Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2023 | May 15, 2023 | |
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Mar. 31, 2023 | |
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 State Or Province | MD | |
Entity Address, Address Line One | 9 Federal Street | |
Entity Address, City or Town | Easton | |
Entity Address, Postal Zip Code | 21601 | |
City Area Code | 410 | |
Local Phone Number | 770-9500 | |
Title of 12(b) Security | Common Stock, $0.001 par value per share | |
Trading Symbol | WULF | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 212,032,468 | |
Entity Central Index Key | 0001083301 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
CURRENT ASSETS: | ||
Cash and cash equivalents | $ 16,985 | $ 1,279 |
Restricted cash | 1 | 7,044 |
Digital currency, net | 117 | 183 |
Prepaid expenses | 4,378 | 5,095 |
Other current assets | 739 | 543 |
Total current assets | 22,220 | 14,144 |
Equity in net assets of investee | 122,035 | 98,741 |
Property, plant and equipment, net | 159,415 | 191,521 |
Right-of-use asset | 11,694 | 11,944 |
Other assets | 1,417 | 1,337 |
Total assets | 316,781 | 317,687 |
CURRENT LIABILITIES: | ||
Accounts payable | 18,966 | 21,862 |
Accrued construction liabilities | 729 | 2,903 |
Other accrued liabilities | 9,119 | 14,963 |
Share based liabilities due to related party | 14,896 | 14,583 |
Other amounts due to related parties | 4,406 | 3,295 |
Contingent value rights | 7,001 | 10,900 |
Current portion of operating lease liability | 43 | 42 |
Insurance premium financing payable | 961 | 2,117 |
Convertible promissory notes | 3,416 | |
Current portion of long-term debt | 51,938 | |
Total current liabilities | 56,121 | 126,019 |
Operating lease liability, net of current portion | 936 | 947 |
Long-term debt | 113,411 | 72,967 |
TOTAL LIABILITIES | 170,468 | 199,933 |
Commitments and Contingencies (See Note 12) | ||
STOCKHOLDERS' EQUITY: | ||
Preferred stock, $0.001 par value, 100,000,000 and 25,000,000 authorized at March 31, 2023 and December 31, 2022, respectively; 9,566 issued and outstanding at March 31, 2023 and December 31, 2022; aggregate liquidation preference of $10,608 and $10,349 at March 31, 2023 and December 31, 2022, respectively | 9,273 | 9,273 |
Common stock, $0.001 par value, 400,000,000 and 200,000,000 authorized at March 31, 2023 and December 31, 2022, respectively; 186,268,682 and 145,492,971 issued and outstanding at March 31, 2023 and December 31, 2022, respectively | 186 | 145 |
Common stock to be issued | 4,390 | |
Additional paid-in capital | 345,195 | 294,810 |
Accumulated deficit | (212,731) | (186,474) |
Total stockholders' equity | 146,313 | 117,754 |
Total liabilities and equity | $ 316,781 | $ 317,687 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
CONSOLIDATED BALANCE SHEETS | ||
Preferred stock par value | $ 0.001 | $ 0.001 |
Preferred stock shares authorized | 100,000,000 | 25,000,000 |
Preferred stock shares issued | 9,566 | 9,566 |
Preferred stock shares outstanding | 9,566 | 9,566 |
Preferred stock, liquidation preference | $ 10,608,000 | $ 10,349 |
Common stock par value | $ 0.001 | $ 0.001 |
Common stock shares authorized | 400,000,000 | 200,000,000 |
Common stock shares issued | 186,268,682 | 145,492,971 |
Common stock shares outstanding | 186,268,682 | 145,492,947 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
CONSOLIDATED STATEMENTS OF OPERATIONS | ||
Revenue | $ 11,533 | $ 217 |
Cost of revenue (exclusive of depreciation shown below) | 5,002 | 32 |
Gross profit | 6,531 | 185 |
Cost of operations: | ||
Operating expenses | 308 | 480 |
Operating expenses - related party | 597 | 62 |
Selling, general and administrative expenses | 6,492 | 5,985 |
Selling, general and administrative expenses - related party | 2,898 | 2,816 |
Depreciation | 5,433 | 4 |
Realized gain on sale of digital currency | (603) | |
Impairment of digital currency | 627 | 5 |
Total cost of operations | 15,752 | 9,352 |
Operating loss | (9,221) | (9,167) |
Interest expense | (6,834) | (5,322) |
Loss before income tax and equity in net loss of investee | (16,055) | (14,489) |
Equity in net loss of investee, net of tax | (10,167) | (788) |
Loss from continuing operations | (26,222) | (15,277) |
Loss from discontinued operations, net of tax | (35) | (2,906) |
Net loss | (26,257) | (18,183) |
Preferred stock dividends | (259) | (45) |
Net loss attributable to common stockholders | $ (26,516) | $ (18,228) |
Loss per common share: | ||
Continuing operations, basic | $ (0.16) | $ (0.15) |
Continuing operations, diluted | (0.16) | (0.15) |
Discontinued operations, basic | (0.03) | |
Discontinued operations, diluted | (0.03) | |
Earnings per share, basic | (0.16) | (0.18) |
Earnings per share, diluted | $ (0.16) | $ (0.18) |
Weighted average common shares outstanding: | ||
Basic | 165,015,228 | 100,121,370 |
Diluted | 165,015,228 | 100,121,370 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Preferred Stock | Common Stock | Additional Paid-in Capital | Common Stock to be Issued | Accumulated Deficit | Total |
Beginning balance at Dec. 31, 2021 | $ 100 | $ 218,762 | $ (95,683) | $ 123,179 | ||
Beginning balance (in shares) at Dec. 31, 2021 | 99,976,253 | |||||
Issuance of Series A Convertible Preferred Stock, net of issuance costs | $ 9,273 | 9,273 | ||||
Issuance of Series A Convertible Preferred Stock, net of issuance costs (in shares) | 9,566 | |||||
Common stock offering, net of issuance costs | $ 1 | 6,783 | $ 6,784 | |||
Common stock offering, net of issuance costs (in shares) | 813,986 | |||||
Warrant exercise (in shares) | 0 | |||||
Preferred stock dividends | (45) | $ (45) | ||||
Net loss | (18,183) | (18,183) | ||||
Ending balance at Mar. 31, 2022 | $ 9,273 | $ 101 | 225,545 | (113,911) | 121,008 | |
Ending balance (in shares) at Mar. 31, 2022 | 9,566 | 100,790,239 | ||||
Beginning balance at Dec. 31, 2022 | $ 9,273 | $ 145 | 294,810 | $ (186,474) | 117,754 | |
Beginning balance (in shares) at Dec. 31, 2022 | 9,566 | 145,492,971 | ||||
Common stock reacquired and exchanged for warrants | $ (12) | (12,479) | (12,491) | |||
Common stock reacquired and exchanged for warrants (in shares) | (12,000,000) | |||||
Warrant issuance in conjunction with debt modification | 16,036 | 16,036 | ||||
Warrant offerings | 14,991 | 14,991 | ||||
Common stock offering, net of issuance costs | $ 41 | 26,268 | 26,309 | |||
Common stock offering, net of issuance costs (in shares) | 40,764,706 | |||||
Common stock to be issued, net of issuance costs | 4,390 | $ 4,390 | ||||
Warrant exercise (in shares) | 342,326 | |||||
Convertible promissory notes converted to common stock | $ 12 | 4,693 | $ 4,705 | |||
Convertible promissory notes converted to common stock (in shares) | 11,762,956 | |||||
Stock-based compensation expense and issuance of stock | 876 | 876 | ||||
Stock-based compensation expense and issuance of stock (in shares) | 248,049 | |||||
Net loss | (26,257) | (26,257) | ||||
Ending balance at Mar. 31, 2023 | $ 9,273 | $ 186 | $ 345,195 | $ (212,731) | $ 4,390 | $ 146,313 |
Ending balance (in shares) at Mar. 31, 2023 | 9,566 | 186,268,682 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (26,257,000) | $ (18,183,000) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Amortization of debt issuance costs, commitment fees and accretion of debt discount | 3,549,000 | 2,458,000 |
Related party expense to be settled with respect to common stock | 313,000 | |
Common stock issued for interest expense | 26,000 | |
Stock-based compensation expense | 876,000 | |
Depreciation | 5,433,000 | 4,000 |
Amortization of right-of-use asset | 250,000 | 20,000 |
Increase in digital currency from mining | (9,940,000) | (217,000) |
Impairment of digital currency | 627,000 | 5,000 |
Realized gain on sale of digital currency | (603,000) | |
Proceeds from sale of digital currency | 9,982,000 | |
Equity in net loss of investee, net of tax | 10,167,000 | 788,000 |
Loss from discontinued operations, net of tax | 35,000 | 2,906,000 |
Changes in operating assets and liabilities: | ||
Decrease (increase) in prepaid expenses | 717,000 | (4,449,000) |
Decrease in amounts due from related parties | 815,000 | |
Increase in other current assets | (241,000) | (34,000) |
Increase in other assets | (83,000) | (848,000) |
Decrease in accounts payable | (2,435,000) | (3,978,000) |
(Decrease) increase in other accrued liabilities | (1,354,000) | 4,756,000 |
Increase in other amounts due to related parties | 325,000 | 776,000 |
Decrease in operating lease liability | (10,000) | (21,000) |
Net cash used in operating activities from continuing operations | (8,623,000) | (15,202,000) |
Net cash used in operating activities from discontinued operations | (90,000) | (50,000) |
Net cash used in operating activities | (8,713,000) | (15,252,000) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Investments in joint venture, including direct payments made on behalf of joint venture | (2,285,000) | (19,072,000) |
Reimbursable payments for deposits on plant and equipment made on behalf of a joint venture or joint venture partner | (11,402,000) | |
Reimbursement of payments for deposits on plant and equipment made on behalf of a joint venture or joint venture partner | 11,402,000 | |
Purchase of and deposits on plant and equipment | (9,986,000) | (27,745,000) |
Payment of contingent value rights liability | (3,899,000) | |
Net cash used in investing activities | (16,170,000) | (46,817,000) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from insurance premium financing | 295,000 | 4,706,000 |
Principal payments on insurance premium financing | (1,451,000) | (1,559,000) |
Proceeds from issuance of common stock, net of issuance costs paid of $995 and $142 | 26,562,000 | 6,787,000 |
Proceeds from common stock to be issued, net of issuance costs of $56 and $0 | 4,390,000 | |
Proceeds from warrant issuances | 2,500,000 | |
Proceeds from issuance of preferred stock | 9,266,000 | |
Proceeds from issuance of convertible promissory note | 1,250,000 | |
Net cash provided by financing activities | 33,546,000 | 19,200,000 |
Net change in cash and cash equivalents and restricted cash | 8,663,000 | (42,869,000) |
Cash and cash equivalents and restricted cash at beginning of period | 8,323,000 | |
Cash and cash equivalents and restricted cash at end of period | 16,986,000 | 3,586,000 |
Cash paid during the period for: | ||
Interest | $ 5,399,000 | $ 1,427,000 |
CONSOLIDATED STATEMENTS OF CA_2
CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Stock issuance costs for common stock to be issued | $ 56 | $ 0 |
Common Stock | ||
Stock issuance costs | $ 995 | $ 142 |
ORGANIZATION
ORGANIZATION | 3 Months Ended |
Mar. 31, 2023 | |
ORGANIZATION | |
ORGANIZATION | NOTE 1 – 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 operations consist of operating, developing and constructing bitcoin mining facilities in the United States that are fueled by clean, low cost and reliable power sources. The Company operates a portfolio of bitcoin mining facilities, either wholly-owned or through joint ventures, that each deploy a series of powerful computers that solve complex cryptographic algorithms, which computing power is provided to a mining pool operator to mine bitcoin and validate transactions on the bitcoin network . TeraWulf’s revenue is substantially derived from pay-per-share base amounts and transaction fee rewards earned in bitcoin from the mining pool as compensation for providing the computing power. The Company also leverages its available digital infrastructure to provide miner hosting services to third parties whereby the Company holds an option to purchase the hosted miners in the future. While the Company may choose to mine other cryptocurrencies in the future, it has no plans to do so currently. TeraWulf’s two bitcoin mining facilities are in New York (the “Lake Mariner Facility”) and Pennsylvania (the “Nautilus Cryptomine Facility”). Mining operations commenced at the Lake Mariner Facility in March 2022 and the Company has energized building one and substantially completed the construction of building two as of March 31, 2023. The Nautilus Cryptomine Facility, which has been developed and constructed through a joint venture (see Note 11), commenced mining operations in February 2023 and achieved full energization of the Company’s allotted infrastructure capacity in April 2023. The Lake Mariner Facility is wholly-owned. On December 13, 2021, TeraWulf Inc. completed a strategic business combination (the “Merger”) with IKONICS Corporation, a Minnesota corporation (“IKONICS”) 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, 2022, 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 $26.5 million and negative cash flows from continuing operations of $8.6 million for the three months ended March 31, 2023. As of March 31, 2023, the Company had balances of cash and cash equivalents and restricted cash of $17.0 million, a working capital deficiency of $33.9 million, total stockholders’ equity of $146.3 million and an accumulated deficit of $212.7 million. The Company has commenced mining activities at the Lake Mariner Facility and at the Nautilus Cryptomine Facility, however not yet to the scale required to support its principal operations. The Company has relied primarily on proceeds from its issuances of debt and equity and sale of bitcoin mined to fund its principal operations. In accordance with development of its bitcoin mining facilities, during the three months ended March 31, 2023, the Company invested approximately $10.0 million for purchases of and deposits on plant and equipment,. Also, during the three months ended March 31, 2023, the Company invested million, net in its joint venture (see Note 11). As of March 31, 2023, the Company expects that is has sufficient capital to complete construction of the Lake Mariner Facility. However, until TeraWulf is able to generate positive cash flows from operations, TeraWulf expects to fund its business operations and infrastructure buildout primarily through cash on the balance sheet, sales of mined bitcoin or through the provision of miner hosting services and, if needed, the issuance of equity securities. During the three months ended March 31, 2023, the Company accomplished several notable steps toward achieving near term positive cash flows from operations, namely: (1) the Company amended its long-term debt agreement (see Note 9) to, among other changes, remove the fixed principal amortization through April 7, 2024 and, potentially, beyond, (2) through the issuance of shares of our common stock, par value (3) mining activities commenced at the Nautilus Cryptomine Facility and the Company deems that it has funded all known and expected capital commitments at that 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), (5) the received miners are sufficient to fully utilize mining capacity both in service and under construction at the Lake Mariner Facility and the Nautilus Cryptomine Facility and (6) the remaining construction activities at the Lake Mariner Facility and the Nautilus Cryptomine Facility are currently ongoing and expected to be complete in the second quarter of 2023. Additionally, if a business need requires its use, the Company has an active At Market Issuance Sales Agreement for sale of shares of Common Stock having an aggregate offering price of up to million (the “ATM Offering”). 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 these actions and conditions will allow the Company to 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 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. COVID-19 Although the World Health Organization declared on May 5, 2023 that it no longer considers COVID-19 a global health emergency, the Company may from time to time experience disruptions to its business operations resulting from continued COVID-19-related supply interruptions, including miner delivery interruptions. The Company may also experience COVID-19-related delays in construction and obtaining necessary equipment in a timely fashion. To date, the Company has experienced certain, but minimal, delays due to COVID-19 among its suppliers and contractors. |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2023 | |
SIGNIFICANT ACCOUNTING POLICIES | |
SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 – 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 significant intercompany accounts and transactions have been eliminated. Certain prior period amounts have been reclassified to conform with current period presentation. Certain amounts in the unaudited interim consolidated statement of cash flows for the three months ended March 31, 2022 were restated as previously disclosed in the restated unaudited interim consolidated statement of cash flows for the three months ended March 31, 2022 included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022. The misstatements related solely to incorrectly calculating the impact of noncash activity on purchase and deposits on plant and equipment, resulting in an understatement of net cash used in investing activities and a corresponding overstatement of net cash used in operating activities 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, 2023 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 our Annual Report on Form 10-K for the fiscal year ended December 31, 2022. 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 assets acquired and liabilities assumed in business combinations, the fair value of contingent consideration issued in a business combination, the establishment of useful lives for property, plant and equipment and intangible assets, the impairment of goodwill and held for sale 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 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. Supplemental Cash Flow Information The following table shows supplemental cash flow information (in thousands): Three Months Ended March 31, 2023 2022 Supplemental disclosure of non-cash activities: Contribution of plant and equipment or deposits on plant and equipment to joint venture $ 35,792 $ — Common stock issuance costs in accounts payable $ 250 $ 3 Preferred stock issuance costs in other accrued liabilities or accounts payable $ — $ 293 Purchases of and deposits on plant and equipment in accounts payable, accrued construction liabilities, other accrued liabilities and long-term debt $ 2,621 $ 8,943 Investment in joint venture in other accrued liabilities, other amounts due to related parties and long-term debt $ 721 $ 482 Preferred stock dividends in other accrued liabilities $ — $ 45 Preferred stock proceeds receivable in other current assets $ — $ 300 Convertible promissory notes converted to common stock $ 4,666 $ — 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 $ — Common stock reacquired in exchange for warrants $ 12,479 $ — Cash and Cash Equivalents Highly liquid instruments with an original maturity of three months or less are classified as cash equivalents. 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, 2023, the Company’s bank balances exceeded the FDIC insurance limit in an amount of approximately $16.1 million. 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. As of March 31, 2023 and December 31, 2022, the Company had cash and cash equivalents of $17.0 million and $8.3 million, respectively. On March 12, 2023, Signature Bank (“SBNY”) was closed by its state chartering authority, the New York State Department of Financial Services. On the same date the FDIC was appointed as receiver and transferred all customer deposits and substantially all of the assets of SBNY to Signature Bridge Bank, N.A., a full-service bank that is being operated by the FDIC. The FDIC, the U.S. Treasury, and the Federal Reserve jointly announced that all depositors of SBNY would be made whole, regardless of deposit insurance limits. The Company automatically became a customer of Signature Bridge Bank, N.A. as part of this action. Normal banking activities resumed on Monday, March 13, 2023. On March 29, 2023, the Company was advised by the FDIC that the Company’s bank accounts would be closed on April 5, 2023 and any remaining funds as of that date would be distributed to the Company by check. As of March 31, 2023, the Company held approximately Restricted Cash The Company considers cash and marketable securities to be restricted when withdrawal or general use is legally restricted. The Company reports restricted cash in the consolidated balance sheets and determines current or non-current classification based on the expected duration of the restriction. The restricted cash included in the consolidated balance sheet as of March 31, 2023 is restricted as to use due to being held as a construction escrow by a third party escrow agent. The restricted cash included in the consolidated balance sheet as of December 31, 2022 is restricted as to use primarily due to being held in escrow in accordance with an asset purchase agreement governing the sale of certain RM 101 assets (see Note 3). The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the consolidated balance sheets that total to the amounts shown in the consolidated statements of cash flows (in thousands): March 31, 2023 December 31, 2022 Cash and cash equivalents $ 16,985 $ 1,279 Restricted cash 1 7,044 Cash and cash equivalents and restricted cash $ 16,986 $ 8,323 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 solely operates 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 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). 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 mining equipment). Leasehold improvements and electrical equipment are depreciated over the shorter of their estimated useful lives or the lease term. Property, plant and equipment, net includes deposits, amounting to approximately $2.7 million and $57.6 million as of March 31, 2023 and December 31, 2022, 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. 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, 2023 and December 31, 2022, the Company is not a counterparty to any finance leases. Debt Modification 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 percent 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 percent, 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 percent, 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 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 Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) No. 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 current period 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. 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. 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. Held for Sale and Discontinued Operations Classification The Company classifies a business as held for sale in the period in which management commits to a plan to sell the business, the business is available for immediate sale in its present condition, an active program to complete the plan to sell the business is initiated, the sale of the business within one year is probable and the business is being marketed at a reasonable price in relation to its fair value. Newly acquired businesses that meet the held-for-sale classification criteria upon acquisition are reported as discontinued operations. Upon a business’ classification as held for sale, net assets are measured for impairment. Goodwill impairment is measured in accordance with the method described in the accounting policy entitled “Goodwill and Indefinite-lived Intangible Assets.” An impairment loss is recorded for long-lived assets held for sale when the carrying amount of the asset exceeds its fair value less cost to sell. Other assets and liabilities are generally measured for impairment by comparing their carrying values to their respective fair values. A long-lived asset is not depreciated or amortized while it is classified as held for sale. Revenue Recognition The Company recognizes revenue under the FASB 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 provide computing power to the mining pool in exchange for consideration. The arrangement is terminable at any time without substantial penalty by either party and the contract term is deemed to be 24 hours. The Company’s enforceable right to compensation only begins when and continues while the Company provides computing power to its customer, the mining pool operator. The mining pool applies the Full Pay Per Share (“FPPS”) model. Under the FPPS model, in exchange for providing computing power 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 computing power, based upon the then current blockchain difficulty. Under this model, the Company is entitled to compensation regardless of whether the pool operator successfully records a block to the bitcoin blockchain. Providing computing power to a mining pool for cryptocurrency transaction verification services is an output of the Company’s ordinary activities. The provision of such computing power is the sole performance obligation. The transaction consideration the Company receives, if any, is non-cash consideration and is all variable. Because cryptocurrency is considered non-cash consideration, fair value of the cryptocurrency award received is determined using the quoted price of the related cryptocurrency in the Company’s principal market at the time of contract inception, which is deemed daily. Revenue is recognized when it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur. After every 24-hour contract term, the mining pool transfers the cryptocurrency consideration to our designated cryptocurrency wallet. There is no significant financing component in these transactions. There may be, however, consideration payable to the customer in the form of a pool operator fee; this fee, if any, 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 current hosting contracts are service contracts with a single performance obligation. The service the Company provides primarily includes hosting the customers’ miners in a physically secure data center with electrical power, internet connectivity, ambient air cooling and available maintenance resources. Hosting revenue is recognized over time as the customer simultaneously receives and consumes the benefits of the Company’s performance. The Company recognizes hosting revenue to the extent that a significant reversal of such revenue will not occur. Data center hosting customers are invoiced and payments are due on a monthly basis. While the majority of consideration is paid in cash, certain consideration is payable in cryptocurrency. Because cryptocurrency is considered non-cash consideration, fair value of the cryptocurrency award received is determined using the quoted price of the related cryptocurrency in the Company’s principal market at the time of contract inception. The Company has . The Company recorded miner hosting revenue of Cryptocurrencies Cryptocurrencies, including bitcoin, are included in current assets in the consolidated balance sheets due to the Company’s ability to sell it in a highly liquid marketplace and its intent to liquidate its cryptocurrencies to support operations when needed. Cryptocurrencies earned by the Company through the provision of computing power to a mining pool and hosting activities are accounted for in connection with the Company’s revenue recognition policy disclosed above. Cryptocurrencies are accounted for as intangible assets with indefinite useful lives. An intangible asset with an indefinite useful life is not amortized but assessed for impairment on a continuous basis through the entirety of its holding period. Impairment exists when the carrying amount exceeds its fair value, which is measured using the quoted price of the cryptocurrency at the time its fair value is being measured, which is based on the intraday low quoted price of the cryptocurrency reported in the Company’s principal market. To the extent an impairment loss is recognized, the loss establishes the new cost basis of the asset. Subsequent reversal of impairment losses is not permitted. Sales of cryptocurrencies by the Company and cryptocurrencies awarded to the Company, including as compensation for data center hosting services, are included within cash flows from operating activities on the consolidated statements of cash flows. The Company accounts for its gains or losses in accordance with the first in first out (“FIFO”) method of accounting. Cost of Revenue Cost of revenue for mining pool revenue is comprised primarily of direct costs of electricity, but excludes depreciation which is separately stated. Cost of revenue for data center hosting is comprised primarily of direct costs of electricity, labor and internet provision. Stock-based Compensation The Company periodically issues restricted stock units to employees and non-employees in non-capital raising transactions for services. In accordance with the authoritative guidance for share-based payments FASB ASC 718 “ Compensation – Stock Compensation cost at the grant date, based on the estimated fair value of the award. For restricted stock units (“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, the effect of the market condition is considered in the determination of fair value on the grant date using a Monte Carlo simulation model. The Company has not issued stock options. Expense for RSUs and stock options is recognized on a straight-line basis over the employee’s or non-employee’s service period, including the derived service period for RSUs with market conditions. Stock-based compensation for RSUs with market conditions 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 RSUs with market conditions 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 or provision within net income (loss) and the related cash flows are classified within operating activities. Power Curtailment Credits Payments received for participation in demand response programs are recorded as a reduction in cost of revenue in the consolidated statements of operations. The Company recorded power curtailment credits of approximately 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. Basic loss per share of common stock is computed by dividing the Company’s net loss attributed to common stockholders (adjusted for preferred stock dividends declared or accumulated) by the weighted average number of shares of common stock outstanding during the period. Convertible preferred stock, which are participating securities because they share in a pro rata basis any dividends declared on common stock but because they do not have the obligation to share in the loss of the Company, are excluded from the calculation of basic net loss per share. Diluted loss per share reflects the effect on weighted average shares outstanding of the number of additional shares outstanding if potentially dilutive instruments, if any, were converted into common stock using the treasury stock method or as-converted method as appropriate. The computation of diluted loss per share does not include dilutive instruments in the weighted average shares outstanding, as they would be anti-dilutive. The Company’s dilutive instruments or participating securities as of March 31, 2023 include convertible preferred stock, common stock warrants and RSUs issued for services. The Company’s dilutive instruments or participating securities as of December 31, 2022 include convertible preferred stock, convertible promissory notes, common stock warrants and RSUs issued for services. million shares of Common Stock. As of March 31, 2023, Common Stock warrants outstanding were Concentrations The Company or its joint venture have 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 17.2% of consolidated revenue for the three months ended March 31, 2023. The Company expects to operate bitcoin mining facilities. While the Company may choose to mine other cryptocurrencies in the future, 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. |
BUSINESS COMBINATION, ASSETS HE
BUSINESS COMBINATION, ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS | 3 Months Ended |
Mar. 31, 2023 | |
BUSINESS COMBINATION, ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS | |
BUSINESS COMBINATION, ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS | NOTE 3 – 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 the CVR Agreement, each shareholder of RM 101 as of immediately prior to the Merger, received 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 are calculated quarterly and are subject to a reserve of up to anniversary of the closing of the Merger. 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 includes certain indemnifications which are subject to an limitation and which expire in August 2023. No indemnification claims have been made as of the date these financial statements were available to be issued. 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 of 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. At December 31, 2022, proceeds from this sale were included in restricted cash in the consolidated balance sheet. In February 2023, all escrowed funds were released to the Company. In accordance with the CVR Agreement, on March 1, 2023, the Company made an initial distribution of $3.8 million of proceeds to the CVR Holders. As of March 31, 2023, all RM 101 assets previously held for sale had been sold and the estimated remaining CVR liability of 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 Company determined that the RM 101 business qualified as assets held for sale as management committed to a plan to sell the business, the business was in readily sellable form and it was deemed probable that the business would be sold in a twelve-month period. All net assets held for sale had been sold as of December 31, 2022. Three Months Ended March 31, 2023 2022 Net sales $ — $ 4,230 Cost of goods sold — 3,223 Gross profit — 1,007 Selling, general and administrative expenses 43 1,264 Research and development expenses — 137 Impairment on remeasurement or classification as held for sale — 3,922 Loss from discontinued operations before other income (43) (4,316) Other income 8 3 Loss from discontinued operations before income tax (35) (4,313) Income tax benefit — 1 Loss from discontinued operations, net of tax $ (35) $ (4,312) Loss from discontinued operations, net of tax in the consolidated statement of operations for the three months ended March 31, 2022 also includes a $1.4 million gain on CVR remeasurement. Total cash flows used in operating activities from discontinued operations was $90,000 and $50,000 in the consolidated statements of cash flows for the three months ended March 31, 2023 and 2022, respectively. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 3 Months Ended |
Mar. 31, 2023 | |
FAIR VALUE MEASUREMENTS | |
FAIR VALUE MEASUREMENTS | NOTE 4 – 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 illustrates the financial instruments measured at fair value on a non-recurring basis segregated by hierarchy fair value levels as of March 31, 2023 (in thousands): Significant Significant Quoted Prices Other Other in Active Observable Unobservable Markets Inputs Inputs Remeasurement Carrying Value (Level 1) (Level 2) (Level 3) Gain Contingent consideration liability - Contingent Value Rights $ 7,001 $ — $ 7,001 $ — $ — $ 7,001 $ — $ 7,001 $ — $ — The following table illustrates the financial instruments measured at fair value on a non-recurring basis segregated by hierarchy fair value levels as of December 31, 2022 (in thousands): Significant Significant Quoted Prices Other Other in Active Observable Unobservable Markets Inputs Inputs Remeasurement Carrying Value (Level 1) (Level 2) (Level 3) Gain Contingent consideration liability - Contingent Value Rights (1) $ 10,900 $ — $ 10,900 $ — $ 1,100 $ 10,900 $ — $ 10,900 $ — $ 1,100 (1) During the three months ended March 31, 2022, the Company changed the valuation approach from the use of other unobservable inputs to other observable inputs based on information obtained through the active marketing and sale of the underlying assets. The Company has determined the long-term debt fair value as of March 31, 2023 is approximately $130.7 million (see Note 9). The carrying values of cash and cash equivalents, restricted cash, prepaid expenses, amounts due from related parties, 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, 2023 and December 31, 2022, 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 and the application of a discount for lack of marketability (“DLOM”) to value its Common Stock warrants issued in connection with the New Term Facility and to value its Common Stock warrants issued in connection with the Fifth Amendment (each as defined in Note 9). The DLOM is applied due primarily to contractual restrictions on the exercise of the respective warrants. The estimated fair value of the warrants is determined using 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, dividend yield and DLOM. 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, which is assumed to be equivalent to their contractual term. The dividend rate is based on the historical rate, which the Company anticipates remaining at zero. The Company applied a DLOM of to value its Common Stock warrants issued in connection with the Fifth Amendment. |
BITCOIN
BITCOIN | 3 Months Ended |
Mar. 31, 2023 | |
BITCOIN | |
BITCOIN | NOTE 5 – BITCOIN The following table presents the Company’s bitcoin activity (in thousands): Three Months Ended March 31, 2023 2022 Beginning balance $ 183 $ — Bitcoin received from mining pool and hosting services 9,940 217 Impairment (627) (5) Disposition (9,379) — Ending balance $ 117 $ 212 |
PROPERTY, PLANT AND EQUIPMENT
PROPERTY, PLANT AND EQUIPMENT | 3 Months Ended |
Mar. 31, 2023 | |
PROPERTY, PLANT AND EQUIPMENT | |
PROPERTY, PLANT AND EQUIPMENT | NOTE 6 — PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment, net consisted of the following (in thousands): March 31, 2023 December 31, 2022 Miners $ 95,411 $ 71,114 Construction in process 35,676 32,360 Leasehold improvements 29,970 29,880 Equipment 7,778 7,208 Deposits on miners 2,680 57,626 171,515 198,188 Less: accumulated depreciation (12,100) (6,667) $ 159,415 $ 191,521 The Company capitalizes 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 $1.0 million and $760,000 for the three months ended March 31, 2023 and 2022, respectively. Depreciation expense was $5.4 million and $4,000 for the three months ended March 31, 2023 and 2022, respectively. |
LEASES
LEASES | 3 Months Ended |
Mar. 31, 2023 | |
LEASES | |
LEASES | NOTE 7 — LEASES Effective in May 2021, the Company entered into a ground lease (the “Ground Lease”) related to its planned bitcoin mining facility in New York with a counterparty which is a related party due to control by a member of Company management. The Ground Lease includes fixed payments and contingent payments, including an annual escalation based on the change in the Consumer Price Index as well as the Company’s proportionate share of the landlord’s cost to own, operate and maintain the premises. The Ground Lease originally had an initial term of at the option of the Company, subject to the Company not then being in default, as defined. In July 2022, the Ground Lease was amended to increase the initial term of the lease to and to amend certain other non-financial sections to adjust environmental obligations, site access rights and leasehold mortgage rights. In September 2022, the compensation due to the landlord for entering into the lease amendment was finalized with a compensatory amount of million, issuable in shares of Common Stock determined using a trailing volume weighted average price. In September 2022, the Company issued shares in satisfaction of this obligation. The Common Stock issued had a fair value of million at the date of issuance. The Ground Lease, which is classified as an operating lease, was remeasured as of the date of the amendment, resulting in an increase of right-of-use asset and operating lease liability in the consolidated balance sheets. The Ground Lease remained classified as an operating lease based on the remeasurement analysis that utilized a discount rate of , 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, 2023, the Company recorded operating lease expense of . For the three months ended March 31, 2022, the Company recorded operating lease expense of . The remaining lease term based on the terms of the amended Ground Lease as of March 31, 2023 is The following is a maturity analysis of the annual undiscounted cash flows of the estimated operating lease liabilities as of March 31, 2023 (in thousands): Year ending December 31: 2023 $ 122 2024 163 2025 163 2026 163 2027 163 Thereafter 1,045 $ 1,819 A reconciliation of the undiscounted cash flows to the operating lease liabilities recognized in the consolidated balance sheet as of March 31, 2023 follows (in thousands): Undiscounted cash flows of the operating lease $ 1,819 Unamortized discount 840 Total operating lease liability 979 Current portion of operating lease liability 43 Operating lease liability, net of current portion $ 936 During the three months ended March 31, 2022, the Company entered into a short term lease arrangement for digital currency mining equipment. The term of the operating lease was two months and concluded in May 2022. There were no variable charges under this arrangement. For the three months ended March 31, 2022, lease expense related to this arrangement of $451,000 was recorded in operating expenses in the consolidated statement of operations. The Company periodically enters into short term lease arrangements for operating equipment and recorded $116,000 under these short term lease arrangements in operating expenses in the consolidated statement of operations for the three months ended March 31, 2023. |
INCOME TAXES
INCOME TAXES | 3 Months Ended |
Mar. 31, 2023 | |
INCOME TAXES | |
INCOME TAXES | NOTE 8 – 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 0.0% for the three months ended March 31, 2023 and 2022. 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, 2023 and 2022, 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, 2023 and 2022 for the amount of deferred tax assets that will not be realized. The Company has no unrecognized tax benefits as of March 31, 2023 and 2022. The Company’s policy is to recognize interest accrued and penalties related to unrecognized tax benefits in tax expense. |
DEBT
DEBT | 3 Months Ended |
Mar. 31, 2023 | |
DEBT | |
DEBT | NOTE 9 – DEBT Long-Term Debt Long-term debt consists of the following (in thousands): March 31, 2023 December 31, 2022 Term loan $ 146,000 $ 146,000 Debt issuance costs and debt discount (32,589) (21,095) 113,411 124,905 Less long-term debt due within one year — 51,938 Total long-term debt, net of portion due within one year $ 113,411 $ 72,967 On December 1, 2021, the Company entered into a Loan, Guaranty and Security Agreement with Wilmington Trust, National Association as administrative agent (the “LGSA”). The LGSA consists of a $123.5 million term loan facility (the “Term Loan”). Prior to an amendment to the LGSA on March 1, 2023 (the “Fifth Amendment,” as described below), the Company was required to pay the outstanding principal balance of the Term Loan in quarterly installments, commencing in April 2023, equal to million subject to certain prepayment fees, including: (1) if paid prior to the first anniversary of the LGSA, a make whole amount based on the present value of the unpaid interest that would have been paid on the prepaid principal amount over the first year of the Term Loan, (2) if paid subsequent to the first anniversary of the LGSA but prior to the second anniversary of the LGSA, an amount of million, is a related party due to cumulative voting control by members of Company management and a member of the Company’s board of directors. In July 2022, NovaWulf Digital Master Fund, L.P. transferred a principal balance of In connection with the LGSA, the Company issued to the holders of the Term Loans 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 Term Loan. In connection with the issuance of the Term Loans, the Company incurred aggregate issuance costs of approximately $4.0 million, in addition to the $1.2 million upfront fee. The aggregate issuance costs and the upfront fee were allocated to the Term Loan Equity and the Term Loan based on the relative fair value method in the amounts of $1.1 million and $4.1 million, respectively. For the 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 Term Loan proceeds and was being accreted into the long-term debt balance over the three-year 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 Company entered into an amendment to the LGSA (the “First Amendment”). This amendment provides for an additional , if higher. No interest rate adjustment has been made under this provision. Pursuant to the New Term Facility, funds can be drawn in million, is a related party due to cumulative voting control by members of Company management and a member of the Company’s board of directors. In July 2022, NovaWulf Digital Master Fund, L.P. transferred its principal balance of $1.8 million of the First Amendment Term Loan to NovaWulf Digital Private Fund LLC. The amortization with respect to the first tranche of the New Term Facility is consistent with existing term loans under the LGSA. The loans under the subsequent tranches of the New Term Facility were originally repayable in quarterly installments on (i) April 5, 2024 and July 8, 2024, equal to of the original principal amount advanced under such tranches of the LGSA. The New Term Facility required the Company to extend the initial term of the Ground Lease from . The prepayment provisions remain unchanged for the Term Loan. If the New Term Facility was repaid within prepayment penalty would have been due. A prepayment thereafter results in no prepayment penalty. In connection with the New Term Facility, the Company paid an upfront fee of $125,000 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% related to the Delayed Draw Term Loan Commitment and 3% 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 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 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. Third-party fees of related to the First Amendment Term loan were expensed to interest expense in the consolidated statement of operations. Fees paid to lenders and the allocated value of the Common Stock warrants, an aggregate . Fees paid and the fair value of the Common Stock warrants related to the Delayed Draw Term Loan Commitment, an aggregate $3.4 million, were capitalized to other assets (the “Commitment Fee Asset”) and were being amortized on a straight-line basis over the commitment period, which expired December 31, 2022. If a tranche of the Delayed Draw Term Loan Commitment was drawn, the then related carrying value of the Commitment Fee Asset was derecognized and a discount on debt was recorded and amortized over the term of the commitment drawn. In October 2022, the Company entered into a third amendment (the “Third Amendment”) to the LGSA. The Third Amendment divided the initial funding of up to million was borrowed upon the effectiveness of the Third Amendment on October 7, 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 million each pursuant to the Third Amendment. One investor, NovaWulf Digital Private Fund LLC, with a principal balance of million borrowing, is a related party due to cumulative voting control by members of Company management and a member of the Company’s board of directors. In connection with the shares of Common Stock at per share. The fair value of the Common Stock warrants and the related proportional carrying value of the Commitment Fee Asset, an aggregate On January 27, 2023, the Company entered into a binding term sheet with the LGSA lenders (the “Term Sheet”) pursuant to which the parties agreed, subject to certain conditions, to make certain amendments to LGSA regarding amortization of LGSA principal and amending certain governance rights. On March 1, 2023, the Company entered into the Fifth Amendment. The Fifth Amendment eliminates mandatory amortization of the term loans under the LGSA through April 7, 2024, as long as the Company received aggregate net proceeds of at least 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. which will automatically extend to the maturity of the Term Loans on December 1, 2024 in the event the Company repays at least $40.0 million of the Term Loan by April 1, 2024. 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) per share of the Company’s Common Stock (the “Dollar Warrants”). 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. million aggregate net proceeds associated with the Amortization Relief Condition. In connection with the issuance of the warrants pursuant to the Warrant Agreement, the Company entered into a registration rights agreement, dated as of March 1, 2023, 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 A, , . 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. For the aggregate LGSA long-term debt for the three months ended March 31, 2023, the Company amortized $3.5 million of the capitalized debt issuance costs and debt discount to interest expense of $2.6 million in the consolidated statement of operations, and as of March 31, 2023, the Company capitalized interest in property, plant and equipment, net of $542,000 and capitalized interest in equity in net assets of investee of $452,000 in the consolidated balance sheet. Capitalized debt issuance costs and debt discount of $32.6 million and $21.1 million are recorded as a reduction of long-term debt as of March 31, 2023 and December 31, 2022, respectively, in the consolidated balance sheets. Principal maturities of outstanding long-term debt as of March 31, 2023 are as follows (in thousands): Year ending December 31: 2023 $ — 2024 146,000 Total principal maturities $ 146,000 |
STANDBY EQUITY PURCHASE AGREEME
STANDBY EQUITY PURCHASE AGREEMENT AND CONVERTIBLE PROMISSORY NOTE | 3 Months Ended |
Mar. 31, 2023 | |
STANDBY EQUITY PURCHASE AGREEMENT AND CONVERTIBLE PROMISSORY NOTES | |
STANDBY EQUITY PURCHASE AGREEMENT AND CONVERTIBLE PROMISSORY NOTES | NOTE 10 – STANDBY EQUITY PURCHASE AGREEMENT AND CONVERTIBLE PROMISSORY NOTE Standby Equity Purchase Agreement On June 2, 2022, the Company entered into a Standby Equity Purchase Agreement (“SEPA”) with YA II PN, Ltd. (“Yorkville”). Pursuant to the SEPA, the Company had the right, but not the obligation, to sell to Yorkville, subject to certain limitations and conditions, up to $50,000,000 of its shares of Common Stock, at the Company’s request any time during the commitment period commencing on June 2, 2022 and terminating on the earliest of (i) the first day of the month following the 36-month anniversary of the SEPA and (ii) the date on which Yorkville shall have made payment of any advances requested pursuant to the SEPA for shares of the Common Stock equal to the commitment amount of $50,000,000 . In addition to the Company’s right to request Advances, subject to certain conditions precedent, the Company had the option to, but was not obligated to, effect a pre-advance loan with a principal amount of million through the issuance and sale to Yorkville of a convertible promissory note (the “Promissory Note”). The Company elected to issue and sell the Promissory Note to Yorkville on June 2, 2022. Subject to the terms of the SEPA, the Company had the right to terminate the SEPA at any time, at five trading days’ prior written notice so long as there are no outstanding Advances, no outstanding balance on the Promissory Note and no other amounts owed to Yorkville. No termination of the SEPA affects the indemnification provisions contained within the SEPA, which provisions survive a termination. The SEPA was terminated on December 20, 2022. Yorkville Convertible Promissory Note On June 2, 2022, the Company issued the Promissory Note to Yorkville, which was issued with a 2% original issue discount, for proceeds of $14.7 million. The maturity date of the $15.0 Promissory Note was originally November 25, 2022 and the Company was required to pay the outstanding principal balance in five monthly $3.0 million payments commencing July 27, 2022. Upon reasonable advance notice, the Company had the right to defer 50% of a monthly payment amount due on two such monthly payments to later dates to be mutually agreed by the Company and Yorkville. In July 2022, $1.5 million of the $3.0 million July monthly payment amount was deferred until the October 2022 monthly payment due date. In August 2022, $1.5 million of the $3.0 million August monthly payment amount was deferred until the November 2022 monthly payment due date. The Promissory Note, which bore an interest rate of 4.0% and had an initial conversion price of $3.75 per share of Common Stock, may have been repaid with the proceeds of a sale of Common Stock to Yorkville or repaid in cash and, if repaid in cash, together with a cash payment premium originally of 6%, provided that if the Company’s Common Stock market price, as defined, was less than $2.25 per share, the cash payment premium would have been 4%. In October and November 2022, the Company amended and restated the Promissory Note to, among other things, change the then-existing repayment schedule, change the cash payment premium to 12% and change the conversion price. The Company determined that extinguishment of debt accounting applied to the October 2022 amendment and restatement because the change in the fair value of the embedded conversion feature was greater than 10% of the carrying value of the Promissory Note immediately prior to the modification. The Company recorded a loss on debt extinguishment of $2.1 million. This extinguishment loss was primarily related to the change in the fair value of the embedded conversion feature of $1.6 million and the excess of the fair value of the A&R Promissory Note of $9.4 million over the carrying value of the Promissory Note immediately prior to the modification. The Company determined that debt modification accounting applied to the November 2022 amendment and restatement. The $20,000 change in the fair value of the embedded conversion feature was accounted for as a debt discount and amortized as an adjustment of interest expense over the remaining term of the Second A&R Promissory Note at an effective rate of 3.1%. No portion of the Second A&R Promissory Note was converted into shares of Common Stock and the Second A&R Promissory Note was paid in full on December 13, 2022. 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. The Convertible Notes, which contained usual and customary antidilution provisions, had a maturity date of April 1, 2025 and accrued annual interest at a rate of million, with certain sales of equity securities excluded, at a conversion price equal to the price per share paid by the investors purchasing such equity securities in such Qualified Financing. The Convertible Notes originally embodied an unconditional obligation to settle a fixed monetary amount with, upon a Qualified Financing, with a variable number of shares and was initially considered potentially share settled debt. On December 12, 2022, the Company entered into a private placement (see Note 14) which met the definition of a Qualified Financing and contemporaneously 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. The Company determined that debt modification accounting applied in connection with the December 12, 2022 amendment to the Convertible Notes. There was no change to the effective interest rate as the result of this amendment. As a result of the private placement, the conversion price was per share of Common Stock. The Convertible Notes are included in convertible promissory notes in the consolidated balance sheet as of December 31, 2022. On January 30, 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 shares of Common Stock. During the three months ended March 31, 2023 and 2022, the Company expensed On January 30, 2023, the Company entered into a convertible promissory note (the “January Convertible Note”) to an accredited investor in a privately negotiated transaction as part of a private placement exempt from registration under Section 4(a)(2) and/or Regulation D under the Securities Act in an aggregate principal amount of $1.25 million. The January Convertible Note had a maturity date of April 1, 2025 and accrued annual interest at a rate of 4%. The January Convertible Note was automatically convertible into Common Stock on the third business day following the Shareholder Approval Date (the “Conversion Date”) at a conversion price equal to the lowest price per share paid by investors purchasing equity securities in any sale of equity securities by the Company between the November 25, 2022 and the Conversion Date with an aggregate gross sales price of not less than $5 million, subject to certain exclusions set forth in the January Convertible Note. The conversion price was per share of Common Stock upon issuance. In March 2023, the January Convertible Note and accrued but unpaid interest were converted into shares of Common Stock. During the three months ended March 31, 2023 and 2022, the Company expensed |
JOINT VENTURE
JOINT VENTURE | 3 Months Ended |
Mar. 31, 2023 | |
JOINT VENTURE | |
JOINT VENTURE | NOTE 11 – JOINT VENTURE On May 13, 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 (3) a Corporate Services Agreement (the “CSA”) with a related party of Talen. Each Member originally held a 50% interest in the Joint Venture. Pursuant to the terms of the Joint Venture agreement, TeraWulf originally would contribute $156.0 million both in cash and in-kind and Talen originally would contribute $156.0 million both in cash and in-kind to Nautilus by March 2022, unless otherwise determined in accordance with the Joint Venture agreement. The Company capitalizes 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 $863,000 and $482,000 for the three months ended March 31, 2023 and 2022, respectively. On August 27, 2022, the Members entered into an amended and restated Joint Venture agreement (“the “A&R 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 of the electricity supply outlined in the Nautilus Ground Lease. Additionally, the Company’s scheduled capital contributions were amended such that the Company would retain a ownership interest in the Joint Venture if such capital contributions were funded. With the change in ownership percentage, governance rights were amended to provide for greater Talen board participation, among other changes. The A&R Agreement amended the capital contribution schedule so that the Company’s scheduled infrastructure-related capital contributions were million capital contributions. The Company was not obligated to fund the balance of the million scheduled infrastructure-related capital contributions. Accordingly, the Company’s ownership interest in the Joint Venture is On March 23, 2023, the Company entered into a second amended and restated limited liability company agreement for Nautilus (the “Second A&R Nautilus Agreement”). Under the Second A&R Nautilus Agreement, the Company holds a equity interest in Nautilus, each subject to adjustment based on relative capital contributions. Distributions are made periodically in accordance with each Member’s respective hash rate contributions after deducting primarily each Member’s share of power and operational costs. Pursuant to the terms of the Second A&R Nautilus Agreement, the Nautilus Cryptomine Facility initially requires MW of electric capacity. Prior to May 13, 2024, the Company may elect to expand the energy requirement of the Nautilus Cryptomine Facility by up to 50MW, funded solely by the Company. If the Company makes such an election, the Talen Member may, within twelve months thereof, 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. On March 19, 2021, TeraCub executed an agreement for the purchase of bitcoin miners from MinerVA Semiconductor Corp. (“MinerVa”) for a total of 30,000 MV7 miners, with originally scheduled monthly deliveries of miners each between November 2021 and January 2022, for an aggregate price of $118.5 million (the “MinerVA Purchase Agreement”). Concurrently with the execution of the Joint Venture agreement, TeraWulf assigned the MinerVA Purchase Agreement to Nautilus. Prior to December 31, 2022, total payment of million were made under the MinerVa Purchase Agreement. Production delays at MinerVA’s factory impacted the initial pricing and delivery schedule. Accordingly, Nautilus and MinerVA have deemed all payments made to date to apply to the initial approximate miners shipped or to be shipped. As of the date at which these financial statements were available to be issued, Nautilus had not amended the MinerVA Purchase Agreement. On June 15, 2021, Nautilus entered into two Non-fixed Price Sales and Purchase Agreements for the purchase of bitcoin miners from Bitmain Technologies Limited (“Bitmain”) for a total of 30,000 S19j Pro miners, with originally scheduled monthly deliveries of 5,000 miners each between January 2022 and March 2022 under one agreement (the “Q1 2022 Bitmain Agreement’) and 5,000 miners each between April 2022 and June 2022 under a second agreement (the “Q2 2022 Bitmain Agreement” and, together, the “Bitmain Purchase Agreements”). During the three months ended March 31, 2022, the Company paid Bitmain $22.8 million and was reimbursed by Talen for 50% of that amount. As of December 31, 2022, the Q1 2022 Bitmain Agreement has concluded with all parties performing under the contract. In September 2022, the Q2 2022 Bitmain Agreement was cancelled whereby each Member received a million credit with Bitmain to use at the respective Member’s discretion (the “Bitmain Credit”). See Note 12. The Company recorded a distribution from the Joint Venture whereby equity in net assets of investee was reduced and property, plant and equipment, net was correspondingly increased by the In December 2022, the Company entered into a Payment Netting Agreement with Nautilus, Talen and the related party FOA and CSA agreement counterparties whereby certain amounts were owed by Nautilus to each of the FOA and CSA counterparties, including for the termination of the FOA agreement. These amounts were offset to arrive at a net result whereby the Company owed the related party FOA counterparty (see Note 16) approximately million. This amount is recorded in equity in net assets of investee in the consolidated balance sheet as of December 31, 2022. The Company’s direct payments to MinerVA and Bitmain, among others, on behalf of Nautilus for the three months ended March 31, 2022, are included in investments in joint venture related to direct payments made on behalf of joint venture in the consolidated statement of cash flows. A reconciliation of amounts included within this footnote to captions in the consolidated statement of cash flows for the three months ended March 31, 2023 and 2022 follows (in thousands): Three Months Ended March 31, 2023 2022 Payment of TeraWulf 50% share of Bitmain deposits $ — $ (11,402) Investments in joint venture related to direct payments made on behalf of joint venture — (11,402) Direct investments in joint venture and payments made on plant and equipment contributed to joint venture (1,467) (7,670) Investments in joint venture, including direct payments made on behalf of joint venture $ (1,467) $ (19,072) Payment of Talen 50% share of Bitmain deposits $ — $ (11,402) Other reimbursable payments — — Reimbursable payments for deposits on plant and equipment made on behalf of joint venture or a joint venture partner $ — $ (11,402) Talen reimbursement of 50% share of Bitmain deposits $ — $ 11,402 Other reimbursable payments — — Reimbursement of payments for deposits on plant and equipment made on behalf of joint venture or a joint venture partner $ — $ 11,402 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 December 31, 2022 (in thousands, except for percentages): Commitment to Company’s Future Company’s Net loss Variable Additional Maximum % Initial Additional Inception Interest in Contributions Exposure to Loss Entity Ownership Investment Investment, Net to Date Entity (1) in Entity (2) Nautilus 25.0 % $ 18,000 $ 131,452 $ 27,417 $ 122,035 $ — $ 122,035 (1) The Members may mutually agree on changes to the Pennsylvania bitcoin mining facility, which could increase the amount of contributions the Company is required to provide. The Members may seek alternate financing for the Pennsylvania bitcoin mining facility, which could reduce the amount of investments each Member may be required to provide. (2) The maximum exposure at March 31, 2023 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 are required for the initial phase of the Pennsylvania bitcoin mining facility buildout. Due to the change in Member ownership percentage and governance rights under the A&R 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, 2023 and 2022 and the condensed financial position as of March 31, 2023 and December 31, 2022 of Nautilus are summarized below (in thousands): Three Months Ended March 31, 2023 (1) 2022 Condensed statement of operations information: Revenue $ 9,106 $ — Operating expense 12,137 1,576 Net loss $ (3,031) $ (1,576) March 31, 2023 (1) December 31, 2022 (1) Condensed balance sheet information: Current assets $ 18,049 $ 28,986 Noncurrent assets 250,068 154,552 Total assets $ 268,117 $ 183,538 Current liabilities $ 20,264 $ 12,864 Noncurrent liabilities 28,283 Equity 219,570 170,674 Total liabilities and equity $ 268,117 $ 183,538 (1) The condensed statement of operations information for the three months ended March 31, 2023 and the condensed balance sheet information as of March 31, 2023 and December 31, 2022 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 March 2022, the Company entered into an exchange agreement with Nautilus and the Nautilus co-venturer whereby the Company purchased 2,469 of Nautilus’ Bitmain S19j Pro miners (the “Nautilus Miners”) to be received under the Bitmain Purchase Agreements in exchange for an option to either (1) deliver miners that are not less favorable in all material respects to those of the Nautilus Miners (the “Exchange Miners”) by July 1, 2022 or (2) incur a pro forma adjustment to Nautilus’ distributions such that the Nautilus co-venturer is made whole as though the miners had not been transferred to the Company. If the Exchange Miners were not delivered by September 30, 2022, the Nautilus co-venturer would have been entitled to elect to distribute in-kind a number of miners then in possession of Nautilus comparable to the then-undelivered Exchange Miners. During the three months ended June 30, 2022, the Nautilus Miners were received and recorded at fair value to property, plant and equipment, net in the amount of million with a corresponding recognition of an exchange miner liability of the same amount. The A&R Agreement removed the Company’s obligation to deliver the Exchange Miners to the Joint Venture. Accordingly, the Company derecognized the miner exchange liability and recorded a In September 2022, the Company, as allowed under the A&R Agreement and because its Lake Mariner Facility was operational, transferred 2,500 Bitmain S19j Pro miners from Nautilus to its Lake Mariner Facility. Accordingly, the Company recorded the miners at an estimated fair value of million. In February and March 2023, the Company, as allowed under the A&R Agreement, transferred control of approximately 3,200 MinerVa miners from Nautilus to its Lake Mariner Facility, including certain miners that had yet to be shipped from MinerVa. Accordingly, the Company recorded the miners at an estimated fair value of March 31, 2023 and recorded a loss of $8.9 million. This loss is recorded as a component of equity in net loss of investee, net of tax in the consolidated statement of operations for the three months ended March 31, 2023. As contemplated in the A&R Agreement, members are allowed to make contributions of miners up to the effective electrical capacity of their owned infrastructure percentage. During the three months ended March 31, 2023 and the year ended December 31, 2022, the Company contributed to Nautilus certain miners with a fair value, determined based on miner vendor contracts, of $36.7 million and $11.6 million, respectively. Accordingly, as of March 31, 2023 and December 31, 2022, the Company increased the equity in net assets of investee balance by $36.7 million $11.6 million, respectively, and reduced the property, plant and equipment, net balance by the same amounts in the consolidated balance sheets. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2023 | |
COMMITMENTS AND CONTINGENCIES. | |
COMMITMENTS AND CONTINGENCIES | NOTE 12 – 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 On December 7, 2021, the Company entered into a Non-fixed Price Sales and Purchase Agreement with Bitmain for the purchase of 3,000 S19XP miners, with originally scheduled monthly deliveries of 500 miners each between July 2022 and December 2022 (the “Second Bitmain Purchase Agreement”) for a total purchase price of $32.6 million. In September 2022, the Company cancelled the September and October 2022 batches and payments previously made for these monthly batches were applied to other payment obligations under the contract. Additionally, certain amounts from the Bitmain Credit have been applied to the Second Bitmain Purchase Agreement. Subsequently, the Company cancelled the November and December 2022 batches and payments previously made and credits previously applied to this agreement became available as account credits for use in new purchasing arrangements with Bitmain. The Company considers the Second Bitmain Purchase Agreement to be concluded as no further Bitmain miner deliveries or Company payments were due as of December 31, 2022. On December 15, 2021, the Company entered into a Non-fixed Price Sales and Purchase Agreement with Bitmain for the purchase of 15,000 S19XP miners, with originally scheduled monthly deliveries of 2,500 miners each between July 2022 and December 2022 (the “Third Bitmain Purchase Agreement”) for a total purchase price of $169.1 million. In September 2022, the Company cancelled the September and October 2022 batches and payments previously made for these monthly batches were applied to other payment obligations under the contract. Additionally, certain amounts from the Bitmain Credit have been applied to the Third Bitmain Purchase Agreement. Subsequently, the Company cancelled the November and December 2022 batches and payments previously made and credits previously applied to this agreement became available as account credits for use in new purchasing arrangements with Bitmain. The Company considers the Third Bitmain Purchase Agreement to be concluded as no further Bitmain miner deliveries or Company payments were due as of December 31, 2022. In September 2022, the Company entered into two Future Sales and Purchase Agreements with Bitmain for the aggregate purchase of 3,400 S19XP miners and 2,700 S19 Pro miners, with originally scheduled monthly deliveries between October 2022 and January 2023 (the “September 2022 Bitmain Purchase Agreements”) for a total purchase price of $23.7 million. The purchase price will be satisfied through application of the balance of the Bitmain Credit. The Company considers the September 2022 Bitmain Purchase Agreements to be concluded as no further Bitmain miner deliveries or Company payments were due as of March 31, 2023. In November 2022, the Company entered into two Future Sales and Purchase Agreements with Bitmain for the aggregate purchase of 3,600 S19XP miners and 2,750 S19 Pro miners, with originally scheduled monthly deliveries between November 2022 and February 2023 (the “November 2022 Bitmain Purchase Agreements”) for a total purchase price of $24.9 million. The purchase price will be satisfied through application of the available account credits. The Company considers the November 2022 Bitmain Purchase Agreements to be concluded as no further Bitmain miner deliveries or Company payments were due as of March 31, 2023. In December 2022, the Company entered into a Future Sales and Purchase Agreement with Bitmain for the aggregate purchase of 14,000 S19 Pro miners, with originally scheduled monthly deliveries commencing December 2022 (the “December 2022 Bitmain Purchase Agreement”) for a total purchase price of $22.4 million. The purchase price will be satisfied through application of the available account credits. The Company considers the December 2022 Bitmain Purchase Agreement to be concluded as no further Bitmain miner deliveries or Company payments were due as of March 31, 2023. 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 |
CONVERTIBLE PREFERRED STOCK
CONVERTIBLE PREFERRED STOCK | 3 Months Ended |
Mar. 31, 2023 | |
CONVERTIBLE PREFERRED STOCK | |
CONVERTIBLE PREFERRED STOCK | NOTE 13 – CONVERTIBLE PREFERRED STOCK TeraWulf 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 million. The Subscription Agreements contain customary representations, warranties, covenants and agreements of the Company. T . 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 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 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 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 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, 2023 and 2022. Cumulative dividends of $1.0 million were accumulated and accreted to liquidation preference as of March 31, 2023. As of March 31, 2023, the aggregate liquidation preference of the Convertible Preferred Stock was approximately $10.6 million. If the entire liquidation preference of the Convertible Preferred Stock was converted at the Conversion Price, the Company would issue approximately 1.1 million shares of Common Stock. |
COMMON STOCK
COMMON STOCK | 3 Months Ended |
Mar. 31, 2023 | |
COMMON STOCK. | |
COMMON STOCK | NOTE 14 – 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 and (2) the Company’s stockholders adopted a charter amendment to remove the restriction on stockholder action by written consent. Accordingly, TeraWulf’s Certificate of Incorporation as of March 31, 2023 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, 2023. In March 2022, the Company concluded a private placement of 271,447 of unregistered Common Stock for proceeds of $2.1 million to an entity controlled by a member of Company management (the “Subscriber”). The Subscriber shall be entitled to customary registration rights as may be reasonably agreed between the Subscriber and the Company. In April 2022, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with Cantor Fitzgerald & Co., as underwriter (the “Underwriter”), pursuant to which the Company issued and sold to the Underwriter an aggregate of 2,985,966 shares of the Company’s Common Stock, par value $0.001 per share (the “April Shares”), for gross proceeds of approximately $20.6 million, before deducting underwriting discounts and commissions and offering expenses payable by the Company. The issuance and sale of the April Shares by the Company under the Underwriting Agreement were made pursuant to the prospectus and prospectus supplement forming a part of the 2022 Registration Statement, including a final prospectus supplement dated April 11, 2022. In April 2022, the Company concluded a private placement of 634,517 of unregistered Common Stock for proceeds of $5.0 million to an entity controlled by a member of Company management and to certain other significant stockholders. In April 2022, the Company entered into a sales agreement (the “April ATM Sales Agreement”) with Cantor Fitzgerald & Co., B. Riley Securities, Inc. and D.A. Davidson & Co. (together the “ATM Agents”), pursuant to which the Company may offer and sell, from time to time, through or to the ATM Agents, 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 April ATM Sales Agreement replaced a similar agreement with (together, the “ATM Sales Agreements”). The Company is not obligated to sell any shares under the April ATM Sales Agreement. The Company will pay the ATM Agents a commission equal to of the gross sales price from each sale of shares. The issuance and sale of the Shares by the Company under the ATM Sales Agreements 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. million. During the three months ended March 31, 2023, the Company did not sell any shares of Common Stock pursuant to the April ATM Sales Agreement. As of March 31, 2023, the remaining capacity of the April ATM Sales Agreement to offer and sell shares of Common Stock is 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 (the “October Warrants”) exercisable at a price of $1.93 per Common Share based on an offering price equal to the trailing 10-day volume weighted price of $1.26 for each Common Share plus one warrant 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 million allocated to the October Warrants. On January 30, 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 per share of Common Stock. The December Warrants become exercisable on January 16, 2023 and expire 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 million allocated to the December Warrants. In January 2023, of the December Warrants expired. On January 30, 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 million equity capital raise by the Company, which may be unilaterally waived by the December Purchasers, and the receipt of shareholder approval of an increase to issued and unauthorized shares of Common Stock (see Note 19). 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. On January 30, 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 On January 30, 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 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 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 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 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. 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 $886,000 . 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, 2022, No dividends were declared during the three months ended March 31, 2023 and 2022. |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 3 Months Ended |
Mar. 31, 2023 | |
STOCK-BASED COMPENSATION | |
STOCK-BASED COMPENSATION | NOTE 15 – STOCK-BASED COMPENSATION On May 13, 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. For the three months ended March 31, 2023 and 2022, stock-based compensation expense was , 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, 2023: Unvested Restricted Stock Units Number of Shares Weighted-Average Grant-Date Fair Value Unvested as of December 31, 2022 1,931,187 $ 2.87 Granted 4,920,000 $ 0.36 Vested (20,232) $ 1.73 Forfeited/canceled — $ - Unvested as of March 31, 2023 6,830,955 $ 1.07 RSUs granted as set out in the table above include RSUs representing 2,940,000 shares with vesting based on market conditions tied to the Company’s stock price achieving a stated price for 45 consecutive trading days. The requisite service period for grants, including derived service periods for RSUs with market conditions, is between one . As of March 31, 2023, there was million of unrecognized compensation cost related to unvested employee and Board of Directors members RSUs. The amount is expected to be recognized over a weighted average period of years. 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, 2023: Unvested Restricted Stock Units Number of Shares Weighted-Average Grant-Date Fair Value Unvested as of December 31, 2022 82,645 $ 1.21 Granted 3,970,564 $ 0.54 Vested (70,423) $ 0.71 Forfeited/canceled — $ - Unvested as of March 31, 2023 3,982,786 $ 0.55 RSUs granted as set out in the table above include RSUs representing 960,000 shares with vesting based on market conditions tied to the Company’s stock price achieving a stated price for 45 consecutive trading days. The requisite service period for grants, including derived service periods for RSUs with market conditions, is between one |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 3 Months Ended |
Mar. 31, 2023 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | NOTE 16 – RELATED PARTY TRANSACTIONS On April 27, 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 per kilowatt hour of electric load utilized by the bitcoin mining facilities. On March 29, 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 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, 2023 and 2022, the Company paid Beowulf E&D million, respectively, under the Services Agreement. For the three months ended March 31, 2023 and 2022, selling, general and administrative expenses– related party in the consolidated statement of operations includes , respectively, in each case related to the base fee and reimbursement of costs and expenses. As of March 31, 2023, million is included in property, plant and equipment, net in the consolidated balance sheet. As of December 31, 2022, 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. However, no awards have been issued as of the date these consolidated financial statements were available for issuance. Once the mining facilities have utilized 100MW of cryptocurrency mining load in the aggregate, and for every incremental 100 MW of cryptocurrency mining load deployed by the mining facilities in the aggregate 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. As of December 31, 2022, the Company considered it probable that the performance milestone of 100MW of mining load deployed by the mining facilities would be met. As of March 31, 2023 and December 31, 2022, $14.9 million and $14.6 million, respectively, are included in share-based liabilities due to related party in the consolidated balance sheets. Performance milestone expense of $312,000 and $0 is included in selling, general and administrative expenses – related party in the consolidated statements of operation for the three months ended March 31, 2023 and 2022, respectively. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 3 Months Ended |
Mar. 31, 2023 | |
SUBSEQUENT EVENTS. | |
SUBSEQUENT EVENTS | NOTE 17 – SUBSEQUENT EVENTS The Company has evaluated subsequent events through May 15, 2023, which is also the date these consolidated financial statements were available to be issued, and has determined that there were no subsequent events which require disclosure. |
SIGNIFICANT ACCOUNTING POLICI_2
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2023 | |
SIGNIFICANT ACCOUNTING POLICIES | |
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 significant intercompany accounts and transactions have been eliminated. Certain prior period amounts have been reclassified to conform with current period presentation. Certain amounts in the unaudited interim consolidated statement of cash flows for the three months ended March 31, 2022 were restated as previously disclosed in the restated unaudited interim consolidated statement of cash flows for the three months ended March 31, 2022 included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022. The misstatements related solely to incorrectly calculating the impact of noncash activity on purchase and deposits on plant and equipment, resulting in an understatement of net cash used in investing activities and a corresponding overstatement of net cash used in operating activities 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, 2023 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 our Annual Report on Form 10-K for the fiscal year ended December 31, 2022. |
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 assets acquired and liabilities assumed in business combinations, the fair value of contingent consideration issued in a business combination, the establishment of useful lives for property, plant and equipment and intangible assets, the impairment of goodwill and held for sale 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 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. |
Supplemental Cash Flow Information | Supplemental Cash Flow Information The following table shows supplemental cash flow information (in thousands): Three Months Ended March 31, 2023 2022 Supplemental disclosure of non-cash activities: Contribution of plant and equipment or deposits on plant and equipment to joint venture $ 35,792 $ — Common stock issuance costs in accounts payable $ 250 $ 3 Preferred stock issuance costs in other accrued liabilities or accounts payable $ — $ 293 Purchases of and deposits on plant and equipment in accounts payable, accrued construction liabilities, other accrued liabilities and long-term debt $ 2,621 $ 8,943 Investment in joint venture in other accrued liabilities, other amounts due to related parties and long-term debt $ 721 $ 482 Preferred stock dividends in other accrued liabilities $ — $ 45 Preferred stock proceeds receivable in other current assets $ — $ 300 Convertible promissory notes converted to common stock $ 4,666 $ — 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 $ — Common stock reacquired in exchange for warrants $ 12,479 $ — |
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. 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, 2023, the Company’s bank balances exceeded the FDIC insurance limit in an amount of approximately $16.1 million. 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. As of March 31, 2023 and December 31, 2022, the Company had cash and cash equivalents of $17.0 million and $8.3 million, respectively. On March 12, 2023, Signature Bank (“SBNY”) was closed by its state chartering authority, the New York State Department of Financial Services. On the same date the FDIC was appointed as receiver and transferred all customer deposits and substantially all of the assets of SBNY to Signature Bridge Bank, N.A., a full-service bank that is being operated by the FDIC. The FDIC, the U.S. Treasury, and the Federal Reserve jointly announced that all depositors of SBNY would be made whole, regardless of deposit insurance limits. The Company automatically became a customer of Signature Bridge Bank, N.A. as part of this action. Normal banking activities resumed on Monday, March 13, 2023. On March 29, 2023, the Company was advised by the FDIC that the Company’s bank accounts would be closed on April 5, 2023 and any remaining funds as of that date would be distributed to the Company by check. As of March 31, 2023, the Company held approximately |
Restricted Cash | Restricted Cash The Company considers cash and marketable securities to be restricted when withdrawal or general use is legally restricted. The Company reports restricted cash in the consolidated balance sheets and determines current or non-current classification based on the expected duration of the restriction. The restricted cash included in the consolidated balance sheet as of March 31, 2023 is restricted as to use due to being held as a construction escrow by a third party escrow agent. The restricted cash included in the consolidated balance sheet as of December 31, 2022 is restricted as to use primarily due to being held in escrow in accordance with an asset purchase agreement governing the sale of certain RM 101 assets (see Note 3). The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the consolidated balance sheets that total to the amounts shown in the consolidated statements of cash flows (in thousands): March 31, 2023 December 31, 2022 Cash and cash equivalents $ 16,985 $ 1,279 Restricted cash 1 7,044 Cash and cash equivalents and restricted cash $ 16,986 $ 8,323 |
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 solely operates 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 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). |
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 mining equipment). Leasehold improvements and electrical equipment are depreciated over the shorter of their estimated useful lives or the lease term. Property, plant and equipment, net includes deposits, amounting to approximately $2.7 million and $57.6 million as of March 31, 2023 and December 31, 2022, 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. |
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, 2023 and December 31, 2022, the Company is not a counterparty to any finance leases. |
Debt Modification | Debt Modification 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 percent 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 percent, 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 percent, 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 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 Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) No. 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 current period 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. |
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. |
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. |
Held for Sale and Discontinued Operations Classification | Held for Sale and Discontinued Operations Classification The Company classifies a business as held for sale in the period in which management commits to a plan to sell the business, the business is available for immediate sale in its present condition, an active program to complete the plan to sell the business is initiated, the sale of the business within one year is probable and the business is being marketed at a reasonable price in relation to its fair value. Newly acquired businesses that meet the held-for-sale classification criteria upon acquisition are reported as discontinued operations. Upon a business’ classification as held for sale, net assets are measured for impairment. Goodwill impairment is measured in accordance with the method described in the accounting policy entitled “Goodwill and Indefinite-lived Intangible Assets.” An impairment loss is recorded for long-lived assets held for sale when the carrying amount of the asset exceeds its fair value less cost to sell. Other assets and liabilities are generally measured for impairment by comparing their carrying values to their respective fair values. A long-lived asset is not depreciated or amortized while it is classified as held for sale. |
Revenue Recognition | Revenue Recognition The Company recognizes revenue under the FASB 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 provide computing power to the mining pool in exchange for consideration. The arrangement is terminable at any time without substantial penalty by either party and the contract term is deemed to be 24 hours. The Company’s enforceable right to compensation only begins when and continues while the Company provides computing power to its customer, the mining pool operator. The mining pool applies the Full Pay Per Share (“FPPS”) model. Under the FPPS model, in exchange for providing computing power 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 computing power, based upon the then current blockchain difficulty. Under this model, the Company is entitled to compensation regardless of whether the pool operator successfully records a block to the bitcoin blockchain. Providing computing power to a mining pool for cryptocurrency transaction verification services is an output of the Company’s ordinary activities. The provision of such computing power is the sole performance obligation. The transaction consideration the Company receives, if any, is non-cash consideration and is all variable. Because cryptocurrency is considered non-cash consideration, fair value of the cryptocurrency award received is determined using the quoted price of the related cryptocurrency in the Company’s principal market at the time of contract inception, which is deemed daily. Revenue is recognized when it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur. After every 24-hour contract term, the mining pool transfers the cryptocurrency consideration to our designated cryptocurrency wallet. There is no significant financing component in these transactions. There may be, however, consideration payable to the customer in the form of a pool operator fee; this fee, if any, 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 current hosting contracts are service contracts with a single performance obligation. The service the Company provides primarily includes hosting the customers’ miners in a physically secure data center with electrical power, internet connectivity, ambient air cooling and available maintenance resources. Hosting revenue is recognized over time as the customer simultaneously receives and consumes the benefits of the Company’s performance. The Company recognizes hosting revenue to the extent that a significant reversal of such revenue will not occur. Data center hosting customers are invoiced and payments are due on a monthly basis. While the majority of consideration is paid in cash, certain consideration is payable in cryptocurrency. Because cryptocurrency is considered non-cash consideration, fair value of the cryptocurrency award received is determined using the quoted price of the related cryptocurrency in the Company’s principal market at the time of contract inception. The Company has . The Company recorded miner hosting revenue of |
Cryptocurrencies | Cryptocurrencies Cryptocurrencies, including bitcoin, are included in current assets in the consolidated balance sheets due to the Company’s ability to sell it in a highly liquid marketplace and its intent to liquidate its cryptocurrencies to support operations when needed. Cryptocurrencies earned by the Company through the provision of computing power to a mining pool and hosting activities are accounted for in connection with the Company’s revenue recognition policy disclosed above. Cryptocurrencies are accounted for as intangible assets with indefinite useful lives. An intangible asset with an indefinite useful life is not amortized but assessed for impairment on a continuous basis through the entirety of its holding period. Impairment exists when the carrying amount exceeds its fair value, which is measured using the quoted price of the cryptocurrency at the time its fair value is being measured, which is based on the intraday low quoted price of the cryptocurrency reported in the Company’s principal market. To the extent an impairment loss is recognized, the loss establishes the new cost basis of the asset. Subsequent reversal of impairment losses is not permitted. Sales of cryptocurrencies by the Company and cryptocurrencies awarded to the Company, including as compensation for data center hosting services, are included within cash flows from operating activities on the consolidated statements of cash flows. The Company accounts for its gains or losses in accordance with the first in first out (“FIFO”) method of accounting. |
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 stated. Cost of revenue for data center hosting is comprised primarily of direct costs of electricity, labor and internet provision. |
Stock-based Compensation | Stock-based Compensation The Company periodically issues restricted stock units to employees and non-employees in non-capital raising transactions for services. In accordance with the authoritative guidance for share-based payments FASB ASC 718 “ Compensation – Stock Compensation cost at the grant date, based on the estimated fair value of the award. For restricted stock units (“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, the effect of the market condition is considered in the determination of fair value on the grant date using a Monte Carlo simulation model. The Company has not issued stock options. Expense for RSUs and stock options is recognized on a straight-line basis over the employee’s or non-employee’s service period, including the derived service period for RSUs with market conditions. Stock-based compensation for RSUs with market conditions 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 RSUs with market conditions 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 or provision within net income (loss) and the related cash flows are classified within operating activities. |
Power Curtailment Credits | Power Curtailment Credits Payments received for participation in demand response programs are recorded as a reduction in cost of revenue in the consolidated statements of operations. The Company recorded power curtailment credits of approximately |
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. Basic loss per share of common stock is computed by dividing the Company’s net loss attributed to common stockholders (adjusted for preferred stock dividends declared or accumulated) by the weighted average number of shares of common stock outstanding during the period. Convertible preferred stock, which are participating securities because they share in a pro rata basis any dividends declared on common stock but because they do not have the obligation to share in the loss of the Company, are excluded from the calculation of basic net loss per share. Diluted loss per share reflects the effect on weighted average shares outstanding of the number of additional shares outstanding if potentially dilutive instruments, if any, were converted into common stock using the treasury stock method or as-converted method as appropriate. The computation of diluted loss per share does not include dilutive instruments in the weighted average shares outstanding, as they would be anti-dilutive. The Company’s dilutive instruments or participating securities as of March 31, 2023 include convertible preferred stock, common stock warrants and RSUs issued for services. The Company’s dilutive instruments or participating securities as of December 31, 2022 include convertible preferred stock, convertible promissory notes, common stock warrants and RSUs issued for services. million shares of Common Stock. As of March 31, 2023, Common Stock warrants outstanding were |
Concentrations | Concentrations The Company or its joint venture have 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 17.2% of consolidated revenue for the three months ended March 31, 2023. The Company expects to operate bitcoin mining facilities. While the Company may choose to mine other cryptocurrencies in the future, 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. |
SIGNIFICANT ACCOUNTING POLICI_3
SIGNIFICANT ACCOUNTING POLICIES (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
SIGNIFICANT ACCOUNTING POLICIES | |
Supplemental disclosure of cash flow information | The following table shows supplemental cash flow information (in thousands): Three Months Ended March 31, 2023 2022 Supplemental disclosure of non-cash activities: Contribution of plant and equipment or deposits on plant and equipment to joint venture $ 35,792 $ — Common stock issuance costs in accounts payable $ 250 $ 3 Preferred stock issuance costs in other accrued liabilities or accounts payable $ — $ 293 Purchases of and deposits on plant and equipment in accounts payable, accrued construction liabilities, other accrued liabilities and long-term debt $ 2,621 $ 8,943 Investment in joint venture in other accrued liabilities, other amounts due to related parties and long-term debt $ 721 $ 482 Preferred stock dividends in other accrued liabilities $ — $ 45 Preferred stock proceeds receivable in other current assets $ — $ 300 Convertible promissory notes converted to common stock $ 4,666 $ — 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 $ — Common stock reacquired in exchange for warrants $ 12,479 $ — |
Schedule of cash, cash equivalents and restricted cash | The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the consolidated balance sheets that total to the amounts shown in the consolidated statements of cash flows (in thousands): March 31, 2023 December 31, 2022 Cash and cash equivalents $ 16,985 $ 1,279 Restricted cash 1 7,044 Cash and cash equivalents and restricted cash $ 16,986 $ 8,323 |
BUSINESS COMBINATION, ASSETS _2
BUSINESS COMBINATION, ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
BUSINESS COMBINATION, ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS | |
Schedule of assets, liabilities, intangible assets and loss from discontinued operations | The loss from discontinued operations, net of tax presented in the consolidated statements of operations includes the following results of RM 101 (in thousands): Three Months Ended March 31, 2023 2022 Net sales $ — $ 4,230 Cost of goods sold — 3,223 Gross profit — 1,007 Selling, general and administrative expenses 43 1,264 Research and development expenses — 137 Impairment on remeasurement or classification as held for sale — 3,922 Loss from discontinued operations before other income (43) (4,316) Other income 8 3 Loss from discontinued operations before income tax (35) (4,313) Income tax benefit — 1 Loss from discontinued operations, net of tax $ (35) $ (4,312) |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
FAIR VALUE MEASUREMENTS | |
Schedule of fair value instruments measured at fair value on non-recurring basis | The following table illustrates the financial instruments measured at fair value on a non-recurring basis segregated by hierarchy fair value levels as of March 31, 2023 (in thousands): Significant Significant Quoted Prices Other Other in Active Observable Unobservable Markets Inputs Inputs Remeasurement Carrying Value (Level 1) (Level 2) (Level 3) Gain Contingent consideration liability - Contingent Value Rights $ 7,001 $ — $ 7,001 $ — $ — $ 7,001 $ — $ 7,001 $ — $ — The following table illustrates the financial instruments measured at fair value on a non-recurring basis segregated by hierarchy fair value levels as of December 31, 2022 (in thousands): Significant Significant Quoted Prices Other Other in Active Observable Unobservable Markets Inputs Inputs Remeasurement Carrying Value (Level 1) (Level 2) (Level 3) Gain Contingent consideration liability - Contingent Value Rights (1) $ 10,900 $ — $ 10,900 $ — $ 1,100 $ 10,900 $ — $ 10,900 $ — $ 1,100 (1) During the three months ended March 31, 2022, the Company changed the valuation approach from the use of other unobservable inputs to other observable inputs based on information obtained through the active marketing and sale of the underlying assets. |
BITCOIN (Tables)
BITCOIN (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Bitcoin | |
Indefinite-lived Intangible Assets [Line Items] | |
Schedule of bitcoin activity | The following table presents the Company’s bitcoin activity (in thousands): Three Months Ended March 31, 2023 2022 Beginning balance $ 183 $ — Bitcoin received from mining pool and hosting services 9,940 217 Impairment (627) (5) Disposition (9,379) — Ending balance $ 117 $ 212 |
PROPERTY, PLANT AND EQUIPMENT (
PROPERTY, PLANT AND EQUIPMENT (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
PROPERTY, PLANT AND EQUIPMENT | |
Schedule of property, plant and equipment | Property, plant and equipment, net consisted of the following (in thousands): March 31, 2023 December 31, 2022 Miners $ 95,411 $ 71,114 Construction in process 35,676 32,360 Leasehold improvements 29,970 29,880 Equipment 7,778 7,208 Deposits on miners 2,680 57,626 171,515 198,188 Less: accumulated depreciation (12,100) (6,667) $ 159,415 $ 191,521 |
LEASES (Tables)
LEASES (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
LEASES | |
Schedule of maturity analysis of annual undiscounted cash flows, operating lease liabilities | The following is a maturity analysis of the annual undiscounted cash flows of the estimated operating lease liabilities as of March 31, 2023 (in thousands): Year ending December 31: 2023 $ 122 2024 163 2025 163 2026 163 2027 163 Thereafter 1,045 $ 1,819 |
Schedule of reconciliation of the 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, 2023 follows (in thousands): Undiscounted cash flows of the operating lease $ 1,819 Unamortized discount 840 Total operating lease liability 979 Current portion of operating lease liability 43 Operating lease liability, net of current portion $ 936 |
DEBT (Tables)
DEBT (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
DEBT | |
Schedule of long-term debt | Long-term debt consists of the following (in thousands): March 31, 2023 December 31, 2022 Term loan $ 146,000 $ 146,000 Debt issuance costs and debt discount (32,589) (21,095) 113,411 124,905 Less long-term debt due within one year — 51,938 Total long-term debt, net of portion due within one year $ 113,411 $ 72,967 |
Schedule principal maturities of outstanding long-term debt | Principal maturities of outstanding long-term debt as of March 31, 2023 are as follows (in thousands): Year ending December 31: 2023 $ — 2024 146,000 Total principal maturities $ 146,000 |
JOINT VENTURE (Tables)
JOINT VENTURE (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
JOINT VENTURE | |
Schedule of reconciliation of direct payments made on behalf of joint venture in the consolidated statement of cash flows | Three Months Ended March 31, 2023 2022 Payment of TeraWulf 50% share of Bitmain deposits $ — $ (11,402) Investments in joint venture related to direct payments made on behalf of joint venture — (11,402) Direct investments in joint venture and payments made on plant and equipment contributed to joint venture (1,467) (7,670) Investments in joint venture, including direct payments made on behalf of joint venture $ (1,467) $ (19,072) Payment of Talen 50% share of Bitmain deposits $ — $ (11,402) Other reimbursable payments — — Reimbursable payments for deposits on plant and equipment made on behalf of joint venture or a joint venture partner $ — $ (11,402) Talen reimbursement of 50% share of Bitmain deposits $ — $ 11,402 Other reimbursable payments — — Reimbursement of payments for deposits on plant and equipment made on behalf of joint venture or a joint venture partner $ — $ 11,402 |
Summary of interest in Nautilus and maximum exposure to loss as a result of its involvement with the VIE | 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 December 31, 2022 (in thousands, except for percentages): Commitment to Company’s Future Company’s Net loss Variable Additional Maximum % Initial Additional Inception Interest in Contributions Exposure to Loss Entity Ownership Investment Investment, Net to Date Entity (1) in Entity (2) Nautilus 25.0 % $ 18,000 $ 131,452 $ 27,417 $ 122,035 $ — $ 122,035 (1) The Members may mutually agree on changes to the Pennsylvania bitcoin mining facility, which could increase the amount of contributions the Company is required to provide. The Members may seek alternate financing for the Pennsylvania bitcoin mining facility, which could reduce the amount of investments each Member may be required to provide. (2) The maximum exposure at March 31, 2023 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 are required for the initial phase of the Pennsylvania bitcoin mining facility buildout. |
Condensed results of operations for the nine months ended December 31,2021 and the condensed financial position as of December 31, 2021, of Nautilus | Three Months Ended March 31, 2023 (1) 2022 Condensed statement of operations information: Revenue $ 9,106 $ — Operating expense 12,137 1,576 Net loss $ (3,031) $ (1,576) March 31, 2023 (1) December 31, 2022 (1) Condensed balance sheet information: Current assets $ 18,049 $ 28,986 Noncurrent assets 250,068 154,552 Total assets $ 268,117 $ 183,538 Current liabilities $ 20,264 $ 12,864 Noncurrent liabilities 28,283 Equity 219,570 170,674 Total liabilities and equity $ 268,117 $ 183,538 (1) The condensed statement of operations information for the three months ended March 31, 2023 and the condensed balance sheet information as of March 31, 2023 and December 31, 2022 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, 2023 | |
Board of Directors And Employees [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Schedule of Nonvested Restricted Stock Units Activity | Unvested Restricted Stock Units Number of Shares Weighted-Average Grant-Date Fair Value Unvested as of December 31, 2022 1,931,187 $ 2.87 Granted 4,920,000 $ 0.36 Vested (20,232) $ 1.73 Forfeited/canceled — $ - Unvested as of March 31, 2023 6,830,955 $ 1.07 |
Non Employees [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Schedule of Nonvested Restricted Stock Units Activity | Unvested Restricted Stock Units Number of Shares Weighted-Average Grant-Date Fair Value Unvested as of December 31, 2022 82,645 $ 1.21 Granted 3,970,564 $ 0.54 Vested (70,423) $ 0.71 Forfeited/canceled — $ - Unvested as of March 31, 2023 3,982,786 $ 0.55 |
ORGANIZATION - (Details)
ORGANIZATION - (Details) | 1 Months Ended | 3 Months Ended | |||||
Mar. 01, 2023 USD ($) | Oct. 31, 2022 USD ($) | Mar. 31, 2023 USD ($) item facility $ / shares | Mar. 31, 2022 USD ($) | Feb. 23, 2023 $ / shares | Dec. 31, 2022 USD ($) $ / shares | Feb. 07, 2021 USD ($) | |
ORGANIZATION | |||||||
Number of mining facilities | facility | 2 | ||||||
Number suppliers for bitcoin miners | item | 2 | ||||||
Net loss attributable to common stockholders | $ (26,516,000) | $ (18,228,000) | |||||
Negative cash flows from continuing operations | (8,623,000) | (15,202,000) | |||||
Cash and cash equivalents | 16,985,000 | $ 1,279,000 | |||||
Cash and cash equivalents and restricted cash | 16,986,000 | 3,586,000 | 8,323,000 | $ 46,455,000 | |||
Working Capital deficiency | 33,900,000 | ||||||
Total stockholders' equity | 146,300,000 | ||||||
Accumulated deficit | (212,731,000) | $ (186,474,000) | |||||
Net invested in Joint Venture | 2,300,000 | ||||||
Aggregate offering price for sale of shares of common stock under ATM Offering | 200,000,000 | ||||||
Net proceeds from issued of common stocking including ATM Offering | $ 26,600,000 | $ 5,100,000 | 26,562,000 | 6,787,000 | |||
Net proceeds from issuance of preferred stock | $ 9,266,000 | ||||||
Proceeds from warrant issuances | $ 4,300,000 | $ 2,500,000 | |||||
Common stock par value | $ / shares | $ 0.001 | $ 0.001 | $ 0.001 | ||||
Net proceeds | $ 34,700,000 | ||||||
Bitcoin miner manufacturers to acquire | |||||||
ORGANIZATION | |||||||
Deposits made on miners | $ 10,000,000 |
SIGNIFICANT ACCOUNTING POLICI_4
SIGNIFICANT ACCOUNTING POLICIES - Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | |
Sep. 30, 2022 | Mar. 31, 2023 | Mar. 31, 2022 | |
Supplemental disclosure of non-cash activities: | |||
Contribution of plant and equipment or deposits on plant and equipment to joint venture | $ 35,792 | ||
Common stock issuance costs in accounts payable | 250 | $ 3 | |
Preferred stock issuance costs in other accrued liabilities or accounts payable | 293 | ||
Purchases of and deposits on plant and equipment in accounts payable, accrued construction liabilities, other accrued liabilities and long-term debt | 2,621 | 8,943 | |
Investment in joint venture in other accrued liabilities, other amounts due to related parties and long-term debt | 721 | 482 | |
Preferred stock proceeds receivable in other current assets | 300 | ||
Convertible promissory notes converted to common stock | 4,666 | ||
Common stock issued pursuant to operating lease amendment | $ 11,500 | ||
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 | ||
Common stock reacquired in exchange for warrants | $ 12,479 | ||
Preferred stock dividends in other accrued liabilities | $ 45 |
SIGNIFICANT ACCOUNTING POLICI_5
SIGNIFICANT ACCOUNTING POLICIES - Cash and Cash Equivalents (Details) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 | Mar. 31, 2022 | Feb. 07, 2021 |
SIGNIFICANT ACCOUNTING POLICIES | ||||
FDIC cash insured amount | $ 250,000 | |||
Cash exceeding FDIC limit | 16,100,000 | |||
Cash and cash equivalents and restricted cash | 16,986,000 | $ 8,323,000 | $ 3,586,000 | $ 46,455,000 |
Balance at bank | $ 80,000 |
SIGNIFICANT ACCOUNTING POLICI_6
SIGNIFICANT ACCOUNTING POLICIES - Restricted Cash (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 | Mar. 31, 2022 | Feb. 07, 2021 |
SIGNIFICANT ACCOUNTING POLICIES | ||||
Cash and cash equivalents | $ 16,985 | $ 1,279 | ||
Restricted cash | 1 | 7,044 | ||
Cash and cash equivalents and restricted cash | $ 16,986 | $ 8,323 | $ 3,586 | $ 46,455 |
SIGNIFICANT ACCOUNTING POLICI_7
SIGNIFICANT ACCOUNTING POLICIES - Segment (Details) | 3 Months Ended |
Mar. 31, 2023 segment | |
SIGNIFICANT ACCOUNTING POLICIES | |
Number of operating segment | 1 |
SIGNIFICANT ACCOUNTING POLICI_8
SIGNIFICANT ACCOUNTING POLICIES - Property, Plant and Equipment (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Property, Plant and Equipment [Line Items] | ||
Deposits on miners | $ 2.7 | $ 57.6 |
Computer Equipment | ||
Property, Plant and Equipment [Line Items] | ||
Estimated useful lives | 5 years | |
Digital Currency Mining Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated useful lives | 4 years |
SIGNIFICANT ACCOUNTING POLICI_9
SIGNIFICANT ACCOUNTING POLICIES - Debt Modification (Details) | 3 Months Ended |
Mar. 31, 2023 | |
SIGNIFICANT ACCOUNTING POLICIES | |
Percentage of changes In debt value and net presents value of future cash flows | 10% |
SIGNIFICANT ACCOUNTING POLIC_10
SIGNIFICANT ACCOUNTING POLICIES - Cryptocurrencies (Details) | 3 Months Ended | |
Mar. 31, 2023 USD ($) item | Mar. 31, 2022 USD ($) | |
Indefinite-lived Intangible Assets [Roll Forward] | ||
Beginning balance | $ 183,000 | |
Impairment | (627,000) | $ (5,000) |
Ending balance | $ 117,000 | |
Number of data center hosting contract with customer | item | 1 | |
Quoted price of bitcoin | $ 38,000 | |
Miner hosting revenue | $ 2,300,000 | $ 0 |
SIGNIFICANT ACCOUNTING POLIC_11
SIGNIFICANT ACCOUNTING POLICIES - Power Curtailment Credits (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
SIGNIFICANT ACCOUNTING POLICIES | ||
Power curtailment credits | $ 0.1 | $ 0 |
SIGNIFICANT ACCOUNTING POLIC_12
SIGNIFICANT ACCOUNTING POLICIES - Loss per Share (Details) - $ / shares | Mar. 31, 2023 | Oct. 31, 2022 |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Number of common stock issued upon conversion of preferred stock | 1,100,000 | |
Warrants outstanding (in shares) | 65,415,150 | |
Exercise price of warrants (in dollars per share) | $ 0.43 | $ 1.93 |
Restricted Stock Units (RSUs) | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Number of shares outstanding (in shares) | 10,813,741 |
SIGNIFICANT ACCOUNTING POLIC_13
SIGNIFICANT ACCOUNTING POLICIES - Concentrations (Details) | 3 Months Ended |
Mar. 31, 2023 item | |
Concentration Risk [Line Items] | |
Number of suppliers | 2 |
Number of mining pool operators | 1 |
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Data center hosting customer | |
Concentration Risk [Line Items] | |
Concentration risk percentage | 17.20% |
BUSINESS COMBINATION, ASSETS _3
BUSINESS COMBINATION, ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS (Details) - USD ($) | 1 Months Ended | 3 Months Ended | |||
Dec. 13, 2021 | Aug. 31, 2022 | Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
BUSINESS COMBINATION | |||||
Contingent value rights | $ 7,001,000 | $ 10,900,000 | |||
Loss from discontinued operations, net of tax | 35,000 | $ 2,906,000 | |||
IKONICS | |||||
BUSINESS COMBINATION | |||||
Initial distribution | 3,800,000 | ||||
Contingent value rights | $ 7,000,000 | ||||
IKONICS | Discontinued Operations, Held-for-sale [Member] | |||||
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 | ||||
IKONICS Corporation | |||||
BUSINESS COMBINATION | |||||
Contingent Value Rights Agreement for each IKONICs common stock | 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% | ||||
Period to receive dispositions, if any, of any part of the pre-merger business of IKCONICS | 18 months | ||||
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 |
BUSINESS COMBINATION, ASSETS _4
BUSINESS COMBINATION, ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS - Loss from Discontinued Operations (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2023 | Sep. 30, 2022 | Mar. 31, 2022 | Dec. 31, 2022 | |
ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS | ||||
Interest expense | $ (6,834,000) | $ (5,322,000) | ||
Cash flow impact of discontinued operations: | ||||
Cash flows used in operating activities from discontinued operations | 90,000 | 50,000 | ||
Re-measurement Gain | $ 1,100,000 | |||
Contingent Value Rights [Member] | ||||
Cash flow impact of discontinued operations: | ||||
Re-measurement Gain | $ 1,100,000 | |||
Contingent Value Rights [Member] | Loss from discontinued operations, Net of tax | ||||
Cash flow impact of discontinued operations: | ||||
Re-measurement Gain | 1,400,000 | |||
Ikonics Inc [Member] | Discontinued Operations, Held-for-sale [Member] | ||||
ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS | ||||
Net sales | 4,230,000 | |||
Cost of goods sold | 3,223,000 | |||
Gross profit | 1,007,000 | |||
Selling, general and administrative expenses | 1,264,000 | $ 43,000 | ||
Research and development expenses | 137,000 | |||
Impairment on remeasurement or classification as held for sale | 3,922,000 | |||
Loss from discontinued operations before other income | (4,316,000) | (43,000) | ||
Other income | 3,000 | 8,000 | ||
Loss from discontinued operations before income tax | (4,313,000) | (35,000) | ||
Income tax benefit | 1,000 | |||
Loss from discontinued operations, net of tax | (4,312,000) | $ (35,000) | ||
Cash flow impact of discontinued operations: | ||||
Cash flows used in operating activities from discontinued operations | $ 90,000 | $ 50,000 |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Re-measurement Gain | $ 1,100 | |
Total fair value assets | $ 7,001 | 10,900 |
Long-term debt fair value | $ 130,700 | |
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% | |
Contingent Value Rights [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Re-measurement Gain | 1,100 | |
Total fair value assets | $ 7,001 | 10,900 |
Fair Value, Inputs, Level 2 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total fair value assets | 7,001 | 10,900 |
Fair Value, Inputs, Level 2 [Member] | Contingent Value Rights [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total fair value assets | $ 7,001 | $ 10,900 |
BITCOIN (Details)
BITCOIN (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Indefinite-lived Intangible Assets [Roll Forward] | ||
Impairment | $ (627) | $ (5) |
Bitcoin | ||
Indefinite-lived Intangible Assets [Roll Forward] | ||
Beginning balance | 183 | |
Bitcoin received from mining pool and hosting services | 9,940 | 217 |
Impairment | (627) | (5) |
Disposition | (9,379) | |
Ending balance | $ 117 | $ 212 |
PROPERTY, PLANT AND EQUIPMENT -
PROPERTY, PLANT AND EQUIPMENT - PPE Schedule (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 |
Property, Plant and Equipment [Line Items] | |||
Property, Plant and Equipment, Gross | $ 171,515 | $ 198,188 | |
Less: accumulated depreciation | (12,100) | (6,667) | |
Property, Plant and Equipment, Net | 159,415 | $ 191,521 | 191,521 |
Miners | |||
Property, Plant and Equipment [Line Items] | |||
Property, Plant and Equipment, Gross | 95,411 | 71,114 | |
Construction in process | |||
Property, Plant and Equipment [Line Items] | |||
Property, Plant and Equipment, Gross | 35,676 | 32,360 | |
Leasehold improvements | |||
Property, Plant and Equipment [Line Items] | |||
Property, Plant and Equipment, Gross | 29,970 | 29,880 | |
Deposits on miners | |||
Property, Plant and Equipment [Line Items] | |||
Property, Plant and Equipment, Gross | 2,680 | 57,626 | |
Equipment | |||
Property, Plant and Equipment [Line Items] | |||
Property, Plant and Equipment, Gross | $ 7,778 | $ 7,208 |
PROPERTY, PLANT AND EQUIPMENT_2
PROPERTY, PLANT AND EQUIPMENT - Narrative (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
PROPERTY, PLANT AND EQUIPMENT | ||
Capitalized interest costs | $ 1,000,000 | $ 760,000 |
Depreciation expense | $ 5,400,000 | $ 4,000,000,000 |
LEASES - Narrative (Details)
LEASES - Narrative (Details) - USD ($) | 1 Months Ended | 3 Months Ended | ||||
Sep. 30, 2022 | May 31, 2021 | Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | Jul. 31, 2022 | |
Property, Plant and Equipment [Line Items] | ||||||
Operating lease, term of lease | 5 years | 8 years | ||||
Option to extend lease | true | |||||
Renewal term of lease | 5 years | |||||
Shares issued towards lease liability | $ 11,500,000 | |||||
Operating lease liability | $ 979,000 | |||||
Lease liability | 8,510,638 | |||||
Right-of-use asset | $ 11,694,000 | $ 11,944,000 | ||||
Weighted average discount rate | 12.60% | |||||
Lease payments | $ 50,000 | |||||
Remaining lease term | 11 years 1 month 6 days | |||||
Digital Currency Mining Equipment [Member] | ||||||
Property, Plant and Equipment [Line Items] | ||||||
Operating lease, term of lease | 2 months | |||||
Variable cost | $ 0 | |||||
Operating lease expense | 451,000 | |||||
Planned Bitcoin Mining Facility, New York [Member] | ||||||
Property, Plant and Equipment [Line Items] | ||||||
Operating lease expense | $ 339,000 | $ 49,000 | ||||
Contingent lease expense | 58,000 | |||||
Lease payments | 310,000 | |||||
Ground Lease | ||||||
Property, Plant and Equipment [Line Items] | ||||||
Operating lease liability | $ 12,000,000 | $ 11,200,000 | ||||
Right-of-use asset | $ 11,200,000 | |||||
Operating Equipment Lease [Member] | ||||||
Property, Plant and Equipment [Line Items] | ||||||
Operating lease expense | $ 116,000 |
LEASES - Maturity analysis of t
LEASES - Maturity analysis of the annual undiscounted cash flows (Details) $ in Thousands | Mar. 31, 2023 USD ($) |
LEASES | |
2023 | $ 122 |
2024 | 163 |
2025 | 163 |
2026 | 163 |
2027 | 163 |
Thereafter | 1,045 |
Operating lease liabilities, to be paid | $ 1,819 |
LEASES - Reconciliation of the
LEASES - Reconciliation of the undiscounted cash flows (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
LEASES | ||
Undiscounted cash flows of the operating lease | $ 1,819 | |
Unamortized discount | 840 | |
Total operating lease liability | 979 | |
Current portion of operating lease liability | 43 | $ 42 |
Operating lease liability, net of current portion | $ 936 | $ 947 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Reconciliation between income tax benefit and the expected tax benefit at the statutory rate | ||
Effective tax rate | 0% | 0% |
Federal statutory rate | 21% | |
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, 2023 | Dec. 31, 2022 |
DEBT | ||
Term loan | $ 146,000 | $ 146,000 |
Debt issuance costs and debt discount | (32,589) | (21,095) |
Term loan, net | 113,411 | 124,905 |
Less long-term debt due within one year. | 51,938 | |
Total long-term debt, net of portion due within one year | $ 113,411 | $ 72,967 |
DEBT - LGSA (Details)
DEBT - LGSA (Details) | 1 Months Ended | 3 Months Ended | |||||||
Mar. 02, 2023 USD ($) | Mar. 01, 2023 USD ($) $ / shares shares | Dec. 01, 2021 USD ($) shares | Oct. 31, 2022 USD ($) tranche $ / shares shares | Jul. 31, 2022 USD ($) tranche $ / shares shares | Mar. 31, 2023 USD ($) $ / shares | Mar. 31, 2022 USD ($) | Dec. 31, 2022 USD ($) | May 31, 2021 | |
DEBT | |||||||||
Common stock offering, net of issuance costs (in shares) | shares | 40,764,706 | 7,481,747 | |||||||
Debt issuance costs and debt discount, unamortized | $ 32,589,000 | $ 21,095,000 | |||||||
Amortization of debt issuance costs, commitment fees and accretion of debt discount | 3,549,000 | $ 2,458,000 | |||||||
Fair value of term loan | $ 130,700,000 | ||||||||
Operating lease, term of lease | 8 years | 5 years | |||||||
Exercise price of warrants (in dollars per share) | $ / shares | $ 1.93 | $ 0.43 | |||||||
Warrants issued to lenders | shares | 2,667,678 | ||||||||
Capitalized interest costs | $ 1,000,000 | $ 760,000 | |||||||
Warrant exercise price (in dollars per share) | $ / shares | $ 1.93 | $ 0.43 | |||||||
Warrant agreement | |||||||||
DEBT | |||||||||
Proceeds from additional capital raise | $ 5,000,000 | ||||||||
Warrant agreement | Penny Warrants | |||||||||
DEBT | |||||||||
Exercise price of warrants (in dollars per share) | $ / shares | $ 0.01 | ||||||||
Warrants issued to lenders | shares | 27,436,126 | ||||||||
Percentage of common stock on fully diluted equity | 10% | ||||||||
Warrant exercise price (in dollars per share) | $ / shares | $ 0.01 | ||||||||
Warrant agreement | Dollar Warrants | |||||||||
DEBT | |||||||||
Exercise price of warrants (in dollars per share) | $ / shares | $ 1 | ||||||||
Warrants issued to lenders | shares | 13,718,064 | ||||||||
Percentage of common stock on fully diluted equity | 5% | ||||||||
Warrant exercise price (in dollars per share) | $ / shares | $ 1 | ||||||||
Delayed Draw Term Loan | |||||||||
DEBT | |||||||||
Allocated fair value of equity included in the issuance of loan | $ 2,900,000 | ||||||||
Effective interest rate of debt | 25.10% | ||||||||
Number of tranches | tranche | 2 | ||||||||
Number of separate increments | tranche | 2 | ||||||||
Number of separate sub-tranches | tranche | 2 | ||||||||
Debt instrument face amount tranches | $ 7,500,000 | ||||||||
Additional warrants | 3.75% | ||||||||
Conversion of additional warrants | 1.875% | ||||||||
Delayed Draw Term Loan | First Tranche | |||||||||
DEBT | |||||||||
Debt instrument face amount tranches | $ 7,500,000 | ||||||||
Delayed Draw Term Loan | Second Tranche | |||||||||
DEBT | |||||||||
Debt instrument face amount tranches | 7,500,000 | ||||||||
Nautilus Joint Venture | |||||||||
DEBT | |||||||||
Common stock offering, net of issuance costs (in shares) | shares | 839,398 | ||||||||
Percentage to outstanding shares | 1.50% | ||||||||
One Term Loan investor, NovaWulf Digital Master Fund, L.P. | |||||||||
DEBT | |||||||||
Loan amount | $ 13,000,000 | ||||||||
Upfront fee | $ 15,000,000 | ||||||||
One Term Loan investor, NovaWulf Digital Master Fund, L.P. | Delayed Draw Term Loan | |||||||||
DEBT | |||||||||
Loan amount | 900,000 | ||||||||
One Term Loan investor, NovaWulf Digital Master Fund, L.P. | Nautilus Joint Venture | |||||||||
DEBT | |||||||||
Issuance costs | 4,000,000 | ||||||||
Upfront fee considered as debt discount | 29,800,000 | ||||||||
Allocated fair value of equity included in the issuance of loan | $ 25,700,000 | ||||||||
Amortization period of debt costs and discount over term of debt | 3 years | ||||||||
Term Loan | |||||||||
DEBT | |||||||||
Loan amount | $ 123,500,000 | ||||||||
Allocated fair value of equity included in the issuance of loan | $ 4,100,000 | ||||||||
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% | ||||||||
Term Loan | Term Sheet | |||||||||
DEBT | |||||||||
Repayments of Debt | $ 40,000,000 | ||||||||
Term Loan | Minimum | Term Sheet | |||||||||
DEBT | |||||||||
Aggregate net proceeds issuance of equity or equity-linked securities | 33,500,000 | ||||||||
Term Loan | Minimum | Warrant agreement | |||||||||
DEBT | |||||||||
Aggregate net proceeds issuance of equity or equity-linked securities | $ 33,500,000 | ||||||||
Term Loan | Nautilus Joint Venture | |||||||||
DEBT | |||||||||
Upfront fee | $ 1,200,000 | ||||||||
Term Loan | One Term Loan investor, NovaWulf Digital Master Fund, L.P. | Nautilus Joint Venture | |||||||||
DEBT | |||||||||
Quarterly periodic payment as a % of the original amount | $ 12.5 | ||||||||
Interest rate | 11.50% | ||||||||
Interest rate in case default | 13.50% | ||||||||
Prepayment incremental amount | $ 5 | ||||||||
Prepayment fees after 1st anniversary | 3% | ||||||||
Prepayment fees after 2nd anniversary | 2% | ||||||||
New Term Facility | |||||||||
DEBT | |||||||||
Upfront fee | 125,000 | ||||||||
Issuance costs | $ 1,500,000 | ||||||||
Amortization period of debt costs and discount over term of debt | 121 days | ||||||||
Percentage of cash interest | 8.50% | ||||||||
Percentage of prepayment penalty | 3% | ||||||||
Additional term loan facility | $ 50,000,000 | ||||||||
Funds drawn at closing | $ 15,000,000 | ||||||||
Operating lease, term of lease | 8 years | 5 years | |||||||
Exercise price of warrants (in dollars per share) | $ / shares | $ 0.01 | ||||||||
Warrants issued to lenders | shares | 5,787,732 | ||||||||
Number of tranches | tranche | 3 | ||||||||
Percentage of outstanding common stock | 5% | ||||||||
Warrant exercise price (in dollars per share) | $ / shares | $ 0.01 | ||||||||
New Term Facility | Nautilus joint venture | |||||||||
DEBT | |||||||||
Percentage of ownership interest | 25% | ||||||||
New Term Facility | Second Tranche | |||||||||
DEBT | |||||||||
Percentage of original principal amount borrowed | 12.50% | ||||||||
Warrants issued as a percentage of diluted equity | 3.75% | ||||||||
Value of warrants | $ 15,000,000 | ||||||||
New Term Facility | Third Tranche | |||||||||
DEBT | |||||||||
Percentage of original principal amount borrowed | 37.50% | ||||||||
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 | |||||||||
Loan amount | $ 1,800,000 | ||||||||
Amortization of debt issuance costs, commitment fees and accretion of debt discount | $ 3,500,000 | ||||||||
Effective interest rate of debt | 13.10% | ||||||||
Percentage of outstanding common stock | 2% | ||||||||
Interest expense | $ 2,600,000 | ||||||||
Capitalized interest in property, plant and equipment | 542,000 | ||||||||
Capitalized interest costs | 452,000 | ||||||||
Debt discount and debt issuance costs | 32,600,000 | $ 21,100,000 | |||||||
First Amendment Term Loan | Interest Expense. | |||||||||
DEBT | |||||||||
Third-party fees | 445,000 | ||||||||
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% | ||||||||
Fees paid to lenders and the fair value of the common stock warrants | $ 3,400,000 | ||||||||
Delayed Draw Term Loan | Delayed Draw Term Loan | |||||||||
DEBT | |||||||||
Loan amount | $ 15,000,000 | ||||||||
Fifth Amendment Term Loan | |||||||||
DEBT | |||||||||
Effective interest rate of debt | 18.80% | ||||||||
Fifth Amendment Term Loan | Interest Expense. | |||||||||
DEBT | |||||||||
Fees paid to lenders and the allocated value of the common stock warrants | $ 16,000,000 |
DEBT - Maturity (Details)
DEBT - Maturity (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Year ending December 31 | ||
2024 | $ 146,000 | |
Total principal maturities | $ 146,000 | $ 146,000 |
STANDBY EQUITY PURCHASE AGREE_2
STANDBY EQUITY PURCHASE AGREEMENT AND CONVERTIBLE PROMISSORY NOTE - Standby Equity Purchase Agreement (Details) - USD ($) | 12 Months Ended | |
Jun. 02, 2022 | Dec. 31, 2022 | |
Yorkville | Convertible promissory note | ||
STANDBY EQUITY PURCHASE AGREEMENT, CONVERTIBLE PROMISSORY NOTE AND DERIVATIVE LIABILITY | ||
Loan amount | $ 15,000,000 | |
Standby equity purchase agreement | ||
STANDBY EQUITY PURCHASE AGREEMENT, CONVERTIBLE PROMISSORY NOTE AND DERIVATIVE LIABILITY | ||
Cost or penalty for termination | 0 | |
Advances received on sale of shares | $ 0 | |
Standby equity purchase agreement | Convertible promissory note | ||
STANDBY EQUITY PURCHASE AGREEMENT, CONVERTIBLE PROMISSORY NOTE AND DERIVATIVE LIABILITY | ||
Loan amount | 15,000,000 | |
Standby equity purchase agreement | Yorkville | ||
STANDBY EQUITY PURCHASE AGREEMENT, CONVERTIBLE PROMISSORY NOTE AND DERIVATIVE LIABILITY | ||
Aggregate amount | $ 50,000,000 | |
Termination period | 36 months | |
Standby equity purchase agreement | Maximum | ||
STANDBY EQUITY PURCHASE AGREEMENT, CONVERTIBLE PROMISSORY NOTE AND DERIVATIVE LIABILITY | ||
Notice period | 5 days |
STANDBY EQUITY PURCHASE AGREE_3
STANDBY EQUITY PURCHASE AGREEMENT AND CONVERTIBLE PROMISSORY NOTE - Convertible promissory note (Details) | 1 Months Ended | 3 Months Ended | |||||||
Jan. 30, 2023 USD ($) $ / shares | Jun. 02, 2022 USD ($) item $ / shares | Mar. 31, 2023 shares | Nov. 30, 2022 USD ($) $ / shares | Oct. 31, 2022 USD ($) | Aug. 31, 2022 USD ($) | Jul. 31, 2022 USD ($) | Mar. 31, 2023 USD ($) | Mar. 31, 2022 USD ($) | |
DEBT | |||||||||
Proceeds from convertible promissory note | $ 1,250,000 | ||||||||
Convertible promissory notes converted to common stock | 4,666,000 | ||||||||
New Convertible Promissory Note | |||||||||
DEBT | |||||||||
Interest rate | 4% | ||||||||
Conversion price (in dollars per share) | $ / shares | $ 0.40 | ||||||||
Unpaid interest converted into shares of common stock | shares | 3,134,932 | ||||||||
Contractual interest expense | 4,000 | $ 0 | |||||||
New Convertible Promissory Note | Private Placement | |||||||||
DEBT | |||||||||
Loan amount | $ 1,250,000 | ||||||||
Convertible promissory notes converted to common stock | $ 5,000,000 | ||||||||
Convertible promissory note | |||||||||
DEBT | |||||||||
Interest rate | 4% | ||||||||
Interest rate in event of default (a a percent) | 15% | ||||||||
Conversion price (in dollars per share) | $ / shares | $ 0.40 | ||||||||
Equity securities with aggregate gross sale price | $ 5,000,000 | ||||||||
Unpaid interest converted into shares of common stock | shares | 8,628,024 | ||||||||
Convertible promissory note | Interest Expense. | |||||||||
DEBT | |||||||||
Contractual interest expense | $ 22,000 | $ 0 | |||||||
Convertible promissory note | Yorkville | |||||||||
DEBT | |||||||||
Discount on issue (as a percent) | 2% | ||||||||
Proceeds from convertible promissory note | $ 14,700,000 | ||||||||
Loan amount | $ 15,000,000 | ||||||||
Number of periodic payments | item | 5 | ||||||||
Periodic payments | $ 3,000,000 | $ 3,000,000 | $ 3,000,000 | ||||||
Monthly payment deferral (as a percent) | 50% | ||||||||
Number of periodic payments deferral | item | 2 | ||||||||
Deferred periodic payment | $ 1,500,000 | $ 1,500,000 | |||||||
Interest rate | 4% | ||||||||
Threshold share price for repayment of debt at premium (in dollars per share) | $ / shares | $ 2.25 | ||||||||
Conversion price (in dollars per share) | $ / shares | $ 3.75 | ||||||||
Convertible promissory note | Yorkville | Share price greater or equal to $2.25 | |||||||||
DEBT | |||||||||
Premium on repayment of debt (as a percent) | 6% | ||||||||
Convertible promissory note | Yorkville | Share price less than $2.25 | |||||||||
DEBT | |||||||||
Premium on repayment of debt (as a percent) | 4% | ||||||||
Convertible promissory note | Accredited Investors | |||||||||
DEBT | |||||||||
Loan amount | 3,400,000 | ||||||||
Convertible promissory note | Management | |||||||||
DEBT | |||||||||
Loan amount | $ 1,700,000 | ||||||||
Amended and Restated Convertible Promissory Notes | |||||||||
DEBT | |||||||||
Cash payment premium | 12% | 12% | |||||||
Extinguishment of debt, change in the fair value percentage | 10% | ||||||||
Loss on extinguishment of debt | $ (2,100,000) | ||||||||
Embedded conversion feature | 1,600,000 | ||||||||
Excess of the fair value of the A&R Promissory Note | $ 9,400,000 | ||||||||
Second Amended and Restated Convertible Promissory Notes | |||||||||
DEBT | |||||||||
Effective interest rate of debt | 3.10% | ||||||||
Embedded conversion feature | $ 20,000 |
JOINT VENTURE (Details)
JOINT VENTURE (Details) | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||||||
Mar. 23, 2023 USD ($) | Aug. 27, 2022 USD ($) | May 13, 2021 USD ($) item | Mar. 31, 2023 USD ($) | Feb. 28, 2023 USD ($) item | Sep. 30, 2022 item | Mar. 31, 2023 USD ($) | Jun. 30, 2022 USD ($) | Mar. 31, 2022 USD ($) item | Dec. 31, 2022 USD ($) | |
Second A&R Nautilus Agreement | ||||||||||
JOINT VENTURE | ||||||||||
Fair value of miners contributed | $ 36,700,000 | $ 36,700,000 | $ 11,600,000 | |||||||
Increased the equity in net assets | $ 36,700,000 | 11,600,000 | ||||||||
Nautilus Joint Venture | ||||||||||
JOINT VENTURE | ||||||||||
Ownership interest in the Joint Venture | 33% | 25% | 25% | |||||||
Nautilus Joint Venture | Second A&R Nautilus Agreement | ||||||||||
JOINT VENTURE | ||||||||||
Maximum operating capacity (MW) | 200 | |||||||||
Ownership interest in the Joint Venture | 25% | |||||||||
Nautilus Joint Venture | Second A&R Nautilus Agreement | Talen | ||||||||||
JOINT VENTURE | ||||||||||
Ownership interest in the Joint Venture | 75% | |||||||||
Talen | ||||||||||
JOINT VENTURE | ||||||||||
Maximum operating capacity (MW) | item | 300 | |||||||||
Interest in joint venture (as a percent) | 50% | |||||||||
Capitalized interest costs | $ 863,000 | $ 482,000 | ||||||||
Nautilus | ||||||||||
JOINT VENTURE | ||||||||||
Interest in joint venture (as a percent) | 25% | |||||||||
Join Venture contribution | $ 156,000,000 | |||||||||
Fair value of purchase obligation | $ 16,000,000 | |||||||||
Miners Value Included in property Plant and Equipment | $ 4,500,000 | 4,800,000 | ||||||||
Ownership percentage acquired in joint venture | 25% | |||||||||
Miner exchange liability | 16,800,000 | |||||||||
Estimated fair value | $ 13,400,000 | $ 13,400,000 | 16,300,000 | |||||||
Loss on sale of net assets held for sale | 804,000 | |||||||||
Loss on transfer of miners | $ 8,900,000 | $ 11,500,000 | ||||||||
Percent of access to electricity supply | 50% | |||||||||
Capital contributions | $ 17,100,000 | |||||||||
Payments for capital contribution | $ 7,300,000 | |||||||||
Nautilus | Bitmain Non-fixed Price Sales and Purchase Agreements | ||||||||||
JOINT VENTURE | ||||||||||
Number miners purchases covered by the agreement | item | 2,469 | |||||||||
Number of miners transferred | item | 3,200 | 2,500 | ||||||||
Nautilus | Talen | ||||||||||
JOINT VENTURE | ||||||||||
Join Venture contribution | $ 156,000,000 |
JOINT VENTURE - Purchase Agreem
JOINT VENTURE - Purchase Agreements (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||||
Jun. 15, 2021 item | Sep. 30, 2022 USD ($) | Mar. 31, 2022 item USD ($) | Dec. 31, 2021 USD ($) item | Mar. 31, 2023 USD ($) | Dec. 31, 2022 USD ($) | Mar. 19, 2021 USD ($) item | |
JOINT VENTURE | |||||||
Total purchase price per agreement | $ | $ 118,500 | ||||||
Number of agreements | 30,000 | ||||||
Equity in net assets of investee | $ | $ 122,035 | $ 98,741 | |||||
Minerva Purchase Agreement | |||||||
JOINT VENTURE | |||||||
Number miners purchases covered by the agreement | 30,000 | ||||||
Deposits made | $ | $ 40,500 | ||||||
Number of miners covered by payment to date | 9,000 | ||||||
Bitmain Non-fixed Price Sales and Purchase Agreements | |||||||
JOINT VENTURE | |||||||
Distributed credit | $ | $ 31,200 | ||||||
Equity in net assets of investee | $ | $ 2,200 | ||||||
Q1 2022 Bitmain Agreement | |||||||
JOINT VENTURE | |||||||
Number of agreements | 5,000 | ||||||
Q2 2022 Bitmain Agreement | |||||||
JOINT VENTURE | |||||||
Number of agreements | 5,000 | ||||||
Talen | Bitmain Non-fixed Price Sales and Purchase Agreements | |||||||
JOINT VENTURE | |||||||
Percentage of payment to the total amount due at the date of purchase agreement amendment | 50% | ||||||
Number of agreements | $ | 22,800 | ||||||
Nautilus | Bitmain Non-fixed Price Sales and Purchase Agreements | |||||||
JOINT VENTURE | |||||||
Number miners purchases covered by the agreement | 2,469 | ||||||
Number of agreements | 2 |
JOINT VENTURE - Payments (Detai
JOINT VENTURE - Payments (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
JOINT VENTURE | ||
Investments in joint venture related to direct payments made on behalf of joint venture - 50% share of purchase agreement deposits | $ (1,467) | $ (19,072) |
Reimbursable payments for deposits on plant and equipment made on behalf of a joint venture or a joint venture partner partner - 50% share of Talen | (11,402) | |
Reimbursement of payments for deposits on plant and equipment made on behalf of a joint venture or joint venture partner | 11,402 | |
Bitmain Non-fixed Price Sales and Purchase Agreements | ||
JOINT VENTURE | ||
Investments in joint venture related to direct payments made on behalf of joint venture - 50% share of purchase agreement deposits | (11,402) | |
Reimbursable payments for deposits on plant and equipment made on behalf of a joint venture or a joint venture partner partner - 50% share of Talen | (11,402) | |
Other direct payments | ||
JOINT VENTURE | ||
Investments in joint venture related to direct payments made on behalf of joint venture - 50% share of purchase agreement deposits | $ (1,467) | (7,670) |
Nautilus | Bitmain Non-fixed Price Sales and Purchase Agreements | ||
JOINT VENTURE | ||
Percentage of share in deposits | 50% | |
Percentage of Talen's share in deposits paid | 50% | |
Talen | ||
JOINT VENTURE | ||
Reimbursement of payments for deposits on plant and equipment made on behalf of a joint venture or joint venture partner | 11,402 | |
Talen | Bitmain Non-fixed Price Sales and Purchase Agreements | ||
JOINT VENTURE | ||
Reimbursement of payments for deposits on plant and equipment made on behalf of a joint venture or joint venture partner | $ 11,402 | |
Talen | Nautilus | Bitmain Non-fixed Price Sales and Purchase Agreements | ||
JOINT VENTURE | ||
Percentage of share in deposits | 50% |
JOINT VENTURE - Interest and Ex
JOINT VENTURE - Interest and Exposure (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
JOINT VENTURE | ||
Net loss Inception to Date | $ (10,167) | $ (788) |
Nautilus | ||
JOINT VENTURE | ||
Ownership interest (as percent) | 25% | |
Initial Investment | $ 18,000 | |
Additional Investment, Net | 131,452 | |
Net loss Inception to Date | (27,417) | |
Company's Variable Interest in Entity | 122,035 | |
Company's Maximum Exposure to Loss in Entity | $ 122,035 |
JOINT VENTURE - Results of Oper
JOINT VENTURE - Results of Operations and Financial Position (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Condensed statements of operations information: | |||
Operating expenses | $ 308 | $ 480 | |
Net loss | (26,257) | (18,183) | |
Condensed balance sheet information: | |||
Current assets | 22,220 | $ 14,144 | |
Total assets | 316,781 | 317,687 | |
Current liabilities | 56,121 | 126,019 | |
Equity | 146,300 | ||
Total liabilities and equity | 316,781 | 317,687 | |
Nautilus Joint Venture | |||
Condensed statements of operations information: | |||
Revenue | 9,106 | ||
Operating expenses | 12,137 | 1,576 | |
Net loss | (3,031) | $ (1,576) | |
Condensed balance sheet information: | |||
Current assets | 18,049 | 28,986 | |
Noncurrent assets | 250,068 | 154,552 | |
Total assets | 268,117 | 183,538 | |
Current liabilities | 20,264 | 12,864 | |
Noncurrent liabilities | 28,283 | ||
Equity | 219,570 | 170,674 | |
Total liabilities and equity | $ 268,117 | $ 183,538 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) $ in Millions | 1 Months Ended | |||||||
Jun. 15, 2021 item | Nov. 30, 2022 USD ($) item agreement | Sep. 30, 2022 USD ($) item agreement | Feb. 28, 2022 MWh | Dec. 31, 2022 USD ($) item | Dec. 15, 2021 USD ($) item | Dec. 07, 2021 USD ($) item | Mar. 19, 2021 USD ($) | |
COMMITMENTS AND CONTINGENCIES | ||||||||
Total purchase price per agreement | $ | $ 118.5 | |||||||
Number of agreements | 30,000 | |||||||
Second Bitmain Purchase Agreement | ||||||||
COMMITMENTS AND CONTINGENCIES | ||||||||
Number miners purchases covered by the agreement | 3,000 | |||||||
Number S19XP miners monthly deliveries | 500 | |||||||
Total purchase price per agreement | $ | $ 32.6 | |||||||
Third Bitmain Purchase Agreement | ||||||||
COMMITMENTS AND CONTINGENCIES | ||||||||
Number miners purchases covered by the agreement | 15,000 | |||||||
Number S19XP miners monthly deliveries | 2,500 | |||||||
Total purchase price per agreement | $ | $ 169.1 | |||||||
Fifth Bitmain Purchase Agreement | ||||||||
COMMITMENTS AND CONTINGENCIES | ||||||||
Total purchase price per agreement | $ | $ 23.7 | |||||||
Number of agreements | agreement | 2 | |||||||
Fifth Bitmain Purchase Agreement | S19XP Miners | ||||||||
COMMITMENTS AND CONTINGENCIES | ||||||||
Number miners purchases covered by the agreement | 3,400 | |||||||
Fifth Bitmain Purchase Agreement | S19 Pro Miners | ||||||||
COMMITMENTS AND CONTINGENCIES | ||||||||
Number miners purchases covered by the agreement | 2,700 | |||||||
Sixth Bitmain Purchase Agreement | ||||||||
COMMITMENTS AND CONTINGENCIES | ||||||||
Total purchase price per agreement | $ | $ 24.9 | |||||||
Number of agreements | agreement | 2 | |||||||
Sixth Bitmain Purchase Agreement | S19XP Miners | ||||||||
COMMITMENTS AND CONTINGENCIES | ||||||||
Number miners purchases covered by the agreement | 3,600 | |||||||
Sixth Bitmain Purchase Agreement | S19 Pro Miners | ||||||||
COMMITMENTS AND CONTINGENCIES | ||||||||
Number miners purchases covered by the agreement | 2,750 | |||||||
Seventh Bitmain Purchase Agreement | ||||||||
COMMITMENTS AND CONTINGENCIES | ||||||||
Total purchase price per agreement | $ | $ 22.4 | |||||||
Seventh Bitmain Purchase Agreement | S19 Pro Miners | ||||||||
COMMITMENTS AND CONTINGENCIES | ||||||||
Number miners purchases covered by the agreement | 14,000 | |||||||
Power Authority of the State of New York | ||||||||
COMMITMENTS AND CONTINGENCIES | ||||||||
Maximum energy that can be purchased | MWh | 90 | |||||||
Term of agreement | 10 years |
CONVERTIBLE PREFERRED STOCK (De
CONVERTIBLE PREFERRED STOCK (Details) | 1 Months Ended | 3 Months Ended | |||||||
Mar. 01, 2023 shares | Oct. 31, 2022 USD ($) shares | Apr. 30, 2022 USD ($) shares | Mar. 31, 2022 USD ($) D $ / shares shares | Mar. 31, 2023 USD ($) $ / shares shares | Mar. 31, 2022 USD ($) $ / shares shares | Feb. 23, 2023 $ / shares shares | Feb. 22, 2023 shares | Dec. 31, 2022 USD ($) $ / shares shares | |
CONVERTIBLE PREFERRED STOCK | |||||||||
Common stock offering, net of issuance costs (in shares) | 40,764,706 | 7,481,747 | |||||||
Common stock offering, net of issuance costs | $ | $ 9,400,000 | $ 26,309,000 | $ 6,784,000 | ||||||
Preferred stock shares authorized | 100,000,000 | 100,000,000 | 25,000,000 | 25,000,000 | |||||
Preferred stock par value | $ / shares | $ 0.001 | $ 0.001 | $ 0.001 | ||||||
Preferred stock, liquidation preference | $ | $ 10,608,000 | $ 10,349 | |||||||
Preferred dividend declared (in dollar per share) | $ / shares | $ 0 | $ 0 | |||||||
Number of common stock issued upon conversion of preferred stock | 1,100,000 | ||||||||
Cumulative dividends accumulated and accreted to liquidation preference | $ | $ 1,000,000 | ||||||||
Dividends declared (in dollar per share) | $ / shares | $ 0 | 0 | |||||||
Private Placement | |||||||||
CONVERTIBLE PREFERRED STOCK | |||||||||
Common stock offering, net of issuance costs (in shares) | 634,517 | 271,447 | |||||||
Common stock offering, net of issuance costs | $ | $ 5,000,000 | $ 2,100,000 | |||||||
Series A Preferred Stock | |||||||||
CONVERTIBLE PREFERRED STOCK | |||||||||
Preferred stock shares authorized | 1 | ||||||||
Annual dividend rate | 10% | ||||||||
Preferred stock, liquidation preference (in dollars per share) | $ / shares | $ 1,000 | $ 1,000 | |||||||
Preferred stock, threshold percentage of stock price trigger | 130% | ||||||||
Preferred stock, conversion threshold trading days | D | 5 | ||||||||
Preferred stock, threshold consecutive trading days | D | 15 | ||||||||
Conversion denomination | $ | $ 1,000 | $ 1,000 | |||||||
Conversion ratio | 100 | 100 | |||||||
Series A Preferred Stock | Maximum | |||||||||
CONVERTIBLE PREFERRED STOCK | |||||||||
Conversion ratio | 125 | 125 | |||||||
Series A Preferred Stock | Subscription Agreements | |||||||||
CONVERTIBLE PREFERRED STOCK | |||||||||
Common stock offering, net of issuance costs (in shares) | 9,566 | ||||||||
Common stock offering, net of issuance costs | $ | $ 9,600,000 | ||||||||
Preferred stock shares authorized | 10,000 | 10,000 | |||||||
Preferred stock par value | $ / shares | $ 0.001 | $ 0.001 |
COMMON STOCK (Details)
COMMON STOCK (Details) | 1 Months Ended | 3 Months Ended | ||||||||||
Mar. 01, 2023 USD ($) shares | Feb. 23, 2023 item $ / shares shares | Jan. 30, 2023 USD ($) $ / shares shares | Feb. 28, 2023 USD ($) $ / shares shares | Jan. 31, 2023 USD ($) | Dec. 31, 2022 USD ($) $ / shares shares | Oct. 31, 2022 USD ($) $ / shares shares | Apr. 30, 2022 USD ($) $ / shares shares | Mar. 31, 2022 USD ($) shares | Mar. 31, 2023 USD ($) item $ / shares shares | Mar. 31, 2022 USD ($) $ / shares shares | Feb. 22, 2023 shares | |
COMMON STOCK | ||||||||||||
Number of proposals approved | item | 2 | |||||||||||
Common stock par value | $ / shares | $ 0.001 | $ 0.001 | $ 0.001 | |||||||||
Authorized shares | 500,000,000 | |||||||||||
Common stock shares authorized | 400,000,000 | 200,000,000 | 400,000,000 | 200,000,000 | ||||||||
Common stock number of votes | item | 1 | |||||||||||
Preferred stock shares authorized | 100,000,000 | 25,000,000 | 100,000,000 | 25,000,000 | ||||||||
Preferred stock par value | $ / shares | $ 0.001 | $ 0.001 | $ 0.001 | |||||||||
Number of shares of common stock | 40,764,706 | 7,481,747 | ||||||||||
Number of shares in each unit | 1 | |||||||||||
Number of warrants in each unit | 1 | |||||||||||
Threshold trading days for weighted average price calculation | 10 days | |||||||||||
Warrants issued to lenders | 2,667,678 | |||||||||||
Exercise price of warrants (in dollars per share) | $ / shares | $ 1.93 | $ 0.43 | ||||||||||
Warrant exercise (in shares) | 342,326 | 0 | ||||||||||
Proceeds from Warrant Exercises | $ | $ 3,000 | |||||||||||
Price per share (in dollar per share) | $ / shares | $ 0.01 | |||||||||||
Common stock offering, net of issuance costs | $ | $ 9,400,000 | 26,309,000 | $ 6,784,000 | |||||||||
Proceeds from issuance of common stock | $ | $ 26,600,000 | 5,100,000 | 26,562,000 | $ 6,787,000 | ||||||||
Proceeds from issuance of warrants | $ | $ 4,300,000 | $ 2,500,000 | ||||||||||
Dividends declared (in dollar per share) | $ / shares | $ 0 | $ 0 | ||||||||||
Common stock shares outstanding | 145,492,947 | 186,268,682 | ||||||||||
Weighted average price | $ / shares | $ 1.26 | |||||||||||
Aggregate purchase price | $ | $ 3,500,000 | |||||||||||
Exchange Agreement | ||||||||||||
COMMON STOCK | ||||||||||||
TeraClub shares converted to TeraWulf shares | 12,000,000 | |||||||||||
New Exchange Warrants | ||||||||||||
COMMON STOCK | ||||||||||||
Number of shares issued for warrant exercise | 12,000,000 | |||||||||||
New exchange warrants issued | 12,000,000 | |||||||||||
Strike price | $ / shares | $ 0.0001 | |||||||||||
Subscription agreements with February Common Stock Investors | ||||||||||||
COMMON STOCK | ||||||||||||
Number of shares of common stock | 1,386,467 | |||||||||||
Share price (in dollars per share) | $ / shares | $ 0.68 | |||||||||||
Proceeds from private placement | $ | $ 886,000 | |||||||||||
Private Placement | ||||||||||||
COMMON STOCK | ||||||||||||
Number of shares of common stock | 634,517 | 271,447 | ||||||||||
Percentage of Warrants Exercised | 50% | |||||||||||
Proceeds from Warrant Exercises | $ | $ 1,800,000 | |||||||||||
Percentage of warrants expired | 50% | |||||||||||
Common stock offering, net of issuance costs | $ | $ 5,000,000 | $ 2,100,000 | ||||||||||
Private Placement | December Warrants | ||||||||||||
COMMON STOCK | ||||||||||||
Warrants issued to lenders | 8,750,000 | |||||||||||
Exercise price of warrants (in dollars per share) | $ / shares | $ 0.40 | |||||||||||
Proceeds from issuance of common stock | $ | $ 5,400,000 | |||||||||||
Proceeds from issuance of warrants | $ | 1,300,000 | |||||||||||
Private Placement | Warrant subscription agreement | Warrant Investors | ||||||||||||
COMMON STOCK | ||||||||||||
Warrants issued to lenders | 1 | |||||||||||
Exercise price of warrants (in dollars per share) | $ / shares | $ 0.00001 | |||||||||||
Warrants issued | 2,380,952 | |||||||||||
Private Placement | Warrant subscription agreement | January 2023 Warrants | ||||||||||||
COMMON STOCK | ||||||||||||
Number of shares of common stock | 2,380,952 | |||||||||||
Proceeds from Issuance of Equity | $ | $ 2,500,000 | |||||||||||
Share price (in dollars per share) | $ / shares | $ 1.05 | |||||||||||
Number of shares issued for warrant exercise | 2,380,952 | |||||||||||
December Private Placement | ||||||||||||
COMMON STOCK | ||||||||||||
Aggregate offering price | $ | $ 6,740,000 | |||||||||||
Number of shares of common stock | 16,850,000 | |||||||||||
Number of warrants issued | 11,250,000 | |||||||||||
Price per share (in dollar per share) | $ / shares | $ 0.40 | |||||||||||
January Private Placement | ||||||||||||
COMMON STOCK | ||||||||||||
Price per share (in dollar per share) | $ / shares | $ 0.40 | |||||||||||
Common stock offering, net of issuance costs | $ | $ 1,750,000 | |||||||||||
Proceeds from Issuance of Equity | $ | $ 30,000,000 | |||||||||||
Percentage of Unexercised Warrants Replaced | 50% | |||||||||||
ATM Sales Agreement | ||||||||||||
COMMON STOCK | ||||||||||||
Number of shares of common stock | 559,622 | |||||||||||
Common stock offering, net of issuance costs | $ | $ 4,700,000 | |||||||||||
April ATM Sales Agreement | ||||||||||||
COMMON STOCK | ||||||||||||
Common stock par value | $ / shares | $ 0.001 | |||||||||||
Aggregate offering price | $ | $ 200,000,000 | |||||||||||
Common stock offering, net of issuance costs | $ | $ 190,000,000 | |||||||||||
Percentage of commission o gross proceed | 3% | |||||||||||
Underwriting Agreement | ||||||||||||
COMMON STOCK | ||||||||||||
Common stock par value | $ / shares | $ 0.001 | |||||||||||
Number of shares of common stock | 36,764,706 | 2,985,966 | ||||||||||
Proceeds from issuance of common stock | $ | $ 20,600,000 | |||||||||||
Share price (in dollars per share) | $ / shares | $ 0.68 | |||||||||||
Term of over allotment option | 30 days | |||||||||||
Number of additional shares granted | 5,514,705 | |||||||||||
Number of common stock elected to purchase | 4,000,000 | |||||||||||
Series A Preferred Stock | ||||||||||||
COMMON STOCK | ||||||||||||
Preferred stock shares authorized | 1 |
STOCK-BASED COMPENSATION (Detai
STOCK-BASED COMPENSATION (Details) | 3 Months Ended | |
Mar. 31, 2023 USD ($) D $ / shares shares | Mar. 31, 2022 USD ($) | |
STOCK-BASED COMPENSATION | ||
Stock-based compensation expense | $ | $ 876,000 | $ 0 |
Minimum | ||
STOCK-BASED COMPENSATION | ||
Requisite service period of grants | 1 year | |
Maximum | ||
STOCK-BASED COMPENSATION | ||
Requisite service period of grants | 3 years | |
Employee | Minimum | ||
STOCK-BASED COMPENSATION | ||
Requisite service period of grants | 1 year | |
Employee | Maximum | ||
STOCK-BASED COMPENSATION | ||
Requisite service period of grants | 3 years | |
Board of Directors And Employees [Member] | ||
STOCK-BASED COMPENSATION | ||
Unrecognized compensation cost | $ | $ 5,100,000 | |
Restricted Stock Units (RSUs) | ||
STOCK-BASED COMPENSATION | ||
Number of Shares, Unvested, Ending Balance | 10,813,741 | |
Number of shares outstanding (in shares) | 10,813,741 | |
Restricted Stock Units (RSUs) | Employee | ||
STOCK-BASED COMPENSATION | ||
Number of Shares, Unvested, Beginning Balance | 1,931,187 | |
Number of Shares, Granted | 4,920,000 | |
Number of sahres, vested | (20,232) | |
Number of Shares, Unvested, Ending Balance | 6,830,955 | |
Weighted-Average Grant-Date Fair Value, Unvested, Beginning Balance | $ / shares | $ 2.87 | |
Weighted-Average Grant-Date Fair Value, Granted | $ / shares | 0.36 | |
Weighted-Average Grant-Date Fair Value, Vested | $ / shares | 1.73 | |
Weighted-Average Grant-Date Fair Value, Unvested, Ending Balance | $ / shares | $ 1.07 | |
Number of shares outstanding (in shares) | 6,830,955 | |
Restricted Stock Units (RSUs) | Non-employee | ||
STOCK-BASED COMPENSATION | ||
Number of Shares, Unvested, Beginning Balance | 82,645 | |
Number of Shares, Granted | 3,970,564 | |
Number of sahres, vested | (70,423) | |
Number of Shares, Unvested, Ending Balance | 3,982,786 | |
Weighted-Average Grant-Date Fair Value, Unvested, Beginning Balance | $ / shares | $ 1.21 | |
Weighted-Average Grant-Date Fair Value, Granted | $ / shares | 0.54 | |
Weighted-Average Grant-Date Fair Value, Vested | $ / shares | 0.71 | |
Weighted-Average Grant-Date Fair Value, Unvested, Ending Balance | $ / shares | $ 0.55 | |
Number of shares outstanding (in shares) | 3,982,786 | |
Restricted Stock Units (RSUs) | Board of Directors And Employees [Member] | Employee | ||
STOCK-BASED COMPENSATION | ||
Recognized over a weighted average period | 10 months 24 days | |
Restricted Stock Units (RSUs) | Non Employees [Member] | Non-employee | ||
STOCK-BASED COMPENSATION | ||
Unrecognized compensation cost | $ | $ 2,100,000 | |
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 | $ | 2,940,000 | |
Number of consecutive trading days | D | 45 | |
Market Conditions Stock Price Based Restricted Stock Units | Non-employee | ||
STOCK-BASED COMPENSATION | ||
Number of Shares, Unvested, Ending Balance | 960,000 | |
Number of shares outstanding (in shares) | 960,000 | |
Number of consecutive trading days | D | 45 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) | 3 Months Ended | 12 Months Ended | |||
Apr. 27, 2021 USD ($) | Mar. 31, 2023 USD ($) | Mar. 31, 2022 USD ($) | Dec. 31, 2022 USD ($) item | Dec. 31, 2021 USD ($) item shares | |
RELATED PARTY TRANSACTIONS | |||||
Amount paid charged to selling, general and administrative | $ 2,898,000 | $ 2,816,000 | |||
Related Party Payment In Balance Sheet | 14,900,000 | $ 14,600,000 | |||
Cryptocurrency load deployment that requires additional share-base award compensation | item | 100 | ||||
Prepaid expenses | |||||
RELATED PARTY TRANSACTIONS | |||||
Amount paid charged to selling, general and administrative | 705,000 | 833,000 | |||
Due from related parties | |||||
RELATED PARTY TRANSACTIONS | |||||
Amount paid charged to selling, general and administrative | 4,100,000 | 3,000,000 | |||
Plant, plant and equipment, net | |||||
RELATED PARTY TRANSACTIONS | |||||
Amount paid charged to selling, general and administrative | 1,500,000 | 5,900,000 | |||
Development of bitcoin and organization and legal costs | |||||
RELATED PARTY TRANSACTIONS | |||||
Amount paid charged to selling, general and administrative | 2,200,000 | $ 2,200,000 | |||
Beowulf E&D | |||||
RELATED PARTY TRANSACTIONS | |||||
Amount paid charged to selling, general and administrative | 312,000 | 0 | |||
Common stock awards issued | shares | 0 | ||||
Cryptocurrency load deployment that requires additional share-base award compensation | item | 100 | ||||
Annual based fee payable | 8,460,000 | ||||
Beowulf E&D | Performance shares | |||||
RELATED PARTY TRANSACTIONS | |||||
Additional awards for every 100MW cryptocurrency mining load | $ 2,500,000 | ||||
Beowulf E&D | Services Agreement | |||||
RELATED PARTY TRANSACTIONS | |||||
Term of agreement | 5 years | ||||
Commons stock awards agreed to issue | $ 12,500,000 | ||||
Beowulf E&D | Services Agreement | Operating expenses. | |||||
RELATED PARTY TRANSACTIONS | |||||
Amount paid charged to selling, general and administrative | 258,000 | 0 | |||
Beowulf E&D | Services Agreement | Selling, general and administrative | |||||
RELATED PARTY TRANSACTIONS | |||||
Transaction amount | 3,200,000 | 1,500,000 | |||
Amount paid charged to selling, general and administrative | $ 2,900,000 | $ 1,100,000 | |||
Beowulf E&D | Development of bitcoin and organization and legal costs | |||||
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 | $ 0.0037 |