JOINT VENTURE (Tables)

6 Months Ended

Jun. 30, 2023

JOINT VENTURE

Schedule of reconciliation of 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 six months ended June 30, 2023 and 2022 follows (in thousands):

	Six Months Ended
	June 30,
	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		(1,736)		(24,965)
Investments in joint venture, including direct payments made on behalf of joint venture	$	(1,736)	$	(36,367)
Payment of Talen 50% share of Bitmain deposits	$	—	$	(11,402)
Other reimbursable payments		—		(220)
Reimbursable payments for deposits on plant and equipment made on behalf of joint venture or a joint venture partner	$	—	$	(11,622)
Talen reimbursement of 50% share of Bitmain deposits	$	—	$	11,402
Other reimbursable payments		—		138
Reimbursement of payments for deposits on plant and equipment made on behalf of joint venture or a joint venture partner	$	—	$	11,540

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	$	124,159	$	30,713	$	111,446	$	—	$	111,446

(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 June 30, 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 six months ended June 30,2023 and the condensed financial position as of June 30, 2023, of Nautilus

The condensed results of operations for the three and six months ended June 30, 2023 and 2022 and the condensed financial position as of June 30, 2023 and December 31, 2022 of Nautilus are summarized below (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
Condensed statement of operations information:
Revenue	$	32,717	$	—	$	41,823	$	—
Operating expense		27,889		2,169		40,026		3,745
Net income (loss)	$	4,828	$	(2,169)	$	1,797	$	(3,745)

	June 30, 2023 (1)		December 31, 2022 (1)
Condensed balance sheet information:
Current assets	$	21,380	$	28,986
Noncurrent assets		193,869		154,552
Total assets	$	215,249	$	183,538
Current liabilities	$	17,408	$	12,864
Noncurrent liabilities		27,658		—
Equity		170,183		170,674
Total liabilities and equity	$	215,249	$	183,538

(1) The condensed statement of operations information for the three and six months ended June 30, 2023 and the condensed balance sheet information as of June 30, 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.