Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2024 | May 10, 2024 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2024 | |
Document Transition Report | false | |
Entity File Number | 001-41163 | |
Entity Registrant Name | TERAWULF INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 87-1909475 | |
Entity Address, Address Line One | 9 Federal Street | |
Entity Address, Postal Zip Code | 21601 | |
Entity Address, City or Town | Easton | |
Entity Address, State or Province | MD | |
City Area Code | 410 | |
Local Phone Number | 770-9500 | |
Title of 12(b) Security | Common Stock, $0.001 par value per share | |
Trading Symbol | WULF | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 333,182,028 | |
Entity Central Index Key | 0001083301 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2024 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
CURRENT ASSETS: | ||
Cash and cash equivalents | $ 45,824 | $ 54,439 |
Digital currency | 2,018 | 1,801 |
Prepaid expenses | 3,973 | 4,540 |
Other receivables | 1,668 | 1,001 |
Other current assets | 873 | 806 |
Total current assets | 54,356 | 62,587 |
Equity in net assets of investee | 91,866 | 98,613 |
Property, plant and equipment, net | 237,889 | 205,284 |
Right-of-use asset | 10,691 | 10,943 |
Other assets | 586 | 679 |
TOTAL ASSETS | 395,388 | 378,106 |
CURRENT LIABILITIES: | ||
Accounts payable | 14,313 | 15,169 |
Accrued construction liabilities | 938 | 1,526 |
Other accrued liabilities | 5,494 | 9,179 |
Share based liabilities due to related party | 0 | 2,500 |
Other amounts due to related parties | 975 | 972 |
Current portion of operating lease liability | 49 | 48 |
Insurance premium financing payable | 983 | 1,803 |
Current portion of long-term debt | 99,360 | 123,465 |
Total current liabilities | 122,112 | 154,662 |
Operating lease liability, net of current portion | 886 | 899 |
Long-term debt | 47 | 56 |
TOTAL LIABILITIES | 123,045 | 155,617 |
Commitments and Contingencies (See Note 12) | ||
STOCKHOLDERS' EQUITY: | ||
Preferred stock, $0.001 par value, $100,000,000 authorized at March 31, 2024 and December 31, 2023; $9,566 issued and outstanding at March 31, 2024 and December 31, 2023; aggregate liquidation preference of $11,709 and $11,423 at March 31, 2024 and December 31, 2023, respectively | 9,273 | 9,273 |
Common stock, $0.001 par value, $400,000,000 authorized at March 31, 2024 and December 31, 2023; $302,921,785 and $276,733,329 issued and outstanding at March 31, 2024 and December 31, 2023, respectively | 303 | 277 |
Additional paid-in capital | 532,238 | 472,834 |
Accumulated deficit | (269,471) | (259,895) |
Total stockholders' equity | 272,343 | 222,489 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 395,388 | $ 378,106 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Statement of Financial Position [Abstract] | ||
Preferred stock par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock shares authorized (in shares) | 100,000,000 | 100,000,000 |
Preferred stock shares issued | 9,566 | 9,566 |
Preferred stock shares outstanding | 9,566 | 9,566 |
Preferred stock, liquidation preference | $ 11,709 | $ 11,423 |
Common stock par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock shares authorized (in shares) | 400,000,000 | 400,000,000 |
Common stock shares issued | 302,921,785 | 276,733,329 |
Common stock shares outstanding | 302,921,785 | 276,733,329 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Revenue | $ 42,433,000 | $ 11,533,000 |
Cost of revenue (exclusive of depreciation shown below) | 14,408,000 | 5,002,000 |
Gross profit | 28,025,000 | 6,531,000 |
Cost of operations: | ||
Depreciation | 15,088,000 | 5,433,000 |
Gain on fair value of digital currency, net | (1,329,000) | 0 |
Realized gain on sale of digital currency | 0 | (603,000) |
Impairment of digital currency | 0 | 627,000 |
Total cost of operations | 30,341,000 | 15,752,000 |
Operating loss | (2,316,000) | (9,221,000) |
Interest expense | (11,045,000) | (6,834,000) |
Loss on extinguishment of debt | (2,027,000) | 0 |
Other income | 500,000 | 0 |
Loss before income tax and equity in net income (loss) of investee | (14,888,000) | (16,055,000) |
Income tax benefit | 0 | 0 |
Equity in net income (loss) of investee, net of tax | 5,275,000 | (10,167,000) |
Loss from continuing operations | (9,613,000) | (26,222,000) |
Loss from discontinued operations, net of tax | 0 | (35,000) |
Net loss | (9,613,000) | (26,257,000) |
Preferred stock dividends | (286,000) | (259,000) |
Net loss available to common stockholders, basic | (9,899,000) | (26,516,000) |
Net loss available to common stockholders, diluted | $ (9,899,000) | $ (26,516,000) |
Loss per common share: | ||
Continuing operations, basic (in dollars per share) | $ (0.03) | $ (0.16) |
Continuing operations, diluted (in dollars per share) | (0.03) | (0.16) |
Discontinued operations, basic (in dollars per share) | 0 | 0 |
Discontinued operations, diluted (in dollars per share) | 0 | 0 |
Earnings per share, basic (in dollars per share) | (0.03) | (0.16) |
Earnings per share, diluted (in dollars per share) | $ (0.03) | $ (0.16) |
Weighted average common shares outstanding: | ||
Basic (in shares) | 290,602,725 | 165,015,228 |
Diluted (in shares) | 290,602,725 | 165,015,228 |
Nonrelated Party | ||
Cost of operations: | ||
Operating expenses | $ 785,000 | $ 308,000 |
Selling, general and administrative expenses | 12,289,000 | 6,492,000 |
Related Party | ||
Cost of operations: | ||
Operating expenses | 888,000 | 597,000 |
Selling, general and administrative expenses | $ 2,620,000 | $ 2,898,000 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Total | Cumulative Effect, Period of Adoption, Adjustment | Preferred Stock | Common Stock | Additional Paid-in Capital | Common Stock to be Issued | Accumulated Deficit | Accumulated Deficit Cumulative Effect, Period of Adoption, Adjustment |
Beginning balance (in shares) at Dec. 31, 2022 | 9,566 | 145,492,971 | ||||||
Beginning balance at Dec. 31, 2022 | $ 117,754 | $ 9,273 | $ 145 | $ 294,810 | $ 0 | $ (186,474) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Common stock reacquired in exchange for warrants (in shares) | (12,000,000) | |||||||
Common stock reacquired in exchange for warrants | (12,491) | $ (12) | (12,479) | |||||
Warrant issuance in conjunction with debt modification | 16,036 | 16,036 | ||||||
Issuance of stock (in shares) | 40,764,706 | |||||||
Issuance of stock | 26,309 | $ 41 | 26,268 | |||||
Common stock to be issued, net of issuance costs | 4,390 | 4,390 | ||||||
Warrant offerings | 14,991 | 14,991 | ||||||
Stock-based compensation expense and issuance of stock (in shares) | 248,049 | |||||||
Stock-based compensation expense and issuance of stock | 876 | 876 | ||||||
Convertible promissory notes converted to common stock (in shares) | 11,762,956 | |||||||
Convertible promissory notes converted to common stock | 4,705 | $ 12 | 4,693 | |||||
Net loss | (26,257) | (26,257) | ||||||
Ending balance (in shares) at Mar. 31, 2023 | 9,566 | 186,268,682 | ||||||
Ending balance at Mar. 31, 2023 | 146,313 | $ 9,273 | $ 186 | 345,195 | 4,390 | (212,731) | ||
Beginning balance (in shares) at Dec. 31, 2022 | 9,566 | 145,492,971 | ||||||
Beginning balance at Dec. 31, 2022 | $ 117,754 | $ 9,273 | $ 145 | 294,810 | 0 | (186,474) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Accounting Standards Update [Extensible Enumeration] | Accounting Standards Update 2023-08 [Member] | |||||||
Ending balance (in shares) at Dec. 31, 2023 | 9,566 | 276,733,329 | ||||||
Ending balance at Dec. 31, 2023 | $ 222,489 | $ 37 | $ 9,273 | $ 277 | 472,834 | 0 | (259,895) | $ 37 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Issuance of stock (in shares) | 23,268,600 | |||||||
Issuance of stock | 50,650 | $ 23 | 50,627 | |||||
Common stock issued for share based liabilities due to related party (in shares) | 1,083,189 | |||||||
Common stock issued for share based liabilities due to related party | 2,500 | $ 1 | 2,499 | |||||
Stock-based compensation expense and issuance of stock (in shares) | 2,190,510 | |||||||
Stock-based compensation expense and issuance of stock | 6,931 | $ 2 | 6,929 | |||||
Tax withholdings related to net share settlements of stock-based compensation awards (in shares) | (353,843) | |||||||
Tax withholdings related to net share settlements of stock-based compensation awards | (651) | (651) | ||||||
Net loss | (9,613) | (9,613) | ||||||
Ending balance (in shares) at Mar. 31, 2024 | 9,566 | 302,921,785 | ||||||
Ending balance at Mar. 31, 2024 | $ 272,343 | $ 9,273 | $ 303 | $ 532,238 | $ 0 | $ (269,471) |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (9,613) | $ (26,257) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||
Amortization of debt issuance costs, commitment fees and accretion of debt discount | 7,593 | 3,549 |
Related party expense to be settled with respect to common stock | 0 | 313 |
Common stock issued for interest expense | 0 | 26 |
Stock-based compensation expense | 6,931 | 876 |
Depreciation | 15,088 | 5,433 |
Amortization of right-of-use asset | 252 | 250 |
Increase in digital currency from mining and hosting services | (41,537) | (9,940) |
Gain on fair value of digital currency, net | (1,329) | 0 |
Realized gain on sale of digital currency | 0 | (603) |
Impairment of digital currency | 0 | 627 |
Proceeds from sale of digital currency | 54,391 | 9,982 |
Loss on extinguishment of debt | 2,027 | 0 |
Equity in net (income) loss of investee, net of tax | (5,275) | 10,167 |
Loss from discontinued operations, net of tax | 0 | 35 |
Changes in operating assets and liabilities: | ||
Decrease in prepaid expenses | 567 | 717 |
Increase in other receivables | (667) | 0 |
Increase in other current assets | (67) | (241) |
Decrease (increase) in other assets | 22 | (83) |
Decrease in accounts payable | (1,686) | (2,435) |
Decrease in other accrued liabilities | (3,906) | (1,354) |
Increase in other amounts due to related parties | 67 | 325 |
Decrease in operating lease liability | (12) | (10) |
Net cash provided by (used in) operating activities from continuing operations | 22,846 | (8,623) |
Net cash used in operating activities from discontinued operations | 0 | (90) |
Net cash provided by (used in) operating activities | 22,846 | (8,713) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Investments in joint venture, including direct payments made on behalf of joint venture | 0 | (2,285) |
Purchase of and deposits on plant and equipment | (46,979) | (9,986) |
Net cash used in investing activities | (46,979) | (12,271) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Principal payments on long-term debt | (33,412) | 0 |
Payments of prepayment fees associated with early extinguishment of long-term debt | (314) | 0 |
Proceeds from insurance premium and property, plant and equipment financing | 0 | 295 |
Principal payments on insurance premium and property, plant and equipment financing | (827) | (1,451) |
Proceeds from issuance of common stock, net of issuance costs paid of $0 and $1,051 | 50,722 | 26,562 |
Proceeds from common stock to be issued, net of issuance costs of $0 and $56 | 0 | 4,390 |
Proceeds from warrant issuances | 0 | 2,500 |
Payments of tax withholding related to net share settlements of stock-based compensation awards | (651) | 0 |
Proceeds from issuance of convertible promissory note | 0 | 1,250 |
Payment of contingent value rights liability related to proceeds from sale of net assets held for sale | 0 | (3,899) |
Net cash provided by financing activities | 15,518 | 29,647 |
Net change in cash and cash equivalents | (8,615) | 8,663 |
Cash and cash equivalents at beginning of period | 54,439 | 8,323 |
Cash and cash equivalents at end of period | 45,824 | 16,986 |
Cash paid during the period for: | ||
Interest | 3,726 | 5,399 |
Income taxes | $ 0 | $ 0 |
CONSOLIDATED STATEMENTS OF CA_2
CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Statement of Cash Flows [Abstract] | ||
Stock issuance costs | $ 0 | $ 1,051 |
Stock issuance costs for stock to be issued | $ 0 | $ 56 |
ORGANIZATION
ORGANIZATION | 3 Months Ended |
Mar. 31, 2024 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION | ORGANIZATION Organization TeraWulf Inc. (“TeraWulf” or the “Company”) is a digital asset technology company with a core business of digital infrastructure and energy development to enable sustainable bitcoin mining. TeraWulf’s principal business consists of developing and operating bitcoin mining facilities in the United States that are fueled by clean, low cost and reliable power sources. The Company generates revenue in the form of bitcoin by providing hash computation services to a mining pool operator to mine bitcoin and validate transactions on the global bitcoin network using application-specific integrated circuit computers (“ASIC” or “miners”) owned by the Company. The earned bitcoin are routinely sold for U.S. dollars. The Company also earned revenue by providing miner hosting services to third parties. In 2024, the Company established WULF Compute as its internal innovation center, with a specific focus on the research, development, and deployment of its expansive and scalable digital infrastructure intended to support a broader high-performance computing (“HPC”) initiative, strategically aimed at diversifying the Company’s revenue streams. Given the increasing demand from high density compute loads, the Company's assets are well positioned to supply energy infrastructure with low cost, zero-carbon power. While the Company may choose to mine other digital currencies, it has no plans to do so currently. TeraWulf currently owns and operates, either independently or through a joint venture, two bitcoin mining facilities: the Lake Mariner Facility located in upstate New York (the “Lake Mariner Facility”) and the Nautilus Cryptomine Facility located in central Pennsylvania (the “Nautilus Cryptomine Facility”). The Company’s wholly-owned Lake Mariner Facility began mining bitcoin in March 2022 and, as of March 31, 2024, the Company has energized three buildings and additional infrastructure comprising 160 MW of capacity. The Nautilus Cryptomine Facility, which has been developed and constructed through a joint venture (see Note 11), commenced mining operations in February 2023 and, in April 2023, achieved full energization of the Company’s allotted infrastructure capacity of 50 MW. On December 13, 2021, TeraWulf Inc. completed a strategic business combination (the “Merger”) with IKONICS Corporation (“IKONICS”) , a Minnesota corporation, pursuant to which, among other things, the Company effectively acquired IKONICS and became a publicly traded company on the National Association of Securities Dealers Automated Quotations (“Nasdaq”), which was the primary purpose of the business combination. IKONICS’ traditional business was the development and manufacturing of high-quality photochemical imaging systems for sale primarily to a wide range of printers and decorators of surfaces. Customers’ applications were primarily screen printing and abrasive etching. TeraWulf initially classified the IKONICS business as held for sale and discontinued operations in its consolidated financial statements. During the year ended December 31, 2023, the Company completed sales of substantially all of IKONICS’ historical net assets (see Note 3). Subsequent to the asset sales, IKONICS’ name was changed to RM 101 Inc. (“RM 101”). Risks and Uncertainties Liquidity and Financial Condition The Company incurred a net loss attributable to common stockholders of $9.9 million and generated cash flows from continuing operations of $22.8 million for the three months ended March 31, 2024. As of March 31, 2024, the Company had balances of cash and cash equivalents of $45.8 million, a working capital deficiency of $67.8 million, total stockholders’ equity of $272.3 million and an accumulated deficit of $269.5 million. As of March 31, 2024, the working capital deficiency included the then outstanding $106.0 million principal balance of the Company’s Term Loans (See Note 9) which matures on December 1, 2024. The Company had 8.0 EH/s of operating capacity across the Lake Mariner Facility and the Nautilus Cryptomine Facility as of March 2024. To date, the Company has relied primarily on proceeds from its issuances of debt and equity and sale of bitcoin, both self-mined and distributed from the joint venture which owns the Nautilus Cryptomine Facility (see Note 11), to fund its principal operations. In accordance with development of its bitcoin mining facilities, during the three months ended March 31, 2024, the Company invested approximately $47.0 million for purchases of and deposits on plant and equipment. TeraWulf expects to fund its business operations and incremental infrastructure buildout primarily through positive cash flows from operations, including sales of bitcoin, both self-mined and distributed from the joint venture which owns the Nautilus Cryptomine Facility, cash on the balance sheet and the issuance of equity securities. During the year ended December 31, 2023, the Company achieved significant milestones by initiating and delivering rapid organic growth at the Lake Mariner Facility, and commencing operations at the Nautilus Cryptomine Facility, resulting in positive cash flows from continuing operations. During the three months ended March 31, 2024, the Company additionally accomplished several notable steps to continue to achieve positive cash flows from operations, namely: (1) the Company repaid $33.4 million of outstanding principal of its Term Loans to remove the fixed principal amortization and extend the excess cash flow sweep through maturity (see Note 9), (2) the Company received net proceeds of $50.7 million through the issuance of shares of our common stock, par value $0.001 per share (the “Common Stock”), (3) the Company received bitcoin distributions of $12.0 million from the joint venture which owns the Nautilus Cryptomine Facility, (4) the Company received substantially all contracted miners from the miner suppliers and has no remaining outstanding financial commitments under the miner purchase agreements (see Notes 11 and 12) for the existing operations at the Lake Mariner Facility and the Nautilus Cryptomine Facility, (5) the construction activities at the Lake Mariner Facility for buildings one, two and three and at the Nautilus Cryptomine Facility are complete as of March 31, 2024, although the Company intends to expand its infrastructure. Additionally, if a business need requires its use, the Company has an active at-the-market sales agreement for sale of shares of Common Stock having an aggregate offering price of up to $200.0 million (the “ATM Sales Agreement”), which had a remaining capacity of $28.9 million as of March 31, 2024. The issuance of Common Stock under this agreement would be made pursuant to the Company’s effective registration statement on Form S-3 (Registration statement No. 333-262226). The Company has determined that it is probable that it will generate positive cash flows from operations and be able to realize its assets and discharge its liabilities and commitments in the normal course of business, including the Term Loans through maturity, based on its expected range of forecasted bitcoin prices, network hashrate, and power prices and, therefore, there is not substantial doubt about the Company’s ability to continue as a going concern through at least the next twelve months. The consolidated financial statements do not include any adjustments that might result from TeraWulf’s possible inability to continue as a going concern. |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2024 | |
Accounting Policies [Abstract] | |
SIGNIFICANT ACCOUNTING POLICIES | SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Principles of Consolidation The accompanying unaudited interim 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 the Company, the accompanying unaudited interim consolidated financial statements reflect all adjustments, consisting of only normal recurring adjustments, considered necessary for a fair statement of such interim results. All intercompany balances and transactions have been eliminated. Certain amounts in the unaudited interim consolidated statement of cash flows for the three months ended March 31, 2023 were restated as previously disclosed in the Amendment No. 1 to the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2023. The misstatements related solely to incorrectly classifying payments of contingent value rights liability related to proceeds from sale of net assets held for sale as an investing activity instead of a financing activity as originally included in the respective interim unaudited consolidated statements of cash flows. The results for the unaudited interim consolidated statements of operations are not necessarily indicative of results to be expected for the year ending December 31, 2024 or for any future interim period. The unaudited interim consolidated financial statements do not include all the information and notes required by U.S. GAAP for complete financial statements. The accompanying unaudited interim financial statements should be read in conjunction with the consolidated financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023. Use of Estimates in the Financial Statements The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates are used for (but are not limited to) such items as the fair values of contingent consideration issued in a business combination, the establishment of useful lives for property, plant and equipment and intangible assets, the fair value of equity securities or warrants to purchase common stock issued individually or as a component of a debt or equity offering, the fair value of changes to the conversion terms of embedded conversion features, the fair value and requisite service periods of stock-based compensation, the fair value of assets received in nonmonetary transactions, the establishment of right-of-use assets and lease liabilities that arise from leasing arrangements, the timing of commencement of capitalization for plant and equipment, impairment of indefinite-lived intangible assets, impairment of long-lived assets, recoverability of deferred tax assets, amortization of deferred issuance costs and debt discount, and the recording of various accruals. These estimates are made after considering past and current events and assumptions about future events. Actual results could differ from those estimates. Revenue Recognition The Company recognizes revenue under the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers (“ASC 606”). The core principle of the revenue standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The following five steps are applied to achieve that core principle: • Step 1: Identify the contract with the customer • Step 2: Identify the performance obligations in the contract • Step 3: Determine the transaction price • Step 4: Allocate the transaction price to the performance obligations in the contract • Step 5: Recognize revenue when the Company satisfies a performance obligation In order to identify the performance obligations in a contract with a customer, a company must assess the promised goods or services in the contract and identify each promised good or service that is distinct. A performance obligation meets ASC 606’s definition of a “distinct” good or service (or bundle of goods or services) if both of the following criteria are met: the customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer (i.e., the good or service is capable of being distinct), and the entity’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract (i.e., the promise to transfer the good or service is distinct within the context of the contract). If a good or service is not distinct, the good or service is combined with other promised goods or services until a bundle of goods or services is identified that is distinct. The transaction price is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer. The consideration promised in a contract with a customer may include fixed amounts, variable amounts, or both. When determining the transaction price, an entity must consider the effects of all of the following: • Variable consideration • Constraining estimates of variable consideration • The existence of a significant financing component in the contract • Noncash consideration • Consideration payable to a customer Variable consideration is included in the transaction price only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. The transaction price is allocated to each performance obligation on a relative standalone selling price basis. The transaction price allocated to each performance obligation is recognized when that performance obligation is satisfied, at a point in time or over time as appropriate. Mining Pool The Company has entered into an arrangement with a cryptocurrency mining pool (the Foundry USA Pool) to perform hash computation (i.e. hashrate) for the mining pool in exchange for consideration. Providing hash computation services to a mining pool is an output of the Company’s ordinary activities. The provision of such hash computation services is the sole performance obligation. The mining pool arrangement is terminable at any time without substantial penalty by Foundry USA Pool and may be terminated without substantial penalty by the Company upon providing one Contract Day’s, as defined, prior written notice. The Company’s enforceable right to compensation only begins when and continues while the Company provides hash computation services to its customer, the mining pool operator. Accordingly, the contract term with Foundry USA Pool is deemed to be less than 24 hours and to continuously renew throughout the day. Additionally, the Company concluded that the mining pool operator’s (i.e., the customer’s) renewal right is not a material right because the renewal rights do not include any discounts; that is, the terms, conditions, and compensation amounts are at the then-current market rates. There is no significant financing component in these transactions. The mining pool applies the Full Pay Per Share (“FPPS”) payout model. Under the FPPS model, in exchange for providing hash computation services to the pool, the Company is entitled to pay-per-share base amount and transaction fee reward compensation, calculated on a daily basis, at an amount that approximates the total bitcoin that could have been mined and transaction fees that could have been awarded using the Company’s hash computation services, based upon the then current blockchain difficulty. Under this model, the Company is entitled to compensation, payable in bitcoin, regardless of whether the pool operator successfully records a block to the bitcoin blockchain. The transaction consideration the Company receives, if any, is noncash consideration and is all variable. Because digital currency is considered noncash consideration, fair value of the digital currency award received would generally be determined using the quoted price of the related digital currency in the Company’s principal market at the time of contract inception. The Company has adopted an accounting policy to aggregate individual contracts with individual terms less than 24-hours within each intraday period and apply a consistent valuation point, the start of day Coordinated Universal Time (00:00:00 UTC), to value the related noncash consideration. Revenue is recognized when it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur, which is the same day that control of the contracted service transfers to the mining pool, which is the same day as the contract inception. After every 24-hour contract term, the mining pool transfers the digital currency consideration to our designated digital currency wallet. Consideration payable to the customer in the form of a pool operator fee, which is incurred only to the extent that the Company has generated FPPS consideration, is deducted from the bitcoin the Company receives and is recorded as contra-revenue, as it does not represent a payment for a distinct good or service. Data Center Hosting The Company’s hosting contracts were service contracts with a single performance obligation. The service the Company provided primarily included hosting the customers’ miners in a physically secure data center with electrical power, internet connectivity, ambient air cooling and available maintenance resources. Hosting revenue was recognized over time as the customer simultaneously receives and consumes the benefits of the Company’s performance. The Company recognized hosting revenue to the extent that a significant reversal of such revenue will not occur. Data center hosting customers were invoiced and payments were due on a monthly basis. While the majority of consideration was paid in cash, certain consideration was payable in digital currency. Because digital currency is considered noncash consideration, fair value of the digital currency award received was determined using the quoted price of the related digital currency in the Company’s principal market at the time of contract inception. The Company had one data center hosting contract with a customer, which expired in February 2024, for which the quoted price of bitcoin in the Company’s principal market at the time of contract inception was approximately $38,000. The Company recorded miner hosting revenue of $0.8 million and $2.3 million during the three months ended March 31, 2024 and 2023, respectively. Cost of Revenue Cost of revenue for mining pool revenue is comprised primarily of direct costs of electricity but excludes depreciation which is separately presented. Cost of revenue for data center hosting is comprised primarily of direct costs of electricity, labor and internet provision. Power Curtailment Credits Proceeds related to participation in demand response programs are recorded as a reduction in cost of revenue in the consolidated statements of operations in the period corresponding to the underlying associated demand response program period. The Company recorded demand response program amounts of approximately $1.2 million and $0.1 million during the three months ended March 31, 2024 and 2023, respectively. Cash and Cash Equivalents Highly liquid instruments with an original maturity of three months or less are classified as cash equivalents. As of March 31, 2024 and December 31, 2023, the Company had cash and cash equivalents of $45.8 million and $54.4 million, respectively. The Company currently maintains cash and cash equivalent balances primarily at two financial institutions that are insured by the Federal Deposit Insurance Corporation (“FDIC”). The Company’s accounts at these institutions are insured, up to $250,000, by the FDIC. As of March 31, 2024, the Company had no bank balances that exceeded the FDIC insurance limit. To reduce its risk associated with the failure of such financial institutions, the Company evaluates at least annually the rating of the financial institutions in which it holds deposits. Supplemental Cash Flow Information The following table shows supplemental cash flow information (in thousands): Three Months Ended 2024 2023 Supplemental disclosure of non-cash activities: Cumulative-effect adjustment due to the adoption of Accounting Standard Update 2023-08 $ 37 $ — Contribution of plant and equipment or deposits on plant and equipment to joint venture $ — $ 35,792 Common stock issuance costs in accounts payable $ — $ 250 Purchases of and deposits on plant and equipment in accounts payable, accrued construction liabilities, other accrued liabilities and long-term debt $ 4,385 $ 2,621 Purchases of and deposits on plant and equipment with digital currency $ 316 $ — Investment in joint venture in other accrued liabilities, other amounts due to related parties and long-term debt $ — $ 721 Convertible promissory notes converted to common stock $ — $ 4,666 Common stock issued for share based liabilities due to related party $ 2,500 $ — Common stock warrants issued for discount on long-term debt $ — $ 16,036 Decrease to investment in joint venture and increase in plant and equipment for distribution or transfer of nonmonetary assets $ — $ 4,519 Decrease to investment in joint venture due to bitcoin received as distribution from investee $ 12,022 $ — Common stock reacquired in exchange for warrants $ — $ 12,479 Nonmonetary Transactions The Company accounts for goods and services exchanged in nonmonetary transactions at fair value unless the underlying exchange transaction lacks commercial substance or the fair value of the assets received or relinquished is not reasonably determinable, in which case the nonmonetary exchange would be measured based on the recorded amount of the nonmonetary asset relinquished. Digital currency Digital currency is comprised of bitcoin earned as noncash consideration in exchange for providing hash computation services to a mining pool as well as in exchange for data center hosting services which are accounted for in connection with the Company’s revenue recognition policy disclosed above. From time to time, the Company also receives bitcoin as distributions-in-kind from its joint venture. Digital currency is included in current assets in the consolidated balance sheets due to the Company’s ability to sell it in a highly liquid marketplace and because the Company reasonably expects to liquidate its digital currency to support operations within the next twelve months. In December 2023, the FASB issued Accounting Standards Update (“ASU”) No. 2023-08, Intangible – Goodwill and Other – Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets (“ASU 2023-08”). ASU 2023-08 requires entities with certain crypto assets to subsequently measure such assets at fair value, with changes in fair value recorded in net income in each reporting period. Crypto assets that meet all the following criteria are within the scope of the ASC 350-60: • meet the definition of intangible assets as defined in the Codification • do not provide the asset holder with enforceable rights to or claims on underlying goods, services, or other assets • are created or reside on a distributed ledger based on blockchain or similar technology • are secured through cryptography • are fungible, and • are not created or issued by the reporting entity or its related parties. In addition, entities are required to provide additional disclosures about the holdings of certain crypto assets. ASU 2023-08 is effective for fiscal years beginning after December 15, 2024, including interim periods within those fiscal years. Early adoption is permitted and the Company has elected to early adopt ASU 2023-08 effective January 1, 2024, resulting in a cumulative-effect change of $37,000 to increase the balance of digital currency with a corresponding decrease in the opening balance of accumulated deficit in the consolidated balance sheet as of January 1, 2024. As a result of adopting ASU 2023-08 on January 1, 2024, the Company measures digital currency at fair value as of each reporting period in accordance with ASC 820, Fair Value Measurement (“ASC 820”), based on quoted prices on the active trading platform that the Company normally transacts and has determined is its principal market for bitcoin (Level 1 inputs), based on all information that is reasonably available. Since bitcoin is traded on a 24-hour period, the Company utilizes the price as of midnight UTC time, which aligns with the Company's revenue recognition policy. Gains and losses from the remeasurement of digital currency are included within gain on fair value of digital currency, net in the consolidated statements of operations. The Company sells bitcoin and gains and losses from such transactions, measured as the difference between the cash proceeds and the carrying basis of bitcoin as determined on a first-in-first-out basis, are also included within gain on fair value of digital currency, net in the consolidated statements of operations. During the three months ended March 31, 2024, the Company recognized $1.3 million of gain on fair value of digital currency, net. Prior to the adoption of ASU 2023-08, the Company accounted for digital currency 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 if events or changes in circumstances indicate it is more likely than not that the asset is impaired. Impairment exists when the carrying amount exceeds its fair value. In testing for impairment, the Company 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 the Company concludes otherwise, it is required to perform a quantitative impairment test. The Company elected to bypass the optional qualitative impairment assessment and to track its bitcoin activity daily for impairment assessment purposes. The Company determined the fair value of its bitcoin on a nonrecurring basis in accordance with ASC 820 based on quoted prices on the active trading platform that the Company normally transacts and has determined is its principal market for bitcoin (Level 1 inputs), based on all information that was reasonably available. The Company performed an analysis each day to identify whether events or changes in circumstances, principally decreases in the quoted price of bitcoin on the active trading platform, indicated that it was more likely than not that its bitcoin were impaired. For impairment testing purposes, the lowest intraday trading price of bitcoin was identified at the single bitcoin level (one bitcoin). The excess, if any, of the carrying amount of bitcoin and the lowest daily trading price of bitcoin represented a recognized impairment loss. To the extent an impairment loss was recognized, the loss established the new cost basis of the asset. Subsequent reversal of previously recorded impairment losses was prohibited. The Company recognized impairment of digital currency of $0.6 million during the three months ended March 31, 2023. Digital currency received as noncash consideration through the Company’s mining activities are included as an adjustment to reconcile net loss to cash provided by (used in) operating activities on the consolidated statements of cash flows. The receipt of digital currency as distributions-in-kind from equity investees are included within supplemental disclosures of noncash investing activities. Proceeds from sales of digital currency are included within cash flows from operating activities on the consolidated statements of cash flows as bitcoin are converted nearly immediately into cash. Concentrations The Company and its joint venture have primarily contracted with two suppliers for the provision of bitcoin miners and one mining pool operator. The Company does not believe that these counterparties represent a significant performance risk. Revenue from one data center hosting customer represents 1.8% and 17.2% of consolidated revenue for the three months ended March 31, 2024 and 2023, respectively. During the three months ended March 31, 2024 and 2023, the Company only operated bitcoin mining facilities; however, the Company has targeted an initial commitment for an allocation of a 2 MW power block at the Lake Mariner Facility intended to support a broader HPC initiative. While the Company may choose to mine other digital currencies, it has no plans to do so currently. If the market value of bitcoin declines significantly, the consolidated financial condition and results of operations of the Company may be adversely affected. Property, Plant and Equipment Property, plant and equipment are recorded at cost, net of accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets (generally 5 years for computer equipment and 4 years for miners). Leasehold improvements and electrical equipment are depreciated over the shorter of their estimated useful lives or the lease term. Changes in depreciation and amortization, generally accelerated depreciation and variable amortization, are determined and recorded when estimates of the remaining useful lives or residual values of long-term assets change. Property, plant and equipment, net includes deposits, amounting to approximately $16.3 million and $36.5 million as of March 31, 2024 and December 31, 2023, respectively, on purchases of such assets, including miners, which would be included in property, plant and equipment upon receipt. Interest related to construction of assets is capitalized when the financial statement effect of capitalization is material, construction of the asset has begun, and interest is being incurred. Interest capitalization ends at the earlier of the asset being substantially complete and ready for its intended use or when interest costs are no longer being incurred. Impairment of Long-lived Assets The Company reviews its long-lived assets, including property, plant and equipment, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset, or asset group, may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to undiscounted cash flows expected to be generated by the asset. Any impairment loss recorded is measured as the amount by which the carrying value of the assets exceeds the fair value of the assets. During the three months ended March 31, 2024 and 2023, the Company recorded no impairment charges for long-lived assets. Leases The Company determines if an arrangement is a lease at inception and, if so, classifies the lease as an operating or finance lease. Operating leases are included in right-of-use (“ROU”) asset, current portion of operating lease liability, and operating lease liability, net of current portion in the consolidated balance sheets. Finance leases would be included in property, plant and equipment, current portion of finance lease liabilities, and finance lease liabilities, net of current portion in the consolidated balance sheets. The Company does not recognize a ROU asset or lease liability for short-term leases having initial terms of 12 months or less and instead recognizes rent expense on a straight-line basis over the lease term. In an arrangement that is determined to be a lease, the Company includes both the lease and nonlease components as a single component and accounts for it as a lease when the Company would otherwise recognize the cost associated with both the lease and nonlease components in a similar fashion. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Lease ROU assets and liabilities are recognized at commencement date, and subsequently remeasured upon changes to the underlying lease arrangement, based on the present value of lease payments over the lease term. If the lease does not provide an implicit rate or if the implicit rate is not determinable, the Company generally uses an estimate of its incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at the commencement date. The ROU asset also includes any lease prepayments made and excludes lease incentives. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Costs associated with operating lease ROU assets are recognized on a straight-line basis within operating expenses or selling, general and administrative, as appropriate, over the term of the lease. Variable lease costs are recognized as incurred and primarily consist of common area maintenance charges not included in the measurement of right-of-use assets and operating lease liabilities. Finance ROU lease assets are amortized within operating expenses or selling, general and administrative expenses, as appropriate, on a straight-line basis over the shorter of the estimated useful lives of the assets or, in the instance where title does not transfer at the end of the lease term, the lease term. The interest component of a finance lease is included in interest expense and recognized using the effective interest method over the lease term. As of March 31, 2024 and December 31, 2023, the Company was not a counterparty to any finance leases. Debt Issuance Costs and Debt Discount Debt issuance costs and debt discount are recorded as a direct reduction of the carrying amount of the debt and are amortized to interest expense using the effective interest method over the contractual term of the debt and in consideration of expected future principal payments subject to an excess cash flow sweep (see Note 9). Debt issuance costs include incremental third-party costs directly related to debt issuance such as attorney and financial advisor fees. Debt discount includes upfront fees and proceeds allocated to other components included in the debt issuance. The allocation of proceeds between the debt instrument and any other components included in the debt issuance, including common stock or warrants to purchase common stock, is generally based on the relative fair value allocation method. All warrants granted by the Company as a component of debt transactions are classified as equity in the consolidated balance sheets as of March 31, 2024 and December 31, 2023. Debt Modification The Company evaluates amendments to its debt instruments in accordance with applicable U.S. GAAP. This evaluation includes comparing (1) if applicable, the change in fair value of an embedded conversion option to that of the carrying amount of the debt immediately prior to amendment and (2) the net present value of future cash flows of the amended debt to that of the original debt to determine, in each case, if a change greater than 10% occurred. In instances where the net present value of future cash flows or the fair value of an embedded conversion option, if any, changed more than 10%, the Company applies extinguishment accounting. In instances where the net present value of future cash flows and the fair value of an embedded conversion option, if any, changed less than 10%, the Company accounts for the amendment to the debt as a debt modification. For debt that has been amended more than once in a twelve-month period, the debt terms that existed just prior to the earliest amendment occurring in the prior twelve months are applied to the 10% test, provided modification accounting was previously applied. Gains and losses on debt amendments that are considered extinguishments are recognized in current earnings. Debt amendments that are considered debt modifications are accounted for prospectively through yield adjustments, based on the revised terms. Legal fees and other costs incurred with third parties that are directly related to debt modifications are expensed as incurred and generally are included in interest expense in the consolidated statements of operations. Amounts paid by the Company to the lenders, including upfront fees and the fair value of warrants issued, are included in future cash flows for accounting treatment determination and, if debt modification is applicable, are also included in the determination of yield adjustment. Convertible Instruments The Company accounts for its issuance of convertible debt and convertible equity instruments in accordance with applicable U.S. GAAP. In connection with that accounting, the Company assesses the various terms and features of the agreement in accordance with ASC 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging Activities (“ASC 815”). ASC 480 requires liability accounting for certain financial instruments, including shares that embody an unconditional obligation to transfer a variable number of shares, provided that the monetary value of the obligation is based solely or predominantly on one of the following three characteristics: (1) a fixed monetary amount known at inception, (2) variations in something other than the fair value of the issuer’s equity shares or (3) variations in the fair value of the issuer’s equity shares, but the monetary value to the counterparty moves in the opposite direction as the value of the issuer’s shares. In accordance with ASC 815, the Company assesses the various terms and features of the agreement to determine whether or not they contain embedded derivative instruments that are required under ASC 815 to be accounted for separately from the host contract and recorded on the balance sheet at fair value. The fair value of derivative liabilities, if any, is required to be revalued at each reporting date, with corresponding changes in fair value recorded in the current period's operating results. Warrants The Company applies ASC 480 and ASC 815 to assist in the determination of whether warrants issued for the purchase of Common Stock should be classified as liabilities or equity. Warrants that are determined to require liability classification are measured at fair value upon issuance and are subsequently remeasured to their then fair value at each subsequent reporting period with changes in fair value recorded in current earnings. Warrants that are determined to require equity classification are measured at fair value upon issuance and are not subsequently remeasured unless they are required to be reclassified. All warrants granted by the Company to date are classified as equity. Stock Issuance Costs Stock issuance costs are recorded as a reduction to issuance proceeds. Stock issuance costs incurred prior to the closing of the related issuances, including under shelf registration statements, are recorded in other assets in the consolidated balance sheets if the closing of the related issuance is deemed probable. Stock-based Compensation The Company periodically issues restricted stock units (“RSUs”) to employees and non-employees in non-capital raising transactions for services. In accordance with ASC 718, Compensation – Stock Compensation , the Company measures stock-based compensation cost at the grant date, based on the estimated fair value of the award. For RSUs with time-based vesting, the fair value is determined by the Company’s stock price on the date of grant. For RSUs with vesting based on market conditions (“PSUs”), the effect of the market condition is considered in the determination of fair value on the grant date using a Monte Carlo simulation model. As of March 31, 2024, the Company had not issued stock options. Expense for RSUs is recognized on a straight-line basis over the employee’s or non-employee’s service period, including the derived service period for PS |
BUSINESS COMBINATION, ASSETS HE
BUSINESS COMBINATION, ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS | 3 Months Ended |
Mar. 31, 2024 | |
Business Combination and Asset Acquisition [Abstract] | |
BUSINESS COMBINATION, ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS | BUSINESS COMBINATION, ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS On December 13, 2021, the Company completed the Merger with RM 101 (formerly known as IKONICS Corporation) pursuant to which, among other things, the Company effectively acquired RM 101 and became a publicly traded company on the Nasdaq. The consideration in the Merger included, among other things, contractual contingent value rights (“CVR”) per a Contingent Value Rights Agreement (the “CVR Agreement”), pursuant to which each shareholder of RM 101 as of immediately prior to the Merger, received one non-transferable CVR for each outstanding share of common stock of RM 101 then held. The holders of the CVRs were entitled to receive 95% of the Net Proceeds (as defined in the CVR Agreement), if any, from the sale, transfer, disposition, spin-off, or license of all or any part of the pre-merger business of RM 101. Payments under the CVR Agreement were calculated quarterly, paid on the sixtieth day after the respective quarterly calculation period and were subject to a reserve of up to 10% of the Gross Proceeds (as defined in the CVR Agreement) from such transaction or more under certain conditions. The CVRs did not confer to the holders thereof any voting or equity or ownership interest in TeraWulf, were not transferable, except in limited circumstances, and were not listed on any quotation system or traded on any securities exchange. The CVR Agreement terminated after all payment obligations to the holders thereof were satisfied. In August 2022, RM 101 sold a certain property, including a warehouse, to a third party for $6.7 million gross with net sale proceeds of $6.2 million. The Definitive Agreement governing the sale included certain indemnifications which were subject to an $850,000 limitation and which expired in August 2023. In August 2022, RM 101 sold (i) certain property, including a warehouse and a building which houses manufacturing, operations and administration, (ii) substantially all of its working capital and (iii) its historical business to a third party for $7.7 million gross, including net working capital, with net sale proceeds of $7.0 million. The Asset Purchase Agreement (the “APA”) governing the sale was structured as an asset sale. The APA included certain indemnifications which were subject to a $650,000 limitation and a related escrow of that amount upon consummation of the transaction. Substantially all the remaining purchase price was placed into escrow upon consummation of the transaction pending the completion of certain remaining environmental testing and remediation resulting therefrom, if any. In February 2023, all escrowed funds were released to the Company. During the three months ended March 31, 2023, the Company made payments of the CVR liability related to proceeds from sales of net assets held for sale of $3.9 million. Additionally, the Company made payments of the CVR liability of $5.7 million and $1.4 million in May and November 2023, respectively, such that as of December 31, 2023, the Company had made all of the aggregate required distributions of $11.0 million of proceeds to the CVR Holders and the CVR Agreement was deemed terminated. Upon acquisition, the RM 101 business met the assets held-for-sale and discontinued operations criteria and is reflected as discontinued operations held for sale in these consolidated financial statements. The loss from discontinued operations, net of tax presented in the consolidated statements of operations included immaterial selling, general and administrative, and was $0 and $35,000 for the three months ended March 31, 2024 and 2023, respectively. Total cash flows used in operating activities from discontinued operations was $0 and $0.1 million in the consolidated statements of cash flows for the three months ended March 31, 2024 and 2023, respectively. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 3 Months Ended |
Mar. 31, 2024 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, a three-level fair value hierarchy prioritizing the inputs to valuation techniques is used to measure fair value. The levels are as follows: (Level 1) observable inputs such as quoted prices in active markets for identical assets or liabilities; (Level 2) observable inputs for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; or inputs other than quoted prices that are observable either directly or indirectly from market data; and (Level 3) unobservable inputs in which there is little or no market data, which require the Company to develop its own assumptions. This hierarchy requires the Company to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value. The following table presents the Company’s financial instruments measured at fair value on a recurring basis and their level within the fair value hierarchy as of March 31, 2024 (in thousands): Carrying Value Level 1 Level 2 Level 3 Bitcoin $ 2,018 $ 2,018 $ — $ — $ 2,018 $ 2,018 $ — $ — The Company has determined the long-term debt fair value as of March 31, 2024 is approximately $100.2 million (see Note 9). The carrying values of cash and cash equivalents, prepaid expenses, other receivables, other current assets, accounts payable, accrued construction liabilities, other accrued liabilities and other amounts due to related parties are considered to be representative of their respective fair values principally due to their short-term maturities. There were no additional material non-recurring fair value measurements as of March 31, 2024 and December 31, 2023, except for (i) the calculation of fair value of Common Stock warrants issued in connection with amendments to the Company’s long-term debt agreement (see Note 9), in connection with the issuance of Common Stock (see Note 15), in connection with a Common Stock exchange agreement (see Note 14) and on a standalone basis (see Note 14), (ii) the change in fair value of embedded derivatives in certain of the Company’s convertible promissory notes (see Note 14) and (iii) the calculation of fair value of nonmonetary assets distributed from the Company’s joint venture (see Note 11). The Company utilized a Black-Scholes option pricing model to value its Common Stock warrants issued (except as discussed for warrants issued in connection with the New Term Facility and the Fifth Amendment (each as defined in Note 9) and to value the change in fair value of embedded derivatives in certain of the Company’s convertible promissory notes. The estimated fair value of the warrants and embedded derivatives is determined using Level 2 and Level 3 inputs. Inherent in the model and fair value estimate are assumptions related to expected share-price volatility, expected life, risk-free interest rate and dividend yield. The Company estimates volatility based on public company peer group volatility over the contractual term of the warrants. The risk-free interest rate is based on the U.S. Treasury rate on the grant date for a maturity similar to the expected life of the warrants or the conversion term, as applicable. The dividend rate is based on the historical rate, which the Company anticipates will remain at zero. |
BITCOIN
BITCOIN | 3 Months Ended |
Mar. 31, 2024 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
BITCOIN | BITCOIN The following table presents the Company’s bitcoin holdings as of March 31, 2024 and December 31, 2023: Bitcoin holdings March 31, 2024 December 31, 2023 Number of bitcoin held 28 43 Carrying basis of bitcoin (in thousands) $ 1,982 $ 1,801 Fair value of bitcoin (in thousands) $ 2,018 $ 1,838 The carrying basis represents the valuation of bitcoin at the time the Company earns the bitcoin through mining activities. The carrying amount for 43 bitcoin held as of December 31, 2023 was determined on the “cost-less-impairment” basis prior to the adoption of ASU 2023-08. The Company’s bitcoin holdings are not subject to contractual sale restrictions. As of March 31, 2024, the Company held no other digital currency. |
PROPERTY, PLANT AND EQUIPMENT
PROPERTY, PLANT AND EQUIPMENT | 3 Months Ended |
Mar. 31, 2024 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY, PLANT AND EQUIPMENT | PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment, net consisted of the following (in thousands): March 31, 2024 December 31, 2023 Miners $ 160,014 $ 100,531 Construction in process 11,848 24,578 Leasehold improvements 77,689 62,850 Equipment 22,007 15,736 Vehicles 104 104 Deposits on miners 16,298 36,469 287,960 240,268 Less: accumulated depreciation (50,071) (34,984) $ 237,889 $ 205,284 Prior to the three months ended March 31, 2024, the Company capitalized a portion of the interest on funds borrowed to finance its capital expenditures. Capitalized interest is recorded as part of an asset’s cost and is depreciated over the same period as the related asset. Capitalized interest costs were $0 and $1.0 million for the three months ended March 31, 2024 and 2023, respectively. Depreciation expense was $15.1 million and $5.4 million for the three months ended March 31, 2024 and 2023, respectively. During the three months ended March 31, 2024, the Company recorded accelerated depreciation expense of $3.8 million related to certain miners of which the Company shortened their estimated useful lives based on expected replacement by April 30, 2024. |
LEASES
LEASES | 3 Months Ended |
Mar. 31, 2024 | |
Leases [Abstract] | |
LEASES | LEASES In May 2021, the Company entered into a ground lease (the “Ground Lease”) related to the Lake Mariner Facility in New York with a counterparty which is a related party due to control by a member of Company management, which was subsequently amended in July 2022. The Ground Lease includes fixed payments and contingent payments, including an annual escalation factor as well as the Company’s proportionate share of the landlord’s cost to own, operate and maintain the premises. The Ground Lease has a term of eight years and a renewal term of five years at the option of the Company, subject to the Company not then being in default, as defined. The Ground Lease, which is classified as an operating lease, was remeasured as of the date of the amendment and utilized a discount rate of 12.6%, which was an estimate of the Company’s incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at the remeasurement date. Upon expiration of the lease, the buildings and improvements on the premises will revert to the landlord in good order. For the three months ended March 31, 2024 and 2023, the Company recorded operating lease expense of $0.3 million and $0.3 million, respectively, including contingent expense of $36,000 and $0.1 million, respectively, in operating expenses – related party in the consolidated statements of operations and made cash lease payments of $0.1 million and $0.3 million, respectively. The remaining lease term based on the terms of the amended Ground Lease as of March 31, 2024 is 10.2 years. The following is a maturity analysis of the annual undiscounted cash flows of the estimated operating lease liabilities as of March 31, 2024 (in thousands): Year ending December 31: 2024 $ 122 2025 163 2026 163 2027 163 2028 163 Thereafter 882 $ 1,656 A reconciliation of the undiscounted cash flows to the operating lease liabilities recognized in the consolidated balance sheet as of March 31, 2024 follows (in thousands): Undiscounted cash flows of the operating lease $ 1,656 Unamortized discount 721 Total operating lease liability 935 Current portion of operating lease liability 49 Operating lease liability, net of current portion $ 886 The Company periodically enters into short term lease arrangements for operating equipment and recorded $48,000 and $0.1 million under these short-term lease arrangements in operating expenses in the consolidated statements of operations for the three months ended March 31, 2024 and 2023, respectively. |
INCOME TAXES
INCOME TAXES | 3 Months Ended |
Mar. 31, 2024 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The Company’s tax provision or benefit from income taxes for interim periods is determined using an estimate of the Company’s annual effective tax rate, adjusted for discrete items, if any, that are taken into account in the relevant period. The Company has an effective tax rate of 0% for each of the three months ended March 31, 2024 and 2023. The Company’s effective rate differs from its statutory rate of 21% primarily due to the recording of a valuation allowance against its deferred tax assets. ASC 740 requires a valuation allowance to reduce the deferred tax assets reported if, based on the weight of available evidence, it is more likely than not that some or a portion or all the deferred tax assets will not be realized. As of March 31, 2024 and 2023, the Company estimated a portion of its deferred tax assets will be utilized to offset the Company’s deferred tax liabilities. Based upon the level of historical U.S. losses and future projections over the period in which the remaining deferred tax assets are deductible, at this time, management believes it is more likely than not that the Company will not realize the benefits of the remaining deductible temporary differences, and as a result the Company has recorded a valuation allowance as of March 31, 2024 and December 31, 2023 for the amount of deferred tax assets that will not be realized. The Company has no unrecognized tax benefits as of March 31, 2024 and December 31, 2023. The Company’s policy is to recognize interest accrued and penalties related to unrecognized tax benefits in tax expense. No accrued interest or penalties were recorded during the three months ended March 31, 2024 and 2023. |
DEBT
DEBT | 3 Months Ended |
Mar. 31, 2024 | |
Debt Disclosure [Abstract] | |
DEBT | DEBT Long-term debt consists of the following (in thousands): March 31, 2024 December 31, 2023 Term loan $ 105,990 $ 139,401 Debt issuance costs and debt discount (6,664) (15,970) Property, plant and equipment finance agreement 81 90 99,407 123,521 Less long-term debt due within one year 99,360 123,465 Total long-term debt, net of portion due within one year $ 47 $ 56 On December 1, 2021, the Company entered into a Loan, Guaranty and Security Agreement (the “LGSA”) with Wilmington Trust, National Association as administrative agent, which consisted of an original term loan facility of $123.5 million (the “Original Term Loan”). In July 2022, the Company entered into an amendment to the LGSA (the “First Amendment”) and borrowed $15.0 million at its closing (the “First Amendment Term Loan”). In October 2022, the Company entered into a third amendment to the LGSA (the “Third Amendment”) and borrowed $7.5 million at its closing (the “Third Amendment Term Loan” and, collectively with the Original Term Loan and First Amendment Term Loan, the “Term Loans”). The Term Loans bear an interest rate of 11.5% and have a maturity date of December 1, 2024. Upon the occurrence and during the continuance of an event of default, as defined, the applicable interest rate will be 13.5%. The interest rate may be increased, if applicable, to the cash interest rate on any junior capital raised plus 8.5%, if higher. As of March 31, 2024, no interest rate adjustments had been made under this provision. Subsequent to an amendment to the LGSA in March 2023 (the “Fifth Amendment,” as described below) and as of March 31, 2024, the Company is required to pay amounts subject to an excess cash flow sweep, as defined, on a quarterly basis which will automatically extend to the maturity of the Term Loans in the event the Company repays at least $40.0 million of the principal balance of the Term Loans by April 1, 2024. Interest payments were due quarterly in arrears prior to the Fifth Amendment and are due monthly in arrears subsequent to the Fifth Amendment. The Company has the option to prepay all or any portion of the Term Loans in increments of at least $5.0 million subject to certain prepayment fees for the Original Term Loan equal to (1) if paid prior to December 1, 2023, an amount of 3% of the prepaid principal and (2) if paid subsequent to December 1, 2023 but prior to the maturity date of the Term Loans, an amount of 2% of the prepaid principal. Certain events, as described in the LGSA, require mandatory prepayment. During the three months ended March 31, 2024 the Company repaid $33.4 million of the principal balance of the Term Loans, including a voluntary prepayment of $18.6 million, such that $40.0 million was repaid in the aggregate as of March 31, 2024 and the excess cash flow sweep automatically extended to the maturity of the Term Loans. In connection with the voluntary prepayment the Company recorded a loss on extinguishment of debt of $2.0 million which is included in the consolidated statement of operations for the three months ended March 31, 2024, consisting of $0.3 million of prepayment fees and the immediate write-off of $1.7 million of unamortized debt discount associated with the principal repaid. The Company made no repayments on the principal balance of the Term Loans during the three months ended March 31, 2023. The Term Loans are guaranteed by TeraWulf Inc. and TeraCub and its subsidiaries, as defined, and is collateralized by substantially all of the properties, rights and assets of TeraWulf Inc. and its subsidiaries (except RM 101), as defined. The LGSA, as amended, requires the Company to maintain or meet certain affirmative, negative and reporting covenants. The affirmative covenants include, among other things, a requirement for the Company to maintain insurance coverage, maintain mining equipment and comply in all material respects with the Company’s Nautilus joint venture agreement (see Note 11), each as defined. The negative covenants restrict or limit the Company’s ability to, among other things, incur debt, create liens, divest or acquire assets, make restricted payments and permit the Company’s interest in the Nautilus joint venture to be reduced below 25%, each as defined. The LGSA also contains usual and customary events of default. If an event of default occurs and is continuing, the then outstanding obligations under the LGSA may become immediately due and payable. As of December 31, 2023, certain of the investors in the Term Loans were related parties due to cumulative voting control by members of the Company’s management and an individual who was then a member of the Company’s board of directors. As of March 31, 2024 and December 31, 2023, the outstanding principal amounts under the Term Loans held by related party entities were $6.7 million and $12.9 million, respectively. In connection with the Original Term Loan, the Company issued to the holders of the Original Term Loan 839,398 shares of Common Stock (the “Term Loan Equity”), which is a quantity of Common Stock which represented 1.5% of the outstanding shares of the publicly registered shares of TeraWulf subsequent to the closing of the Original Term Loan. In connection with the issuance of the Original Term Loan, the Company incurred aggregate issuance costs of approximately $4.0 million, in addition to a $1.2 million upfront fee. The aggregate issuance costs and the upfront fee were allocated to the Term Loan Equity and the Original Term Loan based on the relative fair value method in the amounts of $1.1 million and $4.1 million, respectively. For the Original Term Loan, this $4.1 million was included in debt discount along with the fair value of the Term Loan Equity, an amount of $25.7 million. The total of these items, an amount of $29.8 million, represented debt issuance costs and debt discount and was deducted from the Original Term Loan proceeds and was being accreted into the long-term debt balance over the term of the debt at an effective interest rate of 12.9%, which was in addition to the stated interest rate. In July 2022, the First Amendment to the LGSA provided for an additional $50.0 million term loan facility (the “New Term Facility”). Pursuant to the New Term Facility, funds could have been drawn in three tranches. The First Amendment Term Loan represented the first tranche and was drawn at closing in July 2022, and the subsequent tranches of up to $35 million (the “Delayed Draw Term Loan Commitment”) may have been drawn at Company’s option prior to December 31, 2022, subject to certain conditions, including the raising of matching junior capital, as defined. In connection with the New Term Facility, the Company paid an upfront fee of $0.1 million and issued warrants to the lenders under the New Term Facility to purchase 5,787,732 shares of Common Stock at $0.01 per share, an aggregate number of shares of the Company’s Common Stock equal to 5.0% (comprised of 2.0% related to the Delayed Draw Term Loan Commitment and 3.0% related to the First Amendment Term Loan) of the then fully diluted equity of the Company. In connection with the issuance of the New Term Facility, the Company also incurred aggregate issuance costs of approximately $1.5 million, in addition to the aforementioned upfront fee. If the Company drew subsequent tranches, it was required to issue warrants to the lenders to purchase shares of the Company’s Common Stock equal to dilution of 3.75% upon the issuance of a second tranche in the amount of $15.0 million and 4.25% upon issuance of a third tranche in the amount of $20.0 million, in each case as a percentage of the then fully diluted equity of the Company, respectively. The Company determined that debt modification accounting applied in connection with the New Term Facility. Third party and upfront fees were allocated pro rata between the First Amendment Term Loan and the Delayed Draw Term Loan Commitment. Fees paid to lenders and the allocated value of the Common Stock warrants, an aggregate $3.5 million, related to the First Amendment Term Loan were included with the unamortized discount on the Original Term Loan and were being amortized as an adjustment of interest expense over the remaining term of the Term Loans at an effective rate of 13.1%, which was in addition to the stated interest rate. In October 2022, the Third Amendment to the LGSA divided the initial funding of up to $15.0 million of the Delayed Draw Term Loan Commitment under the First Amendment to the LGSA into two tranches of up to $7.5 million each. The Third Amendment Term Loan represented the first tranche and was borrowed upon the closing in October 2022. In connection with the Third Amendment, the Company entered into an amendment and restatement of the warrant agreement related to the New Term Facility. The amended and restated warrant agreement provides that holders thereto are entitled to additional warrants to purchase an aggregate number of shares of Common Stock equal to an incremental 3.75%, to be divided into two separate increments of 1.875% each, of the fully diluted equity of the Company, determined on the date of the funding of the two separate sub-tranches of $7.5 million each pursuant to the Third Amendment. In connection with the Third Amendment Term Loan, the Company issued warrants to purchase 2,667,678 shares of Common Stock at $0.01 per share. The fair value of the Common Stock warrants and the related proportional carrying value of the Commitment Fee Asset, an aggregate $2.9 million, related to Third Amendment were included with the unamortized discount on the Original Term Loan and First Amendment Term Loan and were being amortized as an adjustment of interest expense over the remaining term of the Term Loans at an effective rate of 25.1%, which was in addition to the stated interest rate. In March 2023, the Fifth Amendment to the LGSA eliminated mandatory amortization of the Term Loans through April 7, 2024, as long as the Company received aggregate net proceeds of at least $33.5 million from the issuance of equity or equity-linked securities by March 15, 2023 (such condition, the “Amortization Relief Condition”). The Company satisfied the Amortization Relief Condition on March 9, 2023. As a condition of the Fifth Amendment becoming effective, the Company entered into a warrant agreement (the “Warrant Agreement”) to issue the following warrants to the lenders: (i) 27,759,265 warrants to purchase an aggregate number of shares of the Company’s Common Stock equal to 10.0% of the fully diluted equity of the Company as of the Fifth Amendment effective date with an exercise price of $0.01 per share of the Company’s Common Stock (the “Penny Warrants”) and (ii) 13,879,630 warrants to purchase an aggregate number of shares of the Company’s Common Stock equal to 5.0% of the fully diluted equity of the Company as of the Fifth Amendment effective date with an exercise price of $1.00 per share of the Company’s Common Stock (the “Dollar Warrants”). The quantity of the Penny Warrants and the Dollar Warrants include the final impact of anti-dilution protection for additional capital raising transactions by the Company of up to $5.0 million subsequent to the $33.5 million aggregate net proceeds associated with the Amortization Relief Condition. The Penny Warrants are exercisable during the period beginning on April 1, 2024 and ending on December 31, 2025, and the Dollar Warrants are exercisable during the period beginning on April 1, 2024 and ending on December 31, 2026. In March 2023, in connection with the issuance of the warrants pursuant to the Warrant Agreement, the Company entered into a registration rights agreement pursuant to which the Company has agreed to provide customary shelf and piggyback registration rights to the LGSA lenders with respect to the common stock issuable upon exercise of the warrants described above. The Company determined that debt modification accounting applied in connection with the Fifth Amendment. Because the First Amendment and the Fifth Amendment occurred within a twelve-month period, the debt terms that existed just prior to the First Amendment were applied in determining the appropriateness of the debt modification accounting model. The allocated value of the Penny Warrants and Dollar Warrants, an aggregate $16.0 million, related to the Fifth Amendment were included with the unamortized discount on the LGSA, as amended, and are being amortized as an adjustment of interest expense over the remaining term of the modified LGSA at an effective rate of 28.5% as of March 31, 2024, which is in addition to the stated interest rate. During the three months ended March 31, 2024, the Company amortized total debt issuance costs and debt discount of $7.6 million which was recorded as interest expense in the consolidated statement of operations. During the three months ended March 31, 2023, the Company amortized total debt issuance costs and debt discount of $3.5 million, of which $2.5 million was recorded as interest expense in the consolidated statement of operations, $0.5 million was capitalized interest in property, plant and equipment, net in the consolidated balance sheet as of December 31, 2023, and $0.5 million was capitalized interest in equity in net assets of investee in the consolidated balance sheet as of December 31, 2023. Principal maturities of outstanding long-term debt as of March 31, 2024 are as follows (in thousands): Year ending December 31: 2024 $ 106,015 2025 36 2026 20 Total principal maturities $ 106,071 |
CONVERTIBLE PROMISSORY NOTES
CONVERTIBLE PROMISSORY NOTES | 3 Months Ended |
Mar. 31, 2024 | |
Equity [Abstract] | |
CONVERTIBLE PROMISSORY NOTES | CONVERTIBLE PROMISSORY NOTES In November 2022, the Company issued convertible promissory notes (the “Convertible Notes”) in an aggregate principal amount of approximately $3.4 million to certain accredited investors, including to members of Company management in the amount of $1.7 million. The Convertible Notes were issued in privately negotiated transactions as part of a private placement exempt from registration under the Securities Act of 1933, as amended. In December 2022, the Company amended the Convertible Notes to (a) change the conversion date to March 1, 2023 and (b) allow for the conversion price to be reduced if an additional Qualified Financing were to occur prior to the conversion date at a price lower than the then existing Convertible Note conversion price. As a result of the private placement, the conversion price was $0.40 per share of Common Stock. In January 2023, the Convertible Notes were amended to change the conversion date to the third business day following the Shareholder Approval Date (as defined in Note 14). In March 2023, the Convertible Notes and accrued but unpaid interest were converted into 8,628,024 shares of Common Stock. |
JOINT VENTURE
JOINT VENTURE | 3 Months Ended |
Mar. 31, 2024 | |
Equity Method Investments and Joint Ventures [Abstract] | |
JOINT VENTURE | JOINT VENTURE In May 2021, the Company and a subsidiary of Talen Energy Corporation (“Talen”) (each a “Member” and collectively the “Members”) entered into a joint venture, Nautilus Cryptomine LLC (“Nautilus”), to develop, construct and operate up to 300 MW of zero-carbon bitcoin mining in Pennsylvania (the “Joint Venture”). In connection with the Joint Venture, Nautilus simultaneously entered into (i) a ground lease (the “Nautilus Ground Lease”), which includes an electricity supply component, with a related party of Talen, (ii) a Facility Operations Agreement (the “FOA”) with a related party of the Company and (iii) a Corporate Services Agreement (the “CSA”) with a related party of Talen. Each Member originally held a 50% interest in the Joint Venture. The Members subsequently amended the Joint Venture agreement in August 2022 (the “A&R Nautilus Agreement”) and March 2023 (the “Second A&R Nautilus Agreement”) whereby, among other changes, the unit ownership will be determined by infrastructure contributions while distributions of mined bitcoin will be determined by each Member’s respective hashrate contributions. Members are allowed to make contributions of miners up to the effective electrical capacity of their owned infrastructure percentage. Each party retains access to 50% of the electricity supply outlined in the Nautilus Ground Lease. Pursuant to the Second A&R Nautilus Agreement, the Company holds a 25% equity interest in Nautilus and Talen holds a 75% equity interest in Nautilus, each subject to adjustment based on relative capital contributions. With the change in ownership percentage, governance rights were amended to provide for greater Talen board participation, among other changes. Pursuant to the terms of the Second A&R Nautilus Agreement, the Nautilus Cryptomine Facility initially requires 200 MW of electric capacity. Prior to May 13, 2024, the Company had the option to expand the energy requirement of the Nautilus Cryptomine Facility by up to 50 MW, funded solely by the Company. In February 2024, the Company exercised its election to expand the energy requirements of the Nautilus Cryptomine Facility by an additional 50 MW. Pursuant to the terms of the Second A&R Nautilus Agreement, the Talen Member may, within twelve months of the Company’s election, elect to expand the energy requirement of the Nautilus Cryptomine Facility by up to an additional 50 MW, funded solely by the Talen Member, for a total capacity of up to 300 MW. Upon such election, Nautilus will call additional capital for expansion and enter into an additional energy supply agreement with Talen Member or its affiliate for the additional capacity, subject to any regulatory approvals and third-party consents. As of May 13, 2024, no additional capital calls for expansion have been made and no additional energy supply has been procured. On March 1, 2024, a subsidiary of Talen sold substantially all its assets to an unaffiliated third party, including the land that Nautilus utilizes pursuant to the Nautilus Ground Lease. In connection with the sale, the Nautilus Ground Lease was assigned from Talen to the purchaser of the assets. The Company capitalized a portion of the interest on funds borrowed to finance its investments in Nautilus prior to Nautilus commencing its principal operations. Capitalized interest costs were $0 and $0.9 million for the three months ended March 31, 2024 and 2023, respectively. Distributions are made periodically in accordance with each Member’s respective hashrate contributions after deducting primarily each Member’s share of power and operational costs. The Company received bitcoin distributions from Nautilus with a fair value of $12.0 million and $0 during the three months ended March 31, 2024 and 2023, respectively. Nautilus is a VIE accounted for using the equity method of accounting. The table below summarizes the Company’s interest in Nautilus and the Company’s maximum exposure to loss as a result of its involvement with the VIE as of March 31, 2024 (in thousands, except for percentages): Entity % Ownership Initial Additional Net loss Company’s Commitment to Company’s Nautilus 25.0 % $ 18,000 $ 95,131 $ 21,265 $ 91,866 $ — $ 91,866 (1) The Members may mutually agree on changes to the Nautilus facility, which could increase the amount of contributions the Company is required to provide. The Members may seek alternate financing for the Nautilus facility, which could reduce the amount of investments each Member may be required to provide. (2) The maximum exposure at March 31, 2024 is determined by adding the Company’s variable interest in the entity and any explicit or implicit arrangements that could require the Company to provide additional financial support. The amount represents the contractually required capital contributions of the Company which were required for the initial phase of the Nautilus facility buildout. In August 2022, due to the change in Member ownership percentage and governance rights under the A&R Nautilus Agreement, Talen determined it controlled the Joint Venture from an accounting perspective and thereby was required to fair value the identifiable assets and liabilities of the Joint Venture for its internal accounting purposes. Under the CSA, Talen is responsible for maintaining the books and records of the Joint Venture and elected to push down the fair value adjustments to Nautilus’ books and records. The Company accounts for the Joint Venture as an equity method investment and the change in ownership percentage does not impact the Company’s method of accounting or basis. Therefore, there is a basis difference between the books and records of Nautilus and the Company’s accounting basis in the Joint Venture. The condensed results of operations for the three months ended March 31, 2024 and 2023 and the condensed financial position as of March 31, 2024 and December 31, 2023 of Nautilus are summarized below (in thousands): Three Months Ended 2024 2023 Condensed statement of operations information: Revenue $ 41,740 $ 9,106 Operating expense 26,322 12,137 Net income (loss) $ 15,418 $ (3,031) March 31, 2024 (1) December 31, 2023 (1) Condensed balance sheet information: Current assets $ 12,560 $ 12,406 Noncurrent assets 158,946 171,245 Total assets $ 171,506 $ 183,651 Current liabilities $ 13,289 $ 13,149 Noncurrent liabilities 29,755 29,493 Equity 128,462 141,009 Total liabilities and equity $ 171,506 $ 183,651 (1) The condensed statements of operations information for the three months ended March 31, 2024 and 2023 and the condensed balance sheet information as of March 31, 2024 and December 31, 2023 reflect the impact of the Talen-estimated fair value measurements of Nautilus which, resulting from the application of ASC 805, Business Combinations, have been pushed down to the books and records of Nautilus by Talen, as discussed above. The Company’s basis in the assets and liabilities of Nautilus continue to be recorded at historical value on the accompanying consolidated balance sheets. In February, March and April 2023, the Company, as allowed under the A&R Nautilus Agreement, transferred control of approximately 4,900 MinerVA miners from Nautilus to its Lake Mariner Facility, including certain miners that have yet to be shipped from MinerVA. Accordingly, the Company recorded the miners at an estimated fair value of $6.9 million, determined based on a contemporaneous observed market price for similar assets, in property, plant and equipment, net and the Company reduced the equity in net assets of investee balance by $20.5 million, the book value of the miners in Nautilus’ books and records, in the consolidated balance sheet as of December 31, 2023 and recorded a loss of $13.6 million as a component of equity in net loss of investee, net of tax in the consolidated statement of operations, of which $8.9 million was recorded during the three months ended March 31, 2023. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2024 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Litigation The Company is not a party to any material legal proceedings and is not aware of any pending or threatened claims. From time to time, the Company may be subject to various legal proceedings, regulatory inquiries and claims that arise in the ordinary course of its business activities. Bitmain Miner Purchase Agreements In March 2024, the Company entered into a Future Sales and Purchase Agreement (the “March 2024 Bitmain Purchase Agreement”) with Bitmain Technologies Delaware Limited (“Bitmain Delaware”) for the purchase of 5,000 S21 miners for a total purchase price of $17.5 million. As of March 31, 2024, the Company made payments of $3.5 million. Subsequent to March 31, 2024 the Company paid the remaining $14.0 million of the purchase price. The March 2024 Bitmain Purchase Agreement also provides the Company the right, but not the obligation, to purchase up to an additional 6,000 PH (approximately 30,000 miners), pursuant to certain payment timing conditions, by December 31, 2024 for a purchase price of $96.0 million (“Bitmain Call Option”). Pursuant to the Bitmain Call Option, the Company paid $9.6 million, calculated as 10% of the purchase price, as consideration for the Bitmain Call Option during the three months ended March 31, 2024 (the “Call Option Fee”). The Call Option Fee shall be applied to the settlement of future down payments of purchases under the Bitmain Call Option, in whole or in part in proportion to the ratio of quantity to be purchased to the maximum PH available under the Bitmain Call Option. Other Commitments In February 2022, the Company entered into an agreement with the Power Authority of the State of New York (“NYPA”) for the purchase of up to 90 MW of electric power over a term of ten years. This agreement includes certain Company site investment commitments including employment targets and capital investment targets. The allocation of 90 MW may be reduced by NYPA based on the Company’s actual electricity usage, as defined and periodically measured, if lower than the allocation or if the site investment commitments are not met. |
CONVERTIBLE PREFERRED STOCK
CONVERTIBLE PREFERRED STOCK | 3 Months Ended |
Mar. 31, 2024 | |
Temporary Equity Disclosure [Abstract] | |
CONVERTIBLE PREFERRED STOCK | CONVERTIBLE PREFERRED STOCK In March 2022, TeraWulf entered into Series A Convertible Preferred Stock Subscription Agreements (the “Subscription Agreements”) with certain accredited and institutional investors (collectively, the “Holders”). Pursuant to the Subscription Agreements, the Company sold 9,566 shares (of 10,000 shares authorized) of Series A Convertible Preferred Stock, par value $0.001 per share (the “Convertible Preferred Stock”) to the Purchasers for an aggregate purchase price of $9.6 million. The Subscription Agreements contain customary representations, warranties, covenants and agreements of the Company. The offer and sale of the Convertible Preferred Stock were made pursuant to the prospectus and prospectus supplement forming a part of the 2022 Registration Statement. Holders of the Convertible Preferred Stock will accumulate cumulative dividends at an annual rate of 10.0% on the stated amount per share plus the amount of any accrued and unpaid dividends on such share, accumulating on a daily basis and payable quarterly on March 31st, June 30th, September 30th and December 31st, respectively, in each year and commencing June 30, 2022. Commencing June 30, 2022, unpaid dividends will be accreted to the liquidation preference. The initial liquidation preference is $1,000 per share. Holders of the Convertible Preferred Stock will also be entitled to such dividends paid to holders of the Company’s Common Stock, if applicable, as if such holders of the Convertible Preferred Stock had converted their Preferred Shares into Common Stock (without regard to any limitations on conversions) and had held such shares of the Company’s Common Stock on the record date for such dividends and distributions. If applicable, such payments will be made concurrently with the dividend or distribution to the holders of the Company’s Common Stock. Upon liquidation, the Convertible Preferred Stock will rank senior to the Company’s Common Stock, and will have the right to be paid, out of the assets of the Company legally available for distribution to its stockholders, an amount equal to the Liquidation Preference (as defined in the Company’s Series A Convertible Preferred Certificate of Designations) per share of the Convertible Preferred Stock. Holders of Convertible Preferred Stock will not generally have the right to vote at any meeting of stockholders, except for certain protective voting rights, as defined. The Convertible Preferred Stock does not have a maturity date. The Holders of the Convertible Preferred Stock will have a right to effect an optional conversion of all or any whole number of shares of the Convertible Preferred Stock at any time and from time to time. The Company will have a right to effect a mandatory conversion of the Convertible Preferred Stock after the third anniversary of the issuance date if the Last Reported Sale Price (as defined in the Company’s Series A Convertible Preferred Certificate of Designations) per share of Common Stock exceeds 130% of the Conversion Price, as defined, on each of at least five (5) trading days (whether or not consecutive) during the fifteen consecutive trading days ending on, and including, the trading day immediately before the mandatory conversion notice date for such mandatory conversion. The number of shares of Common Stock issuable upon conversion will be equal to the liquidation preference, including accumulated and unpaid dividends, divided by the Conversion Price, as defined. The Conversion Price is determined by dividing $1,000 by the Conversion Rate, as defined, which is initially 100 shares of Common Stock per $1,000 liquidation preference of Convertible Preferred Stock. The Conversion Rate will be adjusted for certain customary events, including (but not limited to) stock dividends, stock splits or combinations, tender offers or exchange offers and, additionally, for Fundamental Changes, as defined, to include (but are not limited to) a change in control of the Company, disposition of substantially all assets of the Company, the Company’s Common Stock holders approve a plan of liquidation or dissolution or the Company’s Common Stock cease to be listed on the Nasdaq Capital Market. A Fundamental Change will adjust the Conversion Rate based on the date of the Fundamental Change and the Stock Price, as defined, on such date. The Conversion rate will not exceed 125 shares of Common Stock per $1,000 liquidation preference of Convertible Preferred Stock. If any Convertible Preferred Stock is to be converted pursuant to a Holder’s optional conversion, the Company will have the option to settle such conversion in cash, as defined. No dividends were paid during the three months ended March 31, 2024 and 2023. Cumulative dividends of $2.1 million were accumulated and accreted to liquidation preference as of March 31, 2024. As of March 31, 2024, the aggregate liquidation preference of the Convertible Preferred Stock was approximately $11.7 million. If the entire liquidation preference of the Convertible Preferred Stock was converted at the Conversion Price, the Company would issue approximately 1.2 million shares of Common Stock. |
COMMON STOCK
COMMON STOCK | 3 Months Ended |
Mar. 31, 2024 | |
Equity [Abstract] | |
COMMON STOCK | COMMON STOCK On February 23, 2023 (the “Shareholder Approval Date”), the Company held a Special Meeting of Stockholders. Two proposals were approved. The results of the matters submitted to a stockholder vote at the Special Meeting were as follows: (1) the Company's stockholders adopted a charter amendment to increase the number of authorized shares of the Company’s common stock, par value $0.001 per share, from 200,000,000 to 400,000,000 and increase the number of authorized shares of the Company’s preferred stock, par value $0.001 per share, from 25,000,000 to 100,000,000 and (2) the Company’s stockholders adopted a charter amendment to remove the restriction on stockholder action by written consent. TeraWulf’s Certificate of Incorporation as of March 31, 2024 provides for authorized shares of 500,000,000, divided into (a) 400,000,000 shares of Common Stock, with par value of $0.001 per share and (b) 100,000,000 shares of Preferred Stock, with par value of $0.001 per share. Each holder of a share of Common Stock shall be entitled to one vote of each common share held. Each holder of a share of Preferred Stock shall not be entitled to any voting powers, except as provided in an applicable Certificate of Designations. The board of directors may authorize one or more series of Preferred Stock and may fix the number of shares in such series and the designation, powers, preferences, rights, qualifications, limitations and restrictions in respect of the shares of such series. One series of preferred stock, the Convertible Preferred Stock, was authorized as of March 31, 2024. In April 2022, the Company entered into a sales agreement (the “ATM Sales Agreement“) with Cantor Fitzgerald & Co., B. Riley Securities, Inc. and D.A. Davidson & Co. (“D.A. Davidson“), pursuant to which the Company may offer and sell, from time to time, through or to the agents thereunder, shares of the Company’s Common Stock, par value $0.001 per share, having an aggregate offering price of up to $200.0 million (the “ATM Program”). The ATM Sales Agreement replaced a similar agreement with B. Riley Securities, Inc. and D.A. Davidson. Following the Company's and D.A. Davidson's agreement to terminate the ATM Sales Agreement with respect to D.A. Davidson effective August 7, 2023, the ATM Sales Agreement was further amended on August 11, 2023, adding Northland Securities, Inc. and Compass Point Research & Trading, LLC as agents (all four agents, collectively, the “ATM Agents“). The Company is not obligated to sell any shares under the ATM Program. The Company will pay the ATM Agents a commission equal to 3.0% of the gross sales price from each sale of shares. The issuance and sale of the Shares by the Company under the ATM Program are made pursuant to the prospectus and prospectus supplement forming a part of the 2022 Registration Statement, including a final prospectus supplement dated April 26, 2022. During the three months ended March 31, 2024, the Company sold pursuant to the ATM Program 23,268,600 shares of Common Stock for net proceeds of $50.7 million. During the three months ended March 31, 2023, the Company did not sell any shares of Common Stock pursuant to the ATM Program. As of March 31, 2024, the remaining capacity of the ATM Program to offer and sell shares of Common Stock is $28.9 million. In October 2022, the Company entered into unit subscription agreements with certain accredited investors in privately negotiated transactions (collectively, the “October Purchasers”) as part of a private placement (the “October Private Placement”) exempt from registration under the Securities Act of 1933, as amended. Pursuant to the Unit Subscription Agreements, the Company sold 7,481,747 units, each consisting of one share of the Common Stock and one warrant (the “October Warrants”), exercisable at a price of $1.93 per Common Share, to the October Purchasers for an aggregate purchase price of approximately $9.4 million based on an offering price equal to the trailing 10-day volume weighted price of $1.26 for each Common Share plus one warrant. Approximately $3.5 million of the aggregate purchase price related to investments by entities controlled by members of Company management. In connection with the Unit Subscription Agreements, the Company and the October Purchasers entered into a Registration Rights Agreement, pursuant to which the Company agreed to provide customary shelf and piggyback registration rights to the October Purchasers with respect to the shares of Common Stock underlying the October Warrants. The Company allocated the proceeds between the Common Stock and the October Warrants based on the relative fair values of the financial instruments, with $5.1 million allocated to the Common Stock and $4.3 million allocated to the October Warrants. In January 2023, certain of these investors agreed to amend the terms of their October Warrants such that their warrants would become exercisable only after the Shareholder Approval Date. In December 2022, the Company entered into subscription agreements or unit subscription agreements with certain accredited and institutional investors in privately negotiated transactions (the “December Purchasers”) as part of a private placement (the “December Private Placement”) exempt from registration under the Securities Act of 1933, as amended. Pursuant to these agreements, the Company issued for an aggregate purchase price of $6.7 million (i) 16,850,000 shares of Common Stock at a purchase price of $0.40 per share of Common Stock and (ii) 11,250,000 warrants (the “December Warrants”) exercisable for 8,750,000 shares of Common Stock, at an exercise price equal to $0.40 per share of Common Stock. The December Warrants became exercisable on January 16, 2023 and expired on January 31, 2023. In connection with the issuance of the December Warrants, the Company and the December Purchasers entered into a Registration Rights Agreement, pursuant to which the Company agreed to provide customary shelf and piggyback registration rights to the December Purchasers with respect to the shares of Common Stock underlying the December Warrants. The Company allocated the proceeds between the Common Stock and the December Warrants based on the relative fair values of the financial instruments, with $5.4 million allocated to the Common Stock and $1.3 million allocated to the December Warrants. In January 2023, 50% of the December Warrants were exercised for proceeds of $1.8 million while the remaining 50% of the December Warrants expired. In January 2023, the Company entered into additional subscription agreements with certain December Purchasers pursuant to which such December Purchasers purchased from the Company shares of Common Stock, at a purchase price of $0.40 per share of Common Stock, in private placement transactions exempt from registration under Section 4(a)(2) and/or Regulation D under the Securities Act for an aggregate purchase price of $1.8 million (the “January Private Placement”). The January Private Placement effectively replaced the then 50% unexercised December Warrants at the same purchase price of $0.40 per share of Common Stock. The closing of the January Private Placement was subject to certain conditions, including the completion of a $30 million equity capital raise by the Company, which may have been unilaterally waived by the December Purchasers, and the receipt of shareholder approval of an increase to issued and unauthorized shares of Common Stock. Pursuant to these Common Stock subscription agreements, the Company agreed to provide customary registration rights to the certain December Purchasers. These Common Stock subscription agreements contain customary representations, warranties, covenants and are subject to customary closing conditions and termination rights. The funds pursuant to the additional subscription agreements were received during the three months ended March 31, 2023 and the shares of Common Stock were issued in April 2023. In January 2023, the Company entered into (a) subscription agreements (the “Warrant Subscription Agreements”) with certain accredited investor entities controlled by members of Company management (the “Warrant Investors”) pursuant to which such Warrant Investors purchased from the Company 2,380,952 warrants, each exercisable to purchase one share of the Company’s Common Stock at an exercise price of $0.00001 per share of Common Stock (the “January 2023 Warrants”), in private placement transactions exempt from registration under Section 4(a)(2) and/or Regulation D under the Securities Act for an aggregate purchase price of $2.5 million, based on a price per share of Common Stock of $1.05 for a total of 2,380,952 shares of Common Stock and (b) warrant agreements (the “Warrant Agreements”) with such Warrant Investors. The Warrant Agreements governed the terms and conditions of the January 2023 Warrants, which were exercisable beginning on the first business day following the date on which shareholder approval of an increase in the Company’s authorized Common Stock was obtained, which occurred on the Shareholder Approval Date, and would have expired on December 31, 2023. The Warrant Investors are entitled to customary registration rights with respect to the shares of common stock issuable upon exercise of the Warrant Subscription Agreements. The January 2023 Warrants were exercised and 2,380,952 shares of Common Stock were issued in April 2023. In January 2023, the Company entered into an exchange agreement (the “Exchange Agreement”) with an entity controlled by a member of management (the “Exchanging Shareholder”). Pursuant to the Exchange Agreement, the Exchanging Shareholder exchanged a total of 12,000,000 shares of Common Stock for 12,000,000 new warrants issued by the Company (the “New Exchange Warrants”) in a private exchange exempt from registration under Section 4(a)(2) and/or Regulation D under the Securities Act. The reacquired shares of Common Stock were not retired. The New Exchange Warrants were exercisable at a strike price of $0.0001 per share beginning on the first business day following the date on which shareholder approval of an increase in the Company’s authorized Common Stock was obtained, which occurred on the Shareholder Approval Date, and would have expired on December 31, 2023. The Exchanging Shareholder is entitled to customary registration rights with respect to the shares of common stock issuable upon exercise of the New Exchange Warrants. The Exchange Agreement contains customary representations, warranties, covenants and is subject to customary closing conditions and termination rights. The New Exchange Warrants were exercised and 12,000,000 shares of Common Stock were issued in April 2023. In February 2023, the Company commenced an underwritten public offering of 36,764,706 shares of Common Stock at $0.68 per share (the “Offering”). JonesTrading Institutional Services LLC, as representative of the several underwriters (the “Underwriters”) and pursuant to an underwriting agreement (the “Underwriting Agreement”), acted as book-running manager for the Offering. The Underwriting Agreement includes customary representations, warranties and covenants by the Company and customary conditions to closing, obligations of the parties and termination provisions. Additionally, under the terms of the Underwriting Agreement, the Company agreed to indemnify the Underwriters against certain liabilities, including liabilities under the Securities Act of 1933, or to contribute to payments the Underwriters may be required to make in respect of these liabilities. Pursuant to the Underwriting Agreement, the Company granted the Underwriters a 30-day over-allotment option to purchase up to an additional 5,514,705 shares of its Common Stock, of which the Underwriters elected to purchase 4,000,000 of the over-allotment prior to the close of the Offering. The Offering closed on March 1, 2023 and the Company issued 40,764,706 shares of Common Stock and received net proceeds under the Offering of $26.6 million. The Common Stock was issued pursuant to the Company’s effective Registration Statement on Form S-3 (File No. 333-262226). In February 2023, the Company entered into subscription agreements with certain accredited investors (the “February Common Stock Investors”), pursuant to which the February Common Stock Investors purchased 1,386,467 shares of Common Stock at a purchase price of $0.68 per share for net proceeds to the Company of $0.9 million. The purchase funds were received during the three months ended March 31, 2023 and the shares of Common Stock were issued in April 2023. The private placement transaction was exempt from registration under Section 4(a)(2) and/or Regulation D under the Securities Act. During the three months ended March 31, 2023, 342,326 warrants issued in connection with the LGSA were exercised for issuance of the same number of shares of Common Stock for aggregate proceeds to the Company of $3,000. For the three months ended March 31, 2024, no such warrant exercises occurred. No dividends were declared during the three months ended March 31, 2024 and 2023. |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 3 Months Ended |
Mar. 31, 2024 | |
Share-Based Payment Arrangement [Abstract] | |
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION In May 2021, the Company made effective the 2021 Omnibus Incentive Plan (the “Plan”) for purpose of attracting and retaining employees, consultants and directors of the Company and its affiliates by providing each the opportunity to acquire an equity interest in the Company or other incentive compensation in order to align the interests of such individuals with those of the Company’s stockholders. The Plan provides for a maximum number of shares to be issued, limitations of shares to be delivered for incentive stock options and a maximum compensation amount for any non-employee member of the board of directors, among other provisions. The form of grants under the Plan includes stock options, stock appreciation rights, restricted stock and RSUs. Additionally, during the three months ended March 31, 2024 the Company issued 39,064 shares of Common Stock to Board of Director members for payment of quarterly fees in lieu of cash payments. For the three months ended March 31, 2024 and 2023, stock-based compensation expense was $6.9 million and $0.9 million, respectively. The following table summarizes the activities for unvested Company RSUs granted to employees and Board of Directors members during the three months ended March 31, 2024: Unvested Restricted Stock Units Number of Shares Weighted-Average Grant-Date Fair Value Unvested as of December 31, 2023 3,952,749 $ 1.26 Granted 7,100,000 $ 1.78 Vested (1,303,334) $ 0.65 Forfeited/canceled — $ - Unvested as of March 31, 2024 9,749,415 $ 1.72 RSUs granted as set out in the table above include RSUs representing 4,197,000 shares with vesting based on market conditions tied to the Company’s stock price (the “PSUs”). The PSUs are subject to performance-based vesting conditions measured over a three-year performance period and vest based on the Company’s achievement of certain stock price hurdles by certain determination dates, subject to the respective employee’s continued service through the applicable determination date. The stock price hurdle represents the average closing price of the Company’s Common Stock on Nasdaq during the 45 trading days immediately preceding the applicable determination date. Any unvested PSUs will be forfeited if the performance targets are not achieved within three years of the grant date. The requisite service period for RSUs is between one The following table summarizes the activities for unvested Company RSUs granted to non-employees, excluding Board of Directors members, during the three months ended March 31, 2024: Unvested Restricted Stock Units Number of Shares Weighted-Average Grant-Date Fair Value Unvested as of December 31, 2023 2,389,392 $ 0.79 Granted 300,000 $ 2.49 Vested (848,112) $ 0.85 Forfeited/canceled — $ - Unvested as of March 31, 2024 1,841,280 $ 1.05 one |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 3 Months Ended |
Mar. 31, 2024 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | RELATED PARTY TRANSACTIONS In April 2021, the Company entered into an Administrative and Infrastructure Services Agreement (the “Services Agreement”) with Beowulf Electricity & Data Inc. (“Beowulf E&D”), a related party due to control by a member of Company management. Under the Services Agreement, Beowulf E&D will provide, or cause its affiliates to provide, to TeraWulf certain services necessary to construct and operate certain bitcoin mining facilities developed or anticipated to be developed by the Company and support the Company’s ongoing business, including, among others, services related to construction, technical and engineering, operations and maintenance, procurement, information technology, finance and accounting, human resources, legal, risk management and external affairs consultation. The Services Agreement has an initial term of five years and provides for certain fixed, passthrough and incentive payments to Beowulf E&D, including issuing to certain designated employees of Beowulf E&D awards with respect to shares of TeraWulf Common Stock upon the consummation of an initial public offering of TeraWulf or the consummation of a merger following which TeraWulf is listed on a nationally recognized securities exchange and, thereafter, upon achievement of certain milestones regarding bitcoin mining capacity deployed at the bitcoin mining facilities. For the base fee, the Company originally agreed to pay Beowulf E&D in monthly installments an annual fee for the first year in the amount of $7.0 million and, thereafter, an annual fee equal to the greater of $10.0 million or $0.0037 per kilowatt hour of electric load utilized by the bitcoin mining facilities. In March 2023, TeraWulf and Beowulf E&D entered into an Amendment No. 1 to the Services Agreement, pursuant to which TeraWulf agreed to pay Beowulf E&D, effective as of January 1, 2023, a reduced annual base fee equal to $8.5 million payable in monthly installments, until all obligations under the Company’s LGSA, as amended and restated from time to time, are either indefeasibly repaid in full or refinanced. The Services Agreement also provides for reimbursement of cost and expenses incurred in connection with providing the services. For the three months ended March 31, 2024 and 2023, the Company paid Beowulf E&D $3.4 million and $3.2 million, respectively, under the Services Agreement, including payments related to construction agreements with contractors at the Lake Mariner Facility. For the three months ended March 31, 2024 and 2023, selling, general and administrative expenses – related party in the consolidated statements of operations includes $2.6 million and $2.9 million, respectively, and operating expenses – related party in the consolidated statements of operations includes $0.6 million and $0.3 million, respectively, in each case related to the base fee and reimbursement of costs and expenses. As of March 31, 2024, $0.7 million is included in prepaid expenses, $1.0 million is included in other amounts due to related parties and $0.2 million is included in property, plant and equipment, net in the consolidated balance sheet. As of December 31, 2023, $0.7 million is included in prepaid expenses, $1.0 million is included in amounts due to related parties and $6.6 million is included in property, plant and equipment, net in the consolidated balance sheet. The Services Agreement also provides for performance-related milestones and related incentive compensation. In connection with the listing of its Common Stock on a nationally recognized stock exchange in December 2021, pursuant to the Services Agreement, the Company agreed to issue awards valued at $12.5 million with respect to shares of its Common Stock to certain designated employees of Beowulf E&D in accordance with TeraWulf’s then effective Plan. Additionally, once the mining facilities have utilized 100 MW of cryptocurrency mining load in the aggregate, and for every incremental 100 MW of cryptocurrency mining load deployed thereafter, TeraWulf agreed to issue additional awards of shares of TeraWulf Common Stock each in the amount of $2.5 million to certain designated employees of Beowulf E&D in accordance with TeraWulf’s then effective Plan. The first performance milestone of 100 MW of mining load deployed by the mining facilities was met in April 2023 and the Company recorded performance milestone expense related to this milestone of $0.3 million included in selling, general and administrative expense – related party in the consolidated statement of operations for the three months ended March 31, 2023. The Company recorded no performance milestone expense for the three months ended March 31, 2024. In September 2023, the Company considered it probable that the second performance milestone of incremental 100 MW of mining load deployed by the mining facilities would be met by December 2023. Accordingly, the Company recognized $2.5 million in share based liabilities due to related party in the consolidated balance sheet as of December 31, 2023. During the three months ended March 31, 2024, the Company issued 1,083,189 shares of the Company’s Common Stock with a fair value of $2.5 million to settle the share based liabilities due to related party. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 3 Months Ended |
Mar. 31, 2024 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTS In April 2024, 25,191,155 Penny Warrants and 449,543 Dollar Warrants were exercised for 25,640,698 shares of Common Stock and net proceeds of $0.7 million. On April 8, 2024, the Company repaid $30.2 million of the outstanding principal balance of the Term Loans in accordance with the excess cash flow sweep provision of the Fifth Amendment to the LGSA for the quarter ended March 31, 2024. On April 16, 2024, the Company held its 2024 Annual Meeting of Stockholders (the “2024 Annual Meeting”). As a result of the matters submitted to a stockholder vote at the 2024 Annual Meeting, the Company's stockholders adopted a charter amendment increasing the number of authorized shares of the Company’s Common Stock from 400,000,000 to 600,000,000. Subsequent to March 31, 2024 and through to May 13, 2024, the Company sold, pursuant to the ATM Program, 4,508,896 shares of Common Stock for net proceeds of $10.8 million. |
SIGNIFICANT ACCOUNTING POLICI_2
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2024 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation The accompanying unaudited interim 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 the Company, the accompanying unaudited interim consolidated financial statements reflect all adjustments, consisting of only normal recurring adjustments, considered necessary for a fair statement of such interim results. All intercompany balances and transactions have been eliminated. Certain amounts in the unaudited interim consolidated statement of cash flows for the three months ended March 31, 2023 were restated as previously disclosed in the Amendment No. 1 to the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2023. The misstatements related solely to incorrectly classifying payments of contingent value rights liability related to proceeds from sale of net assets held for sale as an investing activity instead of a financing activity as originally included in the respective interim unaudited consolidated statements of cash flows. |
Use of Estimates in the Financial Statements | Use of Estimates in the Financial Statements The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates are used for (but are not limited to) such items as the fair values of contingent consideration issued in a business combination, the establishment of useful lives for property, plant and equipment and intangible assets, the fair value of equity securities or warrants to purchase common stock issued individually or as a component of a debt or equity offering, the fair value of changes to the conversion terms of embedded conversion features, the fair value and requisite service periods of stock-based compensation, the fair value of assets received in nonmonetary transactions, the establishment of right-of-use assets and lease liabilities that arise from leasing arrangements, the timing of commencement of capitalization for plant and equipment, impairment of indefinite-lived intangible assets, impairment of long-lived assets, recoverability of deferred tax assets, amortization of deferred issuance costs and debt discount, and the recording of various accruals. These estimates are made after considering past and current events and assumptions about future events. Actual results could differ from those estimates. |
Revenue Recognition | Revenue Recognition The Company recognizes revenue under the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers (“ASC 606”). The core principle of the revenue standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The following five steps are applied to achieve that core principle: • Step 1: Identify the contract with the customer • Step 2: Identify the performance obligations in the contract • Step 3: Determine the transaction price • Step 4: Allocate the transaction price to the performance obligations in the contract • Step 5: Recognize revenue when the Company satisfies a performance obligation In order to identify the performance obligations in a contract with a customer, a company must assess the promised goods or services in the contract and identify each promised good or service that is distinct. A performance obligation meets ASC 606’s definition of a “distinct” good or service (or bundle of goods or services) if both of the following criteria are met: the customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer (i.e., the good or service is capable of being distinct), and the entity’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract (i.e., the promise to transfer the good or service is distinct within the context of the contract). If a good or service is not distinct, the good or service is combined with other promised goods or services until a bundle of goods or services is identified that is distinct. The transaction price is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer. The consideration promised in a contract with a customer may include fixed amounts, variable amounts, or both. When determining the transaction price, an entity must consider the effects of all of the following: • Variable consideration • Constraining estimates of variable consideration • The existence of a significant financing component in the contract • Noncash consideration • Consideration payable to a customer Variable consideration is included in the transaction price only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. The transaction price is allocated to each performance obligation on a relative standalone selling price basis. The transaction price allocated to each performance obligation is recognized when that performance obligation is satisfied, at a point in time or over time as appropriate. Mining Pool The Company has entered into an arrangement with a cryptocurrency mining pool (the Foundry USA Pool) to perform hash computation (i.e. hashrate) for the mining pool in exchange for consideration. Providing hash computation services to a mining pool is an output of the Company’s ordinary activities. The provision of such hash computation services is the sole performance obligation. The mining pool arrangement is terminable at any time without substantial penalty by Foundry USA Pool and may be terminated without substantial penalty by the Company upon providing one Contract Day’s, as defined, prior written notice. The Company’s enforceable right to compensation only begins when and continues while the Company provides hash computation services to its customer, the mining pool operator. Accordingly, the contract term with Foundry USA Pool is deemed to be less than 24 hours and to continuously renew throughout the day. Additionally, the Company concluded that the mining pool operator’s (i.e., the customer’s) renewal right is not a material right because the renewal rights do not include any discounts; that is, the terms, conditions, and compensation amounts are at the then-current market rates. There is no significant financing component in these transactions. The mining pool applies the Full Pay Per Share (“FPPS”) payout model. Under the FPPS model, in exchange for providing hash computation services to the pool, the Company is entitled to pay-per-share base amount and transaction fee reward compensation, calculated on a daily basis, at an amount that approximates the total bitcoin that could have been mined and transaction fees that could have been awarded using the Company’s hash computation services, based upon the then current blockchain difficulty. Under this model, the Company is entitled to compensation, payable in bitcoin, regardless of whether the pool operator successfully records a block to the bitcoin blockchain. The transaction consideration the Company receives, if any, is noncash consideration and is all variable. Because digital currency is considered noncash consideration, fair value of the digital currency award received would generally be determined using the quoted price of the related digital currency in the Company’s principal market at the time of contract inception. The Company has adopted an accounting policy to aggregate individual contracts with individual terms less than 24-hours within each intraday period and apply a consistent valuation point, the start of day Coordinated Universal Time (00:00:00 UTC), to value the related noncash consideration. Revenue is recognized when it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur, which is the same day that control of the contracted service transfers to the mining pool, which is the same day as the contract inception. After every 24-hour contract term, the mining pool transfers the digital currency consideration to our designated digital currency wallet. Consideration payable to the customer in the form of a pool operator fee, which is incurred only to the extent that the Company has generated FPPS consideration, is deducted from the bitcoin the Company receives and is recorded as contra-revenue, as it does not represent a payment for a distinct good or service. Data Center Hosting |
Cost of Revenue | Cost of Revenue Cost of revenue for mining pool revenue is comprised primarily of direct costs of electricity but excludes depreciation which is separately presented. Cost of revenue for data center hosting is comprised primarily of direct costs of electricity, labor and internet provision. |
Power Curtailment Credits | Power Curtailment Credits |
Cash and Cash Equivalents | Cash and Cash Equivalents Highly liquid instruments with an original maturity of three months or less are classified as cash equivalents. As of March 31, 2024 and December 31, 2023, the Company had cash and cash equivalents of $45.8 million and $54.4 million, respectively. The Company currently maintains cash and cash equivalent balances primarily at two financial institutions that are insured by the Federal Deposit Insurance Corporation (“FDIC”). The Company’s accounts at these institutions are insured, up to $250,000, by the FDIC. As of March 31, 2024, the Company had no bank balances that exceeded the FDIC insurance limit. To reduce its risk associated with the failure of such financial institutions, the Company evaluates at least annually the rating of the financial institutions in which it holds deposits. |
Nonmonetary Transactions | Nonmonetary Transactions The Company accounts for goods and services exchanged in nonmonetary transactions at fair value unless the underlying exchange transaction lacks commercial substance or the fair value of the assets received or relinquished is not reasonably determinable, in which case the nonmonetary exchange would be measured based on the recorded amount of the nonmonetary asset relinquished. |
Digital currency | Digital currency Digital currency is comprised of bitcoin earned as noncash consideration in exchange for providing hash computation services to a mining pool as well as in exchange for data center hosting services which are accounted for in connection with the Company’s revenue recognition policy disclosed above. From time to time, the Company also receives bitcoin as distributions-in-kind from its joint venture. Digital currency is included in current assets in the consolidated balance sheets due to the Company’s ability to sell it in a highly liquid marketplace and because the Company reasonably expects to liquidate its digital currency to support operations within the next twelve months. In December 2023, the FASB issued Accounting Standards Update (“ASU”) No. 2023-08, Intangible – Goodwill and Other – Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets (“ASU 2023-08”). ASU 2023-08 requires entities with certain crypto assets to subsequently measure such assets at fair value, with changes in fair value recorded in net income in each reporting period. Crypto assets that meet all the following criteria are within the scope of the ASC 350-60: • meet the definition of intangible assets as defined in the Codification • do not provide the asset holder with enforceable rights to or claims on underlying goods, services, or other assets • are created or reside on a distributed ledger based on blockchain or similar technology • are secured through cryptography • are fungible, and • are not created or issued by the reporting entity or its related parties. In addition, entities are required to provide additional disclosures about the holdings of certain crypto assets. ASU 2023-08 is effective for fiscal years beginning after December 15, 2024, including interim periods within those fiscal years. Early adoption is permitted and the Company has elected to early adopt ASU 2023-08 effective January 1, 2024, resulting in a cumulative-effect change of $37,000 to increase the balance of digital currency with a corresponding decrease in the opening balance of accumulated deficit in the consolidated balance sheet as of January 1, 2024. As a result of adopting ASU 2023-08 on January 1, 2024, the Company measures digital currency at fair value as of each reporting period in accordance with ASC 820, Fair Value Measurement (“ASC 820”), based on quoted prices on the active trading platform that the Company normally transacts and has determined is its principal market for bitcoin (Level 1 inputs), based on all information that is reasonably available. Since bitcoin is traded on a 24-hour period, the Company utilizes the price as of midnight UTC time, which aligns with the Company's revenue recognition policy. Gains and losses from the remeasurement of digital currency are included within gain on fair value of digital currency, net in the consolidated statements of operations. The Company sells bitcoin and gains and losses from such transactions, measured as the difference between the cash proceeds and the carrying basis of bitcoin as determined on a first-in-first-out basis, are also included within gain on fair value of digital currency, net in the consolidated statements of operations. During the three months ended March 31, 2024, the Company recognized $1.3 million of gain on fair value of digital currency, net. Prior to the adoption of ASU 2023-08, the Company accounted for digital currency 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 if events or changes in circumstances indicate it is more likely than not that the asset is impaired. Impairment exists when the carrying amount exceeds its fair value. In testing for impairment, the Company 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 the Company concludes otherwise, it is required to perform a quantitative impairment test. The Company elected to bypass the optional qualitative impairment assessment and to track its bitcoin activity daily for impairment assessment purposes. The Company determined the fair value of its bitcoin on a nonrecurring basis in accordance with ASC 820 based on quoted prices on the active trading platform that the Company normally transacts and has determined is its principal market for bitcoin (Level 1 inputs), based on all information that was reasonably available. The Company performed an analysis each day to identify whether events or changes in circumstances, principally decreases in the quoted price of bitcoin on the active trading platform, indicated that it was more likely than not that its bitcoin were impaired. For impairment testing purposes, the lowest intraday trading price of bitcoin was identified at the single bitcoin level (one bitcoin). The excess, if any, of the carrying amount of bitcoin and the lowest daily trading price of bitcoin represented a recognized impairment loss. To the extent an impairment loss was recognized, the loss established the new cost basis of the asset. Subsequent reversal of previously recorded impairment losses was prohibited. The Company recognized impairment of digital currency of $0.6 million during the three months ended March 31, 2023. Digital currency received as noncash consideration through the Company’s mining activities are included as an adjustment to reconcile net loss to cash provided by (used in) operating activities on the consolidated statements of cash flows. The receipt of digital currency as distributions-in-kind from equity investees are included within supplemental disclosures of noncash investing activities. Proceeds from sales of digital currency are included within cash flows from operating activities on the consolidated statements of cash flows as bitcoin are converted nearly immediately into cash. |
Concentrations | Concentrations The Company and its joint venture have primarily contracted with two suppliers for the provision of bitcoin miners and one mining pool operator. The Company does not believe that these counterparties represent a significant performance risk. Revenue from one data center hosting customer represents 1.8% and 17.2% of consolidated revenue for the three months ended March 31, 2024 and 2023, respectively. During the three months ended March 31, 2024 and 2023, the Company only operated bitcoin mining facilities; however, the Company has targeted an initial commitment for an allocation of a 2 MW power block at the Lake Mariner Facility intended to support a broader HPC initiative. While the Company may choose to mine other digital currencies, it has no plans to do so currently. If the market value of bitcoin declines significantly, the consolidated financial condition and results of operations of the Company may be adversely affected. |
Property, Plant and Equipment | Property, Plant and Equipment Property, plant and equipment are recorded at cost, net of accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets (generally 5 years for computer equipment and 4 years for miners). Leasehold improvements and electrical equipment are depreciated over the shorter of their estimated useful lives or the lease term. Changes in depreciation and amortization, generally accelerated depreciation and variable amortization, are determined and recorded when estimates of the remaining useful lives or residual values of long-term assets change. Property, plant and equipment, net includes deposits, amounting to approximately $16.3 million and $36.5 million as of March 31, 2024 and December 31, 2023, respectively, on purchases of such assets, including miners, which would be included in property, plant and equipment upon receipt. Interest related to construction of assets is capitalized when the financial statement effect of capitalization is material, construction of the asset has begun, and interest is being incurred. Interest capitalization ends at the earlier of the asset being substantially complete and ready for its intended use or when interest costs are no longer being incurred. |
Impairment of Long-lived Assets | Impairment of Long-lived Assets |
Leases | Leases The Company determines if an arrangement is a lease at inception and, if so, classifies the lease as an operating or finance lease. Operating leases are included in right-of-use (“ROU”) asset, current portion of operating lease liability, and operating lease liability, net of current portion in the consolidated balance sheets. Finance leases would be included in property, plant and equipment, current portion of finance lease liabilities, and finance lease liabilities, net of current portion in the consolidated balance sheets. The Company does not recognize a ROU asset or lease liability for short-term leases having initial terms of 12 months or less and instead recognizes rent expense on a straight-line basis over the lease term. In an arrangement that is determined to be a lease, the Company includes both the lease and nonlease components as a single component and accounts for it as a lease when the Company would otherwise recognize the cost associated with both the lease and nonlease components in a similar fashion. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Lease ROU assets and liabilities are recognized at commencement date, and subsequently remeasured upon changes to the underlying lease arrangement, based on the present value of lease payments over the lease term. If the lease does not provide an implicit rate or if the implicit rate is not determinable, the Company generally uses an estimate of its incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at the commencement date. The ROU asset also includes any lease prepayments made and excludes lease incentives. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Costs associated with operating lease ROU assets are recognized on a straight-line basis within operating expenses or selling, general and administrative, as appropriate, over the term of the lease. Variable lease costs are recognized as incurred and primarily consist of common area maintenance charges not included in the measurement of right-of-use assets and operating lease liabilities. Finance ROU lease assets are amortized within operating expenses or selling, general and administrative expenses, as appropriate, on a straight-line basis over the shorter of the estimated useful lives of the assets or, in the instance where title does not transfer at the end of the lease term, the lease term. The interest component of a finance lease is included in interest expense and recognized using the effective interest method over the lease term. As of March 31, 2024 and December 31, 2023, the Company was not a counterparty to any finance leases. |
Debt Issuance Costs and Debt Discount | Debt Issuance Costs and Debt Discount Debt issuance costs and debt discount are recorded as a direct reduction of the carrying amount of the debt and are amortized to interest expense using the effective interest method over the contractual term of the debt and in consideration of expected future principal payments subject to an excess cash flow sweep (see Note 9). Debt issuance costs include incremental third-party costs directly related to debt issuance such as attorney and financial advisor fees. Debt discount includes upfront fees and proceeds allocated to other components included in the debt issuance. The allocation of proceeds between the debt instrument and any other components included in the debt issuance, including common stock or warrants to purchase common stock, is generally based on the relative fair value allocation method. All warrants granted by the Company as a component of debt transactions are classified as equity in the consolidated balance sheets as of March 31, 2024 and December 31, 2023. |
Debt Modification | Debt Modification The Company evaluates amendments to its debt instruments in accordance with applicable U.S. GAAP. This evaluation includes comparing (1) if applicable, the change in fair value of an embedded conversion option to that of the carrying amount of the debt immediately prior to amendment and (2) the net present value of future cash flows of the amended debt to that of the original debt to determine, in each case, if a change greater than 10% occurred. In instances where the net present value of future cash flows or the fair value of an embedded conversion option, if any, changed more than 10%, the Company applies extinguishment accounting. In instances where the net present value of future cash flows and the fair value of an embedded conversion option, if any, changed less than 10%, the Company accounts for the amendment to the debt as a debt modification. For debt that has been amended more than once in a twelve-month period, the debt terms that existed just prior to the earliest amendment occurring in the prior twelve months are applied to the 10% test, provided modification accounting was previously applied. Gains and losses on debt amendments that are considered extinguishments are recognized in current earnings. Debt amendments that are considered debt modifications are accounted for prospectively through yield adjustments, based on the revised terms. Legal fees and other costs incurred with third parties that are directly related to debt modifications are expensed as incurred and generally are included in interest expense in the consolidated statements of operations. Amounts paid by the Company to the lenders, including upfront fees and the fair value of warrants issued, are included in future cash flows for accounting treatment determination and, if debt modification is applicable, are also included in the determination of yield adjustment. |
Convertible Instruments | Convertible Instruments The Company accounts for its issuance of convertible debt and convertible equity instruments in accordance with applicable U.S. GAAP. In connection with that accounting, the Company assesses the various terms and features of the agreement in accordance with ASC 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging Activities (“ASC 815”). ASC 480 requires liability accounting for certain financial instruments, including shares that embody an unconditional obligation to transfer a variable number of shares, provided that the monetary value of the obligation is based solely or predominantly on one of the following three characteristics: (1) a fixed monetary amount known at inception, (2) variations in something other than the fair value of the issuer’s equity shares or (3) variations in the fair value of the issuer’s equity shares, but the monetary value to the counterparty moves in the opposite direction as the value of the issuer’s shares. In accordance with ASC 815, the Company assesses the various terms and features of the agreement to determine whether or not they contain embedded derivative instruments that are required under ASC 815 to be accounted for separately from the host contract and recorded on the balance sheet at fair value. The fair value of derivative liabilities, if any, is required to be revalued at each reporting date, with corresponding changes in fair value recorded in the current period's operating results. |
Warrants | Warrants The Company applies ASC 480 and ASC 815 to assist in the determination of whether warrants issued for the purchase of Common Stock should be classified as liabilities or equity. Warrants that are determined to require liability classification are measured at fair value upon issuance and are subsequently remeasured to their then fair value at each subsequent reporting period with changes in fair value recorded in current earnings. Warrants that are determined to require equity classification are measured at fair value upon issuance and are not subsequently remeasured unless they are required to be reclassified. All warrants granted by the Company to date are classified as equity. |
Stock Issuance Costs | Stock Issuance Costs Stock issuance costs are recorded as a reduction to issuance proceeds. Stock issuance costs incurred prior to the closing of the related issuances, including under shelf registration statements, are recorded in other assets in the consolidated balance sheets if the closing of the related issuance is deemed probable. |
Stock-based Compensation | Stock-based Compensation The Company periodically issues restricted stock units (“RSUs”) to employees and non-employees in non-capital raising transactions for services. In accordance with ASC 718, Compensation – Stock Compensation , the Company measures stock-based compensation cost at the grant date, based on the estimated fair value of the award. For RSUs with time-based vesting, the fair value is determined by the Company’s stock price on the date of grant. For RSUs with vesting based on market conditions (“PSUs”), the effect of the market condition is considered in the determination of fair value on the grant date using a Monte Carlo simulation model. As of March 31, 2024, the Company had not issued stock options. Expense for RSUs is recognized on a straight-line basis over the employee’s or non-employee’s service period, including the derived service period for PSUs with market conditions. Stock-based compensation for PSUs is recorded over the derived service period unless the market condition is satisfied in advance of the derived service period, in which case a cumulative catch-up is recognized as of the date of achievement. Stock-based compensation for PSUs is recorded regardless of whether the market conditions are met unless the service conditions are not met. The Company accounts for forfeitures as they occur. The Company recognizes excess tax benefits or deficiencies on vesting or settlement of awards as discrete items within income tax benefit within net loss and the related cash flows are classified within operating activities. |
Other Income | Other Income Other income consists primarily of interest income on bank deposits. |
Loss per Share | Loss per Share The Company computes earnings (loss) per share using the two-class method required for participating securities. The two-class method requires income available to common stockholders for the period to be allocated between common stock and participating securities based upon their respective rights to receive dividends as if all income for the period had been distributed. |
Segment Reporting | Segment Reporting Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision–making group, in deciding how to allocate resources and in assessing performance. Our chief operating decision–making group (“CODM”) is composed of the chief executive officer, chief operating officer and chief strategy officer. Currently, the Company operates solely in the Digital Currency Mining segment. The Company’s mining operations are located in the United States, and the Company has employees only in the United States and views its mining operations as one operating segment as the CODM reviews financial information on a consolidated basis in making decisions regarding resource allocations and assessing performance. Prior to the sale of substantially all of RM 101’s assets, through its ownership of RM 101, the Company operated in the Imaging Technology segment. TeraWulf classified the RM 101 segment as held for sale and discontinued operations in these consolidated financial statements (see Note 3). |
SIGNIFICANT ACCOUNTING POLICI_3
SIGNIFICANT ACCOUNTING POLICIES (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Accounting Policies [Abstract] | |
Supplemental Disclosure of Cash Flow Information | The following table shows supplemental cash flow information (in thousands): Three Months Ended 2024 2023 Supplemental disclosure of non-cash activities: Cumulative-effect adjustment due to the adoption of Accounting Standard Update 2023-08 $ 37 $ — Contribution of plant and equipment or deposits on plant and equipment to joint venture $ — $ 35,792 Common stock issuance costs in accounts payable $ — $ 250 Purchases of and deposits on plant and equipment in accounts payable, accrued construction liabilities, other accrued liabilities and long-term debt $ 4,385 $ 2,621 Purchases of and deposits on plant and equipment with digital currency $ 316 $ — Investment in joint venture in other accrued liabilities, other amounts due to related parties and long-term debt $ — $ 721 Convertible promissory notes converted to common stock $ — $ 4,666 Common stock issued for share based liabilities due to related party $ 2,500 $ — Common stock warrants issued for discount on long-term debt $ — $ 16,036 Decrease to investment in joint venture and increase in plant and equipment for distribution or transfer of nonmonetary assets $ — $ 4,519 Decrease to investment in joint venture due to bitcoin received as distribution from investee $ 12,022 $ — Common stock reacquired in exchange for warrants $ — $ 12,479 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value Instruments Measured at Fair Value on Non-Recurring Basis | The following table presents the Company’s financial instruments measured at fair value on a recurring basis and their level within the fair value hierarchy as of March 31, 2024 (in thousands): Carrying Value Level 1 Level 2 Level 3 Bitcoin $ 2,018 $ 2,018 $ — $ — $ 2,018 $ 2,018 $ — $ — |
BITCOIN (Tables)
BITCOIN (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Crypto Asset Holding | The following table presents the Company’s bitcoin holdings as of March 31, 2024 and December 31, 2023: Bitcoin holdings March 31, 2024 December 31, 2023 Number of bitcoin held 28 43 Carrying basis of bitcoin (in thousands) $ 1,982 $ 1,801 Fair value of bitcoin (in thousands) $ 2,018 $ 1,838 |
PROPERTY, PLANT AND EQUIPMENT (
PROPERTY, PLANT AND EQUIPMENT (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property, plant and equipment | Property, plant and equipment, net consisted of the following (in thousands): March 31, 2024 December 31, 2023 Miners $ 160,014 $ 100,531 Construction in process 11,848 24,578 Leasehold improvements 77,689 62,850 Equipment 22,007 15,736 Vehicles 104 104 Deposits on miners 16,298 36,469 287,960 240,268 Less: accumulated depreciation (50,071) (34,984) $ 237,889 $ 205,284 |
LEASES (Tables)
LEASES (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Leases [Abstract] | |
Lessee, Operating Lease, Liability, Maturity | The following is a maturity analysis of the annual undiscounted cash flows of the estimated operating lease liabilities as of March 31, 2024 (in thousands): Year ending December 31: 2024 $ 122 2025 163 2026 163 2027 163 2028 163 Thereafter 882 $ 1,656 |
Lessee, Operating Lease, Liability, Undiscounted Cash Flows | A reconciliation of the undiscounted cash flows to the operating lease liabilities recognized in the consolidated balance sheet as of March 31, 2024 follows (in thousands): Undiscounted cash flows of the operating lease $ 1,656 Unamortized discount 721 Total operating lease liability 935 Current portion of operating lease liability 49 Operating lease liability, net of current portion $ 886 |
DEBT (Tables)
DEBT (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Debt Disclosure [Abstract] | |
Schedule of Long-Term Debt | Long-term debt consists of the following (in thousands): March 31, 2024 December 31, 2023 Term loan $ 105,990 $ 139,401 Debt issuance costs and debt discount (6,664) (15,970) Property, plant and equipment finance agreement 81 90 99,407 123,521 Less long-term debt due within one year 99,360 123,465 Total long-term debt, net of portion due within one year $ 47 $ 56 |
Schedule of Maturities of Long-Term Debt | Principal maturities of outstanding long-term debt as of March 31, 2024 are as follows (in thousands): Year ending December 31: 2024 $ 106,015 2025 36 2026 20 Total principal maturities $ 106,071 |
JOINT VENTURE (Tables)
JOINT VENTURE (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Schedule of Interest in Variable Interest Entity and Maximum Exposure | The table below summarizes the Company’s interest in Nautilus and the Company’s maximum exposure to loss as a result of its involvement with the VIE as of March 31, 2024 (in thousands, except for percentages): Entity % Ownership Initial Additional Net loss Company’s Commitment to Company’s Nautilus 25.0 % $ 18,000 $ 95,131 $ 21,265 $ 91,866 $ — $ 91,866 (1) The Members may mutually agree on changes to the Nautilus facility, which could increase the amount of contributions the Company is required to provide. The Members may seek alternate financing for the Nautilus facility, which could reduce the amount of investments each Member may be required to provide. (2) The maximum exposure at March 31, 2024 is determined by adding the Company’s variable interest in the entity and any explicit or implicit arrangements that could require the Company to provide additional financial support. The amount represents the contractually required capital contributions of the Company which were required for the initial phase of the Nautilus facility buildout. |
Equity Method Investments | The condensed results of operations for the three months ended March 31, 2024 and 2023 and the condensed financial position as of March 31, 2024 and December 31, 2023 of Nautilus are summarized below (in thousands): Three Months Ended 2024 2023 Condensed statement of operations information: Revenue $ 41,740 $ 9,106 Operating expense 26,322 12,137 Net income (loss) $ 15,418 $ (3,031) March 31, 2024 (1) December 31, 2023 (1) Condensed balance sheet information: Current assets $ 12,560 $ 12,406 Noncurrent assets 158,946 171,245 Total assets $ 171,506 $ 183,651 Current liabilities $ 13,289 $ 13,149 Noncurrent liabilities 29,755 29,493 Equity 128,462 141,009 Total liabilities and equity $ 171,506 $ 183,651 (1) The condensed statements of operations information for the three months ended March 31, 2024 and 2023 and the condensed balance sheet information as of March 31, 2024 and December 31, 2023 reflect the impact of the Talen-estimated fair value measurements of Nautilus which, resulting from the application of ASC 805, Business Combinations, have been pushed down to the books and records of Nautilus by Talen, as discussed above. The Company’s basis in the assets and liabilities of Nautilus continue to be recorded at historical value on the accompanying consolidated balance sheets. |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Board of Directors and Employees | |
STOCK-BASED COMPENSATION | |
Schedule of Nonvested Restricted Stock Units Activity | The following table summarizes the activities for unvested Company RSUs granted to employees and Board of Directors members during the three months ended March 31, 2024: Unvested Restricted Stock Units Number of Shares Weighted-Average Grant-Date Fair Value Unvested as of December 31, 2023 3,952,749 $ 1.26 Granted 7,100,000 $ 1.78 Vested (1,303,334) $ 0.65 Forfeited/canceled — $ - Unvested as of March 31, 2024 9,749,415 $ 1.72 |
Non Employees | |
STOCK-BASED COMPENSATION | |
Schedule of Nonvested Restricted Stock Units Activity | The following table summarizes the activities for unvested Company RSUs granted to non-employees, excluding Board of Directors members, during the three months ended March 31, 2024: Unvested Restricted Stock Units Number of Shares Weighted-Average Grant-Date Fair Value Unvested as of December 31, 2023 2,389,392 $ 0.79 Granted 300,000 $ 2.49 Vested (848,112) $ 0.85 Forfeited/canceled — $ - Unvested as of March 31, 2024 1,841,280 $ 1.05 |
ORGANIZATION (Details)
ORGANIZATION (Details) | 1 Months Ended | 3 Months Ended | ||||
Feb. 28, 2023 MW | Mar. 31, 2024 USD ($) exa_hash_power facility building $ / shares MW | Mar. 31, 2023 USD ($) | Dec. 31, 2023 USD ($) $ / shares | Feb. 23, 2023 $ / shares | Dec. 31, 2022 USD ($) | |
ORGANIZATION | ||||||
Number of mining facilities | facility | 2 | |||||
Number of buildings | building | 3 | |||||
Bitcoin mining facility, operating capacity | MW | 160 | |||||
Net loss available to common stockholders, basic | $ (9,899,000) | $ (26,516,000) | ||||
Net loss available to common stockholders, diluted | (9,899,000) | (26,516,000) | ||||
Net cash provided by (used in) operating activities, continuing operations | 22,846,000 | (8,623,000) | ||||
Working capital deficiency | (67,800,000) | |||||
Total stockholders' equity | 272,343,000 | 146,313,000 | $ 222,489,000 | $ 117,754,000 | ||
Accumulated deficit | (269,471,000) | $ (259,895,000) | ||||
Total principal maturities | $ 106,071,000 | |||||
EXA Hash per second | exa_hash_power | 8 | |||||
Common stock par value (in dollars per share) | $ / shares | $ 0.001 | $ 0.001 | $ 0.001 | |||
Net proceeds | $ 50,700,000 | |||||
Repayments of secured debt | 33,412,000 | 0 | ||||
Loans Payable | Term Sheet | ||||||
ORGANIZATION | ||||||
Repayments of secured debt | 33,400,000 | $ 0 | ||||
Loans Payable | ||||||
ORGANIZATION | ||||||
Total principal maturities | 106,000,000 | |||||
Nautilus | ||||||
ORGANIZATION | ||||||
Maximum operating capacity (in MW) | MW | 50 | |||||
ATM Sales Agreement | ||||||
ORGANIZATION | ||||||
Consideration to be received | 200,000,000 | |||||
Remaining consideration to be received | 28,900,000 | |||||
Capital Addition Purchase Commitments | ||||||
ORGANIZATION | ||||||
Deposits made on miners | $ 47,000,000 |
SIGNIFICANT ACCOUNTING POLICI_4
SIGNIFICANT ACCOUNTING POLICIES - Supplemental Cash Flow Information (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Supplemental disclosure of non-cash activities: | ||
Contribution of plant and equipment or deposits on plant and equipment to joint venture | $ 0 | $ 35,792,000 |
Common stock issuance costs in accounts payable | 0 | 250,000 |
Purchases of and deposits on plant and equipment in accounts payable, accrued construction liabilities, other accrued liabilities and long-term debt | 4,385,000 | 2,621,000 |
Purchases of and deposits on plant and equipment with digital currency | 316,000 | 0 |
Investment in joint venture in other accrued liabilities, other amounts due to related parties and long-term debt | 0 | 721,000 |
Convertible promissory notes converted to common stock | 0 | 4,666,000 |
Common stock issued for share based liabilities due to related party | 2,500,000 | 0 |
Common stock warrants issued for discount on long-term debt | 0 | 16,036,000 |
Decrease to investment in joint venture and increase in plant and equipment for distribution or transfer of nonmonetary assets | 0 | 4,519,000 |
Decrease to investment in joint venture due to bitcoin received as distribution from investee | 12,022,000 | 0 |
Common stock reacquired in exchange for warrants | $ 0 | $ 12,479,000 |
SIGNIFICANT ACCOUNTING POLICI_5
SIGNIFICANT ACCOUNTING POLICIES - Narrative (Details) | 3 Months Ended | ||||
Mar. 31, 2024 USD ($) miningPoolOperator bitcoinMiner operatingSegment $ / shares shares | Mar. 31, 2023 USD ($) | Dec. 31, 2023 USD ($) | Dec. 31, 2022 USD ($) | Oct. 31, 2022 $ / shares | |
Significant Accounting Policies [Line Items] | |||||
Cumulative-effect adjustment due to the adoption of Accounting Standard Update 2023-08 | $ 37,000 | $ 0 | |||
Cash exceeding FDIC limit | $ 0 | ||||
Number of operating segments | operatingSegment | 1 | ||||
Deposits on miners | $ 16,300,000 | $ 36,500,000 | |||
Percentage of changes in debt value and net presents value of future cash flows | 10% | ||||
Quoted price of bitcoin | $ 38,000 | ||||
Miner hosting revenue | 800,000 | 2,300,000 | |||
Impairment of intangible assets | 600,000 | ||||
Power curtailment credits | $ 1,200,000 | 100,000 | |||
Number of common stock issued upon conversion of preferred stock (in shares) | shares | 1,200,000 | ||||
Warrants outstanding (in shares) | shares | 49,120,642 | ||||
Exercise price of warrants (in dollars per share) | $ / shares | $ 0.58 | $ 1.93 | |||
Equity | $ 272,343,000 | 146,313,000 | 222,489,000 | $ 117,754,000 | |
Gain on fair value of digital currency, net | $ 1,329,000 | 0 | |||
Number suppliers for bitcoin miners | bitcoinMiner | 2 | ||||
Number of mining pool operators | miningPoolOperator | 1 | ||||
Accumulated Deficit | |||||
Significant Accounting Policies [Line Items] | |||||
Equity | $ (269,471,000) | $ (212,731,000) | (259,895,000) | $ (186,474,000) | |
Cumulative Effect, Period of Adoption, Adjustment | |||||
Significant Accounting Policies [Line Items] | |||||
Equity | 37,000 | ||||
Cumulative Effect, Period of Adoption, Adjustment | Accumulated Deficit | |||||
Significant Accounting Policies [Line Items] | |||||
Equity | $ 37,000 | ||||
Data center hosting customer | Revenue Benchmark | Customer Concentration Risk | |||||
Significant Accounting Policies [Line Items] | |||||
Concentration risk percentage | 1.80% | 17.20% | |||
Restricted Stock Units (RSUs) | |||||
Significant Accounting Policies [Line Items] | |||||
Number of shares outstanding (in shares) | shares | 11,590,695 | ||||
Computer Equipment | |||||
Significant Accounting Policies [Line Items] | |||||
Property, plant and equipment, useful life | 5 years | ||||
Digital Currency Mining Equipment | |||||
Significant Accounting Policies [Line Items] | |||||
Property, plant and equipment, useful life | 4 years |
BUSINESS COMBINATION, ASSETS _2
BUSINESS COMBINATION, ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS - Narrative (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||||
Nov. 30, 2023 | May 31, 2023 | Aug. 31, 2022 | Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | Dec. 13, 2021 | |
BUSINESS COMBINATION | |||||||
Net cash used in operating activities from discontinued operations | $ 0 | $ (90,000) | |||||
IKONICS | |||||||
BUSINESS COMBINATION | |||||||
Initial distribution | $ 1,400,000 | $ 5,700,000 | 3,900,000 | $ 11,000,000 | |||
IKONICS | Discontinued Operations, Held-for-sale | |||||||
BUSINESS COMBINATION | |||||||
Sale amount of property under Definitive Agreement | $ 6,700,000 | ||||||
Proceeds from sale of property plant and equipment | 6,200,000 | ||||||
Limitation amount of certain indemnifications under Definitive Agreement | 850,000 | ||||||
Income (loss) from discontinued operations | 0 | 35,000 | |||||
Net cash used in operating activities from discontinued operations | $ 0 | $ (100,000) | |||||
IKONICS Corporation | |||||||
BUSINESS COMBINATION | |||||||
Contingent value rights agreement for each IKONICS common stock (in shares) | 1 | ||||||
Percentage of net proceeds holders of CVR are entitled to | 95% | ||||||
Percentage of reserve of the gross proceeds of per-merger business of IKONICS | 10% | ||||||
Sale amount of property under Definitive Agreement | 7,700,000 | ||||||
Proceeds from sale of property plant and equipment | 7,000,000 | ||||||
Limitation amount of certain indemnifications under Definitive Agreement | $ 650,000 |
FAIR VALUE MEASUREMENTS - Finan
FAIR VALUE MEASUREMENTS - Financial Instruments Measured at Fair Value on a Non-Recurring Basis (Details) - Fair Value, Recurring $ in Thousands | Mar. 31, 2024 USD ($) |
Carrying Value | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Bitcoin | $ 2,018 |
Bitcoin | Carrying Value | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Bitcoin | 2,018 |
Level 1 | Estimate of Fair Value Measurement | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Bitcoin | 2,018 |
Level 1 | Bitcoin | Estimate of Fair Value Measurement | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Bitcoin | 2,018 |
Level 2 | Estimate of Fair Value Measurement | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Bitcoin | 0 |
Level 2 | Bitcoin | Estimate of Fair Value Measurement | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Bitcoin | 0 |
Level 3 | Estimate of Fair Value Measurement | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Bitcoin | 0 |
Level 3 | Bitcoin | Estimate of Fair Value Measurement | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Bitcoin | $ 0 |
FAIR VALUE MEASUREMENTS - Narra
FAIR VALUE MEASUREMENTS - Narrative (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2024 USD ($) | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Fair value of term loan | $ 100.2 |
Expected dividend rate | 0% |
New Term Facility | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
DLOM (as a percent) | 20% |
Fifth Amendment Term Loan | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
DLOM (as a percent) | 30% |
BITCOIN - Bitcoin Holdings (Det
BITCOIN - Bitcoin Holdings (Details) $ in Thousands | Mar. 31, 2024 USD ($) bitcoin | Dec. 31, 2023 USD ($) bitcoin |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Number of bitcoin held | bitcoin | 28 | 43 |
Carrying basis of bitcoin (in thousands) | $ 1,982 | $ 1,801 |
Fair value of bitcoin (in thousands) | $ 2,018 | $ 1,838 |
BITCOIN - Narrative (Details)
BITCOIN - Narrative (Details) - bitcoin | Mar. 31, 2024 | Dec. 31, 2023 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Number of bitcoin held | 28 | 43 |
PROPERTY, PLANT AND EQUIPMENT -
PROPERTY, PLANT AND EQUIPMENT - PPE Schedule (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 287,960 | $ 240,268 |
Less: accumulated depreciation | (50,071) | (34,984) |
Property, plant and equipment, net | 237,889 | 205,284 |
Miners | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 160,014 | 100,531 |
Construction in process | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 11,848 | 24,578 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 77,689 | 62,850 |
Equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 22,007 | 15,736 |
Vehicles | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 104 | 104 |
Deposits on miners | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 16,298 | $ 36,469 |
PROPERTY, PLANT AND EQUIPMENT_2
PROPERTY, PLANT AND EQUIPMENT - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Property, Plant and Equipment [Line Items] | ||
Capitalized interest costs | $ 0 | $ 1 |
Depreciation expense | 15.1 | $ 5.4 |
Miners | Service Life | ||
Property, Plant and Equipment [Line Items] | ||
Depreciation expense | $ 3.8 |
LEASES - Narrative (Details)
LEASES - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | May 31, 2021 | |
Property, Plant and Equipment [Line Items] | |||
Operating lease, term of lease | 8 years | ||
Renewal term of lease | 5 years | ||
Weighted average discount rate | 12.60% | ||
Remaining lease term | 10 years 2 months 12 days | ||
Planned Bitcoin Mining Facility, New York | |||
Property, Plant and Equipment [Line Items] | |||
Operating lease expense | $ 300 | $ 300 | |
Contingent lease expense | 36 | 100 | |
Lease payments | 100 | 300 | |
Operating Equipment Lease | |||
Property, Plant and Equipment [Line Items] | |||
Operating lease expense | $ 48 | $ 100 |
LEASES - Maturity Analysis of t
LEASES - Maturity Analysis of the Annual Undiscounted Cash Flows (Details) $ in Thousands | Mar. 31, 2024 USD ($) |
Leases [Abstract] | |
2024 | $ 122 |
2025 | 163 |
2026 | 163 |
2027 | 163 |
2028 | 163 |
Thereafter | 882 |
Operating lease liabilities, to be paid | $ 1,656 |
LEASES - Reconciliation of the
LEASES - Reconciliation of the Undiscounted Cash Flows (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Leases [Abstract] | ||
Undiscounted cash flows of the operating lease | $ 1,656 | |
Unamortized discount | 721 | |
Total operating lease liability | 935 | |
Current portion of operating lease liability | 49 | $ 48 |
Operating lease liability, net of current portion | $ 886 | $ 899 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | |
Income Tax Disclosure [Abstract] | |||
Effective tax rate | 0% | ||
Income tax benefit | $ 0 | $ 0 | |
Unrecognized tax benefits | 0 | $ 0 | |
Accrued interest and penalties | $ 0 | $ 0 |
DEBT - Long-Term Debt Table (De
DEBT - Long-Term Debt Table (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Short-Term Debt [Line Items] | ||
Total principal maturities | $ 106,071 | |
Debt issuance costs and debt discount | (6,664) | $ (15,970) |
Long-term debt | 99,407 | 123,521 |
Less long-term debt due within one year | 99,360 | 123,465 |
Total long-term debt, net of portion due within one year | 47 | 56 |
Term loan | ||
Short-Term Debt [Line Items] | ||
Total principal maturities | 105,990 | 139,401 |
Property, plant and equipment finance agreement | ||
Short-Term Debt [Line Items] | ||
Total principal maturities | $ 81 | $ 90 |
DEBT - Narrative (Details)
DEBT - Narrative (Details) | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||||
Mar. 01, 2023 USD ($) shares | Dec. 01, 2021 USD ($) shares | Mar. 31, 2023 USD ($) $ / shares shares | Oct. 31, 2022 USD ($) tranche $ / shares shares | Jul. 31, 2022 USD ($) tranche $ / shares shares | Mar. 31, 2024 USD ($) $ / shares | Mar. 31, 2023 USD ($) $ / shares shares | Dec. 31, 2023 USD ($) | |
DEBT | ||||||||
Repayments of secured debt | $ 33,412,000 | $ 0 | ||||||
Payments of prepayment fees associated with early extinguishment of long-term debt | 314,000 | 0 | ||||||
Loss on extinguishment of debt | 2,027,000 | 0 | ||||||
Issuance of stock (in shares) | shares | 40,764,706 | 7,481,747 | ||||||
Fair value of term loan | $ 100,200,000 | |||||||
Warrants issued to lenders (in shares) | shares | 2,667,678 | |||||||
Exercise price of warrants (in dollars per share) | $ / shares | $ 1.93 | $ 0.58 | ||||||
Amortization of debt issuance costs, commitment fees and accretion of debt discount | $ 7,593,000 | 3,549,000 | ||||||
Capitalized interest costs | 0 | $ 1,000,000 | ||||||
Warrant agreement | ||||||||
DEBT | ||||||||
Proceeds from additional capital raise | 5,000,000 | |||||||
Warrant agreement | Penny Warrants | ||||||||
DEBT | ||||||||
Warrants issued to lenders (in shares) | shares | 27,759,265 | 27,759,265 | ||||||
Exercise price of warrants (in dollars per share) | $ / shares | $ 0.01 | $ 0.01 | ||||||
Percentage of common stock on fully diluted equity | 10% | |||||||
Warrant agreement | Dollar Warrants | ||||||||
DEBT | ||||||||
Warrants issued to lenders (in shares) | shares | 13,879,630 | 13,879,630 | ||||||
Exercise price of warrants (in dollars per share) | $ / shares | $ 1 | $ 1 | ||||||
Percentage of common stock on fully diluted equity | 5% | |||||||
Delayed Draw Term Loan | ||||||||
DEBT | ||||||||
Allocated fair value of equity included in the issuance of loan | $ 2,900,000 | |||||||
Number of tranches | tranche | 2 | |||||||
Number of separate increments | tranche | 2 | |||||||
Percentage of additional shares received on conversion of additional warrants per each tranche | 1.875% | |||||||
Number of separate sub-tranches | tranche | 2 | |||||||
Delayed Draw Term Loan | First Tranche | ||||||||
DEBT | ||||||||
Debt instrument face amount, per tranche | $ 7,500,000 | |||||||
Delayed Draw Term Loan | Second Tranche | ||||||||
DEBT | ||||||||
Debt instrument face amount, per tranche | 7,500,000 | |||||||
First Amendment Term Loan | ||||||||
DEBT | ||||||||
Amortization of debt issuance costs, commitment fees and accretion of debt discount | 7,600,000 | $ 3,500,000 | ||||||
Interest expense | 2,500,000 | |||||||
Capitalized interest in property, plant and equipment | $ 500,000 | |||||||
Capitalized interest costs | 500,000 | |||||||
Nautilus Joint Venture | ||||||||
DEBT | ||||||||
Issuance of stock (in shares) | shares | 839,398 | |||||||
Percentage to outstanding shares | 1.50% | |||||||
One Term Loan Investor, NovaWulf Digital Master Fund, L.P. | Nautilus Joint Venture | ||||||||
DEBT | ||||||||
Issuance costs | $ 4,000,000 | |||||||
Allocated fair value of equity included in the issuance of loan | 25,700,000 | |||||||
Upfront fee considered as debt discount | 29,800,000 | |||||||
Loans Payable | ||||||||
DEBT | ||||||||
Loan amount | $ 123,500,000 | |||||||
Fair value of term loan | 1,100,000 | |||||||
Amount of fair value included in debt discount | 4,100,000 | |||||||
Effective interest rate of debt | 12.90% | |||||||
Loans Payable | Term Sheet | ||||||||
DEBT | ||||||||
Repayments of debt | $ 40,000,000 | |||||||
Repayments of secured debt | 33,400,000 | $ 0 | ||||||
Payments of prepayment fees associated with early extinguishment of long-term debt | 300,000 | |||||||
Loss on extinguishment of debt | 2,000,000 | |||||||
Unamortized discount, derecognized | 1,700,000 | |||||||
Loans Payable | Term Loan, Optional Prepayment | ||||||||
DEBT | ||||||||
Repayments of secured debt | $ 18,600,000 | |||||||
Loans Payable | Minimum | Term Sheet | ||||||||
DEBT | ||||||||
Proceeds from issuance of equity | $ 33,500,000 | |||||||
Loans Payable | Nautilus Joint Venture | ||||||||
DEBT | ||||||||
Upfront fee | $ 1,200,000 | |||||||
Loans Payable | One Term Loan Investor, NovaWulf Digital Master Fund, L.P. | Nautilus Joint Venture | ||||||||
DEBT | ||||||||
Interest rate | 11.50% | |||||||
Interest rate in case default | 13.50% | |||||||
Prepayment incremental amount | $ 5,000,000 | |||||||
Prepayment fees after 1st anniversary | 3% | |||||||
Prepayment fees after 2nd anniversary | 2% | |||||||
New Term Facility | ||||||||
DEBT | ||||||||
Funds drawn at closing | $ 15,000,000 | |||||||
Percentage of cash interest | 8.50% | |||||||
Issuance costs | $ 1,500,000 | |||||||
Upfront fee | 100,000 | |||||||
Additional term loan facility | $ 50,000,000 | |||||||
Number of tranches | tranche | 3 | |||||||
Warrants issued to lenders (in shares) | shares | 5,787,732 | |||||||
Exercise price of warrants (in dollars per share) | $ / shares | $ 0.01 | |||||||
Percentage of outstanding common stock | 5% | |||||||
New Term Facility | Corporate Joint Venture | ||||||||
DEBT | ||||||||
Percentage of ownership interest | 25% | |||||||
New Term Facility | Second Tranche | ||||||||
DEBT | ||||||||
Warrants issued as a percentage of diluted equity | 3.75% | |||||||
Value of warrants | $ 15,000,000 | |||||||
New Term Facility | Third Tranche | ||||||||
DEBT | ||||||||
Warrants issued as a percentage of diluted equity | 4.25% | |||||||
Value of warrants | $ 20,000,000 | |||||||
New Term Facility | Maximum | ||||||||
DEBT | ||||||||
Remaining line of credit | $ 35,000,000 | |||||||
First Amendment Term Loan | ||||||||
DEBT | ||||||||
Effective interest rate of debt | 13.10% | |||||||
Percentage of outstanding common stock | 2% | |||||||
First Amendment Term Loan | Interest Expense | ||||||||
DEBT | ||||||||
Fees paid to lenders and the allocated value of the common stock warrants | $ 3,500,000 | |||||||
Delayed Draw Term Loan | ||||||||
DEBT | ||||||||
Percentage of outstanding common stock | 3% | |||||||
Delayed Draw Term Loan | Delayed Draw Term Loan | ||||||||
DEBT | ||||||||
Loan amount | $ 15,000,000 | |||||||
Fifth Amendment Term Loan | ||||||||
DEBT | ||||||||
Effective interest rate of debt | 28.50% | |||||||
Fifth Amendment Term Loan | Interest Expense | ||||||||
DEBT | ||||||||
Fees paid to lenders and the allocated value of the common stock warrants | $ 16,000,000 | |||||||
Term loan | NovaWolf Digital Master Fund & NovaWulf Digital Private Fund | ||||||||
DEBT | ||||||||
Loan amount | $ 6,700,000 | $ 12,900,000 |
DEBT - Maturity (Details)
DEBT - Maturity (Details) $ in Thousands | Mar. 31, 2024 USD ($) |
Year ending December 31 | |
2024 | $ 106,015 |
2025 | 36 |
2026 | 20 |
Total principal maturities | $ 106,071 |
CONVERTIBLE PROMISSORY NOTES (D
CONVERTIBLE PROMISSORY NOTES (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | ||||
Jan. 30, 2023 | Mar. 31, 2023 | Mar. 31, 2024 | Mar. 31, 2023 | Jan. 31, 2023 | Nov. 30, 2022 | |
Standby Equity Purchase Agreement & Convertible Promissory Notes [Line Items] | ||||||
Debt conversion, converted instrument, amount | $ 0 | $ 4,666 | ||||
New Convertible Promissory Note | ||||||
Standby Equity Purchase Agreement & Convertible Promissory Notes [Line Items] | ||||||
Conversion price (in dollars per share) | $ 0.40 | |||||
Unpaid interest converted into shares of common stock | 3,134,932 | |||||
Interest rate | 4% | |||||
Convertible promissory note | ||||||
Standby Equity Purchase Agreement & Convertible Promissory Notes [Line Items] | ||||||
Conversion price (in dollars per share) | $ 0.40 | |||||
Unpaid interest converted into shares of common stock | 8,628,024 | |||||
Private Placement | New Convertible Promissory Note | ||||||
Standby Equity Purchase Agreement & Convertible Promissory Notes [Line Items] | ||||||
Loan amount | $ 1,300 | |||||
Debt conversion, converted instrument, amount | $ 5,000 | |||||
Accredited Investors | Convertible promissory note | ||||||
Standby Equity Purchase Agreement & Convertible Promissory Notes [Line Items] | ||||||
Loan amount | $ 3,400 | |||||
Management | Convertible promissory note | ||||||
Standby Equity Purchase Agreement & Convertible Promissory Notes [Line Items] | ||||||
Loan amount | $ 1,700 |
JOINT VENTURE - Narrative (Deta
JOINT VENTURE - Narrative (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||||||
Apr. 30, 2023 minerVAMiner | Mar. 31, 2023 USD ($) minerVAMiner MW | Feb. 28, 2023 minerVAMiner | Aug. 31, 2022 | May 31, 2021 MW | Mar. 31, 2024 USD ($) | Mar. 31, 2023 USD ($) MW | Dec. 31, 2023 USD ($) | Feb. 29, 2024 MW | |
JOINT VENTURE | |||||||||
Payments to acquire property, plant, and equipment | $ 46,979 | $ 9,986 | |||||||
Equity in net assets of investee | 91,866 | $ 98,613 | |||||||
Second A&R Nautilus Agreement | |||||||||
JOINT VENTURE | |||||||||
Fair value of miners contributed | $ 36,700 | $ 36,700 | |||||||
Increased the equity in net assets | 36,700 | ||||||||
Nautilus Joint Venture | Second A&R Nautilus Agreement | |||||||||
JOINT VENTURE | |||||||||
Maximum operating capacity (in MW) | MW | 200 | ||||||||
Ownership interest in the joint venture | 25% | 25% | |||||||
Joint venture, increase in operating capacity (in MW) | MW | 50 | 50 | 50 | ||||||
Nautilus Joint Venture | Second A&R Nautilus Agreement | Talen | |||||||||
JOINT VENTURE | |||||||||
Ownership interest in the joint venture | 75% | 75% | |||||||
Talen | |||||||||
JOINT VENTURE | |||||||||
Maximum operating capacity (in MW) | MW | 300 | 300 | |||||||
Interest in joint venture (as a percent) | 50% | ||||||||
Capitalized interest costs | $ 0 | $ 900 | |||||||
Variable Interest Entity, Not Primary Beneficiary | |||||||||
JOINT VENTURE | |||||||||
Interest in joint venture (as a percent) | 25% | ||||||||
Proceeds from Bitcoin distributions received | $ 12,000 | 0 | |||||||
Percent of access to electricity supply | 50% | ||||||||
Miners value included in property plant and equipment | 6,900 | ||||||||
Estimated fair value | $ 20,500 | ||||||||
Loss on transfer of miners | $ 8,900 | $ 13,600 | |||||||
Variable Interest Entity, Not Primary Beneficiary | Bitmain Non-fixed Price Sales and Purchase Agreements | |||||||||
JOINT VENTURE | |||||||||
Number of miners transferred | minerVAMiner | 4,900 | 4,900 | 4,900 |
JOINT VENTURE - Interest and Ex
JOINT VENTURE - Interest and Exposure (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
JOINT VENTURE | ||
Net loss Inception to Date | $ 5,275 | $ (10,167) |
Variable Interest Entity, Not Primary Beneficiary | ||
JOINT VENTURE | ||
% Ownership | 25% | |
Initial Investment | $ 18,000 | |
Additional Investment, Net | 95,131 | |
Net loss Inception to Date | (21,265) | |
Company’s Variable Interest in Entity | 91,866 | |
Commitment to Future Additional Contributions | 0 | |
Company's Maximum Exposure to Loss in Entity | $ 91,866 |
JOINT VENTURE - Results of Oper
JOINT VENTURE - Results of Operations and Financial Position (Details) - USD ($) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | Dec. 31, 2022 | |
Condensed statement of operations information: | ||||
Net loss | $ (9,613) | $ (26,257) | ||
Condensed balance sheet information: | ||||
Current assets | 54,356 | $ 62,587 | ||
TOTAL ASSETS | 395,388 | 378,106 | ||
Current liabilities | 122,112 | 154,662 | ||
Equity | 272,343 | 146,313 | 222,489 | $ 117,754 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | 395,388 | 378,106 | ||
Nautilus Joint Venture | ||||
Condensed statement of operations information: | ||||
Revenue | 41,740 | 9,106 | ||
Operating expenses | 26,322 | 12,137 | ||
Net loss | 15,418 | $ (3,031) | ||
Condensed balance sheet information: | ||||
Current assets | 12,560 | 12,406 | ||
Noncurrent assets | 158,946 | 171,245 | ||
TOTAL ASSETS | 171,506 | 183,651 | ||
Current liabilities | 13,289 | 13,149 | ||
Noncurrent liabilities | 29,755 | 29,493 | ||
Equity | 128,462 | 141,009 | ||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 171,506 | $ 183,651 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) $ in Millions | 1 Months Ended | 3 Months Ended | |||||
Mar. 31, 2024 USD ($) bitcoinMiner | May 13, 2024 USD ($) | Feb. 28, 2022 MWh | Mar. 31, 2024 USD ($) bitcoinMiner | Mar. 31, 2024 USD ($) | Mar. 31, 2024 pH | Mar. 31, 2024 | |
March 2024 Bitmain Purchase Agreement | |||||||
COMMITMENTS AND CONTINGENCIES | |||||||
Total purchase price per agreement | $ 17.5 | ||||||
Payments for purchase obligation | $ 3.5 | ||||||
March 2024 Bitmain Purchase Agreement | Subsequent Events | |||||||
COMMITMENTS AND CONTINGENCIES | |||||||
Payments for purchase obligation | $ 14 | ||||||
March 2024 Bitmain Purchase Agreement | S21 Miner | |||||||
COMMITMENTS AND CONTINGENCIES | |||||||
Number miners purchases covered by the agreement | bitcoinMiner | 5,000 | 5,000 | |||||
Bitmain Call Option | |||||||
COMMITMENTS AND CONTINGENCIES | |||||||
Total purchase price per agreement | $ 96 | ||||||
Payments for purchase obligation | $ 9.6 | ||||||
Purchase obligation, coupon, percentage of total purchase price | 10% | ||||||
Bitmain Call Option | S21 Miner | |||||||
COMMITMENTS AND CONTINGENCIES | |||||||
Number miners purchases covered by the agreement | 30,000 | 30,000 | 6,000 | ||||
Power Authority of the State of New York | |||||||
COMMITMENTS AND CONTINGENCIES | |||||||
Term of agreement | 10 years | ||||||
Maximum energy that can be purchased | MWh | 90 |
CONVERTIBLE PREFERRED STOCK (De
CONVERTIBLE PREFERRED STOCK (Details) | 1 Months Ended | 3 Months Ended | ||||||
Mar. 01, 2023 shares | Oct. 31, 2022 USD ($) shares | Mar. 31, 2022 USD ($) operatingSegment $ / shares shares | Mar. 31, 2024 USD ($) $ / shares shares | Mar. 31, 2023 USD ($) $ / shares | Dec. 31, 2023 USD ($) $ / shares shares | Feb. 23, 2023 $ / shares shares | Feb. 22, 2023 shares | |
CONVERTIBLE PREFERRED STOCK | ||||||||
Issuance of stock (in shares) | 40,764,706 | 7,481,747 | ||||||
Preferred stock shares authorized (in shares) | 100,000,000 | 100,000,000 | 100,000,000 | 25,000,000 | ||||
Preferred stock par value (in dollars per share) | $ / shares | $ 0.001 | $ 0.001 | $ 0.001 | |||||
Issuance of stock | $ | $ 9,400,000 | $ 50,650,000 | $ 26,309,000 | |||||
Preferred stock, conversion threshold trading days | operatingSegment | 5 | |||||||
Preferred stock, threshold consecutive trading days | operatingSegment | 15 | |||||||
Conversion denomination | $ | $ 1,000 | |||||||
Preferred dividend declared (in dollar per share) | $ / shares | $ 0 | $ 0 | ||||||
Cumulative dividends accumulated and accreted to liquidation preference | $ | $ 2,100,000 | |||||||
Preferred stock, liquidation preference | $ | $ 11,709,000 | $ 11,423,000 | ||||||
Number of common stock issued upon conversion of preferred stock (in shares) | 1,200,000 | |||||||
Series A Preferred Stock | ||||||||
CONVERTIBLE PREFERRED STOCK | ||||||||
Preferred stock shares authorized (in shares) | 1 | |||||||
Annual dividend rate | 10% | |||||||
Preferred stock, liquidation preference (in dollars per share) | $ / shares | $ 1,000 | |||||||
Preferred stock, threshold percentage of stock price trigger | 130% | |||||||
Conversion ratio | 100 | |||||||
Series A Preferred Stock | Maximum | ||||||||
CONVERTIBLE PREFERRED STOCK | ||||||||
Conversion ratio | 125 | |||||||
Series A Preferred Stock | Subscription Agreements | ||||||||
CONVERTIBLE PREFERRED STOCK | ||||||||
Issuance of stock (in shares) | 9,566 | |||||||
Preferred stock shares authorized (in shares) | 10,000 | |||||||
Preferred stock par value (in dollars per share) | $ / shares | $ 0.001 | |||||||
Issuance of stock | $ | $ 9,600,000 |
COMMON STOCK (Details)
COMMON STOCK (Details) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | |||||||||
Mar. 01, 2023 USD ($) shares | Feb. 23, 2023 item $ / shares shares | Feb. 28, 2023 USD ($) $ / shares shares | Jan. 31, 2023 USD ($) $ / shares shares | Dec. 31, 2022 USD ($) $ / shares shares | Oct. 31, 2022 USD ($) $ / shares shares | Apr. 30, 2022 USD ($) $ / shares | Mar. 31, 2024 USD ($) vote $ / shares shares | Mar. 31, 2023 USD ($) $ / shares shares | Dec. 31, 2023 $ / shares shares | Feb. 22, 2023 shares | |
COMMON STOCK | |||||||||||
Number of proposals approved | item | 2 | ||||||||||
Common stock par value (in dollars per share) | $ / shares | $ 0.001 | $ 0.001 | $ 0.001 | ||||||||
Common stock shares authorized (in shares) | 400,000,000 | 400,000,000 | 400,000,000 | 200,000,000 | |||||||
Preferred stock par value (in dollars per share) | $ / shares | $ 0.001 | $ 0.001 | $ 0.001 | ||||||||
Preferred stock shares authorized (in shares) | 100,000,000 | 100,000,000 | 100,000,000 | 25,000,000 | |||||||
Authorized shares (in shares) | 500,000,000 | ||||||||||
Common stock number of votes | vote | 1 | ||||||||||
Issuance of stock (in shares) | 40,764,706 | 7,481,747 | |||||||||
Issuance of stock | $ | $ 9,400 | $ 50,650 | $ 26,309 | ||||||||
Net proceeds from issued of common stocking including ATM Offering | $ | $ 26,600 | $ 5,100 | $ 50,722 | 26,562 | |||||||
Number of shares in each unit (in shares) | 1 | ||||||||||
Number of warrants in each unit (in shares) | 1 | ||||||||||
Exercise price of warrants (in dollars per share) | $ / shares | $ 1.93 | $ 0.58 | |||||||||
Threshold trading days for weighted average price calculation | 10 days | ||||||||||
Weighted average price of last 10 days (in dollars per share) | $ / shares | $ 1.26 | ||||||||||
Aggregate purchase price | $ | $ 3,500 | ||||||||||
Proceeds from warrant issuances | $ | $ 4,300 | $ 0 | 2,500 | ||||||||
Warrants issued to lenders (in shares) | 2,667,678 | ||||||||||
Proceeds from warrant exercises | $ | $ 3 | ||||||||||
Warrant exercise (in shares) | 0 | 342,326 | |||||||||
Dividends declared (in dollar per share) | $ / shares | $ 0 | $ 0 | |||||||||
Exchange Agreement | |||||||||||
COMMON STOCK | |||||||||||
TeraClub shares converted to TeraWulf shares (in shares) | 12,000,000 | ||||||||||
New Exchange Warrants | |||||||||||
COMMON STOCK | |||||||||||
Number of shares issued for warrant exercise (in shares) | 12,000,000 | ||||||||||
New exchange warrants issued (in shares) | 12,000,000 | ||||||||||
Strike price (in dollars per share) | $ / shares | $ 0.0001 | ||||||||||
Subscription agreements with February Common Stock Investors | |||||||||||
COMMON STOCK | |||||||||||
Issuance of stock (in shares) | 1,386,467 | ||||||||||
Share price (in dollars per share) | $ / shares | $ 0.68 | ||||||||||
Proceeds from private placement | $ | $ 900 | ||||||||||
Private Placement | |||||||||||
COMMON STOCK | |||||||||||
Percentage of warrants exercised | 50% | ||||||||||
Proceeds from warrant exercises | $ | $ 1,800 | ||||||||||
Percentage of warrants expired | 50% | ||||||||||
Private Placement | December Warrants | |||||||||||
COMMON STOCK | |||||||||||
Net proceeds from issued of common stocking including ATM Offering | $ | $ 5,400 | ||||||||||
Exercise price of warrants (in dollars per share) | $ / shares | $ 0.40 | ||||||||||
Proceeds from warrant issuances | $ | $ 1,300 | ||||||||||
Warrants issued to lenders (in shares) | 8,750,000 | ||||||||||
Private Placement | Warrant subscription agreement | Warrant Investors | |||||||||||
COMMON STOCK | |||||||||||
Exercise price of warrants (in dollars per share) | $ / shares | $ 0.00001 | ||||||||||
Warrants issued to lenders (in shares) | 1 | ||||||||||
Warrants issued (in shares) | 2,380,952 | ||||||||||
Private Placement | Warrant subscription agreement | January 2023 Warrants | |||||||||||
COMMON STOCK | |||||||||||
Issuance of stock (in shares) | 2,380,952 | ||||||||||
Proceeds from issuance of equity | $ | $ 2,500 | ||||||||||
Share price (in dollars per share) | $ / shares | $ 1.05 | ||||||||||
Number of shares issued for warrant exercise (in shares) | 2,380,952 | ||||||||||
December Private Placement | |||||||||||
COMMON STOCK | |||||||||||
Issuance of stock (in shares) | 16,850,000 | ||||||||||
Aggregate offering price | $ | $ 6,700 | ||||||||||
Price per share (in dollar per share) | $ / shares | $ 0.40 | ||||||||||
Number of warrants issued (in shares) | 11,250,000 | ||||||||||
January Private Placement | |||||||||||
COMMON STOCK | |||||||||||
Issuance of stock | $ | $ 1,800 | ||||||||||
Price per share (in dollar per share) | $ / shares | $ 0.40 | ||||||||||
Proceeds from issuance of equity | $ | $ 30,000 | ||||||||||
ATM Sales Agreement | |||||||||||
COMMON STOCK | |||||||||||
Issuance of stock (in shares) | 23,268,600 | 0 | |||||||||
Issuance of stock | $ | $ 50,700 | ||||||||||
April ATM Sales Agreement | |||||||||||
COMMON STOCK | |||||||||||
Common stock par value (in dollars per share) | $ / shares | $ 0.001 | ||||||||||
Aggregate offering price | $ | $ 200,000 | ||||||||||
Percentage of commission o gross proceed | 3% | ||||||||||
Remaining shares to be issued | $ | $ 28,900 | ||||||||||
Over-Allotment Option | |||||||||||
COMMON STOCK | |||||||||||
Issuance of stock (in shares) | 36,764,706 | ||||||||||
Share price (in dollars per share) | $ / shares | $ 0.68 | ||||||||||
Term of over allotment option | 30 days | ||||||||||
Number of additional shares granted (in shares) | 5,514,705 | ||||||||||
Number of common stock elected to purchase (in shares) | 4,000,000 | ||||||||||
Series A Preferred Stock | |||||||||||
COMMON STOCK | |||||||||||
Preferred stock shares authorized (in shares) | 1 |
STOCK-BASED COMPENSATION - Narr
STOCK-BASED COMPENSATION - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
STOCK-BASED COMPENSATION | ||
Stock-based compensation expense | $ 6.9 | $ 0.9 |
Number of consecutive trading days | 45 days | |
Minimum | ||
STOCK-BASED COMPENSATION | ||
Requisite service period of grants | 1 year | |
Maximum | ||
STOCK-BASED COMPENSATION | ||
Requisite service period of grants | 3 years | |
Board of Directors | ||
STOCK-BASED COMPENSATION | ||
Shares issued (in shares) | 39,064 | |
Board of Directors and Employees | ||
STOCK-BASED COMPENSATION | ||
Unrecognized compensation cost | $ 9.1 | |
Restricted Stock Units (RSUs) | Board of Directors and Employees | Employee | ||
STOCK-BASED COMPENSATION | ||
Recognized over a weighted average period | 4 months 24 days | |
Restricted Stock Units (RSUs) | Non Employees | Non-employee | ||
STOCK-BASED COMPENSATION | ||
Unrecognized compensation cost | $ 1.6 | |
Recognized over a weighted average period | 1 year 2 months 12 days | |
Market Conditions Stock Price Based Restricted Stock Units | Employee | ||
STOCK-BASED COMPENSATION | ||
Number of grants (in shares) | 4,197,000 | |
Performance Stock Units (PSUs) | ||
STOCK-BASED COMPENSATION | ||
Maximum period from grant date for performance target completion | 3 years |
STOCK-BASED COMPENSATION - Acti
STOCK-BASED COMPENSATION - Activity in Unvested RSUs Granted to Employees and Non-Employees (Details) - Restricted Stock Units (RSUs) | 3 Months Ended |
Mar. 31, 2024 $ / shares shares | |
Share-Based Compensation Arrangement by Share-Based Payment Award, Non-Option Equity Instruments, Outstanding [Roll Forward] | |
Ending balance (in shares) | 11,590,695 |
Employee | |
Share-Based Compensation Arrangement by Share-Based Payment Award, Non-Option Equity Instruments, Outstanding [Roll Forward] | |
Beginning balance (in shares) | 3,952,749 |
Granted (in shares) | 7,100,000 |
Vested (in shares) | (1,303,334) |
Forfeited/canceled (in shares) | 0 |
Ending balance (in shares) | 9,749,415 |
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract] | |
Beginning balance (in dollars per share) | $ / shares | $ 1.26 |
Granted (in dollars per share) | $ / shares | 1.78 |
Vested (in dollars per share) | $ / shares | 0.65 |
Forfeited/canceled (in dollars per share) | $ / shares | 0 |
Ending balance (in dollars per share) | $ / shares | $ 1.72 |
Non-employee | |
Share-Based Compensation Arrangement by Share-Based Payment Award, Non-Option Equity Instruments, Outstanding [Roll Forward] | |
Beginning balance (in shares) | 2,389,392 |
Granted (in shares) | 300,000 |
Vested (in shares) | (848,112) |
Forfeited/canceled (in shares) | 0 |
Ending balance (in shares) | 1,841,280 |
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract] | |
Beginning balance (in dollars per share) | $ / shares | $ 0.79 |
Granted (in dollars per share) | $ / shares | 2.49 |
Vested (in dollars per share) | $ / shares | 0.85 |
Forfeited/canceled (in dollars per share) | $ / shares | 0 |
Ending balance (in dollars per share) | $ / shares | $ 1.05 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) | 1 Months Ended | 3 Months Ended | ||||||
Mar. 01, 2023 shares | Oct. 31, 2022 USD ($) shares | Apr. 30, 2021 USD ($) $ / kWh | Mar. 31, 2024 USD ($) shares | Mar. 31, 2023 USD ($) | Dec. 31, 2023 USD ($) | Jan. 01, 2023 USD ($) | Dec. 31, 2021 USD ($) MW shares | |
RELATED PARTY TRANSACTIONS | ||||||||
Prepaid expenses | $ 3,973,000 | $ 4,540,000 | ||||||
Other amounts due to related parties | 975,000 | 972,000 | ||||||
Property, plant and equipment, net | 237,889,000 | 205,284,000 | ||||||
Share based liabilities due to related party | 0 | 2,500,000 | ||||||
Issuance of stock (in shares) | shares | 40,764,706 | 7,481,747 | ||||||
Issuance of stock | $ 9,400,000 | 50,650,000 | $ 26,309,000 | |||||
Related Party | ||||||||
RELATED PARTY TRANSACTIONS | ||||||||
Selling, general and administrative expenses | 2,620,000 | 2,898,000 | ||||||
Operating expenses | $ 888,000 | 597,000 | ||||||
Cryptocurrency load deployment that requires additional share-base award compensation | MW | 100 | |||||||
Share based liabilities due to related party | 2,500,000 | |||||||
Issuance of stock (in shares) | shares | 1,083,189 | |||||||
Issuance of stock | $ 2,500,000 | |||||||
Performance Milestone | Related Party | ||||||||
RELATED PARTY TRANSACTIONS | ||||||||
Selling, general and administrative expenses | 0 | 300,000 | ||||||
Beowulf E&D | Related Party | ||||||||
RELATED PARTY TRANSACTIONS | ||||||||
Annual based fee payable | $ 8,500,000 | |||||||
Prepaid expenses | 700,000 | 700,000 | ||||||
Other amounts due to related parties | 1,000,000 | 1,000,000 | ||||||
Property, plant and equipment, net | 200,000 | $ 6,600,000 | ||||||
Beowulf E&D | Related Party | Performance Shares | ||||||||
RELATED PARTY TRANSACTIONS | ||||||||
Additional awards for every 100MW cryptocurrency mining load | $ 2,500,000 | |||||||
Beowulf E&D | Services Agreement | Related Party | ||||||||
RELATED PARTY TRANSACTIONS | ||||||||
Term of agreement | 5 years | |||||||
Transaction amount | 3,400,000 | 3,200,000 | ||||||
Selling, general and administrative expenses | 2,600,000 | 2,900,000 | ||||||
Operating expenses | $ 600,000 | $ 300,000 | ||||||
Deferred compensation arrangement with individual, shares authorized for issuance | shares | 12,500,000 | |||||||
Beowulf E&D | Development of bitcoin and organization and legal costs | Related Party | ||||||||
RELATED PARTY TRANSACTIONS | ||||||||
Services agreement, monthly fee in the first year | $ 7,000,000 | |||||||
Services agreement, annual fee after the first year if higher | $ 10,000,000 | |||||||
Services agreement, annual fee per kilowatt hour of electric load utilized after the first year if higher | $ / kWh | 0.0037 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - USD ($) | 1 Months Ended | 3 Months Ended | |||||||||
Apr. 08, 2024 | Mar. 01, 2023 | May 13, 2024 | Apr. 30, 2024 | Oct. 31, 2022 | Mar. 31, 2024 | Mar. 31, 2023 | Apr. 16, 2024 | Dec. 31, 2023 | Feb. 23, 2023 | Feb. 22, 2023 | |
Subsequent Event [Line Items] | |||||||||||
Issuance of stock (in shares) | 40,764,706 | 7,481,747 | |||||||||
Proceeds from warrant exercises | $ 3,000 | ||||||||||
Common stock par value (in dollars per share) | $ 0.001 | $ 0.001 | $ 0.001 | ||||||||
Common stock shares authorized (in shares) | 400,000,000 | 400,000,000 | 400,000,000 | 200,000,000 | |||||||
Net proceeds from issuance of common stock | $ 26,600,000 | $ 5,100,000 | $ 50,722,000 | 26,562,000 | |||||||
Repayments of secured debt | 33,412,000 | 0 | |||||||||
Loans Payable | Term Sheet | |||||||||||
Subsequent Event [Line Items] | |||||||||||
Repayments of secured debt | $ 33,400,000 | $ 0 | |||||||||
ATM Sales Agreement | |||||||||||
Subsequent Event [Line Items] | |||||||||||
Issuance of stock (in shares) | 23,268,600 | 0 | |||||||||
Subsequent Events | |||||||||||
Subsequent Event [Line Items] | |||||||||||
Common stock shares authorized (in shares) | 600,000,000 | ||||||||||
Subsequent Events | Loans Payable | Term Sheet | |||||||||||
Subsequent Event [Line Items] | |||||||||||
Repayments of secured debt | $ 30,200,000 | ||||||||||
Subsequent Events | Penny Warrants | |||||||||||
Subsequent Event [Line Items] | |||||||||||
Number of warrants exercised (in shares) | 25,191,155 | ||||||||||
Subsequent Events | Dollar Warrants | |||||||||||
Subsequent Event [Line Items] | |||||||||||
Number of warrants exercised (in shares) | 449,543 | ||||||||||
Subsequent Events | Penny & Dollar Warrants | |||||||||||
Subsequent Event [Line Items] | |||||||||||
Issuance of stock (in shares) | 25,640,698 | ||||||||||
Proceeds from warrant exercises | $ 700,000 | ||||||||||
Subsequent Events | ATM Sales Agreement | |||||||||||
Subsequent Event [Line Items] | |||||||||||
Issuance of stock (in shares) | 4,508,896 | ||||||||||
Net proceeds from issuance of common stock | $ 10,800,000 |