) % MWh Cryptocurrency datacenter 158,040 87,111 70,929 81 % Power and capacity 33,262 44,915 (11,653) (26 %) Revenue per MWh Cryptocurrency datacenter $ 116 $ 358 $ (242) (68 %) Power and capacity $ 109 $ 69 $ 40 58 % Cost of revenue (exclusive of depreciation and amortization) Cryptocurrency datacenter $ 14,675 $ 5,974 $ 8,701 146 % Power and capacity $ 3,760 $ 2,831 $ 929 33 % Cost of revenue per MWh (exclusive of depreciation and amortization) Cryptocurrency datacenter $ 93 $ 69 $ 24 35 % Power and capacity $ 113 $ 63 $ 50 79 % Cryptocurrency Datacenter Metrics Bitcoins produced 866 729 137 19 % Average bitcoin price $ 21,269 $ 41,937 (20,668) (49 %) Average hash rate (EH/s) 115 % Average difficulty 83 % miningdatacenterFor its cryptocurrency mining revenue, Greenidge generates we generate electricity on-site from itsour power plant located at the New York Facility and usesuse that electricity to power ASIC miners, generating bitcoin which itthat we then exchangesexchange for U.S. dollars or holds in its wallet. Greenidge’sdollars. Our cryptocurrency miningdatacenter revenue increaseddecreased by $28.1$12.9 million, or 923.9%41%, during the three months ended September 30, 2021 and increased by $45.5 million, or 525.1%, for2022 as compared to the nine months ended September 30, 2021. Such increases wereprior year period. The decrease was primarily attributable to Greenidge'sthe 49% decline in average bitcoin price as compared to the prior year. This decrease was partially offset by an increase in hash rate from our increased mining fleet resulting in a 188.3% and 86.4%115% increase in the average hash rate during the three and nine months ended September 30, 2021, respectively.2022. The increased average hash rate, along withpartially offset by a lowerhigher average mining difficulty, duringled to us producing 866 bitcoins in the third quarter of 2021 led2022 as compared to Greenidge mining 729 bitcoins in the third quarter of 2021 as compared to 246 bitcoins in the third quarter of 2020. In comparing the nine months ended September 30, 2021 to the same period in 2020, the number of bitcoins mined increased 34.4% to 1,255 due to the increased average hash rate from the mining fleet expansion, which was partially offset the average difficulty and the halving event that occurred in May 2020 and reduced the block reward from 12.5 bitcoin per block to 6.25 bitcoin per block.2021. The increased number of bitcoins mined along withproduced was more than offset by the significantly higher49% lower average bitcoin price in 20212022, resulted in the significant growthdecline in cryptocurrency miningdatacenter revenue.As of September 30, 2021 and September 30, 2020 Greenidge had a power capacity (when not mining) of approximately 106MW and a mining capacity of approximately 44MW and 17MW, respectively. Greenidge’s power capacity is the measure of total rated net MW output of Greenidge’s power plant and represents the maximum useful output of Greenidge’s power generation facilities, whereas mining capacity is the number of rated net MW output from Greenidge’s power generation facilities devoted to bitcoin mining activity.36 revenueGreenidge sellswe sell capacity and energy and ancillary services to the wholesale power grid managed by the NYISO. Through these sales, Greenidge earnswe earn revenue in three streams, including:streams: (1) power revenue received based on the hourly price of power, (2) capacity revenue for committing to sell power to the NYISO when dispatched and (3) other ancillary service revenue received as compensation for the provision of operating reserves. Greenidge'sOur power and capacity revenue of $3.1increased $0.5 million, or 17%, to $3.6 million during the third quarter of 2021 was relatively consistent with the third quarter of 2020, but increased by $2.0 million, or 37.8%, to $7.3 million for the nine months ended September 30, 2021. Power revenue was comparatively higher in the nine months ended September 30, 2021 due to warmer weather in the month of June of 2021 as compared to 2020 and lower power demand in general in 2020 due to the COVID-19 lockdowns. For the quarter ended September 30, 2021, higher prices, signified by the higher power and capacity revenue per MWh, were offset by a decline in volume, signified by the increase in power and capacity MWh. For the nine months ended September 30, 2021, higher prices were partially offset by a decline in volume. The increase in prices were driven by higher demand caused by more extreme weather during 20212022 as compared to the prior year as result of an increase in selling price per MwH of 58% compared to the same periods in 2020 that the plant was online and the New York stay-at-home regulations during 2020, which reduced the demand for power. As the COVID-19 regulations are lifted, Greenidge does not anticipate further COVID-19 impactsperiod in the future unless further COVID-19 outbreaks require further statewide shutdowns.adjustedAdjusted EBITDA (loss) for the Cryptocurrency MiningDatacenter and Power Generation segment increaseddecreased to $21.0$(3.7) million for the third quarter of 20212022 from $0.8$21.0 million in the third quarter of 2020, and increased to $33.7 million for the nine months ended September 30, 2021 from $1.3 million for the same period in 2020.2021. The significant increase in segment adjusted EBITDAvariance was driven by the significantdecline in the price of bitcoin and increase in cryptocurrencynatural gas input costs, partially offset by the increased bitcoin mining due to the expansion of our mining fleet and significantly changed the revenue mix of the segment during the 2021 periods as compared to the 2020 periods. The revenue from cryptocurrency mining has resulted in higher adjusted EBITDA margins than power and capacity revenue, as cryptocurrency mining generates higher revenue per MWh and lower cost of revenue per MWh (exclusive of depreciation and amortization) than power and capacity revenue.miningdatacenter revenue per MWh and power and capacity revenue per MWh are used by management to consider the extent to which it will generate electricity to either mineproduce cryptocurrency or sell power to the New York wholesale power market. Cost of revenue (excluding depreciation and amortization) per MWh represents a measure of the cost of natural gas, emissions credits, payroll and benefits and other direct production costs associated with the MWhs produced to generate the respective revenue category for each MWh utilized. Depreciation and amortization costs are excluded from the cost of revenue (exclusive of depreciation and amortization) per MWh metric; therefore, not all cost of revenues for cryptocurrency miningdatacenter and power and capacity are fully reflected. To the extent any other bitcoin minerscryptocurrency datacenters are public or may go public, the cost of revenue (exclusive of depreciation and amortization) per MWh metric may not be comparable because some competitors may include depreciation in their cost of revenue figures.Support,Support.com, which constitutes the Support Services segment as of close of business on September 14, 2021. As such, there was less than a monthwere only 16 days of operations included in Greenidge'sour consolidated results in 2021, resulting inthe third quarter of 2021. Support Services had revenue of $1.5$7.5 million and segment adjustedSegment Adjusted EBITDA of $0.2$1.4 million in the three months ended September 30, 2022.Nine Months Ended
September 30,Variance $ in thousands 2022 2021 $ % Total revenue $ 98,353 $ 62,993 $ 35,360 56 % Cost of revenue (exclusive of depreciation and amortization shown below) 57,054 19,046 38,008 200 % Selling, general and administrative expenses 35,720 12,017 23,703 197 % Merger and other costs 940 31,095 (30,155) (97 %) Depreciation and amortization 22,680 5,531 17,149 310 % Impairment of long-lived assets 71,500 — 71,500 N/A Remeasurement of environmental liability 11,109 — 11,109 N/A (Loss) income from operations (100,650) (4,696) (95,954) 2043 % Other (expense) income: Interest expense, net (15,693) (1,377) (14,316) (1040) % Interest expense - related party — (22) 22 N/A (Loss) gain on sale of digital assets (15) 159 (174) N/A Loss on sale of assets (130) — (130) N/A Other income, net 200 (23) 223 N/A Total other expense, net (15,638) (1,263) (14,375) (1138 %) (Loss) income before income taxes (116,288) (5,959) (110,329) (1851) % Provision (benefit) for income taxes 15,200 (2,860) 18,060 N/A Net (loss) income $ (131,488) $ (3,099) $ (128,389) (4143 %) Adjusted Amounts (a) Adjusted (loss) income from operations $ (14,726) $ 26,527 $ (41,253) N/A Adjusted operating margin (15.0) % 42.1 % Adjusted net (loss) income $ (30,378) $ 17,868 $ (48,246) N/A Other Financial Data (a) EBITDA (loss) $ (77,915) $ 971 $ (78,886) N/A as a percent of revenues (79.2 %) 1.5 % Adjusted EBITDA $ 9,168 $ 33,668 $ (24,500) (73 %) as a percent of revenues 9.3 % 53.4 % In October 2021, Support agreed with a major customerAdjusted Amounts and Other Financial Data are non-GAAP performance measures. A reconciliation of reported amounts to terminate its contract to provide support services effectiveadjusted amounts can be found in the first quarter"Non-GAAP Measures and Reconciliations" section of 2022.this MD&A.Nine Months Ended
September 30,Variance $ in thousands 2022 2021 $ % Cryptocurrency datacenter $ 61,571 $ 54,217 $ 7,354 14 % Power and capacity 12,395 7,255 5,140 71 % Services and other 24,387 1,521 22,866 1503 % Total revenue $ 98,353 $ 62,993 $ 35,360 56 % Nine Months Ended
September 30,2022 2021 Cryptocurrency datacenter 62 % 86 % Power and capacity 13 % 12 % Services and other 25 % 2 % Total revenue 100 % 100 % major customer representedincrease was offset by lower average bitcoin prices, with prices decreasing by 29% compared to prior year and, to a lesser extent, increased difficulty rates.Nine Months Ended
September 30,Variance $ in thousands 2022 2021 $ % Cryptocurrency datacenter $ 34,795 $ 11,504 $ 23,291 202 % Power and capacity 10,955 6,688 4,267 64 % Services and other 11,304 854 10,450 1224 % Total cost of revenue $ 57,054 $ 19,046 $ 38,008 200 % As a percentage of total revenue 58.0 % 30.2 % 22%121% in the nine months ended September 30, 2022 as compared to the same period of 2021.27%other cost of revenue increased $10.5 million, or 1224%, to $11.3 million for the nine months ended September 30, 2022 as compared to the prior year period primarily resulting from inclusion of the revenuesfull nine months of operations of Support.com in 2022 compared to only 16 days of operations included in the comparable period of the Support businessprior year.threenine months ended September 30, 2022 as compared to the prior year period. The main drivers of the increase in selling, general and administrative expenses were:respectively,due to the recording of a $15.0 million charge for a valuation allowance during the nine months ended September 30, 2022 for the deferred tax assets. This was primarily related to historical net operating loss carryforwards of the Support.com business that was acquired in 2021, reduced profitability caused by the declines in the price of bitcoin and increased power costs. The effective tax rates for the nine months ended September 30, 2021 include the recognition of a deferred tax liability caused by the reorganization from an LLC to a corporation during the three months ended March 31, 2021.Nine Months Ended
September 30,Variance $ in thousands 2022 2021 $ % REVENUE Cryptocurrency Datacenter and Power Generation $ 73,966 $ 61,472 $ 12,494 20 % Support Services 24,387 1,521 22,866 1503 % Total Revenue $ 98,353 $ 62,993 $ 35,360 56 % SEGMENT ADJUSTED EBITDA Cryptocurrency Datacenter and Power Generation $ 3,886 $ 33,464 $ (29,578) (88 %) Support Services 5,282 204 5,078 2489 % Total Adjusted EBITDA $ 9,168 $ 33,668 $ (24,500) (73 %) Reconciliation to loss before income taxes: Depreciation and amortization (22,680) (5,531) Stock-based compensation (1,029) (1,474) Merger and other costs (940) (31,095) Expansion costs (2,375) (128) Interest expense, net (15,693) (1,399) Loss on sale of assets (130) — Long-lived asset impairment (71,500) — Remeasurement of environmental liabilities (11,109) — Consolidated loss before income taxes $ (116,288) $ (5,959) $ in thousands, except $ per MWh
and average bitcoin priceNine Months Ended
September 30,Variance 2022 2021 $ % Cryptocurrency datacenter $ 61,571 $ 54,217 $ 7,354 14 % Power and capacity 12,395 7,255 5,140 71 % Total revenue $ 73,966 $ 61,472 $ 12,494 20 % MWh Cryptocurrency datacenter 380,432 199,200 181,232 91 % Power and capacity 114,322 126,990 (12,668) (10 %) Revenue per MWh Cryptocurrency datacenter $ 162 $ 272 $ (110) (40 %) Power and capacity $ 108 $ 57 $ 51 89 % Cost of revenue (exclusive of depreciation and amortization) Cryptocurrency datacenter $ 34,795 $ 11,504 $ 23,291 202 % Power and capacity $ 10,955 $ 6,688 $ 4,267 64 % Cost of revenue per MWh (exclusive of depreciation and amortization) Cryptocurrency datacenter $ 91 $ 58 $ 33 57 % Power and capacity $ 96 $ 53 $ 43 82 % Cryptocurrency Datacenter Metrics Bitcoins produced 2,048 1,257 791 63 % Average bitcoin price $ 31,666 $ 44,614 $ (12,948) (29 %) Average hash rate (EH/s) 166 % Average difficulty 45 % periods priora charge of $11.1 million during the nine months ended September 30, 2022 as a result of an update to the Merger,cost estimates as part of the Company's ongoing evaluation of the site. Estimates are based on various assumptions including, but not limited to, closure and post-closure cost estimates, timing of expenditures, escalation factors, and requirements of granted permits. Additional adjustments to the environment liability may occur periodically due to potential changes in remediation requirements regarding coal combustion residuals which weremay lead to material changes in estimates and assumptions.includedbe fully recoverable. To determine recoverability of a long-lived asset, management evaluates whether the estimated future undiscounted net cash flows from the asset are less than its carrying amount. If impairment is indicated, the long-lived asset would be written down to fair value.Greenidge's consolidated resultsthe price of operations.Greenidge'sour financial information by providing measures which investors, financial analysts and management use to help evaluate the Company'sour operating performance. Items which the Company doeswe do not believe to be indicative of ongoing business trends are excluded from these calculations so that investors can better evaluate and analyze historical and future business trends on a consistent basis. Definitions37an LLC,a limited liability company, public registration of shares and associated costs), business expansion costs, fair value adjustments for certain financial liabilities (including asset retirement obligations), costs associated with debt and equity transactions, and impairment charges as they are not indicative of business operations. Adjusted EBITDA is intended as a supplemental measure of Greenidge’sour performance that is neither required by, nor presented in accordance with, GAAP. GreenidgeManagement believes that the use of EBITDA and Adjusted EBITDA provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing itsour financial measures with those of comparable companies, which may present similar non-GAAP financial measures to investors. However, you should be aware that when evaluating EBITDA and Adjusted EBITDA, Greenidgewe may incur future expenses similar to those excluded when calculating these measures. In addition, Greenidge’sour presentation of these measures should not be construed as an inference that its future results will be unaffected by unusual or non-recurring items. Greenidge’sOur computation of Adjusted EBITDA may not be comparable to other similarly titled measures computed by other companies, because all companies may not calculate Adjusted EBITDA in the same fashion.Greenidge compensatesWe compensate for these limitations by relying primarily on itsour GAAP results and using EBITDA and Adjusted EBITDA on a supplemental basis. You should review the reconciliation ofbelowabove and not rely on any single financial measure to evaluate Greenidge’sour business.Three Months Ended
September 30,Nine Months Ended
September 30,$ in thousands 2022 2021 2022 2021 Adjusted operating income (loss) (Loss) income from operations $ (17,053) $ (11,865) $ (100,650) $ (4,696) Merger and other costs 242 29,847 940 31,095 Expansion costs 183 128 2,375 128 Impairment of long-lived assets — — 71,500 — Remeasurement of environmental liability — — 11,109 — Adjusted (loss) income from operations $ (16,628) $ 18,110 $ (14,726) $ 26,527 Adjusted operating margin (56.6 %) 50.7 % (15.0) % 42.1 % Adjusted net (loss) income Net loss $ (23,177) $ (7,896) $ (131,488) $ (3,099) Merger and other costs, after tax 242 19,969 940 20,874 Expansion costs, after tax 183 93 2,375 93 Loss on sale of assets, after tax 759 — 130 — Impairment of long-lived assets, after tax — — 71,500 — Remeasurement of environmental liability, after tax — — 11,109 — Tax charge for valuation allowance — — 15,056 — Adjusted net (loss) income $ (21,993) $ 12,166 $ (30,378) $ 17,868 EBITDA (loss) and Adjusted EBITDA (loss) Net loss $ (23,177) $ (7,896) $ (131,488) $ (3,099) Provision for income taxes 79 (4,989) 15,200 (2,860) Interest expense, net 5,430 1,009 15,693 1,399 Depreciation and amortization 13,835 2,667 22,680 5,531 EBITDA (loss) (3,833) (9,209) (77,915) 971 Stock-based compensation 361 411 1,029 1,474 Merger and other costs 242 29,847 940 31,095 Expansion costs 183 128 2,375 128 Loss on sale of assets 759 — 130 — Impairment of long-lived assets — — 71,500 — Remeasurement of environmental liability — — 11,109 — Adjusted EBITDA (loss) $ (2,288) $ 21,177 $ 9,168 $ 33,668 2021, Greenidge2022, we had cash and cash equivalents and restricted cash of $51.1 million and short term investments of $0.5$38.5 million. To date, Greenidge haswe have primarily relied on debt and equity financing to fund itsour operations and to meet ongoing working capital needs and to execute on the initial stages of itsour business plan. On January 29, 2021, Greenidge completed a private placement offeringDuring the first nine months of 1,620,000 shares of series A preferred stock, at a price per share of $25.00, to certain individuals and investors for an aggregate amount of $40.5 million. On September 15, 2021, Greenidge entered into the Purchase Agreement with the Investor, pursuant to38which Greenidge has the right to sell to the Investor up to$5002022, we obtained approximately $110.3 million of shares of class A common stock, subject to certain limitations and conditions set forth in the Purchase Agreement, from time to time during the term of the Purchase Agreement. Through November 12, 2021, Greenidge has sold 1,977,500 shares to the Investor for proceeds of approximately $47.9 million, net of discounts. There can be no assurance that Greenidge will be able to sell additional shares of class A common stock on favorable terms, or at all.On October 13, 2021, Greenidge completed a registered public offering of $55.2 million, in the aggregate, of the Company’s 8.50% Senior Notes due 2026 (the “Notes”). The Notes are senior unsecured obligations of the Company and rank equal in right of payment with the Company’s existing and future senior unsecured indebtedness. The Company received net proceeds after discounts and commissions, but before expenses and payment of the structuring fee, of approximately $53.3 million. The Company intends to use the net proceeds from the offering of the Notes for general corporate purposes, including funding capital expenditures, future acquisitions, investments and working capital and repaying indebtedness.In addition to thecommitted financings noted above, on September 14, 2021, Greenidge completed the Merger, through the issuance of class A common stock, which included cash and cash equivalents of $27.1 million and short term investments of $0.5 million.Greenidgetwo different agreements described further below.itsour equity or debt securities or traditional or non-traditional credit type facilities. If Greenidge raiseswe raise additional equity financing, its ouritsour class A common stock could decline. Furthermore, if Greenidge engageswe engage in additional debt financing, the debt holders would likely have priority over itsour stockholders, on order of payment preference.Greenidgewe held a relatively small amount of digital assets for an extended period as of September 30, 2021, Greenidge’s2022, our current business strategy is to sell digital assets within a short period after earning such assets. GreenidgeWe may choose to change this strategy in the future. The average period between receipt of bitcoin and the subsequent conversion to cash is less than one day because at least 95% of the bitcoin mined each day is liquidated the same day it is mined. Greenidge’sOur liquidity is subject to volatility in both number of bitcoins mined and the underlying price of bitcoin.Greenidge’sour contractual obligations and other commitments as of September 30, 2021,2022, and the years in which these obligations are due:(1)$ in thousands Total Remainder of 2022 2023-2024 2025-2026 Thereafter Debt payments $ 212,089 $ 24,824 $ 102,791 $ 84,474 $ - Leases 273 32 241 — — Environmental obligations 22,415 — 16,500 5,915 — Natural gas transportation 15,168 474 3,792 3,792 7,110 Total $ 249,945 $ 25,330 $ 123,324 $ 94,181 $ 7,110 notes payable amounts presenteddebt payments included in the table above table include financedthe principal, obligations plus estimated contractual future interest and risk premium payments.(2)Lease obligationsamounts due. The lease payments include fixed monthly rental payments and exclude estimated revenue sharingany variable payments.(3)Represents off balance sheet arrangements to purchaseOur operating cash flows are affected by several factors including the price of bitcoin and cost of electricity and natural gas, through March 1, 2022.(4)Represents miner purchaseand based on the current price of bitcoin and electricity cost, we expect that we will require additional capital in order to meet the commitments as ofabove. During the nine months ended September 30, 2022, the Company’s profit and cash flows were impacted significantly by volatility in the prices of bitcoin and natural gas. The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and/or obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management has evaluated different options to improve its liquidity to fund the Company’s expenses and to support the Company’s debt servicing requirements. These options include, but are not limited to:reduced by deposits made asfrom sales of common stock under the original and amended Equity Purchase Agreements, of which $8.9 million proceeds, net of discounts, was received during the nine months ended September 30, 2021.The notes payable are associated with equipment finance and security agreements that financed the purchase of miners that have been delivered. These notes carry an annual interest rate of between 15% - 17%, and are repaid by way of blended payments of interest and principal, as well as an additional risk premium payment, with the final payment due 18 months from delivery date.March 2021,September 2022, Greenidge entered into an equipment lease agreement for certain mining units. In conjunction with the lease agreement, Greenidge recorded a finance lease obligation of $1.2 millionATM Agreement (defined and a right-of-use asset of $1.4 million. The lease includes obligations for a monthly fixed payment of less than $0.1 milliona revenue sharing obligation of 10% of the revenue attributable to the miners purchased. The lease ends in August 2022, at which point the equipment transfers to Greenidge.As ofsince September 30, 2021 Greenidge had outstanding commitments to purchase an additional 17,2002022 through November 11, 2022, the Company received proceeds of $1.6 million from sales of common stock under the ATM Agreement.with a remaining cash commitmentand other assets during the nine months ended September 30, 2022 for proceeds of $103.8 million, which has been included in the table above. $4.8 million.has $5.2 million of committed financing associated with these minersanticipates that existing cash resources will be funded upon delivery. These purchase commitments are cancellable onlydepleted by Greenidge;39however, if Greenidge were to cancel, Greenidge would forfeit the equipment deposits paid. The $5.2 million of committed financing for the miner purchase commitments are generally for a term of 18 months from delivery date with interest rates between 15% to 17% and require an additional risk premium payment.Since the end of the thirdfirst quarter through November 15, 2021, Greenidge had ordered an additional 12,500 S19j Pro Bitmain Antminers. The aggregateof 2023. Depending on its assumptions regarding the timing and ability to achieve more normalized levels of operating revenue, the estimated amount of required liquidity will vary significantly. Similarly, management cannot predict when or if bitcoin prices will recover to prior levels, or when energy costs may decrease. While the Company continues to work to implement the options to improve liquidity, there can be no assurance that these additional purchases was approximately $24.3 million.Greenidge announced in October 2021 that it had entered into a Purchase and Sale Agreement for land and a facility in Spartanburg, South Carolina, with a purchase price of $15.0 million.In the next twelve months, Greenidge expects that its operations and committed financing arrangementsefforts will provide sufficient cash for its operating expenses, purchase commitments, capital expenditures, interest payments and debt repayments. This is predicated on Greenidge achieving its forecast whichbe successful.(including if further COVID-19 outbreaks require further statewide shutdowns) and the other matters identified in Part I, Item 1A "Risk Factors" of our Annual Report on Form 10-K for the year ended December 31, 2021 and Part II, Item 1A. “1A "Risk Factors”" of this Quarterly Report on ForForm 10-Q. Given the lack of improvement in the above mentioned factors in the third quarter of 2022, there is uncertainty regarding the Company’s financial condition and substantial doubt about its ability to continue as a going concern for a reasonable period of time.Greenidge’sour net cash flow (in thousands) for the nine months ended September 30, 20212022 and 2020. Nine Months Ended
September 30,$ in thousands 2022 2021 Net cash (used for) provided by operating activities $ (1,226) $ 26,666 Net cash used in investing activities (122,076) (38,644) Net cash provided by financing activities 79,216 58,075 Net change in cash and cash equivalents and restricted cash (44,086) 46,097 Cash and cash equivalents at beginning of year 82,599 5,052 Cash and cash equivalents and restricted cash at end of period $ 38,513 $ 51,149 2021, as compared to $0.8 million for the nine months ended September 30, 2020.2021. The increasevariance in the operating cash flow during the first nine months of 20212022 as compared to 20202021 was driven primarily by the cash generated from net income (which islower profits caused by the net income adjusted noncash items impacting net income, such as depreciationdecrease in the price of bitcoin and amortization, equity-based Merger-related costs, deferred taxes, accretionthe higher cost of asset retirement obligations, stock-based compensation and loss on environmental liability), which improved by approximately $26.9 million.power in 2022 than in 2021.2021, as compared to $9.3 million for the nine months ended September 30, 2020.2021. For the nine months ended September 30, 2021,2022, purchases of and deposits for property and equipment significantly increased as compared to the prior year due to the Company’s expansion of itsour miner fleet and infrastructure for cryptocurrency mining. During the third quarter of 2021, Greenidge acquired Support through the issuance of common stock, and as a result acquired $27.1 million of cash held by Support.2021, as compared to $0.0 million for2021. For the nine months ended September 30, 2020.2022, the net cash provided by financing activities primarily consisted of $107.1 million of net proceeds from debt and $7.8 million of proceeds from issuance of common stock, net of issuance costs, partially offset by $35.3 million of payments of debt principal. For the nine months ended September 30, 2021, the net cash provided by financing activities consisted of $37.1notes payabledebt obligations and $3.2$1.0 million of proceeds from stock options and warrants exercised, partially offset by repayments on notes payable and finance lease obligations related to equipment finance agreements of $5.0 million and $2.3$4.4 million of costsprincipal payments on debt.the Merger.40Greenidge qualifiesit iswe are permitted to, and intendsintend to, rely on exemptions from certain disclosure requirements. For so long as Greenidge iswe are an emerging growth company, itwe will not be required to:•itsour internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act;•••Greenidge hasWe have elected to take advantage of the benefits of this extended transition period. Its financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards.Greenidgeitsour total annual gross revenues exceed $1.07 billion, (ii) the date that it becomeswe become a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of itsour class A common stock that are held by non-affiliates exceeds $700 million as of the last business day of itsour most recently completed second fiscal quarter, or (iii) the date on which it haswe have issued more than $1 billion in non-convertible debt during the preceding three year period.Critical Accounting Policies and EstimatesGreenidge believes the following accounting policies are most critical to aid you in fully understanding and evaluating this management discussion and analysis:Goodwill and Intangible Assets
As a result of the merger with Support, Greenidge has recorded $46.3 million of goodwill and $22.7 million of intangible assets based on preliminary estimates and assumptions at the date of acquisition and are subject to revision based on final information received, including appraisals and other analyses which support underlying estimates. Acquisitions are accounted for using the acquisition method which requires allocation of the purchase price to assets acquired and liabilities assumed based on estimated fair values. Any excess of the purchase price over the fair value of the assets and liabilities acquired is recorded as goodwill.For the period immediately prior to the effective date of the Merger, Greenridge was a private company, and Support’s stock price fluctuated significantly based on factors not representative of the value of its underlying operations; therefore, Greenidge used the average of its closing stock price for the first ten days of trading on the Nasdaq Exchange ($31.71 per share) to measure the value of the consideration paid to Support shareholders. As the Company finalizes the fair value of assets acquired and liabilities assumed, additional purchase price allocation adjustments may be recorded during the measurement period, but no later than one year from the date of the Merger. The Company will reflect measurement period adjustments in the period in which the adjustments are determined.The Company will be required to perform a goodwill impairment test annually, which will occur in the fourth quarter, or more frequently if events or circumstances indicate that an impairment loss may have been incurred. The applicable guidance allows an entity to first assess qualitative factors to determine if it is more likely than not that the fair value of a reporting unit is less than carrying value. If it is determined that it is more likely than not that the fair value of a reporting unit is less than carrying value then the company will estimate and compare the fair value of its reporting units to their carrying value, including goodwill. If the carrying value of goodwill is not recoverable, an impairment is recognized for the difference. Fair value is determined through the use of41projected future cash flows, multiples of earnings and sales and other factors. Such analysis requires the use of certain market assumptions and discount factors, which are subjective in nature.Due to the timing of the Merger, the Company is in the early stages of our purchase accounting process. As the Company completes this process, including the finalization of the purchase price, fair value calculations, and a more detailed assessment of Support’s business projections, any measurement period adjustments will be recorded and a goodwill impairment test will be performed. In accordance with ASC 805, Support’s assets and liabilities are recorded at fair value at September 14, 2021, and accordingly, there is no cushion between Support’s fair value and carrying value. Considering that the fair value used to determine the consideration was based upon a stock that experienced significant price fluctuations, it is possible that goodwill and intangible assets may need to be impaired at that time.Accounts ReceivableGreenidge provides credit in the normal course of business to its power customer, the NYISO, and to its customers of its Support Services segment. Greenidge performs periodic credit evaluations of its customer’s financial condition and generally does not require collateral. The NYISO makes payments, depending on the type of revenue, within seven days of usage or seven days of month end. The customers of the Support Services segment generally are invoiced monthly and make payments within 30 days of the invoice. There are currently no accounts receivable associated with cryptocurrency mining revenues.Digital AssetsDigital assets are included in current assets in the accompanying consolidated balance sheets. Digital assets are classified as indefinite-lived intangible assets in accordance with ASC 350, Intangibles – Goodwill and Other, and are accounted for in connection with Greenidge’s revenue recognition policy disclosed below. Cryptocurrencies held are accounted for as intangible assets with indefinite useful lives. An intangible asset with an indefinite useful life is not amortized but assessed for impairment annually, or more frequently, when events or changes in circumstances occur indicating that it is more likely than not that the indefinite-lived asset is impaired. Events or circumstances that may trigger an impairment assessment other than annually include but are not limited to material changes in the regulatory environment, potential technological changes in digital currencies, and prolonged or material changes in the price of bitcoin below the carrying cost of the asset. Upon determining an impairment exists, the amount of the impairment is determined as the amount by which the carrying amount exceeds its fair value, which is measured using the quoted price of the cryptocurrency at the time its fair value is being measured. In testing for impairment, Greenidge has the option to first perform a qualitative assessment to determine whether it is more likely than not that an impairment exists. If it is determined that it is not more likely than not that an impairment exists, a quantitative impairment test is not necessary. If Greenidge concludes otherwise, it is required to perform a quantitative impairment test. To the extent an impairment loss is recognized, the loss establishes the new cost basis of the asset. Subsequent reversal of impairment losses is not permitted. Greenidge assessed these digital assets and determined no impairment existed as of September 30, 2021. As of September 30, 2021, Greenidge’s digital assets consisted of approximately 29.8 bitcoins compared to 26.1 bitcoins as of December 31, 2020.Digital assets awarded to Greenidge through its mining activities are included within the operating activities in the accompanying consolidated statements of cash flows. Greenidge accounts for its gains or losses in accordance with the last in, first out (“LIFO”) method of accounting. Gains and losses from the sales of digital assets are recorded in other income (expense) in the accompanying consolidated statements of operations.While management uses available information to evaluate and recognize impairment losses on digital assets, further reductions in the carrying amounts may be necessary based on the changes in the underlying value of bitcoinEmissions Expense and CreditsGreenidge generates carbon dioxide emissions in conjunction with its energy producing activities. As a result, Greenidge incurs emissions expense and is required to purchase emission credits, which are valued at cost, to offset the liability. Greenidge participates in the Regional Greenhouse Gas Initiative (“RGGI”), which requires, by law, that Greenidge remit credits to offset 50% of Greenidge’s annual emission expense in the following year, for each of the years in the three-year control period (January 1, 2021 to December 31, 2023) with final settlement required subsequent to the three-year control period. Greenidge recognizes expense on a per ton basis, where one ton is equal to one RGGI credit. After the control period ends, Greenidge will remit credits to extinguish the remaining emission expense liability. Greenidge recognizes expense on a per ton basis, where one ton is equal to one RGGI credit. The RGGI credits are recorded on a first in, first out basis.Asset Retirement ObligationsAsset retirement obligations are legal obligations associated with the retirement of long-lived assets. The obligations represent the present value of the estimated costs for an asset’s future retirement discounted using a credit-adjusted risk-free rate and are recorded in the period in which the liability is incurred. These liabilities recognized by Greenidge relate to its landfill and the decommissioning costs of a coal ash pond that is currently only used for water discharge.42Greenidge owns and operates a landfill located on its property in the Town of Torrey, NY. As required by the NYSDEC, landfills are required to fund a trust or provide an equivalent financial commitment to cover expenses for approximately 30 years of estimated expenses to maintain the landfill after a landfill has ceased operations. As of September 30, 2021, the landfill owned by Greenidge is a fully permitted, operational landfill and acts as a leachate treatment facility. An annual report is completed by a third-party engineering firm to provide environmental compliance and calculate combined closure and post-closure costs, discounted to current year dollars. In lieu of a trust, Greenidge has negotiated with its largest equity member to maintain a letter of credit guaranteeing the payment of the liability. In accordance with ASC 410-20, Asset Retirement Obligations, Greenidge has recorded an environmental liability of $5.0 million and $4.9 million as of September 30, 2021 and December 31, 2020, respectively. The letter of credit related to this liability was for $5.0 million at September 30, 2021.Greenidge has an obligation associated with coal combustion residuals associated with the closure of a coal ash pond located on its property in the Town of Torrey, NY as coal combustion residuals are subject to Federal and State regulations. In accordance with Federal law and ASC 410-20, Asset Retirement Obligations, Greenidge recorded an asset retirement obligation of $2.4 million and $2.3 million as of September 30, 2021 and December 31, 2020, respectively. There were no changes to cash flow estimates related to the coal ash pond asset retirement obligation during the first nine months of 2021. Estimates are based on various assumptions including, but not limited to, closure and post-closure cost estimates, timing of expenditures, escalation factors, discount rates and methods for complying with coal combustion residuals regulations. Additional adjustments to the asset retirement obligations are expected periodically due to potential changes in estimates and assumptions.Cryptocurrency Mining RevenueGreenidge has entered into digital asset mining pools by executing contracts with the mining pool operators to provide computing power to the mining pool. The contracts are terminable at any time by either party and Greenidge’s enforceable right to compensation only begins when Greenidge provides computing power to the mining pool operator. In exchange for providing computing power, Greenidge is entitled to a theoretical fractional share of the cryptocurrency award the mining pool operator receives less digital asset transaction fees to the mining pool operator. Revenue is measured as the value of the fractional share of the cryptocurrency award received from the pool operator, which has been reduced by the transaction fee retained by the pool operator, for Greenidge’s pro rata contribution of computing power to the mining pool operator for the successful solution of the current algorithm.Providing computing power in digital asset transaction verification services is an output of Greenidge’s ordinary activities. The provision of providing such computing power is the only performance obligation in Greenidge’s contracts with mining pool operators. The transaction consideration Greenidge receives, if any, is noncash consideration, which Greenidge measures at fair value on the date received, which is not materially different than the fair value at the contract inception or the time Greenidge has earned the award from the pools. The consideration is all variable. Because it is not probable that a significant reversal of cumulative revenue will not occur, the consideration is constrained until the mining pool operator successfully places a block (by being the first to solve an algorithm) and Greenidge receives confirmation of the consideration it will receive, at which time revenue is recognized.Pool fees paid by miners to pooling operators are based on a fixed percentage of the theoretical bitcoin block reward and network transaction fees received by miners. Pooling fees are netted against daily bitcoin payouts. Greenidge does not expect any material future changes in pool fee percentages paid to pooling operators, however as pools become more competitive, these fees may trend lower over time.Fair value of the cryptocurrency award received is determined using the quoted price on Greenidge’s primary exchange of the related cryptocurrency at the time of receipt.There is currently no specific definitive guidance under GAAP or alternative accounting framework for the accounting for cryptocurrencies recognized as revenue or held, and management has exercised significant judgment in determining the appropriate accounting treatment. In the event authoritative guidance is enacted by the FASB, Greenidge may be required to change its policies, which could have an effect on the Company’s consolidated financial position and results of operations.Power and Capacity RevenueGreenidge recognizes power revenue at a point in time, when the electricity is delivered to the NYISO and its performance obligation is met. Greenidge recognizes revenue on capacity agreements over the life of the contract as its series of performance obligations are met as capacity to provide power is maintained.Sales tax, value-added tax, and other taxes Greenidge collects concurrent with revenue-producing activities are excluded from revenue. Incidental contract costs that are not material in the context of the delivery of goods and services are recognized as expense. There is no significant financing component in these transactions.Off-Balance Sheet Arrangements43As of September 30, 2021, Greenidge had 1,965,000 mmbtu of natural gas purchased through March 1, 2022 at an average cost of $4.68 / mmbtu, which represents an aggregate commitment of $9.2 million.442021,2022, that the disclosure controls and procedures are effective in ensuring that all material information required to be filed in this Quarterly Report on Form 10-Q has been recorded, processed, summarized and reported when required and the information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.20212022 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.these, or othersuch matters may arise and harm our business. Other than discussed below, and as set forth in Note 9 “Commitments and Contingencies – Merger-Related Litigation” of the Notes to Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q, which is incorporated herein by reference, weWe are currently not aware of any such legal proceedings or claims that we believe will have ana material adverse effect on our business, financial condition or operating results.bitcoin mining data center.cryptocurrency datacenter. We were joined in the petition as a necessary party. The petition asserts, two errors, by the Town of Torrey namely (1) a violation of General Municipal Law 239-m for failure to make the necessary referral to the County or Torrey Planning Committee prior to the Town’s approval of the site plan; and (2)among other things, a violation of the State of New York Environmental Quality Review Act for among other things, failing to identify all areas of environmental concern or scrutinizingappropriately review the potential environmental impacts of the planned expansion of our data center. The matter was adjourned, during which time the General Municipal Law referral issue was rectified, leaving only the SEQRA matter. We have successfully defended similar SEQRA claims brought by the same petitioners in past litigation. Nevertheless, we cannot predict the outcome of this litigation. On April 19, 2021,7, 2022, the Supreme Court denied the petition with prejudice, upholding the Town of Torrey Planning Board once again declared that theTorrey’s site plan application created no significant negative environmental impacts and again approvedreview on multiple, independent grounds. A notice of appeal was filed but the proposed site plan. In light ofappeal was not perfected by the recent Town action,October 20, 2022 deadline; therefore, the petitioners have amended their pleadings against the Town of Torrey and requested that the Court set a new return date to have their claims fully addressed. We believe that the petitioners’ claims against the Town of Torrey have no merit.appeal is deemed abandoned.below,in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021 together with theupdates to those risk factors or new risk factors contained in this Quarterly Report on Form 10-Q below and any other information in this Quarterly Report on Form 10-Q, including our condensed consolidated financial statements and the related notes and in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations”. The occurrence of one or more of the events or circumstances described in these risk factors, alone or in combination with other events or circumstances, may have a material adverse effect on our business, reputation, revenue, financial condition, results of operations and future prospects, in which case the market price of our common stock could decline. Unless otherwise indicated, reference in this section and elsewhere in this Quarterly Report on Form 10-Q to our business being adversely affected, negatively impacted or harmed will include an adverse effect on, or a negative impact or harm to, our business, reputation, financial condition, results of operations, revenue and our future prospects. The material and other risks and uncertainties included in our Annual Report on Form 10-K, summarized above in this Quarterly Report on Form 10-Q and described below are not intended to be exhaustive and are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our business operations. This Quarterly Report on Form 10-Q also contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in the forward-looking statements as a result of a number of factors, including the risks described below. Certain statements in the Risk Factors below are forward-looking statements. See the section titled “Cautionary Statement Regarding Forward-Looking Statements”.businesssubstantial level of indebtedness and operating planour current liquidity constraints could adversely affect our financial condition and our ability to service our indebtedness, which could negatively impact your ability to recover your investment in our common stock.altered dueimpaired;several externalcurrent and changing industry and financial market conditions;includingour operating performance, competitive developments and financial market conditions, the ability to procure equipment in a quantity, cost and timeline consistent with our business plan, the ability to identify and acquire additional locations to replicate the operating model in place at our existing cryptocurrency mining and power generation facility and the ability to integrate the Support Services segment within our overall business plan.We have developed a business plan that contemplates the anticipated completion of our build out in the Town of Torrey, New York, expansion into the Spartanburg facility, as well as the acquisition of additional power generation assets where we envision replicating our existing business model. The business plan is predicated on certain assumptions regarding many factors, someall of which include no disruption to current operations from regulatory changes requirements,are significantly affected by financial, business, economic and procurement of additional mining equipment of certain performance specifications at certain future dates and prices, as well as the acquisition of additional locations. Our business plan is46subject to change to the extent weother factors. We are not able to achieve the expected outcomes consistent withcontrol many of these factors. Given current industry and economic conditions, our current assumptions. There cancash flow may not be no assurance that we will realize the benefits of our growth strategy and business plan, including with respectsufficient to our significant capital expenditures relating to orders of mining equipment. Furthermore, we remain in the process of developing other sites to deploy this mining equipment, and any disruption in developing such sites may delay our deployment efforts. Any delay in developing other sites could delay our ability to deploy mining equipment that we receive, and materially adversely affect our results of operation, strategy and financial performance.As we continue to integrate the Support Services segment within our business model, we may elect or may be required to alter our business plans or change our business strategy with respect to the segment. Any change to our business plans or strategy will present risks related to Support’s ability to execute on these changes and may requireallow us to make additional investments in the Support Services segment, all of which could harmpay principal and interest on our results of operationsdebt and financial performance.bitcoin miningcryptocurrency datacenter operations, through acquisitions, and our efforts may not be successful.miningdatacenter companies has greatly increased in recent years. As we and other bitcoin/cryptocurrency miningdatacenter companies seek to grow their mining capacity or access additional sources of electricity to power their growing miningdatacenter operations, the acquisition of existing cryptocurrency miningdatacenter companies and standalone electricity production facilities may become an attractive avenue of growth. Currently, we source our electricity for our bitcoin mining operationscryptocurrency datacenter facility in New York from our captive 106-megawatt106 MW power generation facility located in the Town of Torrey, New York.facility. If we determine to expand our operations, we may want to do so through the acquisition of additional bitcoin or other cryptocurrency miningdatacenter businesses or electricity generating power plants. We expect thatacquired and commenced operations at a new site will commenceour Spartanburg, SC facility in 2022;December 2021; however, there can be no assurance that operationsadditional expansions will commence on the timeline indicated, or that the expected benefits and advantages of such expansion will be realized. Further attractive acquisition targets may not be available to us for a number of reasons, such as growing competition for attractive targets, economic or industry sector downturns, geopolitical tensions, regulatory changes, environmental challenges, increases in the cost of additional capital needed to close business combination or operate targets post-business combination. Our inability to identify and consummate acquisitions of attractive targets could have a material and adverse impact on our long termlong-term growth prospects, which could materially adversely affect our results of operations, strategy and financial performance.The loss of any of our management team, an inability to execute an effective succession plan, or an inability to attract and retain qualified personnel could adversely affect our results of operations, strategy and financial performance.Our operations, strategy and business depend to a significant degree on the skills and services of our management, including Jeffrey Kirt, our Chief Executive Officer, Dale Irwin, our President and Timothy Rainey, our Chief Financial Officer.At present, our management team is small, and we will need to continue to grow our management in order to alleviate pressure on our existing management team and in order to continue to develop our business and execute on any future identification and expansion into other potential power generation, cryptocurrency mining and support services opportunities. If our management, including any new hires that we may make, fails to work together effectively or to execute our plans and strategies on a timely basis, our business could be harmed. Furthermore, if we fail to execute an effective contingency or succession plan with the loss of any member of management, the loss of such management personnel may significantly disrupt our business.The loss of key members of management could inhibit our business. Our future success also depends in large part on our ability to attract, retain and motivate key management and operating personnel. As we continue to develop and expand our operations, we may require personnel with different skills and experiences, and who have a sound understanding of our business and the bitcoin industry. The market for highly qualified personnel in the industries in which we operate is very competitive, and we may be unable to attract and retain such personnel. If we are unable to attract and retain such personnel, our business could be harmed.47 are currently, and may be in the future, the subject of legal proceedings, including governmental investigations, relating to our products or services.We, or certain of our subsidiaries, have been named as a party to several lawsuits, government inquiries or investigations and other legal proceedings, and may be named in additional ones in the future. Litigation may be time consuming, expensive, and disruptive to normal business operations, and the outcome of litigation is difficult to predict. The ultimate outcome of litigation could have a material adverse effect on our and the trading price for our securities. Furthermore, litigation, regardless of the outcome, may result in significant expenditures, diversion of our management’s time and attention from the operation of the business and damage to our reputation or relationship with third parties, which could materially and adversely affect our results of operations, strategy and financial performance.bitcoin mining data center.cryptocurrency datacenter. We were joined in the petition as a necessary party. The petition asserts,asserted, among other things, a violation of the State of New York Environmental Quality Review Act for failing to identify all areas of environmental concern or appropriately review the potential environmental impacts of the planned expansion of our data center. This claim could result in litigation, may be time-consuming and costly, divert management resources, require us to change, postpone or haltOn April 7, 2022, the construction of our planned bitcoin mining data center expansion, or have other adverse effects on our business. In addition, costly and time-consuming litigation could be necessary to enforce our approved building rights.SinceSupreme Court denied the announcement of the Merger, six complaints have been filed by alleged individual stockholders of Support against Support, the individual directors of Support and, in two of the cases, Greenidge and Merger Sub in various U.S. federal district courts. The lawsuits generally allege that the Form S-4 Registration Statement filedpetition with the Securities and Exchange Commission in connection with the Merger on May 4, 2021 is misleading and/or omits certain material information. In addition, one of the lawsuits also alleges that the members of the Support board breached their fiduciary duties in negotiating and approving the Merger Agreement and that Greenidge and Merger Sub aided and abetted the Support directors’ alleged breaches of fiduciary duty. All six lawsuits seek, among other things, to enjoin the Merger, or in the event that an injunction is not entered and the Merger closes, rescission of the Merger and unspecified money damages, costs and attorneys’ and experts’ fees (see Note 13).Our Support Services segment involves direct sale and licensing of services and software to consumers and small and medium sized businesses, and it typically includes customary indemnification provisions in favor of its partners in its agreements for the distribution of its services and software. As a result, we may be subject to consumer litigation and legal proceedings related to our Support Services segment’s services and software, including putative class action claims and similar legal actions, including, but not limited to, consumer litigation and legal proceedings. We may also be subject to employee litigation and legal proceedings related to our employment practices attempted on a class or representative basis. Such litigation can be expensive and time-consuming regardless of the merits of any action and could divert management’s attention from our business. The cost of defense can be large as can any settlement or judgment in an action. Any of the foregoing could have a material adverse effect on our results of operations, strategy and financial performance.Our ability to use our net operating losses to offset future taxable income may be subject to certain limitations.As of December 31, 2020, Support had approximately $145.6 million in U.S. federal tax net operating loss (“NOLs”) carryforwards, the usage of which is subject to Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”). If a corporation undergoes an “ownership change” within the meaning of Section 382, the corporation’s net operating loss carryforwards and certain other tax attributes arising from before the ownership change are subject to limitations on use after the ownership change. In general, an ownership change occurs if there is a cumulative change in the corporation’s equity ownership by certain stockholders that exceeds fifty percentage points over a rolling three-year period. Similar rules may apply under state tax laws. The Merger resulted in an ownership change for Support. Thus, our existing NOLs may be subject to limitations arising from the previous ownership change, and if we undergo an ownership change in connection with or after this offering, our ability to utilize NOLs could be further limited by Section 382 of the Code. Future changes in our stock ownership, some of which might be beyond our control, could result in additional ownership changes under Section 382 of the Code subjecting our ability to use our NOLs to stricter limitations. For these reasons, we may not be able to utilize a material portion of the NOL carryforwards even if we attain profitability.We have a limited operating history, with operating losses as we have grown. If we are unable to sustain greater revenues than our operating costs of bitcoin mining and power generation, as well as expansion plans, we will resume operating losses, which could negatively impact our operations, strategy and financial performance.48We have undergone a transformation in recent years and began bitcoin mining in May 2019. We have experienced recurring losses from operations in prior years. Our bitcoin mining business is in its early stages, and bitcoin and energy pricing and bitcoin mining economics are volatile and subject to uncertainty. Our current strategy will continue to expose us to the numerous risks and volatility associated with the bitcoin mining and power generation sectors, including fluctuating bitcoin to U.S. dollar prices, the costs of bitcoin miners, the number of market participants mining bitcoin, the availability of other power generation facilities to expand operations and regulatory changes.If, among other things, the price of bitcoin declines or mining economics become prohibitive, we could incur future losses. Such losses could be significant as we incur costs and expenses associated with recent investments and potential future acquisitions, as well as legal and administrative related expenses. While we are closely monitoring our cash balances, cash needs and expense levels, significant expense increases may not be offset by a corresponding increase in revenue or a significant decline in bitcoin prices could significantly impact our financial performance.While we have multiple sources of revenue from our business and operations, these sources of revenue currently all depend on the single natural gas power generation facilitythat we operate. Any disruption to our single power plant would have a material adverse effect on our business and operations, as well as our results of operations and financial condition.We operate a single source natural gas power generation facility that presently comprises and supports all of our business and operations. While we realize multiple sources of revenue from our business and operations, each current source of revenue is dependent on the continuing operation of our natural gas power generation facility inprejudice, upholding the Town of Torrey, New York. Power plants involve complex operations and equipment, muchTorrey’s site plan review on multiple, independent grounds. A notice of which is subject to wear and tear in the normal course of operation. Further, equipment used in the operations of the power plant may also suffer breakdown or malfunction, physical disaster and sabotage. Substantially all of our power plant and bitcoin mining operations are operated with computer systems that may be subject to data security breaches, computer malfunction and viruses, and generally require continual software updates and maintenance. Repairing, replacing or otherwise fixing or addressing any of these or other issues may require the allocation of significant time, capital or other resources, such as technical capability, and during such period of time, we would be unable to operate our power plant and generate revenue. We may not have the adequate capital or other resources to fix or otherwise address these factors or issues in a timely manner or at all, and we may not have access to the necessary parts or equipment that are required to fix or otherwise address such factors or issues. Some of the parts and equipment necessary to operate the power plant may require long lead-times in order to acquire, either due to availability, production time or cycles, shipping or other factors, thereby making such parts or equipment difficult to acquire in a timely manner or on a cost-effective basis, if available at all. Any disruption to our single power plant would cause a suspension of revenue generating activity and would have a material adverse effect on our business and operations, as well as our results of operations and financial condition.As the aggregate amount of computing power, or hash rate, in the bitcoin network increases, the amount of bitcoin earned per unit of hash rate decreases; as a result, in order to maintain our market share, we may have to incur significant capital expenditures in order to expand our fleet of miners.The aggregate computing power of the global bitcoin network has generally grown over time and we expect it to continue to grow in the future. To the extent the global hash rate continues to increase, the market share of and the amount of bitcoin rewards paid to any fixed fleet of miners will decrease. Therefore, in order to maintain our market share, we may be required to expand our mining fleet, which may require significant capital expenditures. Such significant capital expenditures could have an adverse effect on our business operations, strategy and financial performance.The properties utilized by us in our bitcoin mining operations may experience damage, including damage not covered by insurance.Our current bitcoin mining operation in the Town of Torrey, New York is, and any future bitcoin mining operations that we establish will be, subject to a variety of risks relating to physical condition and operation, including:the presence of construction or repair defects or other structural or building damage;any noncompliance with or liabilities under applicable environmental, health or safety regulations or requirements or building permit requirements;any damage resulting from natural disasters, such as hurricanes, earthquakes, fires, floods and windstorms;damage caused by criminal actors, such as cyberattacks, vandalism, sabotage or terrorist attacks; andclaims by employees and others for injuries sustained at our properties.49Any of these could render our bitcoin mining operations and/or power generation inoperable, temporarily or permanently, and the potential impact on our business is currently magnified because we currently operate from a single location. The security and other measures we take to protect against these risks may be insufficient or unavailable. Our property insurance covers approximately $197 million per occurrence on plant, including business interruption, and $50 million for bitcoin mining equipment in all cases, subject to certain deductibles. Our insurance may not be adequate to cover the losses we suffer as a result of these risks, which could materially adversely impact our results of operations and financial condition.Our bitcoin may be subject to loss, theft or restriction on access.We are subject to the risk that some or all of our bitcoin could be lost or stolen. Cryptocurrencies are stored in cryptocurrency sites commonly referred to as “wallets” which may be accessed to exchange a holder’s cryptocurrency assets. Access to our bitcoin assets could also be restricted by cybercrime (such as a denial of service attack) against a service at which we maintain a hosted hot wallet. A hot wallet refers to any cryptocurrency wallet that is connected to the Internet. In general, hot wallets are easier to set up and access than wallets in cold storage, but they are also more susceptible to hackers and other technical vulnerabilities. Cold storage refers to any cryptocurrency wallet that is not connected to the Internet. Cold storage wallets are generally more secure than hot wallets, but they are not ideal for quick or regular transactions, and we may experience lag time in our ability to respond to market fluctuations in the price of our bitcoin. We currently engage a third-party provider to hold our bitcoin in multi-signature cold storage wallets, and such third party provider maintains secure backups to reduce the risk of malfeasance,appeal was filed but the risk of loss of our bitcoin assets cannot be wholly eliminated. We utilize hot wallets on exchangesappeal was not perfected by the October 20, 2022 deadline; therefore, the appeal is deemed abandoned.From time to liquidate daily bitcoin mining rewards (and amounts held in hot wallets are limited to one day’s worth of mining revenue, to mitigate risk of loss. Any restrictions on access to our hot wallets due to cybercrime or other reasons could limit our ability to convert bitcoin to cash.Hackers or malicious actors may attempt to steal, bitcoin, such as by attacking the bitcoin network source code, exchange miners, third-party platforms, cold and hot storage locations or software, our general computer systems or networks, or by other means. As we increase in size,time, we may become a more appealing target of hackers or other malicious actors. In addition, ifinvolved in various legal proceedings that arise in the future we hold moreordinary course of our generated bitcoin long term for investment purposes, the threat of the loss of our bitcoin to hackers would become a more substantial risk and the potential for substantial losses would grow.businessBitcoin are controlled by the possessor of both the unique public and private keys relating to the local or online digital wallet in which they are held, which wallet’s public key or address is reflected in the network’s public blockchain. We publish the public key relating to digital wallets in use when we verify the receipt of transfers and disseminate such information into the network, but we will need to safeguard the private keys relating to such digital wallets. To the extent such private keys are lost, destroyed or otherwise compromised, we will be unable to access our bitcoin and such private keys may not be capable of being restored. Such events could materially adversely impact our results of operations and financial condition.If bitcoin or other cryptocurrencies are determined to be investment securities, and we hold a significant portion of our assets in such cryptocurrency, investment securities or non-controlling equity interests of other entities, we may inadvertently violate the Investment Company Act. We could incur large losses to modify our operations to avoid the need to register as an investment company or could incur significant expenses to register as an investment company or could terminate operations altogether.Under the Investment Company Act of 1940, as amended (the “Investment Company Act”), a company may be deemed an investment company if the value of our investment securities is more than 40% of our total assets (exclusive of government securities and cash items) on an unconsolidated basis. At the present time, the Securities and Exchange Commission (the "SEC") does not deem the bitcoin that we own, acquire or mine as an investment security, and we do not believe any of the bitcoin we own, acquire or mine to be securities. Additionally, we do not currently hold a significant portion of our assets in bitcoin. However, SEC rules and applicable law are subject to change, especially in the evolving world of cryptocurrency, and further, the Investment Company Act analysis may not be uniform across all forms of cryptocurrency that we might mine or hold.If the SEC or other regulatory body were to determine that bitcoin, or any other cryptocurrency that we may mine or hold in the future, constitutes an investment security subject to the Investment Company Act, and if we were to hold a significant portion of our total assets in such bitcoin or other cryptocurrency as a result of our mining activities and/or in investments in which we do not have a controlling interest, the investment securities we hold could exceed 40% of our total assets, exclusive of cash items. Such a situation could be hastened if we choose to hold more of our mined bitcoin or other cryptocurrency rather than converting our mined bitcoin or cryptocurrency in significant part to U.S. dollars.In such an event, we could determine that we have become an investment company. Limited exclusions are available under the Investment Company Act, including an exclusion granting an inadvertent investment company a one-year grace period from registration as an investment company. In that year, we would be required to take actions to cause the investment securities held by us to be less than 40% of our total assets, which could include acquiring assets with our cash and bitcoin or other cryptocurrency on hand, liquidating our investment securities or bitcoin or seeking a no-action letter from the SEC if we are unable to acquire sufficient50assets or liquidate sufficient investment securities in a timely manner. Such actions could require significant cost, disruption to our operations or growth plans and diversion of management time and attention.If we were unable to qualify for an exemption from registration as an investment company, or fail to take adequate steps within the one-year grace period for inadvertent investment companies, we would need to register with the SEC as an investment company under the Investment Company Act or cease almost all business, and our contracts would become voidable. Investment company registration is time consuming and would require a restructuring of our business. Moreover, the operation of an investment company is very costly and restrictive, as investment companies are subject to substantial regulation concerning management, operations, transactions with affiliated persons and portfolio composition, and Investment Company Act filing requirements. The cost of such compliance would result in us incurring substantial additional expenses, and the failure to register if required would have a materially adverse impact on our operations.There has been limited precedent set for financial accounting of digital assets and so it is unclear how we will be required to account for digital asset transactions.While we record digital assets as indefinite-lived intangible assets in accordance with Accounting Standards Codification, or ASC, 350, there is currently no authoritative guidance under U.S. GAAP which specifically addresses the accounting for digital assets, including digital currencies.We recognize bitcoin related revenue when bitcoins are earned. The receipt of bitcoins is generally recorded as revenue, using the spot price of a prominent exchange at the time of daily reward and bitcoins are recorded on the balance sheet at their cost basis and are reviewed for impairment annually.A change in financial accounting standards or their interpretation could result in changes in accounting treatment applicable to our bitcoin business, which may have an adverse effect on our results of operations.If federal or state legislatures or agencies initiate or release tax determinations that change the classification of bitcoins as property for tax purposes (in the context of when such bitcoins are held as an investment), such determination could have a negative tax consequence on us.Current IRS guidance indicates that digital assets such as bitcoin should be treated and taxed as property, and that transactions involving the payment of bitcoin for goods and services should be treated as barter transactions. While this treatment creates a potential tax reporting requirement for any circumstance where the ownership of a bitcoin passes from one person to another, usually by means of bitcoin transactions (including off-blockchain transactions), it preserves the right to apply capital gains treatment to those transactions which may adversely affect our results of operations.Risks the Bitcoin and Cryptocurrency IndustryRegulatory changes or actions may alter the nature of an investment in us or restrict the use of bitcoin in a manner that adversely affects our business, prospects or operations.As bitcoin and cryptocurrencies generally have grown in both popularity and market size, governments around the world have reacted differently to them; certain governments have deemed them illegal, and others have allowed their use and trade without restriction. Based on stated efforts to curtail energy usage on mining, to protect investors or to prevent criminal activity, and in part to redirect interest into competing government-created cryptocurrencies, recent regulations have proliferated. In March 2021, a new law was proposed in India to criminalize the mining, transferring or holding of bitcoin and other cryptocurrencies, and current rules require extensive disclosure to the government of cryptocurrency holdings. At the same time, India is rumored to be developing its own centralized national digital currency. Similarly, China has also limited some mining and trading, although not possession, of cryptocurrency, ostensibly to reduce energy usage in a country representing an estimated 65% of bitcoin mining, but reports suggest such regulation is also designed, in part, to drive appetite for China’s own digital yuan. On April 16, 2021, Turkey imposed bans on the use of cryptocurrency as payment and now requires transactions of a certain size to be reported to a government agency in the wake of alleged fraud at one of Turkey’s largest exchanges. In addition, in May 2021, Iran announced a temporary ban on cryptocurrency mining as a way to reduce energy consumption amid power blackouts. Many jurisdictions, such as the United States, subject bitcoin and other cryptocurrencies to extensive, and in some cases overlapping, unclear and evolving regulatory requirements. Further, in January 2021, Russia adopted legislation to identify cryptocurrency as a digital asset and legitimize its trading, but also prohibit its use as a payment method; mining operations have also grown significantly in Russia since this time. Such varying government regulations and pronouncements are likely to continue for the near future.In the U.S., the Federal Reserve Board, U.S. Congress and certain U.S. agencies (e.g., the Commodity Futures Trading Commission, the SEC, the Financial Crimes Enforcement Network of the U.S. Treasury Department (“FinCEN”), and the Federal Bureau of Investigation) have begun to examine the operations of the bitcoin network, bitcoin users and the bitcoin exchange market. Increasing51regulation and regulatory scrutiny may result in new costs for us and our management having to devote increased time and attention to regulatory matters, change aspects of our business or result in limits on the use cases of bitcoin. In addition, regulatory developments and/or our business activities may require us to comply with certain regulatory regimes. For example, to the extent that our activities cause us to be deemed a money service business under the regulations promulgated by FinCEN under the authority of the U.S. Bank Secrecy Act, we may be required to comply with FinCEN regulations, including those that would mandate us to implement certain anti-money laundering programs, make certain reports to FinCEN and maintain certain records.Ongoing and future regulation and regulatory actions could significantly restrict or eliminate the market for or uses of bitcoin and/or materially and adversely impact our results of operation and financial condition.We are subject to risks related to Internet disruptions, which could have an adverse effect on our ability to mine bitcoin.In general, bitcoin and our business of mining bitcoin is dependent upon the Internet. A significant disruption in Internet connectivity could disrupt a currency’s network operations and have an adverse effect on the price of bitcoin and our ability to mine bitcoin, , which could, depending on the duration of the disruption, materially and adversely impact our results of operations.volatility. will depend significantly on the price of bitcoin.bitcoin because it is the only cryptocurrency asset that we currently mine. Specifically, our revenues from our bitcoin miningcryptocurrency datacenter operations are based principally on two factors: (1) our mining payouts from our third-party mining pools; and (2) the price of bitcoin. Accordingly, a decrease in the price of bitcoin will result in a decrease in our revenues. Moreover, the price of bitcoin has historically been subject to wide swings and significant volatility. This means that our operating results may be subject to significant volatility.those factors discussedother risks and uncertainties described in this section “Risk Factors”.We may not be able to compete effectively against other companies, some of whom have greater resources and experience.We may not be able to compete effectively against present or future competitors. The bitcoin industry has attracted various high-profile and well-established competitors, some of whom have substantially greater liquidity and financial resources than us. With the limited resources we have available, we may experience great difficulties in expanding and improving our network of computers to remain competitive. In addition, new ways for investors and market participants to invest in bitcoin and cryptocurrencies continue to develop, and we may be adversely affected by competition from other methods of investing in bitcoin. Competition from existing and future competitors, particularly those that have access to competitively priced energy, could result in our inability to secure acquisitions and partnerships and to successfully execute our business plan. If we are unable compete effectively, our business could be negatively affected.The impact of geopolitical and economic eventsQuarterly Report on the supply and demand for bitcoin is uncertain.Geopolitical crises may motivate large-scale purchases of bitcoin and other cryptocurrencies, which could increaseForm 10-Q. For example, the price of bitcoin ranged from a low of approximately $30,000 to a high of approximately $68,000 during 2021, and other cryptocurrencies rapidly. This may increasehas ranged from approximately $18,000 to approximately $48,000 year-to date as of September 30, 2022. Ongoing depressed cryptocurrency prices, including the likelihood of a subsequent pricerecent decrease as crisis-driven purchasing behavior dissipates. Such risks are similar to the risks of purchasing commodities in uncertain times, such as the risk of purchasing, holding or selling gold. Alternatively, as cryptocurrencies are an emerging asset class, global crises and general economic downturns may discourage investment in bitcoin as investors could focus their investment on less volatile asset classes as a means of hedging their investment risk.Bitcoin is subject to supply and demand forces. How such supply and demand will be impacted by geopolitical events is largely uncertain but could be harmful to us and our shareholders.Bitcoin miners and other necessary hardware are subject to malfunction, technological obsolescence, the global supply chain and difficulty and cost in obtaining new hardware.Our bitcoin miners are subject to malfunctions and normal wear and tear, and, at any point in time, a certain number of our bitcoin miners are typically off-line for maintenance or repair. The physical degradation of our miners will require us to replace miners that are no longer functional. Because we utilize many units of the same bitcoin miner models, if there is a model wide component malfunction whether in the hardware or the software that powers these miners, the percentage of offline miners could increase substantially, disrupting our operations. Any major bitcoin miner malfunction out of the typical range of downtime for normal maintenance and repair could cause significant economic damage to us.52Additionally, as technology evolves, we may need to acquire newer models of miners to remain competitive in the market. New miners can be costly and may be in short supply. Given the long production period to manufacture and assemble bitcoin miners and the current global semiconductor chip shortage, there can be no assurance that we can acquire enough bitcoin mining computers or replacement parts on a cost-effective basis – or at all – for the maintenance and expansion of our bitcoin mining operations. We rely on third parties, principally located in China, to supply us with bitcoin miners and shortagesprice of bitcoin, miners or their component parts, material increaseshave resulted in, bitcoin miner costs, or delays in delivery of our orders, including due to trade restrictions and COVID-19 supply chain disruptions, could significantly interrupt our plans for expanding our bitcoin mining capacity in the near term and future.Bitmain, a provider of bitcoin miners, adjusts its prices based on bitcoin mining revenues, so the cost of new machines is unpredictable but could be extremely high. As a result, at times, we may obtain Bitmain miners and other hardware from third parties at premium prices, to the extent they are available. Due to high demand and the limited number of suppliers, we must identify miners on terms we find attractive, negotiate to lock in the purchase and price and wait for delivery. As we wait for such miner delivery, we bear the risk of bitcoin price decreases and mining difficulty increases. Meanwhile, our competitors may be receiving and installing miners purchased at lower cost.This upgrading and replacement process requires substantial capital investment and we may face challenges in doing so on a timely and cost-effective basis. Shortages of bitcoin mining computers couldfurther result in, reduced bitcoin mining capacityadverse effects on our business, financial condition, results of operations and increased operating costs, which could materially delay the completion of our planned bitcoin mining capacity expansion and put us at a competitive disadvantage.We face risks and disruptions related to the COVID-19 pandemic and supply chain issues, including in semiconductors and other necessary mining components,growth prospects, which could significantly impact our operations and financial results.Our business was adversely impacted by the effects of the COVID-19 pandemic, in particularability to continue as a result of a decline in energy pricesgoing concern or to pursue our strategy at all.the availability of bitcoin miners, and may continue to be adversely impacted in the future.The COVID-19 pandemic outbreak has and may continue to adversely affect the economies of many countries, resulting in an economic downturn that may have an adverse effect on financial markets, energy and bitcoin prices, the demand for bitcoin and other factors that could impact our operating results.China has also limited the shipment of certain products in and out of its borders, which could negatively impact our ability to receive bitcoin mining equipment from our China-based suppliers. Our third-party manufacturers, suppliers, sub-contractors and customers have been disrupted by worker absenteeism, quarantines, restrictions on employees’ ability to work, office and factory closures, disruptions to ports and other shipping infrastructure, border closures, or other travel or health-related restrictions. Depending on the magnitude of such effects on our supply chain, shipments of parts for our existing miners, as well as any new miners we purchase, may be delayed. As our miners require repair or become obsolete and require replacement, our ability to obtain adequate replacements or repair parts from our manufacturer may therefore be hampered. Supply chain disruptions could therefore negatively impact our operations.In addition, multiple factors including some related to the COVID-19 pandemic have created a global semiconductor shortage. Since the inception of the pandemic, factory shutdowns and limitations due to employee illness or public health requirements have significantly slowed output, while global demand for products requiring chips increased. These 2020-2021 challenges worsened a pre-existing semiconductor and other supply shortage. Semiconductor supply has not yet rebounded, and manufacturers across all industries are waiting and driving up demand and costs. While we have already purchased the bitcoin miners for our 2021 plans, any delay or disruption in delivery of these purchased miners, or future miners necessary for our success and growth, may have a material and negative impact on our results of operations.We may not adequately respond to rapidly changing technology.Competitive conditions within the bitcoin industry require that we use sophisticated technology in the operation of our business. The industry for blockchain technology is characterized by rapid technological changes, new product developments and evolving industry standards. New technologies, techniques or products could emerge that offer better performance than the software and other technologies that we utilize, and we may have to transition to these new technologies to remain competitive. We may not be successful in implementing new technology or doing so in a cost-effective manner. During the course of implementing any such new technology into our operations, we may experience system interruptions. Furthermore, there can be no assurances that we will recognize, in a timely manner or at all, the benefits that we may expect as a result of our implementing new technology into our operations. As a result, our results of operations may suffer.A failure to properly monitor and upgrade the bitcoin network protocol could damage the bitcoin network which could, in turn, have an adverse effect on our business.53The open-source structure of the bitcoin network protocol means that the contributors to the protocol are generally not directly compensated for their contributions in maintaining and developing the protocol. As the bitcoin network protocol is not sold and its use does not generate revenues for contributors, contributors are generally not compensated for maintaining and updating the bitcoin network protocol. The lack of guaranteed financial incentive for contributors to maintain or develop the bitcoin network and the lack of guaranteed resources to adequately address emerging issues with the bitcoin network may reduce incentives to address issues adequately or in a timely manner. Because our mining activities rely on the bitcoin network, negative developments with respect to that network may have an adverse effect on our results of operations and financial condition.Over time, incentives for bitcoin miners to continue to contribute processing power to the bitcoin network may transition from a set reward to transaction fees. If the incentives for bitcoin mining are not sufficiently high, we may not have an adequate incentive to continue to mine.In general, as the number of bitcoin rewards awarded for solving a block in a blockchain decreases, our ability to achieve profitability also decreases. Decreased use and demand for bitcoin rewards may adversely affect our incentive to expend processing power to solve blocks. If the bitcoin rewards for solving blocks and transaction fees are not sufficiently high, fewer bitcoin miners will mine. At insufficiently attractive rewards, our costs of operations in total may exceed our revenues from bitcoin mining.To incentivize bitcoin miners to continue to contribute processing power to the bitcoin network, such network may either formally or informally transition from a set reward to transaction fees earned upon solving for a block. This transition could be accomplished either by bitcoin miners independently electing to record in the blocks they solve only those transactions that include payment of a transaction fee or by the bitcoin network adopting software upgrades that require the payment of a minimum transaction fee for all transactions. If as a result transaction fees paid for bitcoin transactions become too high, bitcoin users may be reluctant to transfer bitcoin orcommercial outlets accept bitcoin as a means of payment, and existing users may be motivated to hold existing bitcoin and switch fromconsumers’ payment by bitcoin to another digital assetsuch retail and commercial outlets remains limited. Conversely, a significant portion of bitcoin demand is generated by speculators and investors seeking to profit from the short- or back to fiatlong-term holding of bitcoin. Many industry commentators believe that bitcoin’s best use case is as a store of wealth, rather than as a currency for transactions, diminishingand that other cryptocurrencies having better scalability and faster settlement times will better serve as currency. This could limit bitcoin’s acceptance as transactional currency. A lack of expansion by bitcoin into retail and commercial markets, or a contraction of such use, may result in increased volatility or a further reduction in the aggregate amountprice of available transaction fees for bitcoin, miners. Such reduction would adversely impact our resultseither of operations and financial condition.Incorrect or fraudulent cryptocurrency transactions may be irreversible.It is possible that, through computer or human error, theft or criminal action, our cryptocurrency could be transferred in incorrect amounts or to unauthorized third parties or accounts. In general, cryptocurrency transactions are irrevocable, and stolen or incorrectly transferred cryptocurrencies may be irretrievable, and we may have extremely limited or no effective means of recovering such cryptocurrencies. As a result, any incorrectly executed or fraudulent bitcoin transactionswhich could adversely affect our business.The bitcoin reward for successfully uncoveringresults of operations.block will halve several times in the future, and bitcoin value may not adjust to compensate us for the reduction in the rewards we receive from ourbitcoin mining efforts.Halving is a process designed to control the overall supply and reduce the risk of inflation in cryptocurrencies using a proof of work consensus algorithm. At a predetermined block, the bitcoin mining reward is cut in half, hence the term “halving.” For bitcoin, the reward was initially set at 50 bitcoin currency rewards per block and this was cut in half to 25 on November 28, 2012 at block 210,000, then again to 12.5 on July 9, 2016 at block 420,000. The most recent halving for bitcoin occurred on May 11, 2020 at block 630,000 and the reward was reduced to 6.25. It is expected that the next halving will likely occur in 2024. This process will reoccur until the total amount of bitcoin currency rewards issued reaches 21 million, which is expected around the year 2140. Bitcoin has had a history of price fluctuations around the halving of its rewards, and there can be no assurance that any price change will be favorable or would compensate for the reduction in bitcoin mining reward in connection with a halving. If the award of bitcoin or a proportionate decrease in bitcoin mining difficulty does not follow these anticipated halving events, the revenue we earn from our bitcoin mining operations would see a corresponding decrease, and we may not have an adequate incentive to continue bitcoin mining.We may not be able to realize the benefits of forks, and forks in a digital asset network may occur in the future which may affect the value of bitcoin held by us.To the extent that a significant majority of users and miners on a cryptocurrency network install software that changes the cryptocurrency network or properties of a cryptocurrency, including the irreversibility of transactions and limitations on the mining of new cryptocurrency, the cryptocurrency network would be subject to new protocols and software. However, if less than a significant majority of users and miners on the cryptocurrency network consent to the proposed modification, and the modification is not compatible with the software prior to its modification, a “fork”result of the network would occur, with one prong of the network running the pre-modified software and the other running the modified software. The effect of such a fork would be the existence of two versions of the cryptocurrency running in parallel, yet lacking interchangeability and necessitating exchange-type transaction to convert currencies between the two forks. After a fork, it may be unclear which fork represents the original asset and which is the new asset.54If we hold bitcoin at the time of a hard fork into two cryptocurrencies, industry standards would dictate that we would be expected to hold an equivalent amount of the old and new assets following the fork. However, we may not be able to secure or realize the economic benefit of the new asset. Our business may be adversely impacted by forks in the bitcoin network.The further development and acceptance of digital asset networks and other digital assets, which represent a new and rapidly changing industry, are subject to a variety of factors that are difficult to evaluate. The slowing or stopping of the development or acceptance of digital asset systems may adversely affect an investment in us.The use of cryptocurrencies to, among other things, buy and sell goods and services and complete transactions, is part of a new and rapidly evolving industry that employs cryptocurrency assets, including bitcoin, based upon a computer-generated mathematical and/or cryptographic protocol. Large-scale acceptancedepressed price of bitcoin as a means of payment has not, and may never, occur. The growth of this industry in general, and the use of bitcoin in particular, is subjectcompared to aits historical high, degree of uncertainty, and the slowing or stopping of the development or acceptance of developing protocols may occur unpredictably. The factors include, but are not limited to:continued worldwide growth in the adoption and use of bitcoin as a medium to exchange;governmental and quasi-governmental regulation of bitcoin and its use, or restrictions on or regulation of access to and operation of the bitcoin network or similar cryptocurrency systems;changes in consumer demographics and public tastes and preferences;the maintenance and development of the open-source software protocol of the network;the increased consolidation of contributors to the bitcoin blockchain through bitcoin mining pools;the availability and popularity of other cryptocurrencies and other forms or methods of buying and selling goods and services, including new means of using fiat currencies;the use of the networks supporting cryptocurrencies for developing smart contracts and distributed applications;general economic conditions and the regulatory environment relating to cryptocurrencies;environmental restrictions on the use of electricity to mine bitcoin and a resulting decrease in global bitcoin mining operations;an increase in bitcoin transaction costs and a resultant reduction in the use of and demand for bitcoin; andnegative consumer sentiment and perception of bitcoin specifically and cryptocurrencies generally.The outcome of any of these factors could have negative effects on our results of operations and financial condition.It is possible that cryptocurrencies other than bitcoin could have features that make them more desirable to a material portion of the cryptocurrency user base and thisindustry has experienced increased credit pressures that could result in a reduction in demandadditional demands for bitcoin, which could have a negative impact on the price of bitcoin and adversely affect us.Bitcoin holds a “first-to-market” advantage overcredit support by third parties or decisions by banks, surety bond providers, investors or other cryptocurrencies. This first-to-market advantage is driven in large part by having the largest user base and, more importantly, the largest combined mining power in usecompanies to securereduce or eliminate their respective blockchains and transaction verification systems. More users and miners makes a cryptocurrency more secure, which makes it more attractive to new users and miners, resulting in a network effect that strengthens this first-to-market advantage.Despite the first-to-market advantage of the bitcoin network over other cryptocurrency networks, it is possible that another cryptocurrency could become comparatively more popular. If an alternative cryptocurrency obtains significant market share—either in market capitalization, mining power or use as a payment technology—this could reduce bitcoin’s market share and value. Substantially all of our mining revenue is derived from mining bitcoin and, while we may mine other cryptocurrencies in the future, we have no plans to do so currently and may incur significant costs if we choose to do so.For example, our current application-specific integrated circuit machines (i.e., our “miners”) are principally utilized for mining bitcoin and cannot mine other cryptocurrencies that are not mined utilizing the SHA-256 algorithm. As a result, the emergence of a cryptocurrency that erodes bitcoin’s market share and value could have a material adverse effect on our results of operations and financial condition.We may be adversely affected by competition from other methods of investing in bitcoin.55We compete with other users and/or companies that are mining bitcoin or providing investors exposure to bitcoin without direct purchases of bitcoin and with other potential financial vehicles linked to cryptocurrency, including securities backed by or linked to bitcoin through entities similar to it. Market and financial conditions, and other conditions beyond our control, may make it more attractive to invest in such other entities, or to invest in bitcoin or other cryptocurrency directly, as opposed to investing in us. Conversely, given the nascence of cryptocurrency market within the broader investment market, investors may associate entities involved in cryptocurrency mining, trading or related services with each other, and thus, public reports of challenges at any of such other entities may have a negative impact on our business. Finally, the emergence of other financial vehicles and exchange-traded funds have been scrutinized by regulators and such scrutiny and any negative impressions or conclusions resulting from such scrutiny could be applicable to us and impact our business. Such circumstances could have a material adverse effect on our results of operations and financial condition.We are subject to momentum pricing risk.Momentum pricing typically is associated with growth stocks and other assets whose valuation, as determined by the investing public, accounts for anticipated future appreciation in value. Cryptocurrency market prices are determined primarily using data from various exchanges, over-the-counter markets, and derivative platforms. Momentum pricing may have resulted, and may continue to result, in speculation regarding future appreciation in the value of cryptocurrencies and bitcoin in particular, inflating and making their market prices more volatile. As a result, they may be more likely to fluctuate in value due to changing investor confidence in future appreciation (or depreciation) in their market prices, which could adversely affect the value of bitcoin mined by us, which could lead to an adverse effect on our results of operations and financial condition.Our reliance on third-party mining pool service providers for our mining payouts may have a negative impact on our business.We use third–party mining pools to receive our mining rewards from the network. Mining pools allow miners to combine their processing power, increasing their chances of solving a block and getting paid by the network. The rewards are distributed by the pool operator, proportionally to our contribution to the pool’s overall mining power used to generate each block. Should a pool operator’s system suffer downtime for any reason, including, as a result of a cyber-attack, software malfunction or other similar issues for any reason, it would negatively impact our ability to receive revenue. Furthermore, we are dependent on the accuracy of the mining pool operator’s record keeping to accurately record the total processing power provided to the pool for a given bitcoin mining application in order to assess the proportion of that total processing power we provided. While we have internal methods of tracking both our power provided and the total used by the pool, the mining pool operator uses our own record-keeping to determine our proportion of a given reward. We have little means of recourse against the mining pool operator if we determine the proportion of the reward paid out to us by the mining pool operator is incorrect, other than leaving the pool. If we are unable to consistently obtain accurate proportionate rewards from our mining pool operators, we may experience reduced reward for our efforts, which would have an adverse effect on our results of operations and financial condition.Banks and financial institutions may not provide bank accounts, or may cut off certain banking or other financial services, to cryptocurrency investors or businesses that engage in bitcoin-related activities or that accept bitcoin as payment.A number of companies that engage in bitcoin and/or other cryptocurrency-related activities have been unable to find banks or financial institutions that are willing to provide them with bank accounts and other services. Similarly, changing governmental regulations about the legality of transferring or holding bitcoin and other cryptocurrency may prompt other banks and financial institutions to close existing bank accounts or discontinue banking or other financial services to such companies in the cryptocurrency industry or even investors with accounts for transferring, receiving or holding their cryptocurrency. Specifically, China already restricts financial institutions from holding, trading or facilitating transactions in bitcoin. Similarly, other countriesas a whole, including our company. These credit pressures have proposed cryptocurrency legislation that could have a significant impact on the ability to utilize banking services in such countries for cryptocurrency. Both India and China, among other countries, are reportedly driving toward the development and adoption of a national digital currency – and taking legislative action that could be viewed as disadvantaging to private cryptocurrencies in the process.Should such rules and restrictions continue or proliferate, we may not only be unable to obtain or maintain these services for our business but also experience business disruption if our necessary commercial partners, such as bitcoin mining pools or miner manufacturers, cannot conduct their businesses effectively due to such regulations. The difficulty that many businesses that provide bitcoin and/or derivatives on other cryptocurrency-related activities havehad, and may continue to have, in finding banks and financial institutions willing to provide them services may diminish the usefulness of bitcoin as a payment system and harm public perception of bitcoin. If we are unable to obtain or maintain banking services formaterial impact on our business, as a result ofincluding, for example, banks, investors and other companies reducing or eliminating their exposure to the cryptocurrency industry, which could materially and adversely impact our bitcoin-related activities, ourbusiness, financial condition and results of operations and financial condition could be materially adversely affected.Blockchain technology may expose us to specially designated nationals or blocked persons or cause us to violate provisions of law.56We are subject to the rules enforced by The Office of Financial Assets Control of the US Department of Treasury (“OFAC”), including regarding sanctions and requirements not to conduct business with persons named on its specially designated nationals list. However, because of the pseudonymous nature of blockchain transactions, we may inadvertently and without our knowledge engage in transactions with persons named on OFAC’S specially designated nationals list.Our operations and financial performance may be impacted by fuel supply disruptions, price fluctuations in the wholesale power and natural gas markets, and fluctuations in other market factors that are beyond our control.Our power generation depends on our purchases of fuel and other products consumed during the production of electricity from a number of suppliers. Our operations and financial performance generally may be impacted by changes in the supply of fuel and other required products, price fluctuations in the wholesale power and natural gas markets, and other market factors beyond our control.Delivery of these fuels to our facilities is dependent upon fuel transmission or transportation infrastructure, storage and inventory of fuel stocks, as well as the continuing financial viability of contractual counterparties. As a result, we are subject to the risks of disruptions or curtailments in the production of power at our generation facility if fuel is limited or unavailable at any price, if a counterparty fails to perform, or if there is a disruption in the fuel delivery infrastructure. Disruption in the delivery of fuel, including disruptions as a result of weather, transportation difficulties, global demand and supply dynamics, labor relations, environmental regulations or the financial viability of fuel suppliers, could adversely affect our ability to operate our facilities, which could result in lower power sales and/or higher costs to our bitcoin mining operations and thereby adversely affect our results of operations.Separate from supply, market prices for power, capacity, ancillary services, natural gas, and oil are volatile, unpredictable and tend to fluctuate substantially. Disruptions in our fuel supplies may require us to find alternative fuel sources at higher costs, to find other sources of power to deliver to counterparties at a higher cost, or to pay damages to counterparties for failure to deliver power as contracted. Unlike most other commodities, electric power can only be stored on a very limited basis and generally must be produced concurrently with its use. As a result, power prices and our costs are subject to significant volatility due to supply and demand imbalances, especially in the day-ahead and spot markets. We buy significant quantities of fuel on a short-term or spot market basis. Prices for the natural gas that we purchase fluctuate, sometimes rising or falling significantly over a relatively short period of time. The price we can obtain for the sale of power may not rise at the same rate, or may not rise at all, to match a rise in fuel or delivery costs. Further, any changes in the costs of natural gas or transportation rates, changes in the relationship between such costs and the market prices of power, or an inability to procure fuel for physical delivery at prices that we consider favorable could all adversely affect our operations, the costs of meeting our obligations, and the profitability of our bitcoin mining, and thus, our operations and financial performance. Volatility in market prices for fuel and electricity may result from a number of factors outside of our control, including:changes in generation capacity in our markets, including the addition of new supplies of power as a result of the development of new plants, expansion of existing plants, the continued operation of uneconomic power plants due to state subsidies, or additional transmission capacity;disruption to, changes in or other constraints or inefficiencies of electricity, fuel or natural gas transmission or transportation;electric supply disruptions, including plant outages and transmission disruptions;changes in market liquidity;weather conditions, including extreme weather conditions and seasonal fluctuations, including the effects of climate change;changes in commodity prices and the supply of commodities, including but not limited to natural gas and oil;changes in the demand for power or in patterns of power usage, including the potential development of demand-side management tools and practices, distributed generation, and more efficient end-use technologies;development of new fuels, new technologies and new forms of competition for the production of power;fuel price volatility;changes in capacity prices and capacity markets.federal, state and foreign governmental environmental, energy and other regulation and legislation, including changes therein and judicial decisions interpreting such regulations and legislation;57the creditworthiness and liquidity of fuel suppliers and/or transporters and their willingness to do business with us; andgeneral economic and political conditions.Such factors and the associated fluctuations in power and natural gas prices have affected our wholesale power generation profitability and cost of power for bitcoin mining activities in the past and will continue to do so in the future.Changes in technology may negatively impact the value of our Town of Torrey, New York power plant and any future power plants.Research and development activities are ongoing in the industry to provide alternative and more efficient technologies to produce power. There are alternate technologies to supply electricity, most notably fuel cells, micro turbines, batteries, windmills and photovoltaic (solar) cells, the development of which are currently being subsidized and expanded by the State of New York, where we currently operate (as well as by state or local governments in areas where we may operate in the future), to address global climate change concerns. It is possible that technological advances will reduce the cost of alternative generation to a level that is equal to or below that of certain central station production. Also, as new technologies are developed and become available, the quantity and pattern of electricity usage by customers could decline, with a corresponding decline in revenues derived by generators. These alternative energy sources could result in a decline to the dispatch and capacity factors of our power plant located in the town of Torrey, New York. As a result of these factors, the value of our generation facilities could be significantly reduced.We sell capacity, energy and ancillary services to the wholesale power grid managed by the NYISO. Our business may be affected by the actions of nearby states or other governmental actors in the competitive wholesale marketplace.We sell capacity, energy and ancillary services to the wholesale power grid managed by the NYISO. The competitive wholesale marketplace may be impacted by out-of-market subsidies provided by states or state entities, including bailouts of uneconomic nuclear plants, imports of power from Canada, renewable mandates or subsidies, mandates to sell power below our cost of acquisition and associated costs, as well as out-of-market payments to new or existing generators. These out-of-market subsidies to existing or new generation undermine the competitive wholesale marketplace, which can lead to decreased energy market revenues or premature retirement of existing facilities, including those owned by us. If these measures continue, capacity and energy prices may be suppressed, and we may not be successful in our efforts to insulate the competitive market from this interference. Our wholesale power revenue may be materially impacted by rules or regulations that allow regulated utilities to participate in competitive wholesale markets or to own and operate rate-regulated facilities that provide capacity, energy and ancillary services that could be provided by competitive market participants.The availability and cost of emission allowances could adversely impact our costs of operations.We are required to maintain, through either allocations or purchases, sufficient emission allowances for SO2, CO2 and NOx to support our operations in the ordinary course of operating our power generation facilities. These allowances are used to meet the obligations imposed on us by various applicable environmental laws. If our operational needs require more than our allocated allowances, we may be forced to purchase such allowances on the open market, which could be costly. If we are unable to maintain sufficient emission allowances to match our operational needs, we may have to curtail our operations so as not to exceed our available emission allowances or install costly new emission controls. As we use the emission allowances that we have purchased on the open market, costs associated with such purchases will be recognized as operating expense. If such allowances are available for purchase, but only at significantly higher prices, the purchase of such allowances could materially increase our costs of operations in the affected markets.Our financial performance could be materially and adversely affected if energy market participants continue to construct additional generation facilities (i.e., new-build) or expand or enhance existing generation facilities despite relatively low power prices and such additional generation capacity results in a reduction in wholesale power prices or more competition from bitcoin mining competitors with access to cheaper supplies of electricity.Given the overall attractiveness of the markets in which we operate, and certain tax benefits associated with renewable energy, among other matters, energy market participants have continued to construct new generation facilities (i.e., new-build) or invest in enhancements or expansions of existing generation facilities despite relatively low wholesale power prices. If this market dynamic continues, and/or if our bitcoin mining competitors begin to build or acquire their own power plants to fuel their bitcoin mining operations, our results of operations and financial condition could be materially and adversely affected if such additional generation capacity results in a cheaper supply of electricity to our bitcoin mining competitors or lower prices at which we sell capacity, energy or ancillary services to the wholesale power grid.58Maintenance, expansion and refurbishment of power generation facilities involve significant risks that could result in unplanned power outages or reduced output and could have a material adverse effect on our revenues, results of operations, cash flows and financial condition.Our facilities require periodic maintenance and repair. Any unexpected failure, including failure associated with breakdowns or forced outages, and any related unanticipated capital expenditures could result in reduced profitability from both loss of bitcoin mining operations and power generation. Such unexpected outages have occurred in the past and may occur in the future, due to factors both within and outside of our control. We can give no assurances that outages involving our power plant will not occur in the future, or that any such outage would not have a negative effect on our business and results of operations. In addition, we cannot be certain of the level of capital expenditures that will be required due to changing environmental laws (including changes in the interpretation or enforcement thereof), needed facility repairs and unexpected events (such as natural disasters or terrorist attacks). Unexpected capital expenditures could have a material adverse effect on our liquidity and financial condition. If we significantly modify power generation equipment, we may be required to install the best available control technology or to achieve the lowest achievable emission rates as such terms are defined under the new source review provisions of the Clean Air Act of 1963, which would likely result in substantial additional capital expenditures.Operation of power generation facilities involves significant risks and hazards that could disrupt or have a material adverse effect on our revenues and results of operations, and we may not have adequate insurance to cover these risks and hazards. Our employees, contractors, customers and the general public may be exposed to a risk of injury due to the nature of our operations.The conduct of our operations, including operation of our power plant, information technology systems and other assets is subject to a variety of inherent risks. These risks include the breakdown or failure of equipment, accidents, potential physical injury, hazardous spills and exposures, fires, property damage, security breaches, viruses or outages affecting information technology systems, labor disputes, obsolescence, delivery/transportation problems and disruptions of fuel supply, performance below expected levels or other financial liability, and may be caused to or by employees, customers, contractors, vendors, contractual or financial counterparties, other third parties, weather events or acts of God.Operational disruptions or similar events may impact our ability to conduct our businesses efficiently and lead to increased costs, expenses or losses. Planned and unplanned outages at our power plants may require us to curtail operation of the plant. Any reduced power supply could also have a negative impact on the cost structure of our bitcoin mining operations.These and other hazards can cause significant personal injury or loss of life, severe damage to and destruction of property, plant and equipment, contamination of, or damage to, the environment and suspension of operations. Further, the employees and contractors of our operating affiliates work in, and customers and the general public may be exposed to, potentially dangerous environments at or near our operations. As a result, employees, contractors, customers and the general public are at risk for serious injury, including loss of life.The occurrence of one or more of these events may result in us or our affiliates being named as a defendant in lawsuits asserting claims for substantial damages, including for environmental cleanup costs, personal injury and property damage and fines and/or penalties. We maintain an amount of insurance protection that we consider adequate, but we cannot provide any assurance that our insurance will be sufficient or effective under all circumstances and against all hazards or liabilities to which we may be subject and, even if we do have insurance coverage for a particular circumstance, we may be subject to a large deductible and maximum cap. A successful claim for which we are not fully insured could hurt our financial results and materially harm our financial condition. Further, due to rising insurance costs and changes in the insurance markets, we cannot provide any assurance that our insurance coverage will continue to be available at all or at rates or on terms similar to those presently available. Any losses not covered by insurance could have a material adverse effect on our financial condition, results of operations or cash flows.Our business is subject to substantial energy regulation and may be adversely affected by legislative or regulatory changes relating to climate change or policies regarding cryptocurrency mining, as well as liability under, or any future inability to comply with, existing or future energy regulations or requirements.Our business is subject to extensive U.S. federal, state and local laws. Compliance with, or changes to, the requirements under these legal and regulatory regimes may cause us to incur significant additional costs or adversely impact our ability to continue operations as usual or compete on favorable terms with competitors. Failure to comply with such requirements could result in the shutdown of a non-complying facility, the imposition of liens, fines, and/or civil or criminal liability and or costly litigations before the agencies and/or in state of federal court. Changes to these laws and regulations could result in temporary or permanent restrictions on certain operations at our facilities, including power generation or use in connection with cryptocurrency mining, and compliance with, or opposing such regulation, may be costly.59The regulatory environment has undergone significant changes in the last several years due to state and federal policies affecting wholesale competition and the creation of incentives for the addition of large amounts of new renewable generation and, in some cases, transmission. These changes are ongoing, and we cannot predict the future design of the wholesale power markets or the ultimate effect that the changing regulatory environment will have on our business. In addition, in some of these markets, interested parties have proposed material market design changes, including the elimination of a single clearing price mechanism, as well as proposals to reinstate the vertically-integrated monopoly model of utility ownership or to require divestiture by generating companies to reduce their market share. If competitive restructuring of the electric power markets is reversed, discontinued, delayed or materially altered, our business prospects and financial results could be negatively impacted. In addition, since 2010, there have been a number of reforms to the regulation of the derivatives markets, both in the United States and internationally. These regulations, and any further changes thereto, or adoption of additional regulations, including any regulations relating to position limits on futures and other derivatives or margin for derivatives, could negatively impact our ability to hedge our portfolio in an efficient, cost-effective manner by, among other things, potentially decreasing liquidity in the forward commodity and derivatives markets or limiting our ability to utilize non-cash collateral for derivatives transactions.Our cost of compliance with existing and new environmental laws could have a material adverse effect on us.We and our affiliates are subject to extensive environmental regulation by governmental authorities, including the United States Environmental Protection Agency (the “EPA”), and state environmental agencies and/or attorneys general. We may incur significant additional costs beyond those currently contemplated to comply with these regulatory requirements. If we fail to comply with these regulatory requirements, we could be forced to reduce or discontinue operations or become subject to administrative, civil or criminal liabilities and fines. Existing environmental regulations could be revised or reinterpreted, new laws and regulations could be adopted or become applicable to us or our facilities, and future changes in environmental laws and regulations could occur, including potential regulatory and enforcement developments related to air emissions, all of which could result in significant additional costs beyond those currently contemplated to comply with existing requirements. Any of the foregoing could have a material adverse effect on results of operations and financial condition.The EPA has recently finalized or proposed several regulatory actions establishing new requirements for control of certain emissions from certain sources, including electricity generation facilities. In the future, the EPA may also propose and finalize additional regulatory actions that may adversely affect our existing generation facilities or our ability to cost-effectively develop new generation facilities. There is no assurance that the currently installed emissions control equipment at the natural gas-fueled generation facilities owned and operated by us will satisfy the requirements under any future EPA or state environmental regulations. Future federal and/or state regulatory actions could require us to install significant additional emissions control equipment, resulting in potentially material costs of compliance for our generation units, including capital expenditures, higher operating and fuel costs and potential production curtailments. These costs could have a material adverse effect on results of operations and financial condition.We may not be able to obtain or maintain all required environmental regulatory approvals. If there is a delay in obtaining any required environmental regulatory approvals, if we fail to obtain, maintain or comply with any such approval or if an approval is retroactively60disallowed or adversely modified, the operation of our generation facilities could be stopped, disrupted, curtailed or modified or become subject to additional costs. Any such stoppage, disruption, curtailment, modification or additional costs could have a material adverse effect on results of operations and financial condition.In addition, we may be responsible for any on-site liabilities associated with the environmental condition of facilities that we have acquired, leased, developed or sold, regardless of when the liabilities arose and whether they are now known or unknown. In connection with certain acquisitions and sales of assets, we may obtain, or be required to provide, indemnification against certain environmental liabilities. Another party could, depending on the circumstances, assert an environmental claim against us or fail to meet its indemnification obligation to us. Such events could have an adverse effect on our results of operations and financial conditionWe could be materially and adversely affected if current regulations are implemented or if new federal or state legislation or regulations are adopted to address global climate change, or if we are subject to lawsuits for alleged damage to persons or property resulting from greenhouse gas emissions.There is attention and interest nationally and internationally about global climate change and how greenhouse gas emissions, such as CO2, contribute to global climate change. Over the last several years, the U.S. Congress and state and federal authorities have considered and debated several proposals intended to address climate change using different approaches, including a cap on carbon emissions with emitters allowed to trade unused emission allowances (cap-and-trade), a tax on carbon or greenhouse gas emissions, limits on the use of generated power in connection with cryptocurrency mining, incentives for the development of low-carbon technology and federal renewable portfolio standards. A number of federal court cases have been filed in recent years asserting damage claims related to greenhouse gas emissions, and the results in those proceedings could establish adverse precedent that might apply to companies (including us) that produce greenhouse gas emissions. Our results of operations and financial condition could be materially and adversely affected if new federal and/or state legislation or regulations are adopted to address global climate change or if we are subject to lawsuits for alleged damage to persons or property resulting from greenhouse gas emissions.Risks Related to Our Support Services SegmentOur Support Services segment's financial condition and results of operations may vary from quarter to quarterSupport’s quarterly results of operations have fluctuated in the past and could do so in the future. Fluctuations in results of operations of our Support Services segment may be due to a number of factors, including, but not limited to, those listed below and those identified throughout this section:The performance of its partners, including the success of its partners in attracting end users of its products, which can impact the amount of revenue it derives;Change, or reduction in or discontinuance of its programs with clients and partners;Cancellations, rescheduling or deferrals of significant customer products or service programs;Its reliance on a small number of partners for a substantial majority of its revenue;Its ability to successfully license and grow revenue related to its SUPERAntiSpyware® software, Guided Paths®, Support.com Cloud and its service offerings;The timing of its sales to its clients and its partners’ resale of its products to end users and its ability to enter into new sales with partners and renew existing programs with its clients and partners;The availability and cost-effectiveness of advertising placements for its software products and services and its ability to respond to changes in the advertising markets in which it participates;The efficiency and effectiveness of its technology specialists;Its ability to effectively match staffing levels with service volumes on a cost-effective basis;Its ability to manage contract labor;Its ability to hire, train, manage and retain its home-based customer support specialists and enhance the flexibility of its staffing model in a cost-effective fashion and in quantities sufficient to meet forecast requirements;61Its ability to manage costs under its self-funded health insurance program;Usage rates on the subscriptions it offers;Its ability to maintain a competitive cost structure for its organization;The rate of expansion of its offerings and its investments therein;Changes in the markets for computers and other technology devices relating to unit volume, pricing and other factors, including changes driven by declines in sales of personal computers and the growing popularity of tablets, and other mobile devices and the introduction of new devices into the connected home;Its ability to adapt to its clients’ needs in a market space defined by frequent technological change;Severe financial hardship or bankruptcy of one or more of its major clients;The amount and timing of operating costs and capital expenditures in its business;Failure to protect its intellectual property; andPublic health or safety concerns, medical epidemics or pandemics, such as COVID-19, and other natural- or man-made disasters;A substantial portion of revenue generated by our Support Services segment is attributable to a limited number of clients. The loss or reduction in business from any of these clients could adversely affect its business and results of operations.Our Support Services segment receives a significant amount of its revenue from a limited number of customers. For the years ended December 31, 2020 and 2019, which was prior to the Merger and not included in the results of operations of Greenidge, its largest customer accounted for over 44% and 63% of Support's total revenue, respectively. For the years ended December 31, 2020 and 2019, its second largest customer accounted for 43% and 25% of Support's total revenue, respectively. For the nine months ended September 30, 2021, of which only a small portion was included in the results of operations of Greenidge, its largest and second largest customer accounted for 55% and 27% of Support's total revenue, respectively. There were no other customers that accounted for 10% or more of Support's total revenue in any of the periods presented. In October 2021, Support agreed with a subsidiary of Comcast Corporation, its second largest customer to terminate its contract to provide support services to Comcast (the “Comcast Contract”), effective the first quarter of 2022. The Comcast Contract represented approximately $2 million and $7 million of Support’s revenues for the three and nine months ended September 30, 2021, respectively, of which, only a small portion occurred since the Merger and was included in Greenidge's results of operations. Support’s operating income from the Comcast Contract for each of the aforementioned periods was negative.In the past, sales to Support’s largest customers have fluctuated significantly from period to period and year to year and will likely continue to fluctuate in the future. The loss of these or other significant relationships, the change of the terms or terminations of its arrangements with any of these customers, the reduction or discontinuance of programs or billable hours with any of these customers, or the failure of any of these customers to achieve their targets has in the past adversely affected and could in the future adversely affect our Support Services segment.Our Support Services segment’s business is based on a relatively new and evolving business model.Our Support Services segment provides customer support services by professionals who work from their homes, creating a robust, timely and innovative library of Guided Path® self-support tools, licensing the Support.com Cloud application, and providing end-user consumer software products. We may not be able to offer these services and software products successfully. Our customer support professionals are generally home-based, which requires a high degree of coordination and quality control of employees working from diverse and remote locations. Based on the relatively new and evolving business model of our Support Services segment, as well as its recent integration within our business as a whole, the future revenue and income potential of the Support Services segment is uncertain. Some of these risks and uncertainties related to our Support Services segment concern its ability to, among other things, maintain current relationships and service programs, develop new relationships, reach prospective customers in a cost-effective manner, reduce its dependence on a limited number of partners, successfully license and grow revenue related to its product and service offerings, adapt to changes in the market it serves, respond to government regulations, and manage and respond to62present, threatened or future litigation. If we are unable to address these risks, our Support Services segment business, results of operations and prospects could suffer.Support is a party to a Consent Order with the Federal Trade Commission which imposes ongoing obligations.On November 6, 2018, Support entered into a Stipulation to Entry of Order for Permanent Injunction and Monetary Judgment (the “Consent Order”), with the Federal Trade Commission (“FTC”), resolving a multi-year FTC investigation relating to PC Healthcheck, an obsolete software program that Support developed on behalf of a third party for their use with their customers. As part of the Consent Order, Support agreed to pay $10 million and to implement certain new procedures and enhance certain existing procedures. Any violation or alleged violation of the terms of the Consent Order could impose additional financial liability in the form of regulatory fines and/or legal fees, as well as harm Support’s reputation with customers or prospective customers and adversely affect our Support Services segment's results of operations.We may face intellectual property infringement claims that could be costly to defend and result in its loss of significant rights.Our Support Services segment relies on the use and licensing of technology. Other parties may assert intellectual property infringement claims against Support or our customers, and our products may infringe the intellectual property rights of third parties. For example, Support’s products may infringe patents issued to third parties. In addition, as is increasingly common in the technology sector, Support may be confronted with the aggressive enforcement of patents by companies whose primary business activity is to acquire patents for the purpose of offensively asserting them against other companies. From time to time, Support has received allegations or claims of intellectual property infringement, and it may receive more claims in the future. Support may also be required to pursue litigation to protect is intellectual property rights or defend against allegations of infringement. Intellectual property litigation is expensive and time-consuming and could divert management’s attention from our business. The outcome of any litigation is uncertain and could significantly impact our financial results. If there is a successful claim of infringement, we may be required to develop non-infringing technology or enter into royalty or license agreements which may not be available on acceptable terms, if at all. Our failure to develop non-infringing technologies or license proprietary rights on a timely basis could harm our Support Services segment.If we are unable to protect or enforce intellectual property rights, related to our Support Services segment, or we lose our ability to utilize the intellectual property of others, our Support Services segment could be adversely affected.The success of our Support Services segment depends, in part, upon our ability to obtain intellectual property protection for Support's proprietary processes, software and other solutions. Support relies upon confidentiality policies, nondisclosure and other contractual arrangements, and patent, trade secret, copyright and trademark laws to protect its intellectual property rights. These laws are subject to change at any time and could further limit Support’s ability to obtain or maintain intellectual property protection. There is uncertainty concerning the scope of patent and other intellectual property protection for software and business methods, which are fields in which Support relies on intellectual property laws to protect its rights. Even where Support obtains intellectual property protection, its intellectual property rights may not prevent or deter competitors, former employees, or other third parties from reverse engineering its solutions or software. Further, the steps Support takes in this regard might not be adequate to prevent or deter infringement or other misappropriation of its intellectual property by competitors, former employees or other third parties, and it may not be able to detect unauthorized use of, or take appropriate and timely steps to enforce, its intellectual property rights. Enforcing Support’s rights might also require considerable time, money and oversight, and it may not be successful. Further, Support relies on third-party software in providing some of its services and solutions. If Support loses its ability to continue using any such software for any reason, including because it is found to infringe the rights of others, it will need to obtain substitute software or find alternative means of obtaining the technology necessary to continue to provide its solutions. Support’s inability to replace such software, or to replace such software in a timely or cost-effective manner, could materially adversely affect the results of operations of our Support Services segment.Our Support Services segment must comply with a variety of existing and future laws and regulations that could impose substantial costs on it and may adversely impact its business.We are subject to a variety of laws and regulations, which may differ among jurisdictions, affecting our Support Services segment's operations in areas including, but not limited to: intellectual property ownership and infringement; tax; anti-corruption such as the Foreign Corrupt Practices Act and the UK Bribery Act; foreign exchange controls and cash repatriation restrictions; data privacy requirements such as the European Economic Area Privacy Regulation, the General Data Protection Regulation (“GDPR”) and the California Consumer Privacy Act (“CCPA”); competition; consent order terms (for example, the recent Consent Order Support entered into with the FTC); advertising; employment; product regulations; health and safety requirements; and consumer laws. If we fail to continue to comply with these regulations, we may be unable to provide products or services to certain customers within our Support Services segment, or we may incur penalties or fines. We are unable to predict the outcome or effects of any of these potential63actions or any other legislative or regulatory proposals on our business. Any changes to the legal and regulatory framework applicable to our Support Services segment could have an adverse impact on the results of its operations. Although Support’s management systems are designed to maintain compliance, if we violate or fail to comply with any laws or regulations, applicable consent orders or decrees, a range of consequences could result, including fines, sales limitations, criminal and civil liabilities or other sanctions. The costs of complying with these laws (including the costs of any investigations, auditing and monitoring) could adversely affect our Support Services segment’s current or future business.Our product and service offerings are in their early stages and failure to market, sell and develop the offerings effectively and competitively could result in a lack of growth.A number of competitive offerings exist in the market, providing various features that may overlap with our Support.com offerings today or in the future. Some competitors in these markets far exceed its spending on sales and marketing activities and benefit from greater existing brand awareness, channel relationships and existing customer relationships. We may not be able to reach the market effectively and adequately or convey our differentiation as needed to grow our customer base. To reach our target market effectively, we may be required to continue to invest substantial resources in sales and marketing and engineering and IT activities, which could have an adverse effect on our Support Services segment's financial results. In addition, if we fail to develop and maintain competitive features, deliver high-quality products and satisfy existing customers, our Support.com offerings could fail to grow. Disruptions in infrastructure operations could impair our ability to deliver Support.com offerings to customers, thereby affecting our reputation with existing and prospective customers and possibly resulting in monetary penalties or financial losses.The Support Services segment operates in a highly competitive industry, with intense price competition, which may intensify as its competitors expand their operations.The industry in which our Support Services segment operates is highly competitive and includes numerous small companies capable of competing effectively in it markets on a local basis, as well as several large companies that possess substantially greater financial resources than we do. Contracts are traditionally awarded on the basis of competitive bids or direct negotiations with customers.The competitive factors in these markets include, amongst others, product and service quality and availability, responsiveness, experience, technology, equipment quality, reputation for retaining highly skilled agents and price. The competitive environment has intensified as mergers among industry partners have reduced the number of available customers and mergers amongst our competitors have created larger companies for us to compete against. Some of our current and potential competitors have greater resources, longer histories, more customers, and/or greater brand recognition. They may secure better terms from vendors, adopt more aggressive pricing, and devote more resources to technology, infrastructure, fulfillment, and marketing.Competition may intensify, including with the development of new business models and the entry of new and well-funded competitors, and as our competitors enter into business combinations or alliances and established companies in other markets expand to become competitive with our business. Furthermore, we cannot be sure that its competitors will not develop competing products, systems, services or technologies that gain market acceptance in advance of our products, systems, services or technologies, or that our competitors will not develop new products, systems, services or technologies that cause our existing products, systems, services or technologies to become non-competitive or obsolete, which may adversely affect our Support Services segment’s results of operations through the potential reduction of sales and profits.Our Support Services segment’s business is highly dependent upon its brand recognition and reputation, and the failure to maintain or enhance its brand recognition or reputation would likely have a material adverse effect on its business.Support’s brand recognition and reputation are critical aspects of our Support Services segment. We believe that maintaining and further enhancing our Support.com brand as well as our reputation will be critical to retaining existing customers and attracting new customers. We also believe that the importance of Support's brand recognition and reputation will continue to increase as competition in its markets continues to develop. Support’s success in this area will be dependent on a wide range of factors, some of which are out of our control, including the following:the efficacy of our marketing efforts;its ability to retain existing and obtain new customers and strategic partners;the quality and perceived value of our services;actions of its competitors, its strategic partners, and other third parties;64positive or negative publicity, including material on the Internet;regulatory and other governmental related developments; andlitigation related developments.Any of the foregoing could have an adverse effect on our Support Services segment's results of operations.Our Support Services segment’s success depends upon ourability to attract, develop and retain highly qualified employees while also controlling itslabor costs in a competitive labor market.Support’s customers expect a high level of customer support and product knowledge from its employees. To meet the needs and expectations of Support’s customers, it must attract, develop and retain a large number of highly qualified employees while at the same time control labor costs. Support’s ability to control labor costs is subject to numerous external factors, including prevailing wage rates and health and other insurance costs, as well as the impact of legislation or regulations governing labor relations, minimum wage, or healthcare benefits. An inability to provide wages and/or benefits that are competitive within the markets in which our Support Services segment operates could adversely affect our ability to retain and attract employees. In addition, Support competes with other retail businesses for many of its employees in hourly positions, and it invests significant resources in training and motivating them to maintain a high level of job satisfaction. These positions have historically had high turnover rates, which can lead to increased training and retention costs, particularly in a competitive labor market. Effective succession planning is also important to our long-term success. Failure to ensure effective transfer of knowledge and smooth transitions involving key employees and executive management could hinder Support’s strategic planning and execution. There is no assurance that Support will be able to attract or retain highly qualified employees in the future. As such, our Support Services segment’s ability to develop and deliver successful products and services may be adversely affected.Disruptions in Support’s information technology and service delivery infrastructure and operations could impair the delivery of its services and harm our Support Services segment's business.Support depends on the continuing operation of its information technology and communication systems and those of its third-party service providers. Any interruption or failure of its internal or external systems could prevent Support or its service providers from accepting orders and delivering services, or cause company and consumer data to be unintentionally lost, destroyed or disclosed. Support’s continuing efforts to upgrade and enhance the security and reliability of its information technology and communications infrastructure could be very costly, and it may have to expend significant resources to remedy problems such as a security breach or service interruption. Interruptions in its services resulting from labor disputes, telephone or Internet failures, power or service outages, natural disasters or other events, or a security breach could reduce its revenue, increase its costs, cause customers and partners and licensees to fail to renew or to terminate their use of its offerings, and harm its reputation and its ability to attract new customers.Costs related to software defects or other errors in Support’s products could have a material adverse effect on our Support Services segment.From time to time, Support may experience software defects, bugs and other errors associated with the introduction and/or use of its complex software products. Despite Support’s testing procedures, errors may occur in new products or releases after commencement of commercial deployments in the future. Such errors could result in:Loss of or delay in market acceptance of its products;Material recall and replacement costs;Delay in revenue recognition or loss of revenue;The diversion of the attention of its engineering personnel from product development efforts;Support having to defend against litigation related to defective products; andDamage to Support’s reputation in the industry that could adversely affect its relationships with its customers.In addition, the process of identifying a software error in software products that have been widely distributed may be lengthy and require significant resources. Support may have difficulty identifying the end customers of the defective products in the field, which may cause it to incur significant replacement costs, contract damage claims from its customers and further reputational harm. Any of65these problems could materially and adversely affect our Support Services segment’s results of operations. Despite Support’s best efforts, security vulnerabilities may exist with respect to its products. Mitigation techniques designed to address such security vulnerabilities, including software and firmware updates or other preventative measures, may not operate as intended or effectively resolve such vulnerabilities. Software and firmware updates and/or other mitigation efforts may result in performance issues, system instability, data loss or corruption, unpredictable system behavior, or the theft of data by third parties, any of which could significantly harm Support’s business and reputation.Support’s systems collect, access, use, and store personal customer information and enable customer transactions, which poses security risks, requires it to invest significant resources to prevent or correct problems that may be caused by security breaches, and may harm our Support Services segment's business.A fundamental requirement for online communications, transactions and support is the secure collection, storage and transmission of confidential information. Support’s systems collect and store confidential and personal information of its individual customers as well as its partners and their customers’ users, including personally identifiable information and payment card information, and its employees and contractors may access and use that information in the course of providing services. In addition, Support collects and retain personal information of its employees in the ordinary course of its business. Support and its third-party contractors use commercially available technologies to secure this information. Despite these measures, parties may attempt to breach the security of Support’s data or that of its customers. In addition, errors in the storage or transmission of data could breach the security of that information. Support may be liable to its customers for any breach in security and any breach could subject it to governmental or administrative proceedings or monetary penalties, damage its relationships with partners and harm its business and reputation. Also, computers are vulnerable to computer viruses, physical or electronic break-ins and similar disruptions, which could lead to interruptions, delays or loss of data. We may be required to expend significant capital and other resources to comply with mandatory privacy and security standards required by law, industry standard, or contract, and to further protect against security breaches or to correct problems caused by any security breach.A breach of Support’s security systems may have a material adverse effect on our Support Services segment's business.Support’ssecurity systems are designed to maintain the physical security of its facilities and protect its customers’ and employees’ confidential information, as well as its own proprietary information. However, Support is also dependent on a number of third-party cloud-based and other service providers of critical corporate infrastructure services relating to, among other things, human resources, electronic communication services and certain finance functions, and Support is, of necessity, dependent on the security systems of these providers. Accidental or willful security breaches or other unauthorized access by third parties or Support’s employees or contractors of its facilities, its information systems or the systems of its cloud-based or other service providers, or the existence of computer viruses or malware in its or their data or software could expose it to a risk of information loss and misappropriation of proprietary and confidential information, including information relating to its products or customers and the personal information of its employees. In addition, Support has, from time to time, also been subject to unauthorized network intrusions and malware on its own IT networks. Any theft or misuse of confidential, personal or proprietary information as a result of such activities could result in, among other things, unfavorable publicity, damage to Support’s reputation, loss of its trade secrets and other competitive information, difficulty in marketing its products, allegations by its customers that Support has not performed its contractual obligations, litigation by affected parties and possible financial obligations for liabilities and damages related to the theft or misuse of such information, as well as fines and other sanctions resulting from any related breaches of data privacy regulations, any of which could have a material adverse effect on its reputation, business, profitability and financial condition. Since the techniques used to obtain unauthorized access or to sabotage systems change frequently and are often not recognized until launched against a target, We may be unable to anticipate these techniques or to implement adequate preventative measures.Data privacy regulations are expanding and compliance with, and any violations of, these regulations may cause us to incur significant expenses.Support’s software and services contain features that allow its technology specialists and other personnel to access, control, monitor, and collect information from computers and other devices. Privacy legislation, enforcement and policy activity in this area are expanding rapidly in many jurisdictions and creating a complex regulatory compliance environment. Costs to comply with and implement these privacy-related and data protection measures could be significant. Even the perception of privacy concerns, whether or not valid, may harm Support’s reputation and inhibit adoption of its solutions by current and future customers. In addition, Support may face claims about invasion of privacy or inappropriate disclosure, use, storage, or loss of information obtained from its customers. In addition, even Support’s inadvertent failure to comply with federal, state or international privacy-related or data protection laws and regulations could result in proceedings against Support by governmental entities or others, and substantial fines and damages. The theft, loss or misuse of personal data collected, used, stored or transferred by Support to run Support’s business could result in significantly increased business and security costs or costs related to defending legal claims.66Our Support Services segment relies on third-party technologies in providing certain of its software and services. Our inability to use, retain or integrate third-party technologies could delay service or software development and could harm the Support Services segment's business.Supportlicenses technologies from third parties, which are integrated into its services, technology and end user software. Support’s use of commercial technologies licensed on a non-exclusive basis from third parties poses certain risks. Some of the third-party technologies Support licenses may be provided under “open source” licenses, which may have terms that require it to make generally available its modifications or derivative works based on such open source code. Support’s inability to obtain or integrate third-party technologies with its own technology could delay service development until equivalent compatible technology can be identified, licensed and integrated. These third-party technologies may not continue to be available to Support on commercially reasonable terms or at all. If Support’s relationship with third parties were to deteriorate, or if such third parties were unable to develop innovative and saleable products, or component features of its products, it could be forced to identify a new developer and its future revenue could suffer. Support may fail to successfully integrate any licensed technology into its services or software, or maintain it through its own development work, which could harm the business and operating results of our Support Services segment.Risks Related to the Ownership of Our SecuritiesBecause we are a “controlled company” within the meaning of the Nasdaq listing rules, our stockholders may not have certain corporate governance protections that are available to stockholders of companies that are not controlled companies.So long as more than 50% of the voting power for the election of our directors is held by an individual, a group or another company, we will qualify as a “controlled company” within the meaning of Nasdaq’s corporate governance standards. As of November 11, 2021, Atlas and its affiliates control 88.8% of the voting power of our outstanding capital stock. As a result, we are a “controlled company” within the meaning of Nasdaq’s corporate governance standards and will not be subject to the requirements that would otherwise require us to have: (i) a majority of independent directors; (ii) compensation of our executive officers determined by a majority of the independent directors or a compensation committee comprised solely of independent directors; and (iii) director nominees selected or recommended for our board either by a majority of the independent directors or a nominating committee comprised solely of independent directors. Because we are a “controlled company”, our stockholders may not have these corporate governance protections that are available to stockholders of companies that are not controlled companies.Atlas and its affiliates may have their interest in us diluted as a result of future equity issuances or their own actions in selling shares of our common stock, in each case, which could result in a loss of the “controlled company” exemption under the Nasdaq listing rules. We would then be required to comply with those provisions of the Nasdaq listing requirements.The dual class structure of our common stock will have the effect of concentrating voting power with Atlas and its affiliates, which may depress the market value of the class A common stock and will limit a stockholder or a new investor’s ability to influence the outcome of important transactions, including a change in control.While the economic rights of our common stock are the same, the class A common stock have one (1) vote per share, while class B common stock have ten (10) votes per share. As of September 16, 2021, our class B common stockholders represent approximately 97% of our voting power. Given the 10:1 voting ratio, even a significant issuance of class A common stock, and/or a transaction involving class A common stock as consideration, may not impact Atlas’ significant majority voting position in us.We have enacted a dual class voting structure to ensure the continuity of voting control in us for the foreseeable future. As a result, for the foreseeable future, Atlas and its affiliates will be able to control matters submitted to stockholders for approval, including the election of directors, amendments of our organizational documents and any merger, consolidation, sale of all or substantially all of our assets or other major corporate transactions.Atlas and its affiliates may have interests that differ from other stockholders and may vote their class B common stock in a way with which other stockholders may disagree or which may be adverse to such other stockholders’ interests. In addition, this concentrated control will have the effect of delaying, preventing or deterring a change in control of Greenidge, could deprive our stockholders of an opportunity to receive a premium for their capital stock as part of a sale of Greenidge, and might have a negative effect on the market price of shares of our class A common stock.67The market price, trading volume and marketability of our class A common stock may be significantly affected by numerous factors beyond our control.The market price and trading volume of our class A common stock may fluctuate and/or decline significantly. Many factors that are beyond our control may materially adversely affect the market price of our class A common stock, the marketability of our class A common stock and our ability to raise capital through equity financings. These factors include the following:the underlying volatility in pricing of, and demand for, energy and/or bitcoin.price and volume fluctuations in the stock markets generally which create highly variable and unpredictable pricing of equity securities;significant volatility in the market price and trading volume of securities of companies in the sectors in which our business operates, which may not be related to the operating performance of these companies and which may not reflect the performance of our businesses;differences between our actual financial and operating results and those expected by investors;fluctuations in quarterly operating results;loss of a major funding source;operating performance of companies comparable to us;changes in regulations or tax law, including those affecting the holding, transferring or mining of cryptocurrency;share transactions by principal stockholders;recruitment or departure of key personnel;general economic trends and other external factors including inflation and interest rates; andinvestor perception of any of the foregoing.We may need to raise additional capital to grow our business and may not be able to do so on favorable terms, if at all. Future issuances of equity or debt securities may adversely affect the value of our common stock.We may need to raise additional capital in the future, including to expand our operations and pursue our growth strategies, to respond to competitive pressures or to meet capital needs in response to operating losses or unanticipated working capital requirements. We may not be able to obtain additional debt or equity financing on favorable terms in the future, if at all, which could impair our growth and adversely affect our existing operations. Similarly, in connection with the Purchase Agreement entered into between us and the Investor, because the purchase price per share to be paid by the Investor for the shares of class A common stock that we may elect to sell to the Investor fluctuates based on the market prices of our class A common stock at the time we elect to sell shares, we may not be able to continue to sell shares of class A common stock on favorable terms, or at all.If we conduct an equity offering, or exercise our right to sell shares of class A common stock to the Investor under the Purchase Agreement, to raise capital or to take advantage of strong capital markets, our stockholders may experience significant dilution of their ownership interests, and the per share value of our class A common stock could materially decline. Furthermore, if we engage in further debt financing, the holders of debt likely would have priority over the holders of our common stock, including the class A common stock, with respect to order of payment. Upon a bankruptcy or liquidation, holders of any such debt securities, and lenders with respect to other borrowings we may make, would receive distributions of our available assets prior to any distributions being made to holders of class A common stock.Moreover, if we issue preferred stock in the future, the holders of such preferred stock could also be entitled to preferences over holders of class A common stock in respect of the payment of dividends and the payment of liquidating distributions. Further, such securities could require us to accept terms that restrict our ability to incur additional indebtedness, take other actions including terms that require us to maintain specified liquidity or other ratios that could otherwise not be in the interests of our stockholders.We cannot predict or estimate the amount, timing or nature of any such future offerings or borrowings.68Our obligations associated with being a public company requires significant resources and management attention. We will incur increased costs as a result of being a public company.As a public company, we are subject to the reporting requirements of the Exchange Act, which requires that we timely file annual, quarterly and current reports with respect to our business and financial condition, and are subject to the rules and regulations implemented by the SEC, the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, and the Public Company Accounting Oversight Board, and the listing requirements of Nasdaq, each of which imposes additional reporting and other obligations on public companies. As a public company, we face increased legal, accounting, administrative and other costs and expenses that we have not previously incurred as a private company, and we may need to hire additional financial and accounting personnel and other experienced staff with the expertise to address complex matters applicable to public companies. In addition, we are required to, among other things:prepare and distribute periodic reports, proxy statements and other stockholder communications in compliance with the federal securities laws, the Nasdaq listing rules and Delaware law;expand the roles and duties of our board of directors and committees thereof and management;institute more comprehensive financial reporting and disclosure compliance procedures;involve and retain, to a greater degree, outside counsel and accountants to assist us with the activities listed above;build and maintain an investor relations function; andestablish new internal policies, including those relating to trading in our securities and disclosure controls and procedures.These rules and regulations, and any future changes thereto, will increase—potentially materially—our legal and financial compliance costs compared to our prior operations and require significant time and attention from our management.As a public company, it may also be more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These increased costs may require us to divert a significant amount of money that we could otherwise use to expand our business and achieve our strategic objectives.We may not complete our analysis of our internal control over financial reporting in a timely manner, or these internal controls may not be determined to be effective.We will be required, pursuant to Section 404 of the Sarbanes-Oxley Act, to furnish an assessment by management on, among other things, the effectiveness of our internal control over financial reporting in the second annual report we file with the SEC. This assessment will need to include disclosure of any material weaknesses identified by management in our internal control over financial reporting. However, our auditors will not be required to formally attest to the effectiveness of our internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act until we are no longer a smaller reporting company or no longer an emerging growth company.We are in the early stages of the costly and challenging process of compiling the system and process documentation necessary to perform the evaluation needed to comply with Section 404. In this regard, we will need to continue to dedicate internal resources (including the potential hiring of additional finance staff), engage outside consultants and adopt a detailed work plan to assess and document the adequacy of internal control over financial reporting, continue steps to improve control processes as appropriate, validate through testing that controls are functioning as documented and implement a continuous reporting and improvement process for internal control over financial reporting. We may not be able to complete our evaluation, testing and any required remediation in a timely fashion. During the evaluation and testing process, if we identify one or more material weaknesses in our internal control over financial reporting, we will need to remediate any future material weaknesses and, if we are unable to do so, we may be unable to assert that our internal controls are effective. If we are unable to assert that our internal control over financial reporting is effective, or if our auditors are unable to express an opinion on the effectiveness of our internal controls when they are required to issue such opinion, investors could lose confidence in the accuracy and completeness of our financial reports, which could harm our business and the price of our common stock.Our management team has limited experience managing a public company.While certain members of our management team have some experience serving as board members of a public company and interacting with public company investors, these management team members have not previously served as management of a publicly traded company and may not have experience complying with the increasingly complex laws pertaining to public companies. Our management team may not successfully or efficiently manage our immediate transition to being a public company subject to69significant regulatory oversight and reporting obligations under the federal securities laws as well as the continuous scrutiny of securities analysts and investors. These new obligations and constituents will require significant attention from our senior management and could divert their attention away from the day-to-day management of our business, which could adversely affect our business and financial performance.We are subject to ongoing public reporting requirements that are less rigorous than Exchange Act rules for companies that are not emerging growth companies or smaller reporting companies, and stockholders could receive less information than they might expect to receive from larger or more mature public companies.We qualify to publicly report on an ongoing basis as an “emerging growth company” (as defined in the JOBS Act) and a “smaller reporting company” (as defined in SEC rules) under the reporting rules set forth under the Exchange Act. For so long as we remain an emerging growth company, we may take advantage of certain exemptions from various reporting requirements that are applicable to other Exchange Act reporting companies that are not emerging growth companies, including but not limited to:not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act;being permitted to include two, not three, years of audited financials in our Forms 10-K and other reduced financial disclosures;being permitted to comply with reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements; andbeing exempt from the requirement to hold a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. This means that an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period and so our financial statements may not be comparable to those of companies that comply with such new or revised accounting standards.We expect to take advantage of these reporting exemptions until we are no longer an emerging growth company or smaller reporting company. We can remain an emerging growth company for up to five years, although if the market value of our class A common stock that is held by non-affiliates exceeds $700 million or more as of any June 30 before that time, we would cease to be an emerging growth company as of the following December 31. We will qualify as a smaller reporting company until our public float, as of the last day of our second fiscal quarter, exceeds $250 million; because our common stock held by our directors, executive officers and Atlas and its affiliates are excluded from the calculation of public float, we anticipate qualifying as a smaller reporting company for the near future.Because we will be subject to ongoing public reporting requirements that are less rigorous than Exchange Act rules for companies that are not emerging growth companies or smaller reporting companies, stockholders could receive less information than they might expect to receive from more mature or larger public companies, and the class A common stock may experience less active trading or more price volatility as a result.Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of us more difficult, and limit attempts by stockholders to replace or remove current management.Provisions in our amended and restated certificate of incorporation and bylaws may have the effect of delaying or preventing a change of control or changes in our management, including provisions that:establish a dual-class common stock structure with ten (10) votes per share for the class B common stock;vest solely in our board the power to fix the board and fill any vacancies and newly created directorships;provide that directors may only be removed by the majority in voting power of the shares of stock then outstanding and entitled to vote thereon;establish advance notice requirements for nominations for election to the board of directors or for proposing matters that can be acted upon by our stockholders at annual stockholder meetings; and70require, among other things, advance board approval or subsequent approval by the board and holders of 66 2/3% of the outstanding voting stock not owned by the interested stockholder for any business combination with an interested stockholder, which is defined as a person or entity owning 15% or more of our outstanding voting stock or an affiliate or associate of us that owned 15% or more of the voting power of the outstanding voting stock at any time within a period of three years prior to the date of such determination, subject to certain exceptions.These provisions may frustrate or prevent any attempts by our stockholders to effect a change in control, or to replace or remove our current management by making it more difficult for our stockholders to replace members of the board of directors, which is responsible for appointing the members of management.Future sales of class A common stock may affect the market price of our class A common stock.We may raise capital by continuing to exercise our rights under the Purchase Agreement to sell shares of class A common stock to the Investor or through other future equity offerings.Pursuant to the Purchase Agreement, we have the right to sell to the Investor up to$500,000,000 of shares of class A common stock, subject to certain limitations and conditions, from time to time during the term of the Purchase Agreement, however, under the applicable Nasdaq rules, in no event may we issue a number of shares of class A common stock that exceeds the Exchange Cap, unless we obtain stockholder approval to issue shares in excess of the Exchange Cap in accordance with applicable Nasdaq rules. We may ultimately decide to sell to the Investor all, some or none of the shares of our class A common stock that may be available for us to sell to the Investor pursuant to the Purchase Agreement. Depending on market liquidity at the time, resales of those shares by the Investor may cause the public trading price of our class A common stock to decrease.We cannot predict what effect, if any, actual or potential future sales of our class A common stock will have on the market price of our class A common stock. Sales of substantial amounts of our class A common stock in the public market, or the perception that such sales could occur, could materially adversely affect the market price of our class A common stock.We may incur additional indebtedness.Despite our current level of indebtedness, we and our subsidiaries may be able to incur significant additional indebtedness. The indenture governing our Notes allows us and our subsidiaries to incur additional indebtedness. If new indebtedness is added to our and our subsidiaries’ current debt levels, the related risks that we face would be increased, and we may not be able to meet all our debt obligations, including repayment of the Notes, in whole or in part. If we incur any additional debt that is secured, the holders of that debt will be entitled to share in the proceeds distributed in connection with any enforcement against the collateral or an insolvency, liquidation, reorganization, dissolution or other winding-up of the applicable obligor prior to applying any such proceeds to the notes. As of October 31, 2021, we had $82.9 million of indebtedness, $55.2 million of which was unsecured.Our amended and restated certificate of incorporation designates the Delaware Court of Chancery as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders and provides that claims relating to causes of action under U.S. federal securities laws may only be brought in U.S. federal district courts, which could limit the ability of our stockholders to obtain a favorable judicial forum for disputes with us, our directors, officers or employees, if any, and could discourage lawsuits against us and our directors, officers and employees, if any.Our amended and restated certificate of incorporation provides that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall, to the fullest extent permitted by law, be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of us, (ii) any action asserting a claim of breach of a fiduciary duty owed by any of our current or former directors, officers, employees or stockholders to us or our stockholders, (iii) any action asserting a claim arising pursuant to any provision of the DGCL or the amended and restated certificate of incorporation or our amended and restated bylaws or as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware, or (iv) any action asserting a claim governed by the internal affairs doctrine of the laws of the State of Delaware. Our amended and restated certificate of incorporation also provides that, unless we consent in writing to the selection of an alternative forum, the U.S. federal district courts shall, to the fullest extent permitted by applicable law, be the exclusive forum for the resolution of any complaint asserting a cause of action arising under U.S. federal securities laws. Support’s governing documents do not contain any exclusive forum provisions.These exclusive forum provisions may limit the ability of our stockholders to bring a claim in a judicial forum that such stockholders find favorable for disputes with us or our directors, officers, or employees, if any, which may discourage such lawsuits against us and our directors, officers, and employees, if any. Alternatively, if a court were to find the choice of forum provisions contained in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could materially adversely affect our business, financial condition, and operating results.71September 13, 2021, we issued 562,174 shares of our class A common stock to 210 Capital, LLC as a consulting fee in connection with the Merger.On September 14, 2021, we issued 5,760,000 shares of our class A common stock and 720,000 shares of our class B common stock upon conversion of the 6,480,000 shares of series A preferred stock.On September 15, 2021,April 7, 2022, we entered into a common stock purchase agreement, (the “Purchaseas amended by Amendment No. 1 to Common Stock Purchase Agreement dated as of April 13, 2022 (as amended, the “2022 Purchase Agreement”), with B. Riley Principal Capital, LLC (“BRPC”), pursuant to which we have the right to sell to BRPC up to $500 million in shares of class A common stock, subject to certain limitations and the satisfaction of specified conditions in the 2022 Purchase Agreement, from time to time over the 24-month period commencing on October 6, 2021.April 28, 2022. From October 6, 2021April 28, 2022 to November 12, 2021,11, 2022, we issued 1,977,5003,234,193 shares of our class A common stock to BRPC under the 2022 Purchase Agreement. We intend to use the net proceeds for general corporate purposes, including funding capital expenditures, future acquisitions, investments and working capital and repaying indebtedness.On September 16 2021, we issued 344,800 shares of our class A common stock to B. Riley Securities, Inc. upon its exercise of our outstanding warrants at an exercise price of $6.25 per share.Act or Regulation D promulgated thereunder, or Rule 701 promulgated under Section 3(b) of the Securities Act as transactions by an issuer not involving any public offering or pursuant to benefit plans and contracts relating to compensation as provided under Rule 701.Act. The recipients of the securities in each of these transactions represented their intentions and appropriate legends were placed upon the stock certificates issued in these transactions.From July 27, 2021 to October 14, 2021 (the date of the filing of our registration statement on Form S-8, File No. 333-260257), we granted stock options to purchase an aggregate of 37,000 shares of our Class A common stock to our [employees] at an exercise price of $7.18 per share under our 2021 Equity Incentive Plan. The offers, sales, and issuances of the securities described in this paragraph were deemed to be exempt from registration under the Securities Act in reliance on Rule 701 promulgated under the Securities Act as transactions by an issuer not involving a public offering or under benefit plans and contracts relating to compensation as provided under Rule 701. The recipients of the securities in each of these transactions represented their intentions to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof. All recipients had adequate access through their relationships with us, or otherwise to information about us. The issuances of these securities were made without any general solicitation or advertising.On November 12, 2021, the Company and Timothy Rainey, the Company’s current Chief Financial Officer, mutually agreed to transition his role with the Company to Treasurer of the Company and Chief Financial Officer of Greenidge Generation Holdings LLC, a subsidiary of the Company, effective January 1, 2022 (the “Transition Date”). Mr. Rainey will continue to serve as the Company’s Chief Financial Officer until the Transition Date.On November 12, 2021, the Company also appointed Robert Loughran as the Company’s Chief Financial Officer, effective the Transition Date. Mr. Loughran has been providing consulting services to the Company's finance department and will continue to do so until the Transition Date.Prior to joining the Company, Mr. Loughran, 57, was employed as Vice President, Corporate Controller at Tronox Holdings plc, a preeminent titanium dioxide pigment, titanium ore and zircon producer. Prior to Tronox, Mr. Loughran was employed as Group Vice President, Chief Accounting Officer at Avon Products, Inc., a multinational cosmetics, skin care, fragrance and personal care company. There are no understandings or arrangements between Mr. Loughran and any other person pursuant to which Mr. Loughran was selected to serve as Chief Financial Officer. There are no existing relationships between Mr. Loughran and any person that would73require disclosure pursuant to Item 404(a) of Regulation S-K or any familial relationships that would require disclosure under Item 401(d) of Regulation S-K.In connection with these changes, on November 12, 2021, the Board of Directors of the Company approved and the Company entered into employment agreements with each of Messrs. Rainey and Loughran on November 15, 2021.Mr. Rainey’s employment agreement (the “Rainey Employment Agreement”), provides that Mr. Rainey will be eligible for (i) an annual base salary of $210,000; (ii) a one-time payment of $450,000 as compensation for Mr. Rainey’s assistance with the Company’s successful listing on the Nasdaq stock exchange, payable on March 31, 2022, subject to Mr. Rainey’s continued employment with the Company through the payment date (the “Listing Achievement Bonus”); and (iii) a target annual bonus opportunity of $387,500 starting with the 2022 fiscal year, subject to such terms and performance conditions as determined by the Company and Mr. Rainey’s continued employment by the Company through the applicable payment date. The term of the Rainey Employment Agreement continues until December 31, 2025, unless earlier terminated pursuant to its terms.
If Mr. Rainey’s employment is terminated by the Company without Cause or Mr. Rainey resigns with Good Reason (as each term is defined in the Rainey Employment Agreement), in addition to any accrued base salary through and including the date of termination and any amounts or benefits required to be paid or provided under applicable law or accrued and vested under the benefit plans of the Company (the “Accrued Amounts”), Mr. Rainey will be entitled to receive, subject to execution of a release and compliance with restrictive covenants: (i) continued payment of his base salary for a period of 12 months following the date of termination; (ii) Company-subsidized COBRA coverage equal to the same portion of the monthly premium the Company pays for active employees until the earlier of (x) the one-year anniversary of the date of termination or (y) the date Mr. Rainey becomes eligible for health insurance coverage under the health plan of another employer; (iii) an amount equal to 50% of Mr. Rainey’s target annual bonus opportunity for the fiscal year in which the termination of employment occurs, payable on the first anniversary of the date of termination; (iv) any earned but unpaid annual bonus for the completed fiscal year that ended prior to the fiscal year in which the termination of employment occurs, payable on the date such annual bonuses are paid to similarly situated employees of the Company; (v) the Listing Achievement Bonus if unpaid, payable within 30 days of the date of termination; and (vi) accelerated vesting of all outstanding unvested stock options granted to Mr. Rainey prior to the execution of the Rainey Employment Agreement (which are scheduled to vest on February 21, 2022) and extended exercisability for up to 18 months after the date of termination. If Mr. Rainey’s employment is terminated due to health or Disability (as defined in the Rainey Employment Agreement), Mr. Rainey will be entitled to receive, subject to the execution of a release and compliance with restrictive covenants, the Accrued Amounts and the items set forth in clauses (v) and (vi) above.Mr. Loughran’s employment agreement (the “Loughran Employment Agreement”) provides that Mr. Loughran will be eligible for (i) an annual base salary of $400,000, (ii) a target annual bonus opportunity of up to 100% of Mr. Loughran’s annual base salary, 50% of which will be paid in restricted stock units under the Company’s equity incentive plan ("RSUs"), vesting in equal annual installments on the first three anniversaries of the grant date, subject to Mr. Loughran’s continued employment through each vesting date and otherwise subject to approval by the board of directors of the Company and the terms and conditions of the Company’s equity incentive plan and (iii) a promotion grant of RSUs with respect to 15,000 shares of the Company, vesting in equal annual installments on the first three anniversaries of the grant date.If Mr. Loughran’s employment with the Company is terminated by the Company without Cause or Mr. Loughran resigns with Good Reason (as each term is defined in the Loughran Employment Agreement), in addition to the Accrued Amounts, Mr. Loughran will be entitled to receive, subject to execution of a release and compliance with restrictive covenants: (i) continued payment of his annual base salary for a period of 12 months following the date of termination; (ii) Company-subsidized COBRA coverage equal to the same portion of the monthly premium the Company pays for active employees until the earlier of (x) the one-year anniversary of the date of termination or (y) the date Mr. Loughran becomes eligible for health insurance coverage under the health plan of another employer; (iii) an amount equal to 100% of Mr. Loughran’s target annual bonus opportunity for the fiscal year in which the termination of employment occurs, payable on the first anniversary of the date of termination; (iv) any earned but unpaid annual bonus for the completed fiscal year that ended prior to the fiscal year in which the termination of employment occurs, payable on the date such annual bonuses are paid to similarly situated employees of the Company; and (v) continued vesting of any time-vesting RSUs that would have vested in the 12-month period following the date of termination. If Mr. Loughran’s employment is terminated due to death or Disability (as defined in the Loughran Employment Agreement), Mr. Loughran will be entitled to receive, subject to execution of a release and compliance with restrictive covenants, the Accrued Amounts and pro rata vesting of any time-vesting RSUs based on the period employed prior to termination.The Rainey Employment Agreement is furnished herewith as Exhibit 10.2 and the Loughran Employment Agreement is furnished herewith as Exhibit 10.3 and each is incorporated by reference herein. The foregoing descriptions of the Rainey Employment74Agreement and the Loughran Employment Agreement do not purport to be complete and are qualified in their entirety by reference to the full text of each agreement.753.23.34.110.1Indenture10.210.3 4.210.44.3Form of 8.50% Senior Note due 2026 (included as Exhibit A to Exhibit 4.2 above)4.44.54.631.1*10.1+10.2†10.3†10.410.510.6†10.7†31.131.231.2*76+Certain schedules and exhibits have been omitted pursuant to Item 601(a)(5) or Item 601(b)(2) of Regulation S-K. We hereby undertake to furnish copies of the omitted schedule or exhibit upon request by the Securities and Exchange Commission.†Management contract or compensatory plan or arrangement.15, 2021Jeffrey E. KirtDavid AndersonJeffrey E. Kirt 15, 2021Timothy RaineyRobert LoughranTimothy Rainey78