10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549 

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022 

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________________ to ________________

Commission file number 001-40849

Mawson Infrastructure Group Inc.

(Exact name of registrant as specified in its charter)

Delaware	88-0445167
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

Level 5, 97 Pacific Highway, North Sydney NSW Australia 2060

(Address of principal executive offices, including zip code)

+61 2 8624 6130

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: 

Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001 per share	MIGI	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒  No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes ☒  No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☒	Smaller reporting company ☒	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ☐  No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

As of August 16, 2022, the issuer had a total of 81,249,768 shares of common stock, par value $0.001 per share, outstanding.

MAWSON INFRASTRUCTURE GROUP INC.

FORM 10-Q

FOR THE QUARTER ENDED JUNE 30, 2022

TABLE OF CONTENTS

Item		Page Number
Part I – Financial Information
1.	Financial Statements	1
2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
3.	Quantitative and Qualitative Disclosures about Market Risks	35
4.	Controls and Procedures	35
Part II – Other Information
1.	Legal Proceedings	37
1A.	Risk Factors	37
2.	Unregistered Sales of Equity Securities and Use of Proceeds	38
3.	Defaults Upon Senior Securities	38
4.	Mine Safety Disclosure	38
5.	Other Information	38
6.	Exhibits	39
	Signatures	40

i 

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

MAWSON INFRASTRUCTURE GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED BALANCE SHEETS

	June 30,			December 31,
	2022			2021
ASSETS	(unaudited)
Current assets:
Cash and cash equivalents	$	2,493,826		$	5,467,273
Prepaid expenses		5,292,034			332,154
Trade and other receivables		4,211,903			5,606,780
Cryptocurrencies		43,967			40,800
Total current assets		12,041,730			11,447,007
Property and equipment, net		148,938,221			76,936,850
Derivative asset		17,714,357			-
Equipment deposits		2,788,722			51,369,216
Financial assets		1,638,027			326,801
Security deposits		4,153,184			1,246,236
Operating lease right-of-use asset		4,570,100			3,968,262
Total assets	$	191,844,341		$	145,294,372
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Trade and other payables	$	47,046,288		$	7,746,988
Current portion of operating lease liability		1,451,655			1,222,382
Current portion of finance lease liability		29,643			8,105
Borrowings		19,473,292			11,095,388
Total current liabilities		68,000,878			20,072,863
Operating lease liability, net of current portion		3,218,546			2,962,765
Finance lease liability, net of current portion		99,046			38,764
Long-term borrowings		19,404,697			7,639,391
Total liabilities		90,723,167			30,713,783
Commitments and Contingencies (note 10)		-			-
Shareholders’ equity:
Additional paid-in capital; Common stock (120,000,000 authorized, 72,491,295 issued and outstanding $0.001 par value shares). Series A preferred stock (1,000,000 authorized shares; nil issued and outstanding as at June 30, 2022)		186,744,313			186,389,568
Accumulated other comprehensive income (loss)		(2,530,052	)		(521,094	)
Accumulated deficit		(82,952,860	)		(71,123,259	)
Total stockholders’ equity		101,261,401			114,745,215
Non-controlling interest		(140,227	)		(164,626	)
Total liabilities and stockholders’ equity	$	191,844,341		$	145,294,372

See Accompanying Notes to Unaudited Condensed Interim Consolidated Financial Statements.

1

MAWSON INFRASTRUCTURE GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

	For the three months ended June 30,						For the six months ended June 30,
	2022			2021			2022			2021
Revenues:
Cryptocurrency mining revenue		16,212,525			5,664,629			34,996,368			10,878,255
Hosting Co Location revenue		3,567,912			-			4,116,860			-
Sale of crypto currency mining equipment		-			280,038			91,545			2,157,651
Total revenues		19,780,437			5,944,667			39,204,773			13,035,906
Less: Cost of revenues (excluding depreciation)		14,359,072			294,140			22,771,433			2,666,921
Gross profit		5,421,365			5,650,527			16,433,340			10,368,985
Selling, general and administrative		9,431,088			3,697,217			15,908,034			6,329,180
LO2A write backs		-			-			-			23,963,050
Share based payments		936,235			5,559,495			1,326,844			20,354,897
Depreciation and amortization		16,023,817			2,533,242			29,826,849			3,848,142
Total operating expenses		26,391,140			11,789,954			47,061,727			54,495,269
Change in fair value of derivative asset		17,714,357			-			17,714,357			-
Loss from operations		(3,255,418	)		(6,139,427	)		(12,914,030	)		(44,126,284	)
Non-operating income/(expense):
Gain / (loss) on foreign currency transactions		1,657,055			(60,747	)		957,818			(722,425	)
Interest expense		(1,565,040	)		(464,039	)		(2,801,713	)		(714,701	)
Impairment of financial assets		(1,107,197	)		-			(1,107,197	)		-
Other income		1,864,968			315,353			1,889,415			694,480
Loss before income taxes		(2,405,632	)		(6,348,860	)		(13,975,707	)		(44,868,930	)
Income tax expense		-			-			-			-
Net Loss		(2,405,632	)		(6,348,860	)		(13,975,707	)		(44,868,930	)
Less: Net loss attributable to non-controlling interests		(288,229	)		(108,937	)		(522,648	)		(65,802	)
Net Loss attributed to Mawson Infrastructure Group shareholders		(2,117,403	)		(6,239,923	)		(13,453,059	)		(44,803,128	)
Net Loss per share, basic & diluted	$	(0.03	)	$	(0.12	)	$	(0.19	)	$	(0.95	)
Weighted average number of shares outstanding		71,598,552			50,264,283			71,790,772			47,298,702

See Accompanying Notes to Unaudited Condensed Interim Consolidated Financial Statements

2

MAWSON INFRASTRUCTURE GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

For the Three Months Ended June 30, 2022

	Common Stock (#)		Common Stock ($)		Additional Paid-in- Capital			Reserves			Accumulated Other Comprehensive Income/ (Loss)			Accumulated Deficit			Total Mawson Stockholders’ Equity			Non- controlling interest			Total Equity
Balance as of March 31, 2022		71,585,295		612,344		167,664,681			18,447,842			62,214			(82,458,914	)		104,328,167			(399,045	)		103,929,122
Issuance of common stock, stock based compensation		5,000		5		27,145			408,584			-			-			435,734			-			435,734
Issuance of warrants		-		-		-			500,500			-			-			500,500			-			500,500
Issuance of RSU’s and stock options		901,000		901		2,252,495			(2,252,500	)		-			-			896			-			896
Net loss		-		-		-			-			-			(2,117,403	)		(2,117,403	)		(288,229	)		(2,405,632	)
Other comprehensive income		-		-		-			-			(2,592,266	)		-			(2,592,266	)		13,028			(2,579,238	)
Non-controlling interest		-		-		(917,684	)		-			-			1,623,457			705,773			534,019			1,239,792
Balance as of June 30, 2022		72,491,295		613,250		169,026,637			17,104,426			(2,530,052	)		(82,952,860	)		101,261,401			(140,227	)		101,121,174

3

MAWSON INFRASTRUCTURE GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

For the Three Months Ended June 30, 2021

	Series A Preferred Stock (#)		Series A Preferred Stock ($)		Common Shares (#)			Common Stock* (#)		Common Stock ($)		Share Subscription Receivable			Additional Paid-in- Capital		Reserves		Accumulated Other Comprehensive Income/(Loss)			Accumulated Deficit			Total Mawson Stockholders’ Equity			Non- controlling interest			Total Equity
Balance as of March 31, 2021		178		-		-			48,673,357		486,440		(16,690	)		82,914,768		17,534,625		(5,957,154	)		(64,722,747	)		30,239,242			16,069			30,255,311
Late acceptance of Exchange of common stock of Cosmos Capital Limited for common stock of Wize Pharma Inc., adjusted to reflect the Exchange Ratio		-		-		-			5,055,813		50,558		-			-		-		-			-			50,558			-			50,558
Share based payments W Capital		-		-		-			-		-		-			-		5,535,900		-			-			5,535,900			-			5,535,900
Issuance of common stock at the price of $87.50		-		-		30,613			-		-		-			-		-		-			-			-			-			-
Other		-		-		-			-		-		-			-		-		-			43,138			43,138			-			43,138
Share based payment - Issuance of BIA		-		-		(30,613	)		190,098		1,901		-			-		-		-			-			1,901			-			1,901
Net loss		-		-		-			-		-		-			-		-		-			(6,239,923	)		(6,239,923	)		-			(6,239,923	)
Other comprehensive income		-		-		-			-		-		-			-		-		(81,116	)		-			(81,116	)		-			(81,116	)
Non-controlling interest		-		-		-			-		-		-			-		-		-			-			-			(108,937	)		(108,937	)
Balance as of June 30, 2021		178		-		-			53,919,268		538,899		(16,690	)		82,914,768		23,070,525		(6,038,270	)		(70,919,532	)		29,549,700			(92,868	)		29,456,832

4

MAWSON INFRASTRUCTURE GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

For the Six Months Ended June 30, 2022

	Common Stock (#)		Common Stock ($)		Additional Paid-in- Capital			Reserves			Accumulated Other Comprehensive Income/ (Loss)			Accumulated Deficit			Total Mawson Stockholders’ Equity			Non- controlling interest			Total Equity
Balance as of December 31, 2021		70,746,508		611,504		165,600,831			20,177,233			(521,094	)		(71,123,259	)		114,745,215			(164,626	)		114,580,589
Issuance of common stock, stock based compensation		18,787		20		134,879			408,584			-			-			543,483			-			543,483
Issuance of warrants		-		-		-			667,333			-			-			667,333			-			667,333
Issuance of RSU’s and stock options		1,726,000		1,726		4,208,611			(4,148,724	)		-			-			61,613			-			61,613
Net loss		-		-		-			-			-			(13,453,059	)		(13,453,059	)		(522,648	)		(13,975,707	)
Other comprehensive income		-		-		-			-			(2,008,958	)		-			(2,008,958	)		13,028			(1,995,930	)
Non-controlling interest		-		-		(917,684	)		-			-			1,623,458			705,774			534,019			1,239,793
Balance as of June 30, 2022		72,491,295		613,250		169,026,637			17,104,426			(2,530,052	)		(82,952,860	)		101,261,401			(140,227	)		101,121,174

5

MAWSON INFRASTRUCTURE GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

For the Six Months Ended June 30, 2021

	Series A Preferred Stock (#)		Series A Preferred Stock ($)		Common Shares (#)			Common Stock (#)		Common Stock ($)		Share Subscription Receivable			Additional Paid-in- Capital			Reserves		Accumulated Other Comprehensive Income/(Loss)			Accumulated Deficit			Total Mawson Stockholders’ Equity			Non- controlling interest			Total Equity
Balance as of December 31, 2020		-		-		7,539,275			-		-		(16,690	)		34,457,051			652,949		(1,341,826	)		(26,159,539	)		7,591,945			(27,066	)		7,564,879
Exchange of stock and Reverse recapitalization of Wize Pharma Inc		178		-		(7,539,275	)		46,132,357		461,324		-			(5,436,541	)		-		-			-			(4,975,217	)		-			(4,975,217	)
Issuance of common stock, net of offer costs, PIPE transaction		-		-		-			2,500,000		25,000		-			2,975,000			-		-			-			3,000,000			-			3,000,000
Issuance of convertible notes, net of offer costs		-		-		-			-				-			20,301,427			-		-			-			20,301,427			-			20,301,427
Issuance of common stock, exercise of warrants		-		-		30,613			41,000		116		-			-			12,417,576		-			-			12,417,692			-			12,417,692
Fair value of IPR&D acquired, net of Business Combination transaction costs		-		-		-			-		-		-			24,765,831			-		-			-			24,765,831			-			24,765,831
Issuance of RSU’s and stock options		-		-		(30,613	)		190,098		1,901		-			411,137			10,000,000		-			-			10,413,038			-			10,413,038
Fair value adjustment of LO2A intellectual property revenue sharing obligation		-		-		-			-		-		-			5,440,863			-		-			-			5,440,863			-			5,440,863
Other		-		-		-			-		-		-			-			-		-			43,135			43,135			-			43,135
Late acceptance of Exchange of common stock of Cosmos Capital Limited for common stock of Wize Pharma Inc., adjusted to reflect the Exchange Ratio		-		-		-			5,055,813		50,558		-			-			-		-			-			50,558						50,558
Net loss		-		-		-			-		-		-			-			-		-			(44,803,128	)		(44,803,128	)					(44,803,128	)
Other comprehensive income		-		-		-			-		-		-			-			-		(4,696,444	)		-			(4,696,444	)					(4,696,444	)
Non-controlling interest		-		-		-			-		-		-			-			-		-			-			-			(65,802	)		(65,802	)
Balance as of June 30, 2021		178		-		-			53,919,268		538,899		(16,690	)		82,914,768			23,070,525		(6,038,270	)		(70,919,532	)		29,549,700			(92,868	)		29,456,832

See Accompanying Notes to Unaudited Condensed Interim Consolidated Financial Statements

6

MAWSON INFRASTRUCTURE GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

	For the six months ended June 30,
	2022			2021
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(13,975,707	)	$	(44,868,930	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		29,826,849			3,848,141
LO2A write offs		-			23,963,050
Lease expense		809,130			-
Foreign exchange gain		137,758			1,569,278
Change in fair value of derivative asset		(17,714,357	)
Sale of intellectual property		(1,465,829	)
Share based payments		1,326,844			20,354,898
Loss on disposal of fixed assets		-			307,100
Interest expense		138,293			654,004
Investment expense		-			131,056
Non-controlling interest		1,239,793			-
Trade and other receivables		1,394,878			141,709
Other current assets		(7,869,996	)		(809,735	)
Trade and other payables		39,299,304			2,373,896
Net cash provided by operating activities		33,146,960			7,664,467
CASH FLOWS FROM INVESTING ACTIVITIES
Net payment for the purchase of property and equipment		(21,100,867	)		(12,705,500	)
Investment in financial assets		-			(341,810	)
Payment of fixed asset deposits		(32,054,326	)		(13,018,320	)
Net cash used in investing activities		(53,155,193	)		(26,065,630	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from common share issuances		51,524			1,334,157
Proceeds from convertible notes		-			21,487,391
Payments of capital issuance costs		-			(2,229,096	)
Proceeds from borrowings		26,581,467			1,423,064
Advances made to external companies		-			(42,210	)
Repayment of lease liabilities		(937,008	)		-
Repayments of borrowings		(6,182,245	)		(722,518	)
Net cash provided by financing activities		19,513,738			21,250,788
Effect of exchange rate changes on cash and cash equivalents		(2,478,952	)		(348,001	)
Net (decrease)/increase in cash and cash equivalents		(2,973,447	)		2,501,624
Cash and cash equivalents at beginning of period		5,467,273			1,112,811
Cash and cash equivalents at end of period	$	2,493,826		$	3,614,435

See Accompanying Notes to Unaudited Condensed Interim Consolidated Financial Statements

7

MAWSON INFRASTRUCTURE GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1 – GENERAL

General

Mawson Infrastructure Group, Inc. (the “Company” or “Mawson” or “we”), formerly known as Wize Pharma, Inc, and before that, known as OphthaliX Inc., was incorporated in the State of Delaware on February 10, 2012.

The accompanying consolidated financial statements, including the results of the Company’s subsidiaries: Mawson Infrastructure Group Pty Ltd (“Mawson AU”, previously known as Cosmos Capital Limited), Cosmos Trading Pty Ltd, Cosmos Infrastructure LLC, Cosmos Manager LLC, MIG No.1 Pty Ltd, Mawson AU Limited (incorporated June 8, 2022), Luna Squares LLC, Luna Squares Texas LLC (formed January 27, 2022), Luna Squares Repairs LLC, Luna Squares Property LLC and Mawson Mining LLC (collectively referred to as the “Group”), have been prepared by the Company, pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) and in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). Wize NC Inc, Occuwize Ltd and Wize Pharma Ltd are additional subsidiaries of Mawson, however these companies have not been consolidated into the financial statements as these companies are subject to contingent value rights (“CVR”), further described in NOTE 10.

These consolidated, condensed unaudited interim financial statements should be read in conjunction with the audited consolidated financial statements of the Group as of December 31, 2021, and the notes thereto, included in the Company’s Annual Report on Form 10-K filed with SEC on March 21, 2022. Accordingly, they do not include all the information and footnotes required by U.S GAAP for complete financial statements. The results of the interim period are not necessarily indicative of the results to be expected for the full year ended December 31, 2022. These consolidated, condensed interim financial statements reflect all adjustments which, in the opinion of management, are necessary to present fairly the financial position, the results of operations and cash flows of the Company for the periods presented.

Mawson, through its subsidiaries, is a ‘Digital Asset Infrastructure’ business, which owns and operates modular data centers (“MDCs”) based in the United States and Australia. As at June 30, 2022 Mawson owned and had ordered 35,329 Application-Specific Integrated Circuit (“ASIC”) computers known as “Miners,” specifically focused on the SHA-256 algorithm, from a variety of manufacturers, including Bitmain Technology Holding Company (“Bitmain”), Canaan Creative (HK) Holdings Limited (“Canaan”) and Shenzhen MicroBT Electronics Technology Co., Ltd (“Whatsminer”).

Going Concern

For the six-month period ending June 30, 2022, the Company incurred a loss after tax of $13.98 million, and as at June 30, 2022 had net current liabilities of $55.96 million and had an accumulated deficit of $82.95 million. The Company’s cash position at June 30, 2022, was $2.50 million. These conditions raise substantial doubt upon the Company’s ability to continue as a going concern for at least a year from the date of approval of these unaudited consolidated financial statements.

Management of the Company believes that there are reasonable grounds to conclude that the Company will continue as a going concern after having regard for the following factors.

The Company’s plans include improving profitability and generating sufficient cash flow from operations.

Management of the Company is of the opinion that the Company can continue to access adequate debt and equity funding to meet its working capital requirements. In July 2022, the Company raised $3.60 million through an issue of secured convertible promissory notes and an aggregate of $5.62 million of net proceeds from the issuance of shares and warrants. The Company has the ability through its At the Market Offering Agreement (the “ATM Agreement”) with H.C. Wainwright & Co., LLC (“Wainwright”), to sell shares of our common stock with an aggregate sales price of up to $100 million. To the extent the Group were to raise additional capital or debt, this could cause additional dilution to our current stockholders. The terms of any future capital raise or debt issuance and the costs of any financing are uncertain. There are no assurances that the Group would be able to raise additional financing when needed or that it would be able to do so on favourable terms.

Based on internally prepared forecast cash flows which take into consideration what management considers to be reasonable scenarios given the inherent risks and uncertainties, combined with existing cash balances, management believes that the Company will be able to meet its obligations as they fall due for at least one year from the date of approval of these unaudited consolidated financial statements.

Accordingly, management of the Company believe that it is appropriate to prepare the Group’s financial statements on a going concern basis. However, should the Company be unable to source sufficient funding through the factors noted above, the Company may not be able to realize assets at their recognized values and extinguish its liabilities in the normal course of business at the amounts stated in these unaudited consolidated financial statements.

These unaudited consolidated financial statements do not include any adjustments relating to the recoverability and carrying amounts of assets and the amounts of liabilities should the Company be unable to continue as a going concern and meet its obligations and debts as and when they fall due.

8

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation and basis of preparation

The accompanying consolidated financial statements of the Company include the accounts of the Company and its wholly or majority owned and controlled subsidiaries, other than those subsidiaries subject to the CVR described more in NOTE 10. Intercompany investments, balances and transactions have been eliminated in consolidation. Non–controlling interests represent the minority equity investment in the Company’s subsidiaries, plus the minority investors’ share of the net operating results and other components of equity relating to the non–controlling interest.

Any changes in the Company’s ownership interest in a consolidated subsidiary, through additional equity issuances by the consolidated subsidiary or from the Company acquiring the shares from existing shareholders, in which the Company maintains control is recognized as an equity transaction, with appropriate adjustments to both the Company’s additional paid-in capital and the corresponding non-controlling interest.

On March 9, 2021, Mawson AU was acquired by the Company. For accounting purposes, this was accounted for as a reverse asset acquisition with Mawson AU as the accounting acquirer (refer to significant accounting policies below). The result of which is that these financial statements are taken to be a continuation of Mawson AU’s financial statements, with the Company incorporated within the acquisition and therefore the historical financial information of Mawson AU (then known as Cosmos Capital Limited) prior to March 9, 2021, became the historical financial information of Mawson AU, which have been consolidated into the financial statements of the Company. 

Use of Estimates and Assumptions

The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported in the financial statements and accompanying notes. The Company evaluates on an ongoing basis its assumptions. The Company’s management believes that the estimates, judgments and assumptions used are reasonable based upon information available at the time they are made.

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These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the consolidated financial statements, and the reported amounts of income and expenses during the reporting periods. Actual results could differ from those estimates. The Company has considered the following to be significant estimates made by management, including but not limited to, going concern assumptions, estimating the useful lives of fixed assets, realization of long-lived assets, unrealized tax positions and the realization of digital currencies, valuing the derivative asset classified under Level 3 fair value hierarchy, business combinations, reverse asset acquisition, and the contingent obligation with respect to future revenues.

Critical Accounting Policies

Critical accounting policies are described in the consolidated financial statements for Mawson included in the Company’s Annual Report on Form10-K filed with SEC on March 21, 2022. There have been some changes to critical accounting policies in the six months period ended June 30, 2022. The reverse asset acquisition accounting policy which is no longer considered to be a critical accounting policy and has therefore been included in significant accounting policies and the fair value of financial instruments has been moved from significant accounting policies to critical accounting policies.

Revenue Recognition – Digital asset mining revenue

The Company recognizes revenue under ASC 606, Revenue from Contracts with Customers. The core principle of ASC 606 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. Five steps are required to be followed in evaluating revenue recognition: (i) identify the contract with the customer; (ii) identity the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price; and (v) recognize revenue when or as the entity satisfied 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).

There is currently no specific definitive guidance in U.S. GAAP or alternative accounting frameworks for the accounting of managing digital currencies and management has exercised significant judgement in determining appropriate accounting treatment for the recognition of revenue for such operations.

The Company has entered into a contract with mining pools and has undertaken the performance obligation of providing computing power in exchange for non-cash consideration in the form of cryptocurrency. The provision of computing power is the only performance obligation in the Group’s contract with its pool operators. In certain pools the amount of reward for computing power depends on the pool’s success in mining blocks. In other pools, the amount of reward includes no such contingency, although the fees payable to such pools are typically higher as a result. Where the consideration received is variable (for example, due to payment only being made upon successful mining), it is recognized when it is highly probable that the variability is resolved, which is generally when the cryptocurrency is received.

The Company measures the non-cash consideration received at the fair market value of the cryptocurrency received. Management estimates fair value on a daily basis, as the quantity of cryptocurrency received multiplied by the price quoted on the crypto exchanges that the Company uses to dispose of cryptocurrency on the day it was received.

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Property and equipment

Property and equipment are stated at cost, net of accumulated depreciation. The cost includes any cost of replacing part of the property and equipment with the original cost of the replaced part being derecognized. All other repair and maintenance costs are recognized in profit or loss incurred. The present value of the expected cost for the decommissioning of an asset after its use is included in the cost of the respective asset if the recognition criteria for a provision are met. Property, plant and equipment transferred from customers is initially measured at the fair value at the date on which control is obtained.

The depreciable amount of fixed assets is depreciated on a straight-line or declining balance basis based on the asset classification, over their useful lives to the economic entity commencing from the time the assets arrive at their destination where they are ready for use. Depreciation is calculated over the following estimated useful lives:

Asset class	Useful life	Depreciation Method
Fixtures and Fittings	5 years	Straight-Line
Plant and equipment	10 years	Straight-Line
Modular data center	5 years	Declining
Motor Vehicles	5 years	Straight-Line
Computer equipment	3 years	Straight-Line
Processing Machinery (Miners)	2 years	Declining
Transformers	15 years	Straight-Line
Leasehold improvements	10 years	Straight-Line

An item of property, plant and equipment and any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income statement when the asset is derecognized.

The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.

The Company changed its policy in relation to freight costs in relation to processing machines with effect from October 1, 2021. Prior to this date these costs were expensed to the statement of operations and profit and loss, and afterwards these costs are capitalized into processing machinery. This change resulted in an increase in processing machines in the balance sheet of $2,978,232 at June 30, 2022, and an increase in the depreciation charge to the six months to June 30, 2022 statement of operations and profit and loss of $84,735 over the prior treatment.

The Company’s long-lived assets are reviewed for impairment in accordance with Accounting Standards Codification (“ASC”) 360, “Property, Plant and Equipment”, whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by the assets. If such asset is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds its fair value. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. During the six month periods ended June 30, 2022, and 2021, no impairment losses have been identified.

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Fair value of financial instruments:

The Company accounts for financial instruments under FASB Accounting Standards Codification Topic (“ASC”) 820, Fair Value Measurements. This statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements, ASC 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels as follows:

Level 1 — quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 — observable inputs other than Level 1, quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, and model-derived prices whose inputs are observable or whose significant value drivers are observable; and

Level 3 — assets and liabilities whose significant value drivers are unobservable. Observable inputs are based on market data obtained from independent sources, while unobservable inputs are based on the Company’s market assumptions. Unobservable inputs require significant management judgment or estimation. In some cases, the inputs used to measure an asset or liability may fall into different levels of the fair value hierarchy. In those instances, the fair value measurement is required to be classified using the lowest level of input that is significant to the fair value measurement. Such determination requires significant management judgment.

	Fair value measured at June 30, 2022
	Total carrying value at June 30, 2022		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Derivative asset	$	17,714,357	$	-	$	-	$	17,714,357
Financial assets	$	1,638,027	$	172,198	$	-	$	1,465,829

	Fair value measured at December, 2021
	Total carrying value at December, 2021		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Derivative asset	$	-	$	-	$	-	$	-
Financial assets	$	326,801	$	326,801	$	-	$	-

Level 3 Assets: 

Power Supply Agreement

During the quarter ended June 30, 2022, the Company recorded a derivative asset related to its Power Supply Agreement with Energy Harbor LLC, the energy supplier to the Company’s Pennsylvania Facility. The Power Supply Agreement was classified as a derivative asset and measured at fair value on the date of Power Supply Agreement, with changes in fair value recognized in the accompanying unaudited condensed consolidated statements of operations. The estimated fair value of the Company’s derivate asset is classified in Level 3 of the fair value hierarchy due to the significant unobservable inputs utilized in the valuation. Specifically, our discounted cash flow estimation models contain quoted commodity exchange spot and forward prices and are adjusted for basis spreads for load zone-to-hub differentials through the term of the Power Supply Agreement, which ends in December 2026. In addition, the Group adopted a further discount rate utilized of approximately 20% above the terminal value of the observable market inputs, but also includes unobservable inputs based on qualitative judgment related to company-specific risk factors. The terms of the Power Supply Agreement require pre-payment of collateral, calculated as forward cost based on the market cost rate of electricity versus the fixed price stated in the contract.

Tasmania Data Infrastructure Pty Ltd (“TDI”)

During June 2022 Mawson AU Limited entered into a License and Services Agreement with TDI in exchange for 42,562,432 fully paid issued shares in TDI, this is held at fair value of $1.47 million as at June 30, 2022 the fair value uses unobservable inputs.

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Level 1 Assets: 

The company holds 50 million shares in DXN Limited (“DXN”), an Australian Securities Exchange (“ASX”) listed company. This is recorded at fair value with changes in fair value recognized in the accompanying unaudited condensed consolidated statements of operations. The fair value of the DXN investment is classified in Level 1 of the fair value hierarchy as it is quoted on an active market, that being the ASX. 

Accounting for Power Supply Contract

In June 2022, the company entered into a Power Supply Agreement with Energy Harbor LLC to provide the delivery of a fixed portion of the total amount of electricity for a fixed price through to December 2026. If the Pennsylvania site uses more electricity than contracted, the cost of the excess is incurred at a new price quoted by Energy Harbor.

While the Company manages operating costs at the Pennsylvania Facility in part by periodically selling unused or uneconomical power back to the market, we do not consider such actions trading activities. That is, the Company does not engage in speculation in the power market as part of our ordinary activities. Because the sale of any electricity under a curtailment program allows for net settlement, we have determined the Power Supply Agreement meets the definition of a derivative under ASC 815, Derivatives and Hedging, (“ASC 815”). However, because the Company has the ability to sell the power back to the grid rather than take physical delivery, physical delivery is not probable through the entirety of the contract and therefore, we do not believe the normal purchases and normal sales scope exception applies to the Power Supply Agreement. Accordingly, the Power Supply Agreement (the non-hedging derivative contract) is recorded at estimated fair value each reporting period with the change in the fair value recorded in change in fair value of derivative asset in the consolidated statements of operations (refer to fair value of financial instruments policy).

Share based payments

The Company follows FASB Codification Topic ASC 718-10 Compensation-Stock Compensation. The Company expenses stock-based compensation to employees and non-employees over the requisite service period based on the estimated grant-date fair value of the awards. The Company determines the grant date fair value of the restricted stock units (“RSUs”) and options using the Black-Scholes option-pricing model. The assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment. These assumptions are the expected stock volatility, the risk–free interest rate, the expected life of the option, the dividend yield on the underlying stock and the expected forfeiture rate. Expected volatility computes stock price volatility over expected terms based on its historical common stock trading prices. Risk–free interest rates are calculated based on the implied yield available on U. S. 10-year Treasury bond.

Significant Accounting Policies

Revenue Recognition - Hosting Co-location revenue

The Company provides power for our co-location hosting customers on a variable basis which is received monthly from the customer based on the power usage at the rate outlined in each customer contract.

We recognize variable power revenue each month as the uncertainty related to the consideration is resolved, power is provided to our customers, and our customers utilize the power (the customer simultaneously receives and consumes the benefits of the Company’s performance).

The customer contracts contain performance obligations, variable consideration in such contracts to be allocated to and recognized in the period to which the consideration relates. Usually this is when it is invoiced, rather than obtaining an estimation of variable consideration at the beginning of the customer contracts.

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Customers also are invoiced a fixed monthly fee for maintenance services which include, cleaning, cabling and other services to maintain the customers’ equipment.

Revenue Recognition - Sale of crypto currency mining equipment

Crypto currency mining equipment sales revenue includes revenues related to the sale of Miners. This is recognized as revenue upon delivery to the customer, which is when the control of the Miner transfers. Payments are typically received at the point control transfers or in accordance with payment terms customary to the business.

Revenue recognition – equipment sales

The Company earned revenues from the sale of earlier generation cryptocurrency mining units and modular data centers that have been assembled or refurbished for resale (collectively “Hardware”). Revenue from the sale of Hardware is recognized when all of the following conditions are satisfied: (i) persuasive evidence of a sales arrangement exists, (ii) the sales terms are fixed or determinable, (iii) title and risk of loss have transferred, and (iv) payment is received. At the date of sale, the net book value is expensed in cost of revenues.

Cost of revenues:

Cost of revenue consists primarily of expenses that are directly related to providing the Company’s service to its paying customers. These primarily consist of costs associated with operating our co-location facilities such as direct power costs, energy costs (including any carbon offset acquired during the year), freight costs and material costs related to cryptocurrency mining.

Research and development expenses:

Research and development expenses are charged to the statement of comprehensive loss as incurred.

Income taxes:

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance may be established to reduce the deferred tax asset to the level at which it is “more likely than not” that the tax asset or benefits will be realized. Realization of tax benefits of deductible temporary differences and operating loss carryforwards depends on having sufficient taxable income of an appropriate character within the carryback or carryforward periods.

The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained upon review by the taxing authority. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs.

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Functional currency:

All subsidiaries of Company have a functional currency of United States dollar (“USD”) with the exceptions of Mawson Infrastructure Group Pty Ltd, MIG No.1 Pty Ltd, Cosmos Trading Pty Ltd and Mawson AU Limited whose functional currency is the Australian Dollar (“AUD”). The financial statements of foreign businesses have been translated into USD at current exchange rates for balance sheet items and at the average rate for income statement items. Translation of all the consolidated companies’ financial records into USD is required due to the reporting currency for these consolidated financial statements presented as USD and the functional currency of the parent company being that of AUD. Translation adjustments are accumulated in other comprehensive loss. Revenue and expense accounts are converted at prevailing rates throughout the year. Gains or losses on foreign currency transactions and translation adjustments in highly inflationary economies are recorded in income in the period in which they are incurred.

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 is composed of the chief executive officer. We currently operate in one segment surrounding our cryptocurrency mining operation.

Cash and cash equivalents:

Cash and cash equivalents include cash on hand, deposits held at call with financial institutions, cash held with digital currency exchanges, and other short-term and highly liquid investments that are readily convertible to known amounts of cash and have original maturities of three months or less.

Digital Currencies

Digital currencies are included in current assets in the consolidated balance sheets. Digital currencies are classified as indefinite-lived intangible assets in accordance with ASC 350, Intangibles - Goodwill and Other, and are accounted for in connection with the Company’s revenue recognition policy detailed above.

The following table presents the Company’s digital currency (Bitcoin) activities for the three months and six months ended June 30, 2022:

	Three months to June 30, 2022			Six months to June 30, 2022
Opening number of Bitcoin held as at March 31, 2022 and December 31, 2021		0.00			0.92
Number of Bitcoin added		489.60			948.27
Number of Bitcoin sold		(487.39	)		(946.98	)
Closing number of Bitcoin held as at June 30, 2022		2.21			2.21

Digital currency is not amortized but assessed for impairment annually, or more frequently, when events or changes in circumstances occur indicating that it is more likely than not that the indefinite-lived asset is impaired. Impairment exists when the carrying amount exceeds its fair value. In testing for impairment, the Company has the option to first perform a qualitative assessment to determine whether it is more likely than not that an impairment exists. If it is determined that it is not more likely than not that an impairment exists, a quantitative impairment test is not necessary. If the Company concludes otherwise, it is required to perform a quantitative impairment test. 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.

The Company’s policy is to dispose of production at the earliest opportunity, therefore the holding period is minimal, usually no more than a few days. Due to the short period which Bitcoin are held prior to sale and the consequent small numbers held, the risk of impairment is not material.

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Equipment deposits:

The Company records a prepaid expense for costs paid but not yet incurred. Those expected to be incurred within one year are recognized and shown as equipment deposits. Equipment deposits result from advance payments to suppliers for goods to be received in the future. Equipment deposits are initially recognized as assets at the date the amount is paid, and are subsequently recorded as equipment as the Company takes delivery and control of the equipment from the supplier. Amounts are recognized initially at the amount of the unconditional consideration. They are subsequently measured at cost, less loss allowance.

Reverse Asset Acquisition:

On March 9, 2021, the Company acquired the shares of Cosmos Capital Limited (now known as Mawson Infrastructure Group Pty Ltd and referred to herein as Mawson AU) in a stock for stock exchange. This transaction has been accounted for as a reverse asset acquisition. This transaction reverse asset acquisition and the associated impact is referred to as the “Cosmos Transaction”.

Under the terms of the Cosmos Transaction Bid Implementation Agreement, the Company was required to make share-based payments consisting of up to 40,000,000 shares under an Incentive Compensation Program and warrants issued to HC Wainwright as a fee related to the acquisition by Mawson of Mawson AU. In addition, Mawson AU had an outstanding obligation to W Capital Advisors Pty Ltd (“W Capital”) for options over the equity of Mawson AU which was terminated for consideration of warrants over the Company’s shares being issued to W Capital.

Concentrations of credit risk:

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash, cash equivalents, marketable securities. Cash and cash equivalents and restricted bank deposits are invested in banks in Australia and the U.S. If the counterparty completely failed to perform in accordance with the terms of the contract, is the maximum amount of loss the Company would be the balance. Management believes that the financial institutions that hold the Company’s investments are financially sound and, accordingly, minimal credit risk exists with respect to these investments. The Company has no off-balance-sheet concentration of credit risk such as foreign exchange contracts, option contracts or other foreign hedging arrangements.

Legal and other contingencies: 

The Company accounts for its contingent liabilities in accordance with ASC 450 “Contingencies”. A provision is recorded when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. With respect to legal matters, provisions are reviewed and adjusted to reflect the impact of negotiations, estimated settlements, legal rulings, advice of legal counsel and other information and events pertaining to a particular matter. Legal costs incurred in connection with loss contingencies are expensed as incurred. As of June 30, 2022, the Company is not a party to any litigation that would reasonably be expected to have a material adverse effect on the Company’s business, financial position, results of operations or cash flows.

Leases:

The Company accounts for its leases under ASC 842, Leases which was effective January 1, 2019. The Company determines if an arrangement is a lease at inception. Using ASC 842 leases are classified as operating or finance leases on the Balance Sheet as a right of use (“ROU”) assets and lease liabilities within current liabilities and long-term liabilities on our consolidated balance sheet. ROU assets and lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. The Company’s lease does not provide an implicit rate and therefore the Company measured the ROU asset and lease obligation based upon the present value of future minimum lease payments. The Company’s incremental borrowing rate is estimated based on risk-free discount rate for the lease, determined using a period comparable with that of the lease term and in a similar economic environment. The lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise such options. The Company does not record leases on the consolidated balance sheets with a term of one year or less. The Company does not separate lease and non-lease components but rather account for each separate component as a single lease component for all underlying classes of assets. Where leases contain escalation clauses, rent abatements, or concessions, such as rent holidays and landlord or tenant incentives or allowances, the Company applies them in the determination of straight-line operating lease cost over the lease term.

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Recent Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (FASB) or other standard setting bodies and adopted by the Company as of the specified effective date. For information with respect to recent accounting pronouncements, see Note 2 to the consolidated financial statements for Mawson as of December 31, 2021, included in the Company’s Annual Report on Form 10-K filed with SEC on March 21, 2022, recent accounting pronouncements since that date include:

In March 2022, the FSAB issued ASU update 2022-01—Derivatives and Hedging (Topic 815): Fair Value Hedging—Portfolio Layer Method. The adoption of ASU 2021-01 did not have a material impact on the Company’s financial statements or disclosures.

In March 2022, the FSAB issued ASU 2022-02—Financial Instruments—Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures. The adoption of ASU 2022-02 did not have a material impact on the Company’s financial statements or disclosures.

In June 2022, the FSAB issued ASU 2022-03—Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions. The adoption of ASU 2022-03 did not have a material impact on the Company’s financial statements or disclosures.

NOTE 3 – BASIC AND DILUTED NET LOSS PER SHARE

Net loss per common share is calculated in accordance with ASC Topic 260: Earnings Per Share (“ASC 260”). Basic loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. The computation of diluted net loss per share does not include dilutive common stock equivalents in the weighted average shares outstanding, as they would be anti-dilutive.

Securities that could potentially dilute loss per share in the future that were not included in the computation of diluted loss per share as at June 30, 2022 and 2021 are as follows:

	As at June 30,
	2022		2021
Warrants to purchase common stock		6,391,667		1,698,727
Options to purchase common stock		29,459		-
Mandatory convertible notes to exchange common stock		-		6,362,690
Restricted Stock-Units (“RSUs”) issued under a management equity plan		2,449,725		4,000,000
		8,870,851		12,061,417

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The following table sets forth the computation of basic and diluted loss per share:

	For the three months ended June 30,						For the six months ended June 30,
	2022			2021			2022			2021
Net Loss attributable to common shareholders	$	(2,117,403	)	$	(6,239,923	)	$	(13,453,059	)	$	(44,803,128	)
Denominator:
Weighted average common shares - basic and diluted		71,598,552			50,264,283			71,790,772			47,298,702
Loss per common share - basic and diluted	$	(0.03	)	$	(0.12	)	$	(0.19	)	$	(0.95	)

Comparative weighted average common shares have been revised by the ratio of Mawson AU to the Company shares exchanged in the reverse asset acquisition in March 2021. Pursuant to that certain Certificate of Amendment to the Certificate of Incorporation of the Company dated August 11, 2021, Mawson executed a 10-for-1 reverse stock split of its outstanding common stock and reduced its authorized common stock to 120,000,000 shares, as set forth in the Company’s Current Report on Form 8-K filed August 16, 2021. 

NOTE 4 – DEPOSIT, PROPERTY AND EQUIPMENT

On August 9, 2021, Cosmos Infrastructure LLC entered into a second Long-Term Purchase Contract with Canaan for the purchase of 15,000 next generation Avalon A1246 ASIC Miners. The average purchase price per unit is $4,908 for a total purchase price of $73,620,000. The final shipment for contract was received during May 2022, in total there were 11,000 Miners delivered, there was a final adjustment to the purchase price based on the actual tera hash and number of Miners delivered based on the agreed price per tera hash under the terms of the contract. The purchase price adjustment resulted in a $0.3 million reduction in the purchase price, this is due to be received in cash from Canaan.

During the six months ended June 30, 2022, $32,054,326 cash was paid for equipment which was recorded as a either deposit or within property plant and equipment on the balance sheet.

NOTE 5 – LEASES

Luna Squares LLC leases a 16.35-acre lot in Georgia from the Development Authority of Washington County. The lease term was originally for 1 acre from May 1, 2020, until April 30, 2023. An amendment to the lease and exercise of option to lease four additional acres was signed and became effective February 23, 2021. A further amendment to the lease and exercise of option to lease was signed and became effective August 24, 2021. The Lease Amendment covers an additional 11.35 acres of the property, bringing the total to 16.35 acres under the lease. It also includes 5, 3-year extension options bringing the total lease period to run potentially until 2038.

The Company leases the headquarters of its business operations at Level 5, 97 Pacific Highway, North Sydney NSW 2060 Australia, being 1,076 square feet of office space held under a license agreement.

The Company leases 6-acres of land in Pennsylvania which began in October 2021 for thirty-six months with the option to execute four additional three-year extensions.

On March 16, 2022, Luna Squares LLC entered into a lease with respect to a property in the City of Sharon, Mercer County, Pennsylvania with Vertua Property, Inc. (a related entity – refer to note 12 for details). The term of the lease is for 5 years, with 2 options to extend for 5 years each.

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During May 2022, Luna Square Texas LLC entered into four lease agreements to lease 11 acres of land in Texas for a period of five years.

Other than the foregoing leases, the Company does not lease any material assets. The Company believes that these offices and facilities are suitable and adequate for its operations as currently conducted and as currently foreseen. In the event additional or substitute offices and facilities are required, the Company believes that it could obtain such offices and facilities at commercially reasonable rates.

The Company’s lease costs recognized in the Consolidated Statements of Income and Comprehensive Loss consist of the following:

	For the three months ended June 30,				For the six months ended June 30,
	2022		2021		2022		2021
Operating lease charges (1)	$	434,977	$	24,557	$	802,112	$	35,780
Finance lease charges:
Amortization of right-of-use assets		8,094		-		12,396		-
Interest on lease obligations	$	2,468	$	-	$	3,946	$	-

⁽¹⁾ Included in Selling, General & Administrative Expenses.

The following is a schedule of the Company’s lease liabilities by contractual maturity as of June 30, 2022:

	Operating leases			Finance Leases
2023	$	1,823,308		$	38,248
2024		1,799,315			38,248
2025		862,083			38,248
2026		553,715			29,352
2027		281,105			4,818
Total undiscounted lease obligations		5,319,526			148,914
Less imputed interest		(649,325	)		(20,225	)
Total present value of lease liabilities		4,670,201			128,689
Less current portion of lease liabilities		1,451,655			29,643
Non-current lease liabilities	$	3,218,546		$	99,046

Other lease information as of June 30,2022:

	Operating leases			Finance Leases
Operating cash flows from operating and finance leases	$	922,332		$	14,676
Weighted-average remaining lease term – operating and finance leases (years)		3.21			3.88
Weighted-average discount rate – operating and leases (%)		8.0	%		7.5	%

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NOTE 6 – PROPERTY AND EQUIPMENT

Property and equipment, net, consisted of the following:

	June 30, 2022			December 31, 2021
Plant and equipment		6,583,193			1,046,866
Computer equipment		469,966			216,099
Furniture & fixtures		29,851			31,474
Processing machines (Miners)		144,010,826			81,341,098
Modular data center		21,678,051			9,819,796
Motor Vehicles		327,053			250,425
Transformers		6,978,071			1,190,609
Low-cost assets		872,612			246,154
Assets under construction		13,630,192			1,008,001
Leasehold improvements		360,000			-
Total		194,939,815			95,150,522
Less: Accumulated depreciation		(46,001,594	)		(18,213,672	)
Property and equipment, net		148,938,221			76,936,850

Depreciation and amortization expense for the three month period ended June 30, 2022 and 2021 was $16,023,817 and $2,533,242, respectively. Depreciation and amortization expense for the six month period ended June 30, 2022 and 2021 was $29,826,849 and $3,848,142, respectively. There were no impairment charges recognized for property and equipment for six month period ended June 30, 2022, or June 30, 2021. 

NOTE 7 – FINANCIAL ASSETS

 

During June 2022 Mawson AU Limited entered into a License and Services Agreement with TDI in exchange for 42,562,432 fully paid issued shares in TDI, this is held at fair value of $1.47 million as at June 30, 2022.

NOTE 8 – INCOME TAXES

The following table summarizes our effective tax rate based on the tax expense/(benefit) for income taxes attributable to pretax income:

	For the three months ended June 30,
	2022			2021
Income/(Loss) before income taxes		(2,405,632	)		(6,348,860	)
Tax Expense/(Benefit) for income taxes		12,128			-
Effective income tax rate		(0.50	)%		0.00	%

	For the six months ended June 30,
	2022			2021
Income/(Loss) before income taxes		(13,975,707	)		(44,868,930	)
Tax Expense/(Benefit) for income taxes		12,128			-
Effective income tax rate		(0.09	)%		0.00	%

The Company’s effective tax rate is calculated by dividing total income tax expense by the sum of income before income tax expense and the net income attributable to noncontrolling interests. The Company has maintained a full valuation allowance for federal and the majority of its state jurisdictions.

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NOTE 9 – STOCKHOLDERS EQUITY

Common Stock

TraDigital Marketing Group LLC was issued 5,000 shares of the Company’s common stock during May 2022 for consultancy services provided to the Company.

Under the terms of the Cosmos Transaction Bid Implementation Agreement the Company made share-based awards under an Incentive Compensation Program during September 2021 (refer to reverse acquisition accounting policy). During the three-month period ending June 30, 2022, two employees converted certain of these awards into 901,000 shares of common stock of Mawson.

Restricted Stock

As of June 30, 2022, there was no restricted stock.

Common Stock Warrants

A summary of the status of the Company’s outstanding stock warrants and changes during the six months ended June 30, 2022, is as follows:  

	Number of Warrants			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in years)
Outstanding as of December 31, 2021		3,524,189
Issued		4,143,478		$	8.57		1.5
Exercised		(1,276,000	)
Expired		-
Outstanding as of June 30, 2022		6,391,667		$	8.57		1.5
Warrants exercisable as of June 30, 2022.		6,391,667		$	8.57		1.5

On February 23, 2022, Mawson issued to Celsius Mining warrants with an expiry date of August 23, 2023, to purchase up to 3,850,000 shares of common stock, of Mawson at an exercise price of US$6.50 per share, in connection with the $20 million loan made by Celsius to Luna Squares LLC in connection with a Customer Equipment and Co-Location Agreement entered into by Celsius and Luna Squares LLC.

Under the terms of the Cosmos Transaction Bid Implementation Agreement the Company made share-based awards in the form of warrants, options and RSUs under an Incentive Compensation Program during September 2021 (refer to reverse acquisition accounting policy). During the six months ended June 30, 2022, four employees exercised 1,276,000 of their warrants to convert these into common stock of Mawson.

NOTE 10 – COMMITMENTS AND CONTINGENCIES

Agreements

1. In connection with the Cosmos Transaction, we issued one CVR to each of our securityholders for each outstanding share of common stock of Mawson, and for each share of common stock of Mawson underlying other convertible securities and warrants, held immediately before the closing of the Cosmos Transaction. Each CVR represents the right to receive a pro rata share of any consideration that we may receive in connection with any successful monetization of our LO2A business, less transaction expenses and customary deductions as detailed in the CVR agreement, including a deduction of up to $300,000 to be repaid to us for amounts we spend in the development of the LO2A Technology at the request of the representative of the holders of the CVRs. As at June 30, 2022, the Company cannot reliably measure the cost of the CVRs and it is not probable that these payments will be made and therefore this has been classified as a contingent liability.

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2. During June 2022 Mawson AU Limited entered into a share subscription and equipment sale with Tasmania Data Infrastructure Pty Ltd (“TDI”).  TDI has a 100% renewable energy Bitcoin Mining facility at the Que River Mine Site in Tasmania, Australia. Mawson AU Limited has agreed to exchange approximately 1975 ASIC Bitcoin Miners for 107,042,254 fully paid issued shares in TDI. This transaction is expected to finalize later this fiscal year.

NOTE 11 – BORROWINGS

Short-term Borrowings

Whatsminers

On October 15, 2021, the Company acquired 2,000 Whatsminers M30’s for delivery in October 2021 from Foundry Digital LLC for a total consideration of $16,481,328. The Company paid a deposit of $3,202,766 and entered into an extension of the original Foundry finance agreement with Foundry for the balance of the consideration over a 12-month term, of which $4,914,329 is outstanding at June 30, 2022.

Marshall loan

In December 2021 MIG No. 1 Pty Ltd entered into a Secured Loan Facility Agreement with Marshall Investments MIG Pty Ltd which was payable in three tranches. The first tranche was received during December 2021 with an amount of $7.86 million. Tranche two and three were received during January and February 2022 with a total amount of $7.11 million. The loan matures in 2024 and bears interest at a rate of 12.00% per annum, payable monthly which commenced December 2021. This loan facility is secured by a general security agreement given by the Company. Principal repayments begin during 2023. 

The amount classified as a current liability is $2.54 million with the remaining balance classified as a long-term liability.

Celsius loan

On February 23, 2022, Luna Squares LLC entered into the Co-Location Agreement with Celsius Mining LLC, in connection with this agreement, Celsius Mining loaned Luna Squares LLC a principal amount of US$20,000,000, for the purpose of funding the infrastructure required to meet the obligations of the Co-Location Agreement, for which Luna Squares LLC issued a Secured Promissory Note for repayment of such amount. The Secured Promissory Note accrues interest daily at a rate of 12% per annum. Luna Squares LLC is required to amortize the loan at a rate of 15% per quarter, with principal repayments starting in the third quarter of 2022. The Secured Promissory Note has a maturity date of August 23, 2023. Celsius Mining LLC filed for Chapter 11 bankruptcy protection on July 13, 2022. The Company does not anticipate any changes to the terms of the loan agreement due to Celsius Mining LLC’s bankruptcy filing.

The amount classified as a current liability is $12.02 million with the remaining balance considered a long term liability.

Long-term Borrowings

Marshall loan

The total classified as payable after more than one year under this arrangement is $11.24 million.

Celsius loan

The total classified as payable after more than one year under this arrangement is $7.98 million.

NOTE 12 – RELATED PARTY TRANSACTIONS

On March 16, 2022, Luna Squares LLC entered into a lease with respect to a property in the City of Sharon, Mercer County, Pennsylvania with Vertua Property, Inc, a subsidiary entity in which Vertua Ltd has a 100% ownership interest. James Manning, CEO, a director and a significant shareholder of the Company, is also a director of Vertua Ltd and has a material interest in the Sharon lease as a large shareholder of Vertua Ltd. The lease contains market standard legal terms, and will be for a term of 5 years, and Luna Squares LLC has 2 options to extend for 5 years each. The Company’s Audit Committee has compared the rent and terms to other arms’ length leases the Company has entered into and formed the view the rent is in line with the market for similar properties. Rent is subject to annual increases equal to the amount of the Consumer Price Index for the Northeast Region, or 4%, whichever is higher. The base rental amount in the first year is $0.24 million. Depending on power energization and usage, variable additional rent may be payable, with charges ranging from $500 to $10,000 per month, depending on power energized and whether it is available. Upon the recommendation from the Audit Committee, the directors of the Company, other than James Manning, were made aware of the material facts as to Mr. Manning’s interest in the lease and authorized the Company in good faith to enter the lease after determining the lease to be fair to the Company.

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NOTE 13 – SUBSEQUENT EVENTS

On July 8, 2022, the Company issued secured convertible promissory notes to investors in the aggregate principal amount of $3,600,000 (the “Secured Convertible Promissory Notes”) in exchange for an aggregate of $3,600,000. In connection with each Secured Convertible Promissory Note, the Company and its subsidiaries, Luna Squares LLC and Cosmos Infrastructure LLC, entered into a Guarantee and Security Agreement (the “Security Agreements”) with each investor, securing such investor’s Secured Convertible Promissory Note by specific, and separate application-specific integrated circuit (ASIC) mining hardware of Cosmos Infrastructure LLC. Each Security Agreement contains customary covenants and customary events of default, the occurrence of which could result in an acceleration of the Secured Convertible Promissory Notes. The Secured Convertible Promissory Notes are convertible at the option of the holder at a price of $0.85 per share of our common stock, except in the case of an event of default, during which the Secured Convertible Promissory Notes are convertible at the option of the holder into shares of the Company’s common stock, at a price of $0.80 per share. The Secured Convertible Promissory Notes bear interest of twenty percent (20%) per annum, except in the case of an event of default, during which they will bear interest of twenty-five percent (25%) per annum. One-half of the interest that accrues each month on the Secured Convertible Promissory Notes must be paid monthly. All unpaid principal, together with any then unpaid and accrued interest and other amounts payable under the Secured Convertible Promissory Notes, is due and payable if not converted pursuant to the terms and conditions of the Secured Convertible Promissory Note on the earlier of (i) one year after its issuance, or (ii) following an event of default.

On July 17, 2022, the Company entered into a Securities Purchase Agreement with an institutional investor providing for the issuance and sale by the Company of 8,000,000 shares of the Company’s common stock, at a price of $0.80 per share, accompanied by warrants to purchase 10,000,000 shares of the Company’s common stock in a registered direct offering pursuant to a “shelf” registration statement on Form S-3 (File No. 333-264062). The warrants issued in this offering have an exercise price of $1.01 per share of our common stock, are exercisable 6 months after issuance and will expire five and one-half years following issuance. The exercise price of the warrants issued in this offering is subject to adjustment for stock splits, reverse splits, and similar capital transactions as described in the warrants. This offering closed on July 20, 2022. The net amount raised was $5.62 million.

On August 12, 2022, Mawson AU entered into a non-binding Memorandum of Understanding to, amongst other things, discuss the possibility of selling certain assets to its supplier, Faith Technologies Inc. (“FTI”) in return for FTI reducing amounts outstanding to FTI by Mawson AU by $4,598,800.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Management’s Discussion and Analysis of Financial Condition and Results of Operations analyzes the major elements of our balance sheets, statements of comprehensive income (loss) and cash flows. The following discussion and analysis of our financial condition and results of operations should be read together with the interim condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q, as well as our audited consolidated financial statements and related notes as disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021. All amounts are in U.S. dollars.

Throughout this report, unless otherwise designated, the terms “we,” “us,” “our,” the “Company,” “Mawson,” “our company” and the “combined company” refer to Mawson Infrastructure Group Inc., a Delaware corporation, and its direct and indirect subsidiaries, including Mawson Infrastructure Group Pty Ltd, an Australian company (“Mawson AU”), Cosmos Trading Pty Ltd, Cosmos Infrastructure LLC, Cosmos Manager LLC, Cosmos MIG No.1 Pty Ltd, Mawson AU Limited, Luna Squares LLC, Luna Squares Texas, Luna Squares Repairs LLC, Luna Squares Property LLC and Mawson Mining LLC . Wize NC Inc, Occuwize Ltd and Wize Pharma Ltd are subsidiaries of Mawson however these companies have not been consolidated into the financial statements are not included when referring to we, us, our or the Company or Mawson as these are subject to contingent value rights (“CVR”), refer to NOT 10 of the financial statements.

Pursuant to that certain Certificate of Amendment to the Certificate of Incorporation of the Company dated August 11, 2021, Mawson executed a 10-for-1 reverse stock split of its outstanding common stock and reduced its authorized common stock to 120,000,000 shares, as set forth in the Company’s Current Report on Form 8-K filed with SEC on August 16, 2021. Unless otherwise specified, all Mawson share numbers in this Quarterly Report on Form 10-Q reflect post-reverse stock split numbers.

Forward-Looking Statement Notice

This Quarterly Report on Form 10-Q contains forward-looking statements about our expectations, beliefs or intentions regarding, among other things, our product development efforts, business, financial condition, results of operations, strategies or prospects. In addition, from time to time, our representatives have made or may make forward-looking statements, orally or in writing. Forward-looking statements can be identified by the use of forward-looking words such as “believe,” “expect,” “intend,” “plan,” “may,” “should” or “anticipate” or their negatives or other variations of these words or other comparable words or by the fact that these statements do not relate strictly to historical or current matters. These forward-looking statements may be included in, but are not limited to, various filings made by us with the SEC, press releases or oral statements made by or with the approval of one of our authorized executive officers. Forward-looking statements relate to anticipated or expected events, activities, trends or results as of the date they are made. Because forward-looking statements relate to matters that have not yet occurred, these statements are inherently subject to risks and uncertainties that could cause our actual results to differ materially from any future results expressed or implied by the forward-looking statements. Many factors could cause our actual activities or results to differ materially from the activities and results anticipated in forward-looking statements, including, but not limited to, the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2021, and in Part II – Item 1A of this report.

This report identifies important factors which could cause our actual results to differ materially from those indicated by the forward-looking statements, particularly those set forth under Item 1A. “Risk Factors” as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2021, and in Part II – Item 1A of this report.

Such risk factors are not necessarily all of the important factors that could cause actual results to differ materially from those expressed in any of our forward-looking statements. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

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Factors that could cause our actual results to differ materially from those expressed or implied in such forward-looking statements include, but are not limited to:

● that we have incurred operating losses and may continue to do so for the foreseeable future;

● our ability to raise additional capital, under favorable terms or at all, and continue as a going concern;

● that we may never become profitable;

● competition and technological challenges we may face;

● the slowing or stopping of the development or acceptance of digital asset systems;

● changes the Bitcoin network’s protocols and software;

● any decrease in the incentive for Bitcoin mining;

●  increases in Bitcoin network difficulty (which typically leads to lower Bitcoin rewards for the same effort);

● growth challenges we may face;

● our ability to obtain and maintain adequate insurance;

● we may become subject to existing or future government regulations which increase the cost of doing business, or which cause us to cease some or all of our operations;

● our exposure to fluctuations in the market value of digital assets, in particular Bitcoin, and the relative attractiveness of those digital assets to investors, speculators, and users payment network services over other solutions;

● our reliance on third party manufacturers for Miners and other infrastructure and hardware and the anticipated delivery dates of new miners;

● counter-party and customer default risks due to cryptocurrency market fluctuations and disruptions;

● increased input costs, such as increased energy prices or hardware and infrastructure costs;

● risks relating to the supply chain disruptions due to pandemic (e.g. COVID-19), shortages (computer chips), and geo-political tensions (e.g. China trade bans, war in Ukraine);

● climate and climate change risks, including direct risks from storms and floods, but also the implementation of policies which may lead to higher energy costs;

● political or economic crises motivating large-scale sales of digital assets;

● regulatory risks, including local and global governments regulating, or even banning, Bitcoin or Bitcoin mining;

● the impact of our business successes or failures on the value of our common stock;

● the impact of future stock sales on our stock price;

● the potential lack of liquidity, or volatility, of our common stock and warrants;

● the potential failure to maintain effective internal controls over financial reporting;

● the existence of anti-takeover provisions in our charter documents and Delaware law;

● that we do not intend to pay dividends on our common stock; and

● competitive companies and technologies within our industry, and outside it (such as central bank digital currencies and quantum computing).

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All forward-looking statements attributable to us or persons acting on our behalf speak only as of the date of this report and are expressly qualified in their entirety by the cautionary statements included in this report. Except as required by applicable law, we undertake no obligations to update or revise forward-looking statements to reflect events or circumstances that arise after the date made or to reflect the occurrence of unanticipated events. In evaluating forward-looking statements, you should consider these risks and uncertainties.

Overview

Mawson is a ‘Digital Asset Infrastructure’ business, which owns and operates (through its subsidiaries) modular data centers (“MDCs”) in the United States and Australia. We are focused on developing the technology to enable us to own and operate MDCs that are both air-cooled and liquid immersion cooled.

Our primary business is the ownership and operation of Application-Specific Integrated Circuit (“ASIC”) computers known as Miners. We currently operate three sites, with two locations in USA, and a location in Australia, from which we operate our combined business. The Miners are predominately focused on the process of digital mining, specifically for Bitcoin.

We offer ‘hosting’ or ‘co-location’ facilities to other businesses in the digital asset infrastructure industry to have their Miners located within our MDCs, who pay us a fee for the use of our facilities and related services (often based on consumption).

We also sell used crypto currency mining equipment on a periodic basis, subject to prevailing market conditions for used equipment.

As of June 30, 2022

	Existing Operations Online		Order and Purchase Agreements		Cumulative Fleet Fully Deployed
Total miners online		24,419		-		24,419
Total miners in Transit		1,008		-		1,008
Total miners on order		-		-		-
Total miners in storage		9,902		-		9,902
Total miners		35,329		-		35,329

We continue to conduct research and development in relation to our MDCs which we are actively testing in several configurations and locations to determine the best configuration for both ASIC and alternate computing uses.

Prior LO2A Business

On March 9, 2021, the Company acquired the shares of Mawson AU in a stock for stock exchange (the “Cosmos Transaction”).

Prior to the Cosmos Transaction our main business undertaking was as a clinical-stage biopharmaceutical company focused on the treatment of ophthalmic disorders, including dry eye syndrome (our “LO2A business”). However, as part of the Cosmos Transaction, substantially all of the economic benefits of any successful monetization of our LO2A business, if any, will benefit only the holders of CVR and any contingent right holders. Accordingly, we assessed that the fair value of this asset at the acquisition date was $nil. The asset was therefore assessed as impaired and the prior carrying amount of $23.96 million has been fully expensed in the consolidated statements of operations for the year ended December 31, 2021.

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Recent Developments.

On May 12, 2022, Luna Squares Texas LLC (our wholly owned subsidiary) entered into an Option Agreement and Gross Profit Agreement with JAI TX, LLC and then signed or took and assignment of 4 leases for properties in Texas (all in close proximity) with the intent to develop MDC facilities for mining Bitcoin. Luna Squares Texas LLC will seek to execute relevant power agreements, however the expectation is that the four locations can provide a combined 120MW of power. Rent under the leases ranges from $1,500 to $5,227.20 per acre per annum. The lessors include a substantial listed holder of land in Texas, and family groups. Under the Option Agreement, JAI TX, LLC has the option to receive an issue of up to 20% of the membership interests in Luna Squares Texas LLC. The purchase prices will be a share of capital costs equal to the membership interest acquired by JAI TX, LLC, and an amount of Luna Squares Texas LLC’s debt financing in proportion to JAI TX, LLC’s shareholding. In return for certain services provided by JAI TX, LLC, JAI TX, LLC will be entitled to a share of all Electric Reliability Council of Texas program payments paid to Luna Squares Texas LLC (“ERCOT Payment”), as well as a share of the Bitcoin profit from the Texas locations less certain costs, including depreciation. Capital costs for Luna Squares Texas LLC are expected to exceed $4.19m .

On May 27, 2022, Mawson entered into an ATM Agreement with H.C. Wainwright & Co., LLC (“Wainwright”), to sell shares of our common stock, par value $0.001 per share, (the “Shares”) having an aggregate sales price of up to $100 million, from time to time, through an “at the market offering” program under which Wainwright will act as sales agent. We will pay Wainwright a commission rate equal to 3.0% of the aggregate gross proceeds from each sale of Shares and have agreed to provide Wainwright with customary indemnification and contribution rights. We will also reimburse Wainwright for certain specified expenses in connection with entering into the ATM Agreement. The ATM Agreement contains customary representations and warranties and conditions to the sale of the Shares pursuant thereto.

During June 2022 Mawson AU Limited entered into a share subscription and equipment sale deed with Tasmania Data Infrastructure Pty Ltd (“TDI”). TDI has a 100% renewable energy Bitcoin Mining facility at the Que River Mine Site in Tasmania, Australia. Mawson AU Limited has agreed to exchange approximately 1975 ASIC Bitcoin Miners for 107,042,254 fully paid issued shares in TDI. This transaction is expected to finalize later this year.

COVID-19.

The COVID-19 global pandemic has been unpredictable and unprecedented and is likely to continue to result in significant national and global economic disruption, which may adversely affect our business. The Company relies on equipment supplied by third parties which, like many manufacturing businesses globally, are at risk of supply chain issues. We currently do not expect any material impact on our long-term development, operations, or liquidity due to the COVID-19 pandemic. However, we are actively monitoring this situation and the possible effects on our financial condition, liquidity, operations, suppliers, and industry.

Regulation of Digital Assets

Digital assets and cryptocurrencies have been the source of much regulatory consternation, resulting in differing definitional outcomes without a single unifying statement. We do not believe our mining activities require registration to conduct such activities and accumulate digital assets. Nevertheless it is likely that regulation in the digital asset industry will increase. On March 9, 2022, President Biden issued an executive order that identified the following objectives for future regulation of digital assets in the United States: (1) protect consumers, investors, and businesses, (2) protect financial stability, (3) mitigate the illicit finance and national security risks posed by misuse of digital assets, (4) reinforce United States leadership in the global financial system and in technological and economic competitiveness, (5) promote access to safe and affordable financial services, and (6) support technological advances that promote responsible development and use of digital assets. The executive order was generally received as a positive for the digital asset industry, especially in the United States, as it appears to seek to foster an environment of innovation for digital assets within some reasonable bounds. This can be seen as similar to moves in the Australian government context, where the government has declared that it is seeking to better understand digital assets in order to craft and promulgate better designed regulation, and can be seen as contrasting to the reactions in some jurisdictions, where outright bans and other barriers have been erected against digital assets and cryptocurrencies.

In the past it has also been noted that the SEC, the Commodity Futures Trading Commission (“CFTC”), Nasdaq or other governmental or quasi-governmental agency or organization (including similar authorities in other jurisdictions such as Australia) may conclude that our digital asset mining activities involve the offer or sale of “securities”, or ownership of “investment securities”, and we may face regulation under the Securities Act of 1933, as amended (the “Securities Act”) or the Investment Company Act of 1940. Such regulation or the inability to meet the requirements to continue operations, would have a material adverse effect on business, financial condition, results of operations and prospects of our business. Currently in Australia, Bitcoin itself is not considered a financial product nor are digital assets regarded as money or currency for the purpose of Australian law. The effect of any future regulatory change on digital assets or an entity dealing in or holding digital assets is impossible to predict, but such change could be substantial and adverse to our financial returns.

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Results of Operations – Three months Ended June 30, 2022 compared to the three months ended June 30, 2021

	For the three months ended June 30,
	2022			2021
Revenues:
Cryptocurrency mining revenue		16,212,525			5,664,629
Hosting Co Location revenue		3,567,912			-
Sale of crypto currency mining equipment		-			280,038
Total revenues		19,780,437			5,944,667
Less: Cost of revenues (excluding depreciation)		14,359,072			294,140
Gross profit		5,421,365			5,650,527
Selling, general and administrative		9,431,088			3,697,217
Share based payments		936,235			5,559,495
Depreciation and amortization		16,023,817			2,533,242
Total operating expenses		26,391,140			11,789,954
Change in fair value of derivative		17,714,357			-
Loss from operations		(3,255,418	)		(6,139,427	)
Non-operating income/(expense):
Gains / (losses) on foreign currency transactions		1,657,055			(60,747	)
Interest expense		(1,565,040	)		(464,039	)
Impairment of financial assets		(1,107,197	)		-
Other income		1,864,968			315,353
Loss before income taxes		(2,405,632	)		(6,348,860	)
Income tax expense		-			-
Net Loss		(2,405,632	)		(6,348,860	)

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Revenues

Cryptocurrency mining revenues from production for the three months ended June 30, 2022 and 2021 were $16.21 million and $5.66 million respectively. This represented an increase of $10.55 million or 186% over the period. The increase in mining revenue for the period was primarily attributable to an increase in the total Bitcoin produced. Bitcoin produced totaled 489.60 in 2022 compared with 127.0 in the 2021 period, or an increase of 286% of Bitcoin produced over the respective period.

Hosting co-location revenue for the three months ended June 30, 2022 and 2021 were $3.57 million and $nil respectively. This increase is due to there being no co-location revenue in the prior period because this service was not offered at that time.

Sales of crypto currency mining equipment for the three months ended June 30, 2022, were $nil million and $0.28 million respectively.

Operating Cost and Expenses

Our operating costs and expenses include cost of revenues; selling, general and administrative expenses; share based payments; and depreciation and amortization.

Cost of revenues.

Our cost of revenue consists primarily of: direct power costs related to cryptocurrency mining, and cost of mining equipment sold.

Cost of revenues for the three months ended June 30, 2022 and 2021 were $14.36 million and $0.29 million, respectively. The increase in cost of revenue was primarily attributable to: an increase in power costs, and increased deployment of cryptocurrency mining hardware. Included in our cost of revenues is any costs associated with offsetting carbon emissions. 

Selling, general and administrative. 

Our selling, general and administrative expenses consist primarily of professional and management fees relating to: accounting, payroll, audit, and legal; equipment repairs; marketing; consultant fees and general office expenses.

Selling, general and administrative expenses for the three months ended June 30, 2022 and 2021 were $9.43 million and $3.70 million respectively. The increase in selling, general and administrative expenses were attributable to a number of factors; payroll expenses increased by $3.34 million due to an increase in employee numbers during the year; property tax increase of $1.29 million, equipment repair costs increased by $0.80 million; marketing costs increased by $0.50 million and operating lease expense increased by $0.43 million due to the new lease agreements entered into during the period.

Share based payments.

Share based payments expenses for the three months ended June 30, 2022 and 2021 were $0.94 million and $5.56 million respectively. In the three months ended June 30, 2022, share based payments were largely attributable to costs recognized for warrants issued to Celsius Mining LLC amounting to $0.50 million and $0.4 million in relation to long-term incentives for the Company’s leadership team. The prior period contained a $5.53 million fair value modification to warrants issued.

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Depreciation and amortization.

Depreciation consists primarily of depreciation of cryptocurrency mining hardware and MDC equipment.

Depreciation and amortization for the three months ended June 30, 2022 and 2021 were $16.02 million and $2.53 million, respectively. The increase is primarily attributable to new machines and MDCs which are being procured and have come into the ownership of the Company and the application of the diminishing value method, resulting in a higher depreciation expense in the initial months of mining equipment operation.

Change in fair value of derivative

During the three months ended June 30, 2022, a derivative asset of $17.71 million was recorded for our Power Supply Agreement with Energy Harbor LLC, this is measured at fair value.

Non-operating expense

Non-operating expenses consist primarily of interest expense and impairment of equity accounted investment.

Interest expense increased by $1.10 million attributable to the interest costs charged on the loans taken out with Foundry Digital LLC, and Marshall Investments MIG Pty Ltd during the year ended December 2021 and Celsius Mining LLC during the 6 month period ending June 30, 2022.

There was an impairment of financial assets in relation to the equity accounted investment Cosmos Asset Management Pty Ltd of $1.11 million during the three months ended June 30, 2022.

Non-operating income

Non-operating income consists primarily of changes in fair value of derivative assets, unrealized losses on foreign currency remeasurement and other income.

During the three months ended June 30, 2022, the realized and unrealized gain on foreign currency transactions was $1.66 million, and for the three months ended June 30, 2021 there was a loss of $0.06 million.

During the three months ended June 30, 2022, there was other income recognized which mainly consisted of the license of our intellectual property of $1.15 million and $0.53 million for curtailment income. The license of our intellectual property relates to the future sale of equipment to TDI, combined with consulting and advisory services to enable TDI to build a facility in Tasmania, Australia.

Net loss available to Common Shareholders

As a result of the foregoing, the Company recognized a net loss of $2.12 million for the three months ended June 30, 2022, compared to a net loss of $6.24 million for the three months ended June 30, 2021.

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Results of Operations – Six months Ended June 30, 2022 compared to the six months ended June 30, 2021

	For the six months ended June 30,
	2022			2021
Revenues:
Cryptocurrency mining revenue		34,996,368			10,878,255
Hosting Co Location revenue		4,116,860			-
Sale of crypto currency mining equipment		91,545			2,157,651
Total revenues		39,204,773			13,035,906
Less: Cost of revenues (excluding depreciation)		22,771,433			2,666,921
Gross profit		16,433,340			10,368,985
Selling, general and administrative		15,908,034			6,329,180
LO2A write backs		-			23,963,050
Share based payments		1,326,844			20,354,897
Depreciation and amortization		29,826,849			3,848,142
Total operating expenses		47,061,727			54,495,269
Change in fair value of derivative		17,714,357			-
Loss from operations		(12,914,030	)		(44,126,284	)
Non-operating income/(expense):
Gains on foreign currency transactions		957,818			(722,425	)
Interest expense		(2,801,713	)		(714,701	)
Impairment of financial assets		(1,107,197	)		-
Other income		1,889,415			694,480
Loss before income taxes		(13,975,707	)		(44,868,930	)
Income tax expense		-			-
Net Loss		(13,975,707	)		(44,868,930	)

Revenues

Cryptocurrency mining revenues from production for the six months ended June 30, 2022 and 2021 were $35.0 million and $10.88 million respectively. This represented an increase of $24.12 million or 222% over the period. The increase in mining revenue for the period was primarily attributable to an increase in the total Bitcoin produced. Bitcoin produced totaled 948.27 in the six months ended June 30, 2022 compared with 250.22 in the six months ended June 30, 2021, or an increase of 279% of Bitcoin produced over the respective period.

Hosting co-location revenue for the six months ended June 30, 2022 and 2021 were $4.12 million and $nil respectively. This increase is due to there being no co-location revenue in the prior period because this service was not offered at that time.

Sales of crypto currency mining equipment for the six months ended June 30, 2022, were $0.09 million and $2.16 million respectively.

Operating Cost and Expenses

Our operating costs and expenses include cost of revenues; selling, general and administrative expenses; share based payments; and depreciation and amortization.

Cost of revenues.

Our cost of revenue consists primarily of: direct power costs related to cryptocurrency mining, and cost of mining equipment sold.

Cost of revenues for the six months ended June 30, 2022 and 2021 were $22.77 million and $2.67 million, respectively. The increase in cost of revenue was primarily attributable to: an increase in power costs, increase in the deployed operations of cryptocurrency mining hardware. Included in our cost of revenues is any costs associated with offsetting carbon emissions. 

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Selling, general and administrative. 

Our selling, general and administrative expenses consist primarily of professional and management fees relating to: accounting, payroll, audit, and legal; equipment repairs; marketing; consultant fees and general office expenses.

Selling, general and administrative expenses for the six months ended June 30, 2022 and 2021 were $15.91 million and $6.33 million respectively. The increase in selling, general and administrative expenses were attributable to a number of factors; payroll expenses increased by $5.12 million due to an increase in employee numbers during the year; equipment repair costs increased by $1.90 million; property tax increased by $1.33 million; consultant costs increased by $0.50 million; marketing costs increased by $0.91 million and operating lease expense increased by $0.80 million due to the new lease agreements entered into during the period.

Share based payments.

Share based payments expenses for the six months ended June 30, 2022 and 2021 were $1.32 million and $20.35 respectively. In the six months ended June 30, 2022, share based payments were largely attributable to costs recognized for warrants issued to Celsius Mining LLC amounting to $0.67 million and $0.57 million in relation to long-term incentives for the Company’s leadership team. The prior period contained a $5.53 million fair value modification to warrants issued, another $6.18 million warrants were issued, and $8.58 million share-based payments were made under an Incentive Compensation Program in relation to the Bid Implementation Agreement.

Depreciation and amortization.

Depreciation consists primarily of depreciation of cryptocurrency mining hardware and MDC equipment.

Depreciation and amortization for the six months ended June 30, 2022 and 2021 were $29.83 million and $3.85 million, respectively. The increase is primarily attributable to new machines and MDCs which are being procured and have come into the ownership of the Company and the application of the diminishing value method, resulting in a higher depreciation expense in the initial months of mining equipment operation.

Change in fair value of derivative

During the six months ended June 30, 2022, a derivative asset of $17.71 million was recorded for our Power Supply Agreement with Energy Harbor LLC, this is measured at fair value.

Non-operating expense

Non-operating expenses consist primarily of interest expense and impairment of equity accounted investment.

Interest expense increased by $2.09 million attributable to the interest costs charged on the loans taken out with Foundry Digital LLC, Marshall Investments MIG Pty Ltd during the year ended December 2021, and Celsius Mining LLC during the 6 month period ending June 30, 2022.

There was an impairment of financial assets in relation to the equity accounted investment Cosmos Asset Management Pty Ltd of $1.11 million during the six months to June 30, 2022.

Non-operating income

Non-operating income consist primarily of unrealized losses on foreign currency remeasurement and other income.

During the six months ended June 30, 2022, the realized and unrealized gain on foreign currency transactions were $0.96 million, and for the six months ended June 30, 2021 there was a loss of $0.72 million.

During the three months ended June 30, 2022, there was other income recognized which mainly consisted of the sale of our intellectual property of $1.15 million and $0.53 million for curtailment income.

Net loss available to Common Shareholders

As a result of the foregoing, the Company recognized a net loss of $13.45 million for the six months ended June 30, 2022, compared to a net loss of $44.80 million for the six months ended June 30, 2021.

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Liquidity and Capital Resources

General

Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis. Significant factors in the management of liquidity are funds generated by operations, levels of accounts receivable and accounts payable and capital expenditures. For the six month period ended June 30, 2022, we financed our operations primarily through:

1.	Net cash provided by operating activities of $33.15 million;
2.	On October 15, 2021, an expansion of the Equipment Finance and Security Agreement was entered into with Foundry Digital LLC (“Foundry”) to purchase an additional 2000 Whatsminers M30’s delivered in October 2021. In total $13,185,062 was borrowed from Foundry, of which $4,914,329 is owed at June 30, 2022;
3.	On December 9, 2021, MIG No.1 Pty Ltd entered into a Secured Loan Facility Agreement with Marshall Investments MIG Pty Ltd (“Marshall”) with a total loan facility of AUD$20 million. Principal repayments will begin in January 2023.
4.	On February 23, 2022, Luna Squares LLC entered into the Co-Location Agreement with Celsius Mining LLC, in connection with this agreement, Celsius Mining loaned Luna Squares LLC a principal amount of US$20,000,000, for the purpose of funding the infrastructure required to meet the obligations of the Co-Location Agreement. The Secured Promissory Note evidencing this loan accrues interest daily at rate of 12% per annum. Luna Squares LLC is required to amortize the loan at a rate of 15% per quarter, with principal repayments starting in the third quarter following the closing. This Secured Promissory Note has a maturity date of August 23, 2023.

During the six months ending June 30, 2022 we repaid $6.2 million of payments against the historical facilities provided by Foundry.

We believe our working capital requirements will continue to be funded through a combination of the cash we expect to generate from future operations, our existing funds, external debt facilities available to us and further issuances of shares. These are expected to be adequate to fund our operations over the next twelve months. In addition, the Company has access to equity financing through the ATM offering facility entered in May 2022. For our business to grow it is expected we will continue investing in mining equipment, we are likely to require additional capital in either the short-term or long-term.

Working Capital and Cash Flows

As of June 30, 2022, and December 31, 2021, we had cash and cash equivalents balance of $2.49 million and $5.47 million in cash and cash equivalents, respectively.

As of June 30, 2022, and December 31, 2021, our trade receivables balance was $4.21 million and $5.61 million respectively.

As of June 30, 2022, we had $19.47 million of outstanding short-term borrowings, and as of December 31, 2021, we had $11.10 million of short-term borrowings. The short-term borrowings as of June 30, 2022, relate to the acquisition of cryptocurrency mining equipment under the Foundry agreements, and also to the secured loan facilities with Celsius Mining LLC and Marshall Investments MIG Pty Ltd. As of June 30, 2022, and as of December 31, 2021, we had $19.40 million and $7.64 million respectively of outstanding long-term borrowings. The long-term borrowings as of June 30, 2022, primarily relate to the secured loan facilities with Celsius Mining LLC and Marshall Investments MIG Pty Ltd.

As of June 30, 2022, we had negative working capital of $55.96 million and as at December 31, 2021, we had negative working capital of $8.63 million. The decrease in working capital was primarily attributable to an increase in the Company’s short term and long-term borrowings during 2022, as compared to 2021.

The following table presents the major components of net cash flows (used in) provided by operating, investing and financing activities for the six months ending June 30, 2022 and 2021:

	Six Months Ended June 30,
	2022			2021
Net cash provided by operating activities	$	33,146,960		$	7,664,467
Net cash used in investing activities	$	(53,155,193	)	$	(26,065,630	)
Net cash provided by financing activities	$	19,513,738		$	(21,250,788	)

For the six months ended June 30, 2022, net cash provided by operating activities was $33,146,960 and for the six months ended June 30, 2021, net cash provided by operating activities was $7,664,467. The increase in net cash provided by operating activities was primarily attributable to timing differences in trade and other receivables and trade and other payables.

For the six months ended June 30, 2022 and 2021, net cash used in investing activities was $53,155,193 and $26,065,630, respectively. The increase in net cash used in investing activities was primarily attributable to the increase in the acquisition of cryptocurrency mining equipment.

For the six months ended June 30, 2022 and 2021, net cash provided by financing activities was $19,513,738 and $21,250,788, respectively. The cash provided by financing activities during June 30, 2022 was primarily attributable to proceeds from borrowings.

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Financial condition

As at June 30, 2022 had net current liabilities of $55.96 million and had an accumulated deficit of $82.95 million. The Company’s cash position at June 30, 2022, was $2.49 million. For the six month period ending June 30, 2022, the Company incurred a loss after tax of $13.98 million.

Our primary requirements for liquidity and capital are working capital, capital expenditures, public company costs and general corporate needs. We expect these needs to continue as we further develop and grow our business. Our principal sources of liquidity have been and are expected to be our cash and cash equivalents, external debt facilities available to us and further issuances of shares. In addition, Mawson has an active At The Market (ATM) available for sale of shares of Common Stock having an aggregate offering price of up to $100.0 million. These are expected to be adequate to fund our operations over the next twelve months.

In the event that we require additional capital to respond to competitive pressure, market dynamics, new technologies, customer demands, business opportunities, challenges, acquisitions or unforeseen circumstances in either the short-term or long-term, we may determine to engage in equity or debt financings or enter into credit facilities for other reasons. If we are unable to obtain adequate financing on terms satisfactory to us when we require it, our ability to continue to grow or support our business model and to respond to business challenges could be significantly limited. In particular, the widespread COVID-19 pandemic, including rising inflation and interest rates, and the conflict between Russia and Ukraine have resulted in, and may continue to result in, significant disruption and volatility in the global financial markets, reducing our ability to access capital. If we are unable to raise additional funds when or on the terms desired, our business, financial condition and results of operations could be adversely affected.

Non-GAAP Financial Measures

The Company utilizes a number of different financial measures, both GAAP and non-GAAP, in analyzing and assessing its overall business performance, for making operating decisions and for forecasting and planning future periods. The Company considers the use of non-GAAP financial measures helpful in assessing its current financial performance, ongoing operations and prospects for the future. While the Company uses non-GAAP financial measures as a tool to enhance its understanding of certain aspects of its financial performance, the Company does not consider these measures to be a substitute for, or superior to, the information provided by GAAP financial measures. Consistent with this approach, the Company believes that disclosing non-GAAP financial measures to the readers of its financial information provides such readers with useful supplemental data that, while not a substitute for GAAP financial measures, allows for greater transparency in the review of its financial and operational performance. Investors are cautioned that there are inherent limitations associated with the use non-GAAP financial measures as an analytical tool. In particular, non-GAAP financial measures are not based on a comprehensive set of accounting rules or principles and many of the adjustments to the GAAP financial measures reflect the exclusion of items that are recurring and will be reflected in the company’s financial results for the foreseeable future. In addition, other companies, including other companies in the Company’s industry, may calculate non-GAAP financial measures differently than the Company does, limiting their usefulness as a comparative tool.

The Company is providing supplemental financial measures for (i) non-GAAP adjusted earnings before interest, taxes, depreciation and amortization, or (“adjusted EBITDA”) that excludes the impact of interest, taxes, depreciation, amortization, share-based compensation expense, LO2A write-back, unrealized gains/losses on share of associates, and certain non-recurring expenses. We believe that adjusted EBITDA is useful to investors in comparing our performance across reporting periods on a consistent basis.

	For the three months ended June 30,						For the six months ended June 30,
	2022			2021			2022			2021
Reconciliation of non-GAAP adjusted EBITDA:
Net loss:		(2,405,632	)		(6,348,860	)		(13,975,707	)		(44,868,930	)
Impairment of financial assets		1,107,197			-			1,107,197			-
Depreciation and amortization		16,023,817			2,533,242			29,826,849			3,848,142
Share based payments		936,235			5,559,495			1,326,844			20,354,897
Unrealized and realized losses/(gain)		(1,657,055	)		60,747			(957,818	)		722,425
Other non-operating revenue		(1,864,968	)		(315,353	)		(1,889,415	)		(694,480	)
Other non-operating expenses		1,565,040			464,039			2,801,713			714,701
LO2A write-back		-			-			-			23,963,050
EBITDA (non-GAAP)		13,704,634			1,953,310			18,239,663			4,039,805

Critical accounting estimates

The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported in the financial statements and accompanying notes. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the consolidated financial statements, and the reported amounts of income and expenses during the reporting periods. Actual results could differ from those estimates. The Company has considered the following to be significant estimates made by management, including but not limited to:

Going concern assumption- Management assumes that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business. Please see NOTE 1-GENERAL to the consolidated condensed financial statements in Item 1 of PART I of this Quarterly Report on Form 10-Q for more information about this assumption.

Long-lived assets- Management reviews long-lived assets for impairment whenever events or changes in circumstances have occurred that may affect the recoverability or the estimated useful lives of long-lived assets. Long-lived assets include property and equipment and operating lease right-of-use assets. A long-lived asset may be impaired when the estimated future undiscounted cash flows are less than the carrying amount of the asset. If that comparison indicates that the asset’s carrying value may not be recoverable, the impairment is measured based on the difference between the carrying amount and the estimated fair value of the asset.

Stock based compensation- Management used Black-Scholes to evaluate our awards and will continue to use judgment in evaluating the assumptions related to our stock-based compensation on a prospective basis.

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Item 3. Quantitative and Qualitative Disclosures about Market Risks

As a smaller reporting company, the Company has elected not to provide the disclosure required by this item.

Item 4. Controls and Procedures

Evaluation of disclosure controls and procedures

Our management, with the participation of our Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer), has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a- 15(e)) and 15d- 15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this Annual Report. Our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost benefit relationship of possible controls and procedures. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were not effective at the reasonable assurance level as of June 30, 2022, due to the material weaknesses in our internal control over financial reporting described below. Management’s assessment of the effectiveness of our disclosure controls and procedures is expressed at a level of reasonable assurance because management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives. 

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

Significant Reliance on Key Individuals. There is inadequate segregation of duties in place related to our financial reporting and other management review and oversight procedures due to the lack of sufficient accounting personnel. This is not inconsistent with similar small fast-growing organizations. This gives rise to the risk of lack of ability to react in a timely manner to operations issues and meet increased US GAAP/PCAOB/SOX/SEC registrant requirements. In addition, this poses the risk that compliance and other reporting obligations are not adequately dealt with.

Controls over the financial statement close and reporting process. Controls were not adequately designed in the financial statement close and reporting process. This includes controls related to complex and judgmental accounting transactions including business acquisitions, manual journal entries, account reconciliations and financial statement disclosures.

Information and Technology Controls. There are control deficiencies related to information technology (“IT”) general controls that aggregate into a material weakness. The inadequate design of these IT general and application controls prevent the system from providing complete and accurate information consistent with financial reporting objectives. Deficiencies identified include lack of controls over access to programs and data, program changes, program development, program changes and general IT controls.

Data from third parties. The Company did not properly design or implement controls to ensure that data received from third parties is complete and accurate. Such data is relied on by the Company in determining amounts pertaining to revenue and cryptocurrency assets is complete and accurate.

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Fixed asset verification. The Company did not properly execute its designed controls around physical asset verification at US mining sites. Together with system limitations, restricting tracking of fixed asset movements, there is a risk around the existence of fixed assets. The root cause is the lack of sufficient capable personnel to perform physical asset inspections, combined with system limitations.

  

Notwithstanding the identified material weaknesses and management’s assessment that our internal control over financial reporting was not effective as of June 30, 2022, management believes that the consolidated financial statements included in this quarterly Report on Form 10-Q fairly present, in all material respects, our financial condition, results of operations and cash flows as of and for the periods presented in accordance with generally accepted accounting principles. We rely on the assistance of outside advisors with expertise in these matters in preparing the financial statements. 

Remediation

Our Board of Directors and management take internal control over financial reporting and the integrity of our financial statements seriously. Our management continues to work to improve its controls related to our material weaknesses. With the oversight of senior management and our audit committee, we have begun taking steps to remediate the underlying causes of the identified material weaknesses, primarily through the performance of a risk assessment process; the development and implementation of formal, documented policies and procedures, improved processes and control activities (including an assessment of the segregation of duties); as well as the hiring of additional finance personnel for specific roles such as financial reporting. During the first and second quarter of 2022, we made the following changes to our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting: 

  

   ●  We have performed a risk assessment and designed controls for all significant business processes. We have continued implementation of entity level and process level controls with respect to the preparation and review of our consolidated financial statements as well as transactional level controls over all significant business processes and IT. We have developed process level controls relating to the review of manually prepared analyses and supporting information used to prepare our consolidated financial statements. We are in the process of implementing and validating these controls. At this time, we cannot state whether these controls will prove to be effective. Using criteria set forth by Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control, we have developed a plan to assess the effectiveness of the internal control structure and procedures as at the end of the fiscal year.   

  

The material weaknesses in our internal control over financial reporting will not be considered remediated until other information technology general controls and process-level controls operate for a sufficient period of time and can be tested and concluded by management to be designed and operating effectively. We cannot provide any assurance that these remediation efforts will be successful or that our internal control over financial reporting will be effective as a result of these efforts. In addition, we continue to evaluate and work to improve our internal control over financial reporting related to the identified material weaknesses, management may determine to take additional measures to address control deficiencies or determine to modify the remediation plan described above. 

Changes in internal control over financial reporting

Except for the remedial measures described above, there have been no other changes in our internal control over financial reporting (as defined in Rules 13a-15(f) or 15d-15(f) of the Exchange Act) that occurred during the most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

We are currently not, and have not been in the recent past, a party to any legal proceedings which may have or have had in the recent past significant effects on our financial position or profitability. However, we have been in the past, and may be from time to time in the future, named as a defendant in certain routine litigation incidental to our business.

Item 1A. Risk Factors

The Company’s risk factors were disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2021. In addition, the Company wishes to disclose the following risk factors.

Listing on The Nasdaq Capital Market (“Nasdaq”)

Although our common stock is currently listed on Nasdaq, we may not be able to continue to meet Nasdaq’s minimum listing requirements or those of any other national exchange. If we are unable to maintain listing on Nasdaq or if a liquid market for our common stock does not develop or is not sustained, our common stock may remain thinly traded. The Listing Rules of Nasdaq require listing issuers to comply with certain standards in order to remain listed on its exchange. If, for any reason, we should fail to maintain compliance with these listing standards and Nasdaq should delist our securities from trading on its exchange and we are unable to obtain listing on another national securities exchange, a reduction in some or all of the following may occur, each of which could have a material adverse effect on our shareholders:

● The liquidity of our common stock;

● The market price of our common stock;

● Our ability to obtain financing for the continuation of our operations;

● The number of investors that will consider investing in our common stock;

● The number of market makers in our common stock;

● The availability of information concerning the trading prices and volume of our common stock; and

● The number of broker-dealers willing to execute trades in our common stock.

The Cryptocurrency Industry has recently experienced a downturn

As of June 30, 2022, the price of Bitcoin was down by over 50% from the beginning of the year and many businesses in this industry have been impacted by this downturn. The fall in the Bitcoin price directly affects our ability to generate revenue. Further, volatility in energy prices has meant that the major input cost to generate Bitcoin has increased. In July of 2022, Celsius Networks, LLC and Celsius Mining LLC, filed for Chapter 11 bankruptcy. Celsius Mining LLC is one of our significant hosting customers and its failure to pay (or pay timely) amounts it owes to us when due could have a material adverse effect on our financial situation.

Inflation in the global economy could negatively impact our business and results of operations.

General inflation in the United States and around the world has risen to levels not experienced in recent decades. General inflation, including rising prices for energy, metals, components, and other inputs as well as rising wages negatively impact our business by increasing our operating costs. As a result of inflation, we have experienced and may continue to experience, cost increases. Although we may take measures to mitigate the impact of this inflation, if these measures are not effective, our business, financial condition, results of operations, and liquidity could be materially adversely affected. Even if such measures are effective, there could be a difference between the timing of when these beneficial actions impact our results of operations and when the cost of inflation is incurred.

Our business could be harmed by prolonged power and internet outages, shortages, or capacity constraints.

Our operations require a significant amount of electrical power and access to high-speed internet to be successful. If we are unable to secure sufficient electrical power, or if we lose internet access for a prolonged period, we may be required to reduce our operations or cease them altogether. If this occurs, our business and results of operations may be materially and adversely affected.

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We are subject to risks associated with our need for significant electrical power.

Our operations have required significant amounts of electrical power, and, as we continue to expand our mining fleet, we anticipate our demand for electrical power will continue to grow. If we are unable to continue to obtain sufficient electrical power on a cost-effective basis, we may not realize the anticipated benefits of our significant capital investments.

Additionally, our operations could be materially adversely affected by prolonged power outages. Therefore, we may have to reduce or cease our operations in the event of an extended power outage, or as a result of the unavailability or increased cost of electrical power. If this were to occur, our business and results of operations could be materially and adversely affected.

We may need to raise additional capital to continue our operations and execute our business strategy.

We expect that we may incur net losses for the foreseeable future. Accordingly, our ability to continue as a going concern and execute our business strategy depends on our ability to raise additional capital through equity, debt or structured financings, collaborations and strategic alliances or other similar types of arrangements.

Our capital needs have depended on, and will continue to depend on, many factors that are highly variable and difficult to predict, including:

● the rate of growth we choose to pursue;

● the cost of energy;

● the cost of key supplies, materials and equipment; and

● the price of Bitcoin;

At June 30, 2022, our cash and cash equivalents were approximately $2.50 million and our accumulated deficit was approximately $82.95 million. We incurred a net loss of approximately $13.98 million for the six-month period ended June 30, 2022. We may never become profitable. Based on some of our current operating plan estimates, we have sufficient cash to satisfy our working capital needs and other liquidity requirements over the next 12 months from the date of issuance of the accompanying consolidated financial statements. We may need to raise additional capital or significantly curtail our planned operations to remain a going concern.

Additional capital may not be available to us, or even if it is, the cost of such capital may be high. We may be forced to obtain additional capital when our stock price or trading volume or both are low, or when the general market for cryptocurrency companies is weak. Raising capital under any of these or similar scenarios, if we can raise any at all, may lead to significant dilution to our existing stockholders.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

During the three month period ended June 30, 2022, in addition to those sales previously disclosed in our filings with the SEC, we have issued and sold the following securities without registration under the Securities Act: 

On May 3, 2022, the Company issued 5,000 shares of its common stock to a service provider in exchange for $27,150 of services.  The issuance of the common stock was exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), pursuant to Section 4(a)(2) of the Securities Act and/or Rule 506(b) of Regulation D promulgated thereunder because, among other things, the transaction did not involve a public offering, the investor was an accredited investor, the investor took the securities for investment and not resale and the Company took appropriate measures to restrict the transfer of the securities.

Item 3. Defaults Upon Senior Securities

None

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None

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Item 6. Exhibits

2.1	Bid Implementation Agreement between Wize Pharma, Inc. and Cosmos Capital Limited, dated December 30, 2020 (Incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on January 5, 2021)
2.2	Deed of Amendment, dated January 18, 2021, of the Bid Implementation Agreement between Wize Pharma, Inc. and Cosmos Capital Limited, dated December 30, 2020 (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on January 19, 2021)
3.1	Certificate of Incorporation (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on April 5, 2012)
3.2	Certificate of Amendment to Certificate of Incorporation (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on July 18, 2013)
3.3	Certificate of Amendment to Certificate of Incorporation dated November 15, 2017 (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on November 21, 2017)
3.4	Certificate of Amendment to Certificate of Incorporation dated March 1, 2018 (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on March 5, 2018)
3.5	Certificate of Amendment to Certificate of Incorporation dated March 17, 2021 (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on March 23, 2021)
3.6	Certificate of Amendment to Certificate of Incorporation dated June 9, 2021 (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on June 14, 2021)
3.7	Certificate of Amendment to Certificate of Incorporation dated August 11, 2021 (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on August 16, 2021)
3.8	Certificate of Registration of a Company of Cosmos Capital Limited ACN 636 458 912 (Incorporated by reference to the Company’s Registration Statement on Form S-1 (File No. 333-256947) filed with the SEC on June 9, 2021)
3.9	Constitution of Cosmos Capital Limited (Incorporated by reference to the Company’s Registration Statement on Form S-1 (File No. 333-256947) filed with the SEC on June 9, 2021)
3.10	Bylaws (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on May 10, 2013)
4.1	Form of Indenture filed as Exhibit 4.1 to the Company’s Registration Statement on Form S-3 filed April 1, 2022
31.1*	Certification of Principal Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of Principal Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002.
32**	Certifications of Principal Executive Officer and Principal Financial Officer under Section 906 of the Sarbanes-Oxley Act of 2002.
99.1*	Press Release
99.2*	Investor Presentation
101	The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2022, formatted in Inline XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021, (ii) Consolidated Statements of Operations for the three and six months ended June 30, 2022 and 2021, (iii) Consolidated Statements of Cash Flows for the six months ended June 30, 2022 and 2021, and (iv) Notes to Consolidated Financial Statements
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

* Filed herewith.

** Furnished herewith.

39

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Mawson Infrastructure Group Inc.
Date: August 22, 2022	By:	/s/ James Manning
		James Manning, Chief Executive Officer
		(Principal Executive Officer)
Date: August 22, 2022	By:	/s/ Ariel Sivikofsky
		Chief Financial Officer
		(Principal Financial and Accounting Officer)

40

EX-31.1

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

I, James Manning, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Mawson Infrastructure Group Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the unaudited condensed consolidated financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

	MAWSON INFRASTRUCTURE GROUP INC.
Date: August 22, 2022	By:	/s/ James Manning
		James Manning
		Chief Executive Officer (Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

I, Ariel Sivikofsky, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Mawson Infrastructure Group Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the unaudited condensed consolidated financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

	MAWSON INFRASTRUCTURE GROUP INC.
Date: August 22, 2022	By:	/s/ Ariel Sivikofsky
		Ariel Sivikofsky
		Chief Financial Officer (Principal Financial Officer)

EX-32

Exhibit 32

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Mawson Infrastructure Group Inc. (the “Company”) for the period ended June 30, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, James Manning, Chief Executive Officer of the Company, and Ariel Sivikofsky, Chief Financial Officer of the Company, each hereby certifies, pursuant to 18 U.S.C. Section 1350, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

	MAWSON INFRASTRUCTURE GROUP INC.
Date: August 22, 2022	By:	/s/ James Manning
		James Manning
		Chief Executive Officer
		(Principal Executive Officer)

	MAWSON INFRASTRUCTURE GROUP INC.
Date: August 22, 2022	By:	/s/ Ariel Sivikofsky
		Ariel Sivikofsky
		Chief Financial Officer
		(Principal Financial Officer)

EX-99.1

Exhibit 99.1

 

Mawson Infrastructure Group Announces Financial Results for Second Quarter 2022

Q2 2022 revenue of $19.8 Million, up 236% vs Q2 2021

Q2 2022 non-GAAP EBITDA of $13.7 Million, up 756% v Q2 2021

Q2 2022 gross profit of $5.4 Million, flat v Q2 2021

490 Self-mined Bitcoin produced in Q2 2022, up 286% v Q2 2021

Mawson has approximately 40,000 ASIC Bitcoin Miners deployed across its Self-Mining and Hosting Co-location businesses

Mawson Energy Demand Response Program Participation Commences

Atlanta, Georgia and Sydney Australia — August 22nd, 2022 — Mawson Infrastructure Group Inc. (NASDAQ:MIGI) (“Mawson”), a digital infrastructure provider, is pleased to announce business highlights and financial results for the second quarter of 2022.

Q2 2022 Financial and Business Highlights

● Q2 2022 revenue of $19.8 Million, up 236% vs Q2 2021

● Q2 2022 non-GAAP EBITDA of $13.7 Million, up 756% v Q2 2021

● Q2 2022 gross profit of $5.4 Million, flat v Q2 2021

● 490 Self-mined Bitcoin produced in Q2 2022, up 286% v Q2 2021

● Mawson Energy Demand Response Program Participation Commences

● Mawson has approximately 40,000 ASIC Bitcoin Miners deployed across its Self-Mining and Hosting Co-location businesses

● Hosting Co-location revenue of $3.57 Million, up 536% v Q1 2022

● 230-megawatt expansion at Georgia, USA facility commences, capable of accommodating up to 7.5 Exahash

● New 120 megawatt Texas Bitcoin Mining Facility signed in partnership with JAI Energy and Texas Pacific Land Corporation (NASDAQ:TPL), capable of accommodating up to 4.0 Exahash

● Positive energy load study received for Mawson’s second Pennsylvania site in the town of Sharon, with 120 megawatts of capacity capable of accommodating up to 4.0 Exahash

● Mawson to become 33% shareholder in Tasmania Data Infrastructure, developer of a large-scale hydro powered Bitcoin Mining Facility in Australia

Subsequent to Quarter End

● $10 Million in new capital raised in July to continue to build out digital infrastructure, potential strategic transactions and for general corporate purposes, including working capital.

2022/23 Strategic Focus

● Expand existing Bitcoin Self-Mining operations from the end of July hash rate of 1.7 Exahash, to our anticipated 2.3 Exahash by Q4, 2022 and on to our anticipated 5.5 Exahash in 2023.

● Expand Mawson’s hosting co-location business from the 1.8 Exahash (54 megawatts) online at the end of June to our anticipated 3.0 Exahash (100 megawatts) by Q4, 2022 and on to our anticipated 6.5 Exahash (200 megawatts) in 2023.

● Continue to develop the company’s Georgia, Pennsylvania, Texas and Australian Bitcoin Mining facilities.

● Continue to evaluate opportunities to decrease the overall costs of Bitcoin production.

● Continue with our strong ESG focus across our business.

 

Aerial view of Sandersville, Georgia facility ~ 80-megawatts / 41 Modular Data Centers (July 2022)

 

Aerial view of Midland, Pennsylvania facility expansion (July 2022)

2

James Manning, CEO and Founder of Mawson Infrastructure, said, "Q2 2021 was a solid operational quarter for our business. We increased our Bitcoin Self-Mining operational footprint, producing 490 Bitcoin, delivered Q2 revenue of $19.8 million, up 236% vs Q2 2021, delivered Q2 gross profit of $5.4 million, flat vs Q2 2021, and posted Q2 non-GAAP EBITDA of $13.7 million, up 756% vs Q2 2021. Our hosting co-location business accelerated in Q2 – ending the quarter with 54 megawatts of hosting co-location online. Mawson also commenced its Energy Demand Response Program late in Q2, receiving revenue and reducing overall costs as a result. In exciting news, we commenced work to expand our Georgia Bitcoin Mining facility to 230-megawatts, expected to be online in 2023 which is capable of accommodating up to 7.5 Exahash, signed a new 120 megawatt facility in Texas in partnership with Texas Pacific Land Corporation (NASDAQ:TPL), capable of accommodating up to 4.0 Exahash, and received a positive energy load study for our second site in Pennsylvania in the town of Sharon, with 120 megawatts of capacity, which is also capable of accommodating up to 4.0 Exahash. The pipeline of strong demand for our hosting co-location business – which adds an additional revenue stream for the group paid in USD – continues to be solid, and we look forward to updating stockholders on this front in due course.”

Conference Call Details:

The company has scheduled a webcast for August 22, 2022 at 5:00 p.m. Eastern Time, to discuss results for the second quarter of 2022.

A new Investor Presentation will be available on the website at www.mawsoninc.com prior to the call.

Conference Call Information:

Date: Monday, August 22, 2022

Time: 5:30 p.m. Eastern Time

Dial in Number for U.S. Callers: 1-877-407-4018

Dial in Number for International Callers: 1-201-689-8471

Please Reference Conference ID: 13731984

The call will also be accompanied live by webcast and will be accessible at:

https://viavid.webcasts.com/starthere.jsp?ei=1561902&tp_key=1890ad1a4d

To join the live conference call, please dial in to the above referenced telephone numbers five to ten minutes prior to the scheduled conference call time.

A replay will be available starting on August 22, 2022 at approximately 8:30 p.m. ET through September 5, 2022 at 11:59 P.M. ET. To access the replay, please dial 1-844-512-2921 in the U.S. and 1-412-317-6671 for international callers. The conference ID# is 13731984.

###

3

About Mawson Infrastructure

Mawson Infrastructure Group (NASDAQ: MIGI) is a digital infrastructure provider, with multiple operations throughout the USA and Australia. Mawson’s vertically integrated model is based on a long-term strategy to promote the global transition to the new digital economy. Mawson matches sustainable energy infrastructure with next-generation mobile data centre (MDC) solutions, enabling low-cost Bitcoin production and on-demand deployment of infrastructure assets. With a strong focus on shareholder returns and an aligned board and management, Mawson Infrastructure Group is emerging as a global leader in ESG focused Bitcoin mining and digital infrastructure.

For more information, visit: www.mawsoninc.com

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Mawson cautions that statements in this press release that are not a description of historical fact are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of words referencing future events or circumstances such as “expect,” “intend,” “plan,” “anticipate,” “believe,” and “will,” among others. Because such statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. These forward-looking statements are based upon Mawson’s current expectations and involve assumptions that may never materialize or may prove to be incorrect. Actual results and the timing of events could differ materially from those anticipated in such forward-looking statements as a result of various risks and uncertainties, which include, without limitation, the possibility that Mawson’s need and ability to raise additional capital, the development and acceptance of digital asset networks and digital assets and their protocols and software, the reduction in incentives to mine digital assets over time, the costs associated with digital asset mining, the volatility in the value and prices of cryptocurrencies and further or new regulation of digital assets. More detailed information about the risks and uncertainties affecting Mawson is contained under the heading “Risk Factors” included in Mawson’s Annual Report on Form 10-K filed with the SEC on March 21, 2022 and Mawson’s Quarterly Report on Form 10-Q filed with the SEC on May 16, 2022, and August 22, 2022, and in other filings Mawson has made and may make with the SEC in the future. One should not place undue reliance on these forward-looking statements, which speak only as of the date on which they were made. Because such statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. Mawson undertakes no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they were made, except as may be required by law.

Investor Contact:

Brett Maas
646-536-7331
brett@haydenir.com
www.haydenir.com

4

EX-99.2

Exhibit 99.2 

Q2 2022 Investor Presentation THE DIGITAL ASSET COMPANY Q2 FY2022 Investor Presentation NASDAQ: MIGI August 2022

Q2 2022 Investor Presentation Q2 2022 Investor Presentation 2 LEGAL DISCLAIMER Information contained herein is derived from various internal and external sources which are deemed reliable, but no representations or warranties are made by Company, or any of its affiliates, employees or representatives as to the accuracy or completeness of such information. The Company has not independently verified any of the information set forth in this Presentation. No representation is made as to the reasonableness of the assumptions within or the accuracy or completeness of any projections or modelling or any other information contained herein. Any data on past performance or modelling contained herein is not an indication as to future performance. The Company assumes no obligation to update the information in this Presentation. The information contained in this Presentation does not purport to contain all of the information that a prospective investor may desire. In all cases, interested parties should conduct their own investigation and analysis of Company and the information contained herein. Except as otherwise expressly indicated, this Presentation speaks as of the date hereof. The Company, does not undertake to update the information contained herein, correct any inaccuracies that may become apparent or provide the recipient with access to any additional evaluation material. The delivery of this Presentation does not imply that there has been no change in Company’s affairs after the date hereof. This Presentation is not a prospectus, disclosure document or offering document, and does not constitute an offer or invitation to apply for securities under any. In particular, this Presentation shall not form the basis of or be relied on in connection with any contract or commitment whatsoever. FORWARD LOOKING STATEMENTS/USE OF PROJECTIONS Statements made in this presentation include forward - looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward - looking statements can be identified by the use of words as “may,” “will,” “plan,” “should,” “expect,” “anticipate,” “estimate,” “continue,” target,” or comparable terminology. All financial forecasts are forward - looking statements, are for illustrative purposes only and should not be relied upon as being necessarily indicative of future results. All forward - looking statements are inherently subject to certain risks, trends and uncertainties, many of which the Company cannot predict with accuracy and some of which the Company might not even anticipate and involve factors that may cause actual results to differ materially from those projected or suggested. Readers are cautioned not to place undue reliance on these forward - looking statements and are advised to consider the factors listed above together with the additional factors under the heading “Risk Factors” in the Company's Annual Report on Form 10 - K filed with the SEC on March 21 2022, as may be supplemented or amended by future filings of the Company. The Company assumes no obligation to update or supplement forward - looking statements that become untrue because of subsequent events, new information or otherwise. More specifically, it is impossible to forecast what the price of bitcoin or the hash rate difficulty will be on any specific date, or when all the Company's miners are expected to be deployed. This presentation is for illustrative purposes only to provide the reader with an estimate of the Company's potential gross revenue, mining power and hosting costs, which might be attained if all miners were deployed as of a specific date and with certain parameters used, as set forth below. The Bitcoin Self - Mining parameters used were hash rates of 1.7 EH, 2.3 EH and 5.50 EH, Bitcoin price assumption of $25,000 and network difficulty as at 15 August 2022. NO OFFER OR SOLICITATION This presentation shall not constitute a solicitation of a proxy, consent or authorization with respect to any securities. This presentation shall also not constitute an offer to sell or the solicitation of an offer to buy any securities. No offer, sale or solicitation of any securities shall be made in any jurisdiction in which such offer, sale or solicitation would be prohibited. NEITHER THE SECURITIES AND EXCHANGE COMMISSION (“SEC”) NOR ANY STATE HAS APPROVED OR DISAPPROVED OF THE SECURITIES OR DETERMINED IF THIS PRESENTATION IS TRUTHFUL OR COMPLETE. INVESTOR NOTICES Investing in our securities involves a high degree of risk. Before making an investment decision, you should carefully consider the risks, uncertainties and forward - looking statements described under “Risk Factors” in our most recent SEC filings including our Annual Report on Form 10 - K filed with the SEC on March 21 2022 and our Quarterly Reports on Form 10 - Q filed with the SEC on May 16, 2022, and August 22, 2022. If any of these risks were to occur, our business, financial condition or results of operations would likely suffer. In that event, the value of our securities could decline, and you could lose part or all of your investment. The risks and uncertainties we describe are not the only ones facing us. Additional risks not presently known to us or that we currently deem immaterial may also impair our business operations. In addition, our past financial performance may not be a reliable indicator of future performance, and historical trends should not be used to anticipate results in the future. Lastly, with the current worldwide situation caused by COVID - 19, supply - chain disruptions and general inflation there can be no assurances as to when we may see any long - term sustained recovery in the bitcoin market, and if so, whether any recovery might be significant. NON - GAAP FINANCIAL MEASURES T he Company utilizes a number of different financial measures, both GAAP and non - GAAP, in analyzing and assessing its overall business performance, for making operating decisions and for forecasting and planning future periods. The Company considers the use of non - GAAP financial measures helpful in assessing its current financial performance, ongoing operations and prospects for the future. While the Company uses non - GAAP financial measures as a tool to enhance its understanding of certain aspects of its financial performance, the Company does not consider these measures to be a substitute for, or superior to, the information provided by GAAP financial measures. Consistent with this approach, the Company believes that disclosing non - GAAP financial measures to the readers of its financial information provides such readers with useful supplemental data that, while not a substitute for GAAP financial measures, allows for greater transparency in the review of its financial and operational performance. Investors are cautioned that there are inherent limitations associated with the use non - GAAP financial measures as an analytical tool. In particular, non - GAAP financial measures are not based on a comprehensive set of accounting rules or principles and many of the adjustments to the GAAP financial measures reflect the exclusion of items that are recurring and will be reflected in the Company’s financial results for the foreseeable future. In addition, other companies, including other companies in the Company’s industry, may calculate non - GAAP financial measures differently than the Company does, limiting their usefulness as a comparative tool.

Q2 2022 Investor Presentation 3 FULLY PAID & DELIVERED BITCOIN SELF - MINING CAPACITY Focused on Bitcoin Self - Mining, Hosting Co - location services and Energy Markets, Mawson’s integrated model is based on a long term strategy to assist in the global transition to a digital and decarbonised society. 5.3 EH 1 2.3 EH 590 MW SITES 5 1. Assumes all equipment deployed and 100% online, plus the construction of all contracted sites on time, actual results are lik ely to vary in a negative manner. Construction delays are common and it is rare for all equipment to be deployed and 100% online, however accurate historical downtime averages are difficult to calculate and also may not provide an accurate picture du e to differences moving forward. Investors should consider all risk factors related to uptime when considering these figures, which are a best case scenario. Annualised revenue is based on BTC USD$25k and difficulty as at 15 August 2022. Please see Coinwarz Bitcoin Mining Calculator at https://www.coinwarz.com/mining/bitcoin/calculator . The above information is for general information purposes only, and are forward looking statements which should not be relied upon as being necessaril y i ndicative of future results. Mawson takes no responsibility for the accuracy of third party information, including websites. Online calculator excludes overheads and fees (except pool fees). The above information should be read in conjunction with th e d isclaimer on page 2. Please see our Risk Factors in our Annual Report on Form 10 - K filed March 21, 2022, under the Sub - Heading Risks Relating to Our Business and Management for important risks related to our Self - Mining. 2. Approximately 100 megawatts (MW) is currently allocated to Mawson’s Hosting Co - location customers, see page 7 for further detail s. Contracted energy capacity delivery is not guaranteed and is subject to decreases in various circumstances such as times of high energy use . 3. 2020 carbon offset with carbon credits, 2021 carbon footprint assessment and offset underway. 3.0 EH Approximately 3.5 Exahash online as at end July 2022 4 USA + 1 AUS (3 OPERATING) Bitcoin mining & hosting co - location 3 2 Net Zero Carbon HOSTING CO - LOCATION AGREEMENTS IN PLACE ANTICIPATED SELF - MINING & HOSTING OPERATIONAL CAPACITY BY Q4 2022 Mawson at a glance Total energy infrastructure capacity available for Bitcoin Mining Approximately 1.7 EH online as at end July 2022 Approximately 1.8 EH online as at end July 2022

Q2 2022 Investor Presentation 4 Financial Highlights Operational Highlights Strategic Highlights Headline Results Q2 FY2022 33% Mawson to become 33% shareholder in Tasmania Data Infrastructure, developer of a large - scale hydro powered Bitcoin Mining Facility in Australia $10 M New capital raised in July (subsequent to quarter end) 120 MW New Bitcoin Mining Facility Signed in Texas, USA 120 MW New Bitcoin Mining Facility in Sharon, Pennsylvania, USA Δ (Q2 FY2021) Revenue $ 19.8 M +236% Gross Profit $ 5.4 M flat EBITDA (Non - GAAP) $ 13.7 M +756% Bitcoin produced from Self - Mining 490 +286% 230 - Megawatt Sandersville, GA facility expansion commences 230 MW (~7.5EH) Participation in Energy Demand Response Program commences 1H FY2022 949 Self - Mined Bitcoin produced 949 BTC Approximately 40,000 ASIC Bitcoin Miners deployed across operations as at 30 June, 2022 40,000

Q2 2022 Investor Presentation 5 Q2 - 22 ($M) Q1 - 22 ($M) Δ ($M) ASSETS Cash and cash equivalents $2.5 $5.8 ($3.3) Property and equipment, net $148.9 $102.5 $46.4 Equipment deposits $2.8 $41.7 ($38.9) Derivative assets $17.7 - $17.7 Other Assets $19.9 $16.0 $3.9 Total Assets $191.8 $166.0 $25.8 Trade and other payables $47.0 $14.0 $33.0 Borrowings $38.9 $43.0 ($4.1) Other Liabilities $4.8 $5.1 ($0.3) Total Liabilities $90.7 $62.1 $28.6 Net Assets $101.1 $103.9 ($2.8) June 30, 2022 Balance Sheet 1 Q2 FY2022 Summary 1. Balance sheet presented in a non - GAAP basis. Please see page 17 for reconciliation to statutory GAAP accounts per 10Q. 5.6 8.4 15.8 11.0 5.4 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Gross Profit ($M) 1.6 2.9 10.0 4.5 13.7 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Non - GAAP EBITDA ($M) 5.9 10.9 19.5 19.4 19.8 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Revenue ($M)

Q2 2022 Investor Presentation 6 1. Assumes all equipment deployed and 100% online, plus the construction of all contracted sites on time, actual results are lik ely to vary in a negative manner. Construction delays are common and it is rare for all equipment to be deployed and 100% online, however accurate historical downtime averages are difficult to calculate and also may not provide an accurate pi ctu re due to differences moving forward. Investors should consider all risk factors related to uptime when considering these figures, which are a best case scenario. Annualised revenue is based on BTC USD$25k and network difficulty as at 15 August 2022. Please see Coinwarz Bitcoin Mining Calculator at https://www.coinwarz.com/mining/bitcoin/calculator . The above information is for general information purposes only, and are forward looking statements which should not be relied upo n a s being necessarily indicative of future results. Mawson takes no responsibility for the accuracy of third party information, including websites. Online calculator excludes overheads and fees (except pool fees). The above information shou ld be read in conjunction with the disclaimer on page 2. Please see our Risk Factors in our Annual Report on Form 10 - K filed March 21, 2022, under the Sub - Heading Risks Relating to Our Business and Management for important risks related to our Sel f - Mining. 2. Approximately 100 megawatts (MW) is currently allocated to Mawson’s Hosting Co - location customers, see page 7 for further details. Mawson Self - Mining July 2022 Anticipated Q4 2022 1 Δ Anticipated 2023 2 Δ Capacity (MW) 2 590 MW 800 MW +210 MW 1,000 MW +200 MW Total Exahash (EH) Online 1.7 E H 2.3 EH +0.6 EH 5.5 EH +3.2 EH BTC Mining Production / day 7.5 BTC /day 1 10.5 BTC /day 1 +3.0 BTC 24.5 BTC /day +14.0 BTC Annualised Revenue 1 ~$68.5M ~$95.8M +$27.3M ~$223.5M +$127.7M Mining Revenue Operating Costs Mawson Hashrate Network Hashrate ASIC Miner power consumption Block reward 6.25 BTC + TXN fees Datacentre power usage 52,560 Blocks per year Power price Bitcoin price Other operating costs = = x + x x x +

Q2 2022 Investor Presentation 7 Mawson Hosting Co - location July 2022 Anticipated Q4 2022 1 Δ Anticipated 2023 1 Δ Contracted Hosting Customers (MW) 100 MW 120 MW +20MW 200 MW +80MW Hosting Exahash (EH) Capacity 13.5 EH 20.5 EH +7.0 EH 27.0 EH +6.5 EH 1. Exahash capacity assumes installation of current generation ASIC Bitcoin Mining hardware including but not limited to Bitmain S19J Pro, MicroBT M30/1, Avalon A1246 assuming approximately 30 megawatt per 1 Exahash . M awson leverages its surplus infrastructure capacity to generate an additional revenue stream, comprising hosting co - location services. Aerial view of Midland, Pennsylvania Bitcoin Mining Facility Expansion. Hosting Exahash (EH) Online 1.8 EH 3.0 EH +1.2 EH 6.5 EH +3.5 EH

Q2 2022 Investor Presentation 8 Mawson Energy Demand Response with Tonnes of CO2 emissions avoided Equivalent to avoiding: M awson engages in Energy Demand Response Programs across its operations, releasing energy capacity back into the grid and curtailing as part of its overall power management strategy. This program is m anaged by Voltus , Inc, Mawson and our energy consultants. Supporting local energy networks Reduced overall operating costs 7,488 11,264 MWh Total Load Reduction FY 2022 year to date 17,414 Barrels of oil consumed Equivalent to carbon sequestered by: 124,800 Tree seedlings grown for 10 years

Q2 2022 Investor Presentation 9 26 Years Sandersville, GA USA Midland, PA USA New South Wales AUS Secure Energy Pipeline Energy Infrastructure underpins future growth Energy infrastructure capacity available for Bitcoin Self - Mining and Hosting Co - location currently 590MW Proven history of efficient and rapid modular site development Expansion and development of existing facilities Future development pipeline We focus on identifying stranded and distressed energy infrastructure Over 500MW pipeline of energy projects 230MW 100 MW + 20 MW Pipeline Sites 1 +500 MW 15 Years 7 Years Lease term 20 MW Texas USA 120MW 15 Years 1. Pipeline sites refer to real estate sites with access to stranded and distressed energy that we have identified and are in va rio us stages of commercial negotiations for purchase or lease. Sharon, PA USA 15 Years Existing Capacity Target Expansion 120MW 100MW 20MW

Q2 2022 Investor Presentation 10 Current Exahash Capacity Current MW capacity Future potential MW capacity Future potential Exahash Capacity Current Modular Data Centre Capacity Lease Term Tenancy Type Energy Mix Sharon, PA USA 4.0 EH 120 MW - - 60 15 Years Long - term lease TBC Sandersville, GA USA 7.5 EH 230 MW - - 115 26 Years Long - term lease with option to buy ~75% carbon - free (carbon credits for balance) Texas USA 4.0 EH 120 MW - - 60 15 Years Long - term lease ~50% carbon - free (carbon credits for balance) Midland, PA USA 3.3 EH 100 MW +20 MW +0.65 EH 50 15 Years Long - term lease 100% carbon - free New South Wales AUS 0.4 EH 20 MW - - 10 7 Years Long - term lease 100% renewable Current Total 19.2 EH 1 590 MW +20MW +0.65 EH 295 - - - Compelling Bitcoin Mining Facilities 1. Exahash capacity assumes installation of current generation ASIC Bitcoin Mining hardware including but not limited to Bitmain S19J Pro, MicroBT M30/1, Avalon A1246 assuming approximately 30 megawatt per 1 Exahash .

Q2 2022 Investor Presentation 11 11 Mawson’s Infrastructure First Approach 1 Strict ROIC assessment of sites 2 Modular Data Centre (MDC) IP 3 Long - term agreements 4 ESG & Social Impact focus • High quality, stable and supportive jurisdictions • Selection of sites with stranded/under - utilised energy infrastructure especially in regional areas • Target low cost of energy across portfolio • Design allows for rapid deployment in most climates • One of the lowest costs of deployment in the industry • Flexibility to rapidly re - deploy equipment across facilities • Secured long - term agreements for key sites • Target sites that satisfy a Net Zero Carbon 2030 strategy • Site criteria includes targeting n on - carbon emitting energy mix greater than 75% • Deep community engagement to win local support / social licence to operate • Dedicated carbon offset program : demonstrated contribution to major projects Sharon, PA USA 15 Years Georgia, USA 26 Years Midland, PA USA 15 Years New South Wales, AUS 7 Years Texas, USA 15 Years Q2 2022 Investor Presentation 11

Q2 2022 Investor Presentation 12 ESG Focus 100,000 22,277 Tonnes of C0 2 Offsets purchased in 2020, 2021 carbon footprint being assessed/offset Georgia, USA • Platinum sponsor of School Athletics Programs • Mawson Group Academic Scholarship • Mawson and Brentwood School Career Pathways Program • Christmas Tree giveaway • Washington County Regional Medical Centre Pennsylvania, USA • Mawson supporter of Buhl Park (community park) • Community College Beaver County Scholarship Program • Lincoln Park Performing Arts Centre Supporter • Beaver Falls Park sponsorship • Heritage Valley Health System Supporter A responsible, accountable and ethical approach to corporate governance underpins the way we do business. • Independent Board of Directors • Code of Ethics and Business Conduct • Audit & Remuneration Committee Net Zero Carbon Socially Engaged Governance Framework Trees Planted by the end of 2022 New South Wales, AUS • Major sponsor of Far North Coast Men's/Women's/Junior Rugby Union 7,488 Tonnes of CO2 emissions avoided through Energy Demand Response Program

Q2 2022 Investor Presentation 13 Highly experienced Management & Board 25 years with AGL Energy (AGL.ASX), Australia’s largest energy generator/retailer, 5 years as CEO and Managing Director 15 years management experience across technology, accounting, logistics, property development 30 years experience across financial services. Previous Commercial Director of Sealink Travel Group (SLK.ASX) 25 years experience in public markets, having served as CFO of numerous public and private companies on the NASDAQ and ASX James Manning Founder & CEO Greg Martin Independent Non - Executive Chair Michael Hughes Independent Non - Exec Director Yossi Keret Independent Non - Exec Director Board FCA with over 25 years of experience in financial stewardship. He has worked in public practice with KPMG and Deloitte 16 years experience in senior operational management roles across multiple industries 15 years experience in financial markets and funds management 15 years’ experience in business leadership and delivery of major projects Ariel Sivikofsky Chief Financial Officer Liam Wilson Chief Operating Officer Nick Hughes - Jones Chief Commercial Officer Craig Hibbard Chief Development Officer Key employees 15 years’ legal experience across technology, banking and asset management, formerly with Macquarie Bank, ANZ Bank and HUB24 Tom Hughes General Counsel 20 years’ experience across technology, communications and marketing, primarily in the telecommunications and IT industries Heath Donald Chief Marketing Officer

Q2 2022 Investor Presentation 14 Ticker NASDAQ:MIGI Share price $0.99 S hares outstanding 81,241,906 $80M Market capitalisation Mawson Register 76% 24% Based on share price as at 15 August, 2022 Board and Management 19% External Investors 81% High Insider ownership

Q2 2022 Investor Presentation 15 Mawson Infrastructure Group A strong platform for sustainable growth 1. 2020 carbon offset with carbon credits, 2021 carbon footprint currently being assessed/offset. 2. https://www.prnewswire.com/news - releases/bitcoin - miners - revenue - rose - 206 - in - 2021 - 301482452. html . 3. Please see our Risk Factors in our Annual Report on Form 10 - K filed March 21, 2022, under the Sub - Heading Risks Relating to Our Business and Management for important risks related to our Self - Mining Hash Rate. Rapid Growth and Scale Bitcoin Self - Mining and Hosting Co - location growth 0.2 EH in July 2021 3.5 EH in July 2022 5.3 EH target Q4 2022 12.0 EH target FY 2023 Infrastructure First Approach Owner/Operator of Bitcoin Self - Mining, Hosting Co - location Facilities, and Modular Data Centres (MDC) 5 Secured Locations (3 Operating) 4 USA sites, 1 AUS site Sustainable Bitcoin Mining N et Zero Carbon Bitcoin Mining/Hosting 1 Strategic Relationships Purpose Investments, Inc Canaan Inc (NASDAQ:CAN) Texas Pacific Land Corporation (NYSE:TPL) Voltus , Inc Lowest quartile operator - Large revenue opportunity Low costs of deployment per megawatt and costs of production ~$15BN bitcoin mining revenue in 2021 2 High insider ownership ~19% owned by directors and senior management

Q2 2022 Investor Presentation 16 Reconciliation of Non - GAAP Metrics Q2 Balance Sheet Net loss (GAAP) ($2.4) Net other expenses 1 ($0.8) Depreciation & amortisation 2 $16.0 Share Based Payments 3 $0.9 EBITDA (Non - GAAP) $13.7 1. Adjustments for – realized and unrealized gains and losses, non - operating income/(expense), impairment of financial assets. 2. Reverses out accelerated depreciation effect 3. Reverses out share - based payments 4. Round ing to millions Q2 EBITDA + Gross Profit Pages 4/5 identifies some non - GAAP financial metrics, which require reconciliation to the statutory GAAP numbers. We set them out as follows: Page 5 identifies some non - GAAP financial metrics, which require reconciliation to the statutory GAAP numbers. We set them out as follows: Revenue $19.8 Less Cost of Revenues ($14.4) GROSS PROFIT (GP) $5.4 Assets Cash and cash equivalents Cash $2.5M Property and equipment, net $148.9M Equipment deposits $2.8M Derivative Assets $17.7M Other Assets Trade and other receivables $13.7M Right of use assets $4.6M Marketable securities $1.6M Total Assets $191.8M Liabilities Trade and other payables $47.0M Borrowings $38.90M Other Liabilities Lease liability $4.8M Total Liabilities $90.7M

Q2 2022 Investor Presentation Level 5, 97 Pacific Highway North Sydney, NSW, Australia, 2060 info@mawsoninc.com Brett Mass Hayden IR mawson@haydenir.com Investor Relations Head Office

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Document And Entity Information - shares	6 Months Ended
	Jun. 30, 2022	Aug. 16, 2022
Document Information Line Items
Entity Registrant Name	Mawson Infrastructure Group Inc.
Trading Symbol	MIGI
Document Type	10-Q
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		81,249,768
Amendment Flag	false
Entity Central Index Key	0001218683
Entity Current Reporting Status	Yes
Entity Filer Category	Non-accelerated Filer
Document Period End Date	Jun. 30, 2022
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q2
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Document Quarterly Report	true
Document Transition Report	false
Entity File Number	001-40849
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	88-0445167
Entity Address, Address Line One	Level 5
Entity Address, Address Line Two	97 Pacific Highway
Entity Address, City or Town	North Sydney NSW
Entity Address, Country	AU
Entity Address, Postal Zip Code	2060
City Area Code	+61 2
Local Phone Number	8624 6130
Title of 12(b) Security	Common Stock, par value $0.001 per share
Security Exchange Name	NASDAQ
Entity Interactive Data Current	Yes

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Consolidated Condensed Balance Sheets - USD ($)	Jun. 30, 2022	Dec. 31, 2021
Current assets:
Cash and cash equivalents	$ 2,493,826	$ 5,467,273
Prepaid expenses	5,292,034	332,154
Trade and other receivables	4,211,903	5,606,780
Cryptocurrencies	43,967	40,800
Total current assets	12,041,730	11,447,007
Property and equipment, net	148,938,221	76,936,850
Derivative asset	17,714,357
Equipment deposits	2,788,722	51,369,216
Financial assets	1,638,027	326,801
Security deposits	4,153,184	1,246,236
Operating lease right-of-use asset	4,570,100	3,968,262
Total assets	191,844,341	145,294,372
Current liabilities:
Trade and other payables	47,046,288	7,746,988
Current portion of operating lease liability	1,451,655	1,222,382
Current portion of finance lease liability	29,643	8,105
Borrowings	19,473,292	11,095,388
Total current liabilities	68,000,878	20,072,863
Operating lease liability, net of current portion	3,218,546	2,962,765
Finance lease liability, net of current portion	99,046	38,764
Long-term borrowings	19,404,697	7,639,391
Total liabilities	90,723,167	30,713,783
Commitments and Contingencies (note 10)
Shareholders’ equity:
Additional paid-in capital; Common stock (120,000,000 authorized, 72,491,295 issued and outstanding $0.001 par value shares). Series A preferred stock (1,000,000 authorized shares; nil issued and outstanding as at June 30, 2022)	186,744,313	186,389,568
Accumulated other comprehensive income (loss)	(2,530,052)	(521,094)
Accumulated deficit	(82,952,860)	(71,123,259)
Total stockholders’ equity	101,261,401	114,745,215
Non-controlling interest	(140,227)	(164,626)
Total liabilities and stockholders’ equity	$ 191,844,341	$ 145,294,372

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Consolidated Condensed Balance Sheets (Parentheticals) - $ / shares	Jun. 30, 2022	Dec. 31, 2021
Common stock, shares authorized	120,000,000	120,000,000
Common stock, shares issued	72,491,295	72,491,295
Common stock, shares outstanding	72,491,295	72,491,295
Common stock, par value (in Dollars per share)	$ 0.001	$ 0.001
Series A Preferred Stock
Preferred stock, shares authorized	1,000,000	1,000,000
Preferred stock, shares issued
Preferred stock, shares outstanding

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Consolidated Condensed Statements of Operations (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Revenues:
Cryptocurrency mining revenue	$ 16,212,525	$ 5,664,629	$ 34,996,368	$ 10,878,255
Hosting Co Location revenue	3,567,912		4,116,860
Sale of crypto currency mining equipment		280,038	91,545	2,157,651
Total revenues	19,780,437	5,944,667	39,204,773	13,035,906
Less: Cost of revenues (excluding depreciation)	14,359,072	294,140	22,771,433	2,666,921
Gross profit	5,421,365	5,650,527	16,433,340	10,368,985
Selling, general and administrative	9,431,088	3,697,217	15,908,034	6,329,180
LO2A write backs				23,963,050
Share based payments	936,235	5,559,495	1,326,844	20,354,897
Depreciation and amortization	16,023,817	2,533,242	29,826,849	3,848,142
Total operating expenses	26,391,140	11,789,954	47,061,727	54,495,269
Change in fair value of derivative asset	17,714,357		17,714,357
Loss from operations	(3,255,418)	(6,139,427)	(12,914,030)	(44,126,284)
Non-operating income/(expense):
Gain / (loss) on foreign currency transactions	1,657,055	(60,747)	957,818	(722,425)
Interest expense	(1,565,040)	(464,039)	(2,801,713)	(714,701)
Impairment of financial assets	(1,107,197)		(1,107,197)
Other income	1,864,968	315,353	1,889,415	694,480
Loss before income taxes	(2,405,632)	(6,348,860)	(13,975,707)	(44,868,930)
Income tax expense
Net Loss	(2,405,632)	(6,348,860)	(13,975,707)	(44,868,930)
Less: Net loss attributable to non-controlling interests	(288,229)	(108,937)	(522,648)	(65,802)
Net Loss attributed to Mawson Infrastructure Group shareholders	$ (2,117,403)	$ (6,239,923)	$ (13,453,059)	$ (44,803,128)
Net Loss per share, basic & diluted (in Dollars per share)	$ (0.03)	$ (0.12)	$ (0.19)	$ (0.95)
Weighted average number of shares outstanding (in Shares)	71,598,552	50,264,283	71,790,772	47,298,702

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Consolidated Condensed Statements of Operations (Unaudited) (Parentheticals) - $ / shares	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Income Statement [Abstract]
Net Loss per share, basic & diluted	$ (0.03)	$ (0.12)	$ (0.19)	$ (0.95)
Weighted average number of shares outstanding	71,598,552	50,264,283	71,790,772	47,298,702

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Consolidated Condensed Statements of Stockholders' Equity (Unaudited) - USD ($)	Series A Preferred Stock	Common Stock	Additional Paid-in- Capital	Reserves	Accumulated Other Comprehensive Income/(Loss)	Accumulated Deficit	Total Mawson Stockholders’ Equity	Non- controlling interest	Common Shares	Share Subscription Receivable	Total
Balance at Dec. 31, 2020			$ 34,457,051	$ 652,949	$ (1,341,826)	$ (26,159,539)	$ 7,591,945	$ (27,066)		$ (16,690)	$ 7,564,879
Balance (in Shares) at Dec. 31, 2020									7,539,275
Exchange of stock and Reverse recapitalization of Wize Pharma Inc		$ 461,324	(5,436,541)				(4,975,217)				(4,975,217)
Exchange of stock and Reverse recapitalization of Wize Pharma Inc (in Shares)	178	46,132,357							(7,539,275)
Issuance of common stock, net of offer costs, PIPE transaction		$ 25,000	2,975,000				3,000,000				3,000,000
Issuance of common stock, net of offer costs, PIPE transaction (in Shares)		2,500,000
Issuance of convertible notes, net of offer costs			20,301,427				20,301,427				20,301,427
Issuance of common stock, exercise of warrants		$ 116		12,417,576			12,417,692				12,417,692
Issuance of common stock, exercise of warrants (in Shares)		41,000							30,613
Fair value of IPR&D acquired, net of Business Combination transaction costs			24,765,831				24,765,831				24,765,831
Issuance of RSU’s and stock options		$ 1,901	411,137	10,000,000			10,413,038				10,413,038
Issuance of RSU’s and stock options (in Shares)		190,098							(30,613)
Fair value adjustment of LO2A intellectual property revenue sharing obligation			5,440,863				5,440,863				5,440,863
Late acceptance of Exchange of common stock of Cosmos Capital Limited for common stock of Wize Pharma Inc., adjusted to reflect the Exchange Ratio		$ 50,558					50,558				50,558
Late acceptance of Exchange of common stock of Cosmos Capital Limited for common stock of Wize Pharma Inc., adjusted to reflect the Exchange Ratio (in Shares)		5,055,813
Other						43,135	43,135				43,135
Net loss						(44,803,128)	(44,803,128)				(44,803,128)
Other comprehensive income					(4,696,444)		(4,696,444)				(4,696,444)
Non-controlling interest								(65,802)			(65,802)
Balance at Jun. 30, 2021		$ 538,899	82,914,768	23,070,525	(6,038,270)	(70,919,532)	29,549,700	(92,868)		(16,690)	29,456,832
Balance (in Shares) at Jun. 30, 2021	178	53,919,268
Balance at Mar. 31, 2021		$ 486,440	82,914,768	17,534,625	(5,957,154)	(64,722,747)	30,239,242	16,069		(16,690)	30,255,311
Balance (in Shares) at Mar. 31, 2021	178	48,673,357
Late acceptance of Exchange of common stock of Cosmos Capital Limited for common stock of Wize Pharma Inc., adjusted to reflect the Exchange Ratio		$ 50,558					50,558				50,558
Late acceptance of Exchange of common stock of Cosmos Capital Limited for common stock of Wize Pharma Inc., adjusted to reflect the Exchange Ratio (in Shares)		5,055,813
Share based payments W Capital				5,535,900			5,535,900				5,535,900
Issuance of common stock at the price of $87.50
Issuance of common stock at the price of $87.50 (in Shares)									30,613
Other						43,138	43,138				43,138
Share based payment - Issuance of BIA		$ 1,901					1,901				1,901
Share based payment - Issuance of BIA (in Shares)		190,098							(30,613)
Net loss						(6,239,923)	(6,239,923)				(6,239,923)
Other comprehensive income					(81,116)		(81,116)				(81,116)
Non-controlling interest								(108,937)			(108,937)
Balance at Jun. 30, 2021		$ 538,899	82,914,768	23,070,525	(6,038,270)	(70,919,532)	29,549,700	(92,868)		$ (16,690)	29,456,832
Balance (in Shares) at Jun. 30, 2021	178	53,919,268
Balance at Dec. 31, 2021		$ 611,504	165,600,831	20,177,233	(521,094)	(71,123,259)	114,745,215	(164,626)			114,580,589
Balance (in Shares) at Dec. 31, 2021		70,746,508
Issuance of common stock, stock based compensation		$ 20	134,879	408,584			543,483				543,483
Issuance of common stock, stock based compensation (in Shares)		18,787
Issuance of warrants				667,333			667,333				667,333
Issuance of RSU’s and stock options		$ 1,726	4,208,611	(4,148,724)			61,613				61,613
Issuance of RSU’s and stock options (in Shares)		1,726,000
Net loss						(13,453,059)	(13,453,059)	(522,648)			(13,975,707)
Other comprehensive income					(2,008,958)		(2,008,958)	13,028			(1,995,930)
Non-controlling interest			(917,684)			1,623,458	705,774	534,019			1,239,793
Balance at Jun. 30, 2022		$ 613,250	169,026,637	17,104,426	(2,530,052)	(82,952,860)	101,261,401	(140,227)			101,121,174
Balance (in Shares) at Jun. 30, 2022		72,491,295
Balance at Mar. 31, 2022		$ 612,344	167,664,681	18,447,842	62,214	(82,458,914)	104,328,167	(399,045)			103,929,122
Balance (in Shares) at Mar. 31, 2022		71,585,295
Issuance of common stock, stock based compensation		$ 5	27,145	408,584			435,734				435,734
Issuance of common stock, stock based compensation (in Shares)		5,000
Issuance of warrants				500,500			500,500				500,500
Issuance of RSU’s and stock options		$ 901	2,252,495	(2,252,500)			896				896
Issuance of RSU’s and stock options (in Shares)		901,000
Net loss						(2,117,403)	(2,117,403)	(288,229)			(2,405,632)
Other comprehensive income					(2,592,266)		(2,592,266)	13,028			(2,579,238)
Non-controlling interest			(917,684)			1,623,457	705,773	534,019			1,239,792
Balance at Jun. 30, 2022		$ 613,250	$ 169,026,637	$ 17,104,426	$ (2,530,052)	$ (82,952,860)	$ 101,261,401	$ (140,227)			$ 101,121,174
Balance (in Shares) at Jun. 30, 2022		72,491,295

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Consolidated Condensed Statements of Stockholders' Equity (Unaudited) (Parentheticals)	3 Months Ended
	Jun. 30, 2021 $ / shares
Statement of Stockholders' Equity [Abstract]
Common stock price per share	$ 87.5

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Consolidated Condensed Statements of Cash Flows (Unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$ (13,975,707)	$ (44,868,930)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	29,826,849	3,848,141
LO2A write offs		23,963,050
Lease expense	809,130
Foreign exchange gain	137,758	1,569,278
Change in fair value of derivative asset	(17,714,357)
Sale of intellectual property	(1,465,829)
Share based payments	1,326,844	20,354,898
Loss on disposal of fixed assets		307,100
Interest expense	138,293	654,004
Investment expense		131,056
Non-controlling interest	1,239,793
Trade and other receivables	1,394,878	141,709
Other current assets	(7,869,996)	(809,735)
Trade and other payables	39,299,304	2,373,896
Net cash provided by operating activities	33,146,960	7,664,467
CASH FLOWS FROM INVESTING ACTIVITIES
Net payment for the purchase of property and equipment	(21,100,867)	(12,705,500)
Investment in financial assets		(341,810)
Payment of fixed asset deposits	(32,054,326)	(13,018,320)
Net cash used in investing activities	(53,155,193)	(26,065,630)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from common share issuances	51,524	1,334,157
Proceeds from convertible notes		21,487,391
Payments of capital issuance costs		(2,229,096)
Proceeds from borrowings	26,581,467	1,423,064
Advances made to external companies		(42,210)
Repayment of lease liabilities	(937,008)
Repayments of borrowings	(6,182,245)	(722,518)
Net cash provided by financing activities	19,513,738	21,250,788
Effect of exchange rate changes on cash and cash equivalents	(2,478,952)	(348,001)
Net (decrease)/increase in cash and cash equivalents	(2,973,447)	2,501,624
Cash and cash equivalents at beginning of period	5,467,273	1,112,811
Cash and cash equivalents at end of period	$ 2,493,826	$ 3,614,435

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General

6 Months Ended

Jun. 30, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

GENERAL

NOTE 1 – GENERAL

General

Mawson Infrastructure Group, Inc. (the “Company” or “Mawson” or “we”), formerly known as Wize Pharma, Inc, and before that, known as OphthaliX Inc., was incorporated in the State of Delaware on February 10, 2012.

The accompanying consolidated financial statements, including the results of the Company’s subsidiaries: Mawson Infrastructure Group Pty Ltd (“Mawson AU”, previously known as Cosmos Capital Limited), Cosmos Trading Pty Ltd, Cosmos Infrastructure LLC, Cosmos Manager LLC, MIG No.1 Pty Ltd, Mawson AU Limited (incorporated June 8, 2022), Luna Squares LLC, Luna Squares Texas LLC (formed January 27, 2022), Luna Squares Repairs LLC, Luna Squares Property LLC and Mawson Mining LLC (collectively referred to as the “Group”), have been prepared by the Company, pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) and in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). Wize NC Inc, Occuwize Ltd and Wize Pharma Ltd are additional subsidiaries of Mawson, however these companies have not been consolidated into the financial statements as these companies are subject to contingent value rights (“CVR”), further described in NOTE 10.

These consolidated, condensed unaudited interim financial statements should be read in conjunction with the audited consolidated financial statements of the Group as of December 31, 2021, and the notes thereto, included in the Company’s Annual Report on Form 10-K filed with SEC on March 21, 2022. Accordingly, they do not include all the information and footnotes required by U.S GAAP for complete financial statements. The results of the interim period are not necessarily indicative of the results to be expected for the full year ended December 31, 2022. These consolidated, condensed interim financial statements reflect all adjustments which, in the opinion of management, are necessary to present fairly the financial position, the results of operations and cash flows of the Company for the periods presented.

Mawson, through its subsidiaries, is a ‘Digital Asset Infrastructure’ business, which owns and operates modular data centers (“MDCs”) based in the United States and Australia. As at June 30, 2022 Mawson owned and had ordered 35,329 Application-Specific Integrated Circuit (“ASIC”) computers known as “Miners,” specifically focused on the SHA-256 algorithm, from a variety of manufacturers, including Bitmain Technology Holding Company (“Bitmain”), Canaan Creative (HK) Holdings Limited (“Canaan”) and Shenzhen MicroBT Electronics Technology Co., Ltd (“Whatsminer”).

Going Concern

For the six-month period ending June 30, 2022, the Company incurred a loss after tax of $13.98 million, and as at June 30, 2022 had net current liabilities of $55.96 million and had an accumulated deficit of $82.95 million. The Company’s cash position at June 30, 2022, was $2.50 million. These conditions raise substantial doubt upon the Company’s ability to continue as a going concern for at least a year from the date of approval of these unaudited consolidated financial statements.

Management of the Company believes that there are reasonable grounds to conclude that the Company will continue as a going concern after having regard for the following factors.

The Company’s plans include improving profitability and generating sufficient cash flow from operations.

Management of the Company is of the opinion that the Company can continue to access adequate debt and equity funding to meet its working capital requirements. In July 2022, the Company raised $3.60 million through an issue of secured convertible promissory notes and an aggregate of $5.62 million of net proceeds from the issuance of shares and warrants. The Company has the ability through its At the Market Offering Agreement (the “ATM Agreement”) with H.C. Wainwright & Co., LLC (“Wainwright”), to sell shares of our common stock with an aggregate sales price of up to $100 million. To the extent the Group were to raise additional capital or debt, this could cause additional dilution to our current stockholders. The terms of any future capital raise or debt issuance and the costs of any financing are uncertain. There are no assurances that the Group would be able to raise additional financing when needed or that it would be able to do so on favourable terms.

Based on internally prepared forecast cash flows which take into consideration what management considers to be reasonable scenarios given the inherent risks and uncertainties, combined with existing cash balances, management believes that the Company will be able to meet its obligations as they fall due for at least one year from the date of approval of these unaudited consolidated financial statements.

Accordingly, management of the Company believe that it is appropriate to prepare the Group’s financial statements on a going concern basis. However, should the Company be unable to source sufficient funding through the factors noted above, the Company may not be able to realize assets at their recognized values and extinguish its liabilities in the normal course of business at the amounts stated in these unaudited consolidated financial statements.

These unaudited consolidated financial statements do not include any adjustments relating to the recoverability and carrying amounts of assets and the amounts of liabilities should the Company be unable to continue as a going concern and meet its obligations and debts as and when they fall due.

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Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2022

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation and basis of preparation

The accompanying consolidated financial statements of the Company include the accounts of the Company and its wholly or majority owned and controlled subsidiaries, other than those subsidiaries subject to the CVR described more in NOTE 10. Intercompany investments, balances and transactions have been eliminated in consolidation. Non–controlling interests represent the minority equity investment in the Company’s subsidiaries, plus the minority investors’ share of the net operating results and other components of equity relating to the non–controlling interest.

Any changes in the Company’s ownership interest in a consolidated subsidiary, through additional equity issuances by the consolidated subsidiary or from the Company acquiring the shares from existing shareholders, in which the Company maintains control is recognized as an equity transaction, with appropriate adjustments to both the Company’s additional paid-in capital and the corresponding non-controlling interest.

On March 9, 2021, Mawson AU was acquired by the Company. For accounting purposes, this was accounted for as a reverse asset acquisition with Mawson AU as the accounting acquirer (refer to significant accounting policies below). The result of which is that these financial statements are taken to be a continuation of Mawson AU’s financial statements, with the Company incorporated within the acquisition and therefore the historical financial information of Mawson AU (then known as Cosmos Capital Limited) prior to March 9, 2021, became the historical financial information of Mawson AU, which have been consolidated into the financial statements of the Company. 

Use of Estimates and Assumptions

The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported in the financial statements and accompanying notes. The Company evaluates on an ongoing basis its assumptions. The Company’s management believes that the estimates, judgments and assumptions used are reasonable based upon information available at the time they are made.

These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the consolidated financial statements, and the reported amounts of income and expenses during the reporting periods. Actual results could differ from those estimates. The Company has considered the following to be significant estimates made by management, including but not limited to, going concern assumptions, estimating the useful lives of fixed assets, realization of long-lived assets, unrealized tax positions and the realization of digital currencies, valuing the derivative asset classified under Level 3 fair value hierarchy, business combinations, reverse asset acquisition, and the contingent obligation with respect to future revenues.

Critical Accounting Policies

Critical accounting policies are described in the consolidated financial statements for Mawson included in the Company’s Annual Report on Form10-K filed with SEC on March 21, 2022. There have been some changes to critical accounting policies in the six months period ended June 30, 2022. The reverse asset acquisition accounting policy which is no longer considered to be a critical accounting policy and has therefore been included in significant accounting policies and the fair value of financial instruments has been moved from significant accounting policies to critical accounting policies.

Revenue Recognition – Digital asset mining revenue

The Company recognizes revenue under ASC 606, Revenue from Contracts with Customers. The core principle of ASC 606 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. Five steps are required to be followed in evaluating revenue recognition: (i) identify the contract with the customer; (ii) identity the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price; and (v) recognize revenue when or as the entity satisfied 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).

There is currently no specific definitive guidance in U.S. GAAP or alternative accounting frameworks for the accounting of managing digital currencies and management has exercised significant judgement in determining appropriate accounting treatment for the recognition of revenue for such operations.

The Company has entered into a contract with mining pools and has undertaken the performance obligation of providing computing power in exchange for non-cash consideration in the form of cryptocurrency. The provision of computing power is the only performance obligation in the Group’s contract with its pool operators. In certain pools the amount of reward for computing power depends on the pool’s success in mining blocks. In other pools, the amount of reward includes no such contingency, although the fees payable to such pools are typically higher as a result. Where the consideration received is variable (for example, due to payment only being made upon successful mining), it is recognized when it is highly probable that the variability is resolved, which is generally when the cryptocurrency is received.

The Company measures the non-cash consideration received at the fair market value of the cryptocurrency received. Management estimates fair value on a daily basis, as the quantity of cryptocurrency received multiplied by the price quoted on the crypto exchanges that the Company uses to dispose of cryptocurrency on the day it was received.

Property and equipment

Property and equipment are stated at cost, net of accumulated depreciation. The cost includes any cost of replacing part of the property and equipment with the original cost of the replaced part being derecognized. All other repair and maintenance costs are recognized in profit or loss incurred. The present value of the expected cost for the decommissioning of an asset after its use is included in the cost of the respective asset if the recognition criteria for a provision are met. Property, plant and equipment transferred from customers is initially measured at the fair value at the date on which control is obtained.

The depreciable amount of fixed assets is depreciated on a straight-line or declining balance basis based on the asset classification, over their useful lives to the economic entity commencing from the time the assets arrive at their destination where they are ready for use. Depreciation is calculated over the following estimated useful lives:

Asset class	Useful life	Depreciation Method
Fixtures and Fittings	5 years	Straight-Line
Plant and equipment	10 years	Straight-Line
Modular data center	5 years	Declining
Motor Vehicles	5 years	Straight-Line
Computer equipment	3 years	Straight-Line
Processing Machinery (Miners)	2 years	Declining
Transformers	15 years	Straight-Line
Leasehold improvements	10 years	Straight-Line

An item of property, plant and equipment and any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income statement when the asset is derecognized.

The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.

The Company changed its policy in relation to freight costs in relation to processing machines with effect from October 1, 2021. Prior to this date these costs were expensed to the statement of operations and profit and loss, and afterwards these costs are capitalized into processing machinery. This change resulted in an increase in processing machines in the balance sheet of $2,978,232 at June 30, 2022, and an increase in the depreciation charge to the six months to June 30, 2022 statement of operations and profit and loss of $84,735 over the prior treatment.

The Company’s long-lived assets are reviewed for impairment in accordance with Accounting Standards Codification (“ASC”) 360, “Property, Plant and Equipment”, whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by the assets. If such asset is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds its fair value. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. During the six month periods ended June 30, 2022, and 2021, no impairment losses have been identified.

Fair value of financial instruments:

The Company accounts for financial instruments under FASB Accounting Standards Codification Topic (“ASC”) 820, Fair Value Measurements. This statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements, ASC 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels as follows:

Level 1 — quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 — observable inputs other than Level 1, quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, and model-derived prices whose inputs are observable or whose significant value drivers are observable; and

Level 3 — assets and liabilities whose significant value drivers are unobservable. Observable inputs are based on market data obtained from independent sources, while unobservable inputs are based on the Company’s market assumptions. Unobservable inputs require significant management judgment or estimation. In some cases, the inputs used to measure an asset or liability may fall into different levels of the fair value hierarchy. In those instances, the fair value measurement is required to be classified using the lowest level of input that is significant to the fair value measurement. Such determination requires significant management judgment.

	Fair value measured at June 30, 2022
	Total carrying value at June 30, 2022		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Derivative asset	$	17,714,357	$	-	$	-	$	17,714,357
Financial assets	$	1,638,027	$	172,198	$	-	$	1,465,829

	Fair value measured at December, 2021
	Total carrying value at December, 2021		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Derivative asset	$	-	$	-	$	-	$	-
Financial assets	$	326,801	$	326,801	$	-	$	-

Level 3 Assets: 

Power Supply Agreement

During the quarter ended June 30, 2022, the Company recorded a derivative asset related to its Power Supply Agreement with Energy Harbor LLC, the energy supplier to the Company’s Pennsylvania Facility. The Power Supply Agreement was classified as a derivative asset and measured at fair value on the date of Power Supply Agreement, with changes in fair value recognized in the accompanying unaudited condensed consolidated statements of operations. The estimated fair value of the Company’s derivate asset is classified in Level 3 of the fair value hierarchy due to the significant unobservable inputs utilized in the valuation. Specifically, our discounted cash flow estimation models contain quoted commodity exchange spot and forward prices and are adjusted for basis spreads for load zone-to-hub differentials through the term of the Power Supply Agreement, which ends in December 2026. In addition, the Group adopted a further discount rate utilized of approximately 20% above the terminal value of the observable market inputs, but also includes unobservable inputs based on qualitative judgment related to company-specific risk factors. The terms of the Power Supply Agreement require pre-payment of collateral, calculated as forward cost based on the market cost rate of electricity versus the fixed price stated in the contract.

Tasmania Data Infrastructure Pty Ltd (“TDI”)

During June 2022 Mawson AU Limited entered into a License and Services Agreement with TDI in exchange for 42,562,432 fully paid issued shares in TDI, this is held at fair value of $1.47 million as at June 30, 2022 the fair value uses unobservable inputs.

Level 1 Assets: 

The company holds 50 million shares in DXN Limited (“DXN”), an Australian Securities Exchange (“ASX”) listed company. This is recorded at fair value with changes in fair value recognized in the accompanying unaudited condensed consolidated statements of operations. The fair value of the DXN investment is classified in Level 1 of the fair value hierarchy as it is quoted on an active market, that being the ASX. 

Accounting for Power Supply Contract

In June 2022, the company entered into a Power Supply Agreement with Energy Harbor LLC to provide the delivery of a fixed portion of the total amount of electricity for a fixed price through to December 2026. If the Pennsylvania site uses more electricity than contracted, the cost of the excess is incurred at a new price quoted by Energy Harbor.

While the Company manages operating costs at the Pennsylvania Facility in part by periodically selling unused or uneconomical power back to the market, we do not consider such actions trading activities. That is, the Company does not engage in speculation in the power market as part of our ordinary activities. Because the sale of any electricity under a curtailment program allows for net settlement, we have determined the Power Supply Agreement meets the definition of a derivative under ASC 815, Derivatives and Hedging, (“ASC 815”). However, because the Company has the ability to sell the power back to the grid rather than take physical delivery, physical delivery is not probable through the entirety of the contract and therefore, we do not believe the normal purchases and normal sales scope exception applies to the Power Supply Agreement. Accordingly, the Power Supply Agreement (the non-hedging derivative contract) is recorded at estimated fair value each reporting period with the change in the fair value recorded in change in fair value of derivative asset in the consolidated statements of operations (refer to fair value of financial instruments policy).

Share based payments

The Company follows FASB Codification Topic ASC 718-10 Compensation-Stock Compensation. The Company expenses stock-based compensation to employees and non-employees over the requisite service period based on the estimated grant-date fair value of the awards. The Company determines the grant date fair value of the restricted stock units (“RSUs”) and options using the Black-Scholes option-pricing model. The assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment. These assumptions are the expected stock volatility, the risk–free interest rate, the expected life of the option, the dividend yield on the underlying stock and the expected forfeiture rate. Expected volatility computes stock price volatility over expected terms based on its historical common stock trading prices. Risk–free interest rates are calculated based on the implied yield available on U. S. 10-year Treasury bond.

Significant Accounting Policies

Revenue Recognition - Hosting Co-location revenue

The Company provides power for our co-location hosting customers on a variable basis which is received monthly from the customer based on the power usage at the rate outlined in each customer contract.

We recognize variable power revenue each month as the uncertainty related to the consideration is resolved, power is provided to our customers, and our customers utilize the power (the customer simultaneously receives and consumes the benefits of the Company’s performance).

The customer contracts contain performance obligations, variable consideration in such contracts to be allocated to and recognized in the period to which the consideration relates. Usually this is when it is invoiced, rather than obtaining an estimation of variable consideration at the beginning of the customer contracts.

Customers also are invoiced a fixed monthly fee for maintenance services which include, cleaning, cabling and other services to maintain the customers’ equipment.

Revenue Recognition - Sale of crypto currency mining equipment

Crypto currency mining equipment sales revenue includes revenues related to the sale of Miners. This is recognized as revenue upon delivery to the customer, which is when the control of the Miner transfers. Payments are typically received at the point control transfers or in accordance with payment terms customary to the business.

Revenue recognition – equipment sales

The Company earned revenues from the sale of earlier generation cryptocurrency mining units and modular data centers that have been assembled or refurbished for resale (collectively “Hardware”). Revenue from the sale of Hardware is recognized when all of the following conditions are satisfied: (i) persuasive evidence of a sales arrangement exists, (ii) the sales terms are fixed or determinable, (iii) title and risk of loss have transferred, and (iv) payment is received. At the date of sale, the net book value is expensed in cost of revenues.

Cost of revenues:

Cost of revenue consists primarily of expenses that are directly related to providing the Company’s service to its paying customers. These primarily consist of costs associated with operating our co-location facilities such as direct power costs, energy costs (including any carbon offset acquired during the year), freight costs and material costs related to cryptocurrency mining.

Research and development expenses:

Research and development expenses are charged to the statement of comprehensive loss as incurred.

Income taxes:

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance may be established to reduce the deferred tax asset to the level at which it is “more likely than not” that the tax asset or benefits will be realized. Realization of tax benefits of deductible temporary differences and operating loss carryforwards depends on having sufficient taxable income of an appropriate character within the carryback or carryforward periods.

The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained upon review by the taxing authority. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs.

Functional currency:

All subsidiaries of Company have a functional currency of United States dollar (“USD”) with the exceptions of Mawson Infrastructure Group Pty Ltd, MIG No.1 Pty Ltd, Cosmos Trading Pty Ltd and Mawson AU Limited whose functional currency is the Australian Dollar (“AUD”). The financial statements of foreign businesses have been translated into USD at current exchange rates for balance sheet items and at the average rate for income statement items. Translation of all the consolidated companies’ financial records into USD is required due to the reporting currency for these consolidated financial statements presented as USD and the functional currency of the parent company being that of AUD. Translation adjustments are accumulated in other comprehensive loss. Revenue and expense accounts are converted at prevailing rates throughout the year. Gains or losses on foreign currency transactions and translation adjustments in highly inflationary economies are recorded in income in the period in which they are incurred.

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 is composed of the chief executive officer. We currently operate in one segment surrounding our cryptocurrency mining operation.

Cash and cash equivalents:

Cash and cash equivalents include cash on hand, deposits held at call with financial institutions, cash held with digital currency exchanges, and other short-term and highly liquid investments that are readily convertible to known amounts of cash and have original maturities of three months or less.

Digital Currencies

Digital currencies are included in current assets in the consolidated balance sheets. Digital currencies are classified as indefinite-lived intangible assets in accordance with ASC 350, Intangibles - Goodwill and Other, and are accounted for in connection with the Company’s revenue recognition policy detailed above.

The following table presents the Company’s digital currency (Bitcoin) activities for the three months and six months ended June 30, 2022:

	Three months to June 30, 2022			Six months to June 30, 2022
Opening number of Bitcoin held as at March 31, 2022 and December 31, 2021		0.00			0.92
Number of Bitcoin added		489.60			948.27
Number of Bitcoin sold		(487.39	)		(946.98	)
Closing number of Bitcoin held as at June 30, 2022		2.21			2.21

Digital currency is not amortized but assessed for impairment annually, or more frequently, when events or changes in circumstances occur indicating that it is more likely than not that the indefinite-lived asset is impaired. Impairment exists when the carrying amount exceeds its fair value. In testing for impairment, the Company has the option to first perform a qualitative assessment to determine whether it is more likely than not that an impairment exists. If it is determined that it is not more likely than not that an impairment exists, a quantitative impairment test is not necessary. If the Company concludes otherwise, it is required to perform a quantitative impairment test. 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.

The Company’s policy is to dispose of production at the earliest opportunity, therefore the holding period is minimal, usually no more than a few days. Due to the short period which Bitcoin are held prior to sale and the consequent small numbers held, the risk of impairment is not material.

Equipment deposits:

The Company records a prepaid expense for costs paid but not yet incurred. Those expected to be incurred within one year are recognized and shown as equipment deposits. Equipment deposits result from advance payments to suppliers for goods to be received in the future. Equipment deposits are initially recognized as assets at the date the amount is paid, and are subsequently recorded as equipment as the Company takes delivery and control of the equipment from the supplier. Amounts are recognized initially at the amount of the unconditional consideration. They are subsequently measured at cost, less loss allowance.

Reverse Asset Acquisition:

On March 9, 2021, the Company acquired the shares of Cosmos Capital Limited (now known as Mawson Infrastructure Group Pty Ltd and referred to herein as Mawson AU) in a stock for stock exchange. This transaction has been accounted for as a reverse asset acquisition. This transaction reverse asset acquisition and the associated impact is referred to as the “Cosmos Transaction”.

Under the terms of the Cosmos Transaction Bid Implementation Agreement, the Company was required to make share-based payments consisting of up to 40,000,000 shares under an Incentive Compensation Program and warrants issued to HC Wainwright as a fee related to the acquisition by Mawson of Mawson AU. In addition, Mawson AU had an outstanding obligation to W Capital Advisors Pty Ltd (“W Capital”) for options over the equity of Mawson AU which was terminated for consideration of warrants over the Company’s shares being issued to W Capital.

Concentrations of credit risk:

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash, cash equivalents, marketable securities. Cash and cash equivalents and restricted bank deposits are invested in banks in Australia and the U.S. If the counterparty completely failed to perform in accordance with the terms of the contract, is the maximum amount of loss the Company would be the balance. Management believes that the financial institutions that hold the Company’s investments are financially sound and, accordingly, minimal credit risk exists with respect to these investments. The Company has no off-balance-sheet concentration of credit risk such as foreign exchange contracts, option contracts or other foreign hedging arrangements.

Legal and other contingencies: 

The Company accounts for its contingent liabilities in accordance with ASC 450 “Contingencies”. A provision is recorded when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. With respect to legal matters, provisions are reviewed and adjusted to reflect the impact of negotiations, estimated settlements, legal rulings, advice of legal counsel and other information and events pertaining to a particular matter. Legal costs incurred in connection with loss contingencies are expensed as incurred. As of June 30, 2022, the Company is not a party to any litigation that would reasonably be expected to have a material adverse effect on the Company’s business, financial position, results of operations or cash flows.

Leases:

The Company accounts for its leases under ASC 842, Leases which was effective January 1, 2019. The Company determines if an arrangement is a lease at inception. Using ASC 842 leases are classified as operating or finance leases on the Balance Sheet as a right of use (“ROU”) assets and lease liabilities within current liabilities and long-term liabilities on our consolidated balance sheet. ROU assets and lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. The Company’s lease does not provide an implicit rate and therefore the Company measured the ROU asset and lease obligation based upon the present value of future minimum lease payments. The Company’s incremental borrowing rate is estimated based on risk-free discount rate for the lease, determined using a period comparable with that of the lease term and in a similar economic environment. The lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise such options. The Company does not record leases on the consolidated balance sheets with a term of one year or less. The Company does not separate lease and non-lease components but rather account for each separate component as a single lease component for all underlying classes of assets. Where leases contain escalation clauses, rent abatements, or concessions, such as rent holidays and landlord or tenant incentives or allowances, the Company applies them in the determination of straight-line operating lease cost over the lease term.

Recent Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (FASB) or other standard setting bodies and adopted by the Company as of the specified effective date. For information with respect to recent accounting pronouncements, see Note 2 to the consolidated financial statements for Mawson as of December 31, 2021, included in the Company’s Annual Report on Form 10-K filed with SEC on March 21, 2022, recent accounting pronouncements since that date include:

In March 2022, the FSAB issued ASU update 2022-01—Derivatives and Hedging (Topic 815): Fair Value Hedging—Portfolio Layer Method. The adoption of ASU 2021-01 did not have a material impact on the Company’s financial statements or disclosures.

In March 2022, the FSAB issued ASU 2022-02—Financial Instruments—Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures. The adoption of ASU 2022-02 did not have a material impact on the Company’s financial statements or disclosures.

In June 2022, the FSAB issued ASU 2022-03—Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions. The adoption of ASU 2022-03 did not have a material impact on the Company’s financial statements or disclosures.

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Basic and Diluted Net Loss Per Share

6 Months Ended

Jun. 30, 2022

Earnings Per Share [Abstract]

BASIC AND DILUTED NET LOSS PER SHARE

NOTE 3 – BASIC AND DILUTED NET LOSS PER SHARE

Net loss per common share is calculated in accordance with ASC Topic 260: Earnings Per Share (“ASC 260”). Basic loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. The computation of diluted net loss per share does not include dilutive common stock equivalents in the weighted average shares outstanding, as they would be anti-dilutive.

Securities that could potentially dilute loss per share in the future that were not included in the computation of diluted loss per share as at June 30, 2022 and 2021 are as follows:

	As at June 30,
	2022		2021
Warrants to purchase common stock		6,391,667		1,698,727
Options to purchase common stock		29,459		-
Mandatory convertible notes to exchange common stock		-		6,362,690
Restricted Stock-Units (“RSUs”) issued under a management equity plan		2,449,725		4,000,000
		8,870,851		12,061,417

The following table sets forth the computation of basic and diluted loss per share:

	For the three months ended June 30,						For the six months ended June 30,
	2022			2021			2022			2021
Net Loss attributable to common shareholders	$	(2,117,403	)	$	(6,239,923	)	$	(13,453,059	)	$	(44,803,128	)
Denominator:
Weighted average common shares - basic and diluted		71,598,552			50,264,283			71,790,772			47,298,702
Loss per common share - basic and diluted	$	(0.03	)	$	(0.12	)	$	(0.19	)	$	(0.95	)

Comparative weighted average common shares have been revised by the ratio of Mawson AU to the Company shares exchanged in the reverse asset acquisition in March 2021. Pursuant to that certain Certificate of Amendment to the Certificate of Incorporation of the Company dated August 11, 2021, Mawson executed a 10-for-1 reverse stock split of its outstanding common stock and reduced its authorized common stock to 120,000,000 shares, as set forth in the Company’s Current Report on Form 8-K filed August 16, 2021. 

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Deposit, Property and Equipment

6 Months Ended

Jun. 30, 2022

Deposit, Property and Equipment [Abstract]

DEPOSIT, PROPERTY AND EQUIPMENT

NOTE 4 – DEPOSIT, PROPERTY AND EQUIPMENT

On August 9, 2021, Cosmos Infrastructure LLC entered into a second Long-Term Purchase Contract with Canaan for the purchase of 15,000 next generation Avalon A1246 ASIC Miners. The average purchase price per unit is $4,908 for a total purchase price of $73,620,000. The final shipment for contract was received during May 2022, in total there were 11,000 Miners delivered, there was a final adjustment to the purchase price based on the actual tera hash and number of Miners delivered based on the agreed price per tera hash under the terms of the contract. The purchase price adjustment resulted in a $0.3 million reduction in the purchase price, this is due to be received in cash from Canaan.

During the six months ended June 30, 2022, $32,054,326 cash was paid for equipment which was recorded as a either deposit or within property plant and equipment on the balance sheet.

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Leases

6 Months Ended

Jun. 30, 2022

Leases [Abstract]

LEASES

NOTE 5 – LEASES

Luna Squares LLC leases a 16.35-acre lot in Georgia from the Development Authority of Washington County. The lease term was originally for 1 acre from May 1, 2020, until April 30, 2023. An amendment to the lease and exercise of option to lease four additional acres was signed and became effective February 23, 2021. A further amendment to the lease and exercise of option to lease was signed and became effective August 24, 2021. The Lease Amendment covers an additional 11.35 acres of the property, bringing the total to 16.35 acres under the lease. It also includes 5, 3-year extension options bringing the total lease period to run potentially until 2038.

The Company leases the headquarters of its business operations at Level 5, 97 Pacific Highway, North Sydney NSW 2060 Australia, being 1,076 square feet of office space held under a license agreement.

The Company leases 6-acres of land in Pennsylvania which began in October 2021 for thirty-six months with the option to execute four additional three-year extensions.

On March 16, 2022, Luna Squares LLC entered into a lease with respect to a property in the City of Sharon, Mercer County, Pennsylvania with Vertua Property, Inc. (a related entity – refer to note 12 for details). The term of the lease is for 5 years, with 2 options to extend for 5 years each.

During May 2022, Luna Square Texas LLC entered into four lease agreements to lease 11 acres of land in Texas for a period of five years.

Other than the foregoing leases, the Company does not lease any material assets. The Company believes that these offices and facilities are suitable and adequate for its operations as currently conducted and as currently foreseen. In the event additional or substitute offices and facilities are required, the Company believes that it could obtain such offices and facilities at commercially reasonable rates.

The Company’s lease costs recognized in the Consolidated Statements of Income and Comprehensive Loss consist of the following:

	For the three months ended June 30,				For the six months ended June 30,
	2022		2021		2022		2021
Operating lease charges (1)	$	434,977	$	24,557	$	802,112	$	35,780
Finance lease charges:
Amortization of right-of-use assets		8,094		-		12,396		-
Interest on lease obligations	$	2,468	$	-	$	3,946	$	-

⁽¹⁾ Included in Selling, General & Administrative Expenses.

The following is a schedule of the Company’s lease liabilities by contractual maturity as of June 30, 2022:

	Operating leases			Finance Leases
2023	$	1,823,308		$	38,248
2024		1,799,315			38,248
2025		862,083			38,248
2026		553,715			29,352
2027		281,105			4,818
Total undiscounted lease obligations		5,319,526			148,914
Less imputed interest		(649,325	)		(20,225	)
Total present value of lease liabilities		4,670,201			128,689
Less current portion of lease liabilities		1,451,655			29,643
Non-current lease liabilities	$	3,218,546		$	99,046

Other lease information as of June 30,2022:

	Operating leases			Finance Leases
Operating cash flows from operating and finance leases	$	922,332		$	14,676
Weighted-average remaining lease term – operating and finance leases (years)		3.21			3.88
Weighted-average discount rate – operating and leases (%)		8.0	%		7.5	%

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Property and Equipment

6 Months Ended

Jun. 30, 2022

Property, Plant and Equipment [Abstract]

PROPERTY AND EQUIPMENT

NOTE 6 – PROPERTY AND EQUIPMENT

Property and equipment, net, consisted of the following:

	June 30, 2022			December 31, 2021
Plant and equipment		6,583,193			1,046,866
Computer equipment		469,966			216,099
Furniture & fixtures		29,851			31,474
Processing machines (Miners)		144,010,826			81,341,098
Modular data center		21,678,051			9,819,796
Motor Vehicles		327,053			250,425
Transformers		6,978,071			1,190,609
Low-cost assets		872,612			246,154
Assets under construction		13,630,192			1,008,001
Leasehold improvements		360,000			-
Total		194,939,815			95,150,522
Less: Accumulated depreciation		(46,001,594	)		(18,213,672	)
Property and equipment, net		148,938,221			76,936,850

Depreciation and amortization expense for the three month period ended June 30, 2022 and 2021 was $16,023,817 and $2,533,242, respectively. Depreciation and amortization expense for the six month period ended June 30, 2022 and 2021 was $29,826,849 and $3,848,142, respectively. There were no impairment charges recognized for property and equipment for six month period ended June 30, 2022, or June 30, 2021. 

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Financial Assets

6 Months Ended

Jun. 30, 2022

Transfers and Servicing [Abstract]

FINANCIAL ASSETS

NOTE 7 – FINANCIAL ASSETS

 

During June 2022 Mawson AU Limited entered into a License and Services Agreement with TDI in exchange for 42,562,432 fully paid issued shares in TDI, this is held at fair value of $1.47 million as at June 30, 2022.

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Income Taxes

6 Months Ended

Jun. 30, 2022

Income Tax Disclosure [Abstract]

INCOME TAXES

NOTE 8 – INCOME TAXES

The following table summarizes our effective tax rate based on the tax expense/(benefit) for income taxes attributable to pretax income:

	For the three months ended June 30,
	2022			2021
Income/(Loss) before income taxes		(2,405,632	)		(6,348,860	)
Tax Expense/(Benefit) for income taxes		12,128			-
Effective income tax rate		(0.50	)%		0.00	%

	For the six months ended June 30,
	2022			2021
Income/(Loss) before income taxes		(13,975,707	)		(44,868,930	)
Tax Expense/(Benefit) for income taxes		12,128			-
Effective income tax rate		(0.09	)%		0.00	%

The Company’s effective tax rate is calculated by dividing total income tax expense by the sum of income before income tax expense and the net income attributable to noncontrolling interests. The Company has maintained a full valuation allowance for federal and the majority of its state jurisdictions.

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Stockholders Equity

6 Months Ended

Jun. 30, 2022

Schedule of outstanding stock warrants [Abstract]

STOCKHOLDERS EQUITY

NOTE 9 – STOCKHOLDERS EQUITY

Common Stock

TraDigital Marketing Group LLC was issued 5,000 shares of the Company’s common stock during May 2022 for consultancy services provided to the Company.

Under the terms of the Cosmos Transaction Bid Implementation Agreement the Company made share-based awards under an Incentive Compensation Program during September 2021 (refer to reverse acquisition accounting policy). During the three-month period ending June 30, 2022, two employees converted certain of these awards into 901,000 shares of common stock of Mawson.

Restricted Stock

As of June 30, 2022, there was no restricted stock.

Common Stock Warrants

A summary of the status of the Company’s outstanding stock warrants and changes during the six months ended June 30, 2022, is as follows:  

	Number of Warrants			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in years)
Outstanding as of December 31, 2021		3,524,189
Issued		4,143,478		$	8.57		1.5
Exercised		(1,276,000	)
Expired		-
Outstanding as of June 30, 2022		6,391,667		$	8.57		1.5
Warrants exercisable as of June 30, 2022.		6,391,667		$	8.57		1.5

On February 23, 2022, Mawson issued to Celsius Mining warrants with an expiry date of August 23, 2023, to purchase up to 3,850,000 shares of common stock, of Mawson at an exercise price of US$6.50 per share, in connection with the $20 million loan made by Celsius to Luna Squares LLC in connection with a Customer Equipment and Co-Location Agreement entered into by Celsius and Luna Squares LLC.

Under the terms of the Cosmos Transaction Bid Implementation Agreement the Company made share-based awards in the form of warrants, options and RSUs under an Incentive Compensation Program during September 2021 (refer to reverse acquisition accounting policy). During the six months ended June 30, 2022, four employees exercised 1,276,000 of their warrants to convert these into common stock of Mawson.

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2022

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE 10 – COMMITMENTS AND CONTINGENCIES

Agreements

1. In connection with the Cosmos Transaction, we issued one CVR to each of our securityholders for each outstanding share of common stock of Mawson, and for each share of common stock of Mawson underlying other convertible securities and warrants, held immediately before the closing of the Cosmos Transaction. Each CVR represents the right to receive a pro rata share of any consideration that we may receive in connection with any successful monetization of our LO2A business, less transaction expenses and customary deductions as detailed in the CVR agreement, including a deduction of up to $300,000 to be repaid to us for amounts we spend in the development of the LO2A Technology at the request of the representative of the holders of the CVRs. As at June 30, 2022, the Company cannot reliably measure the cost of the CVRs and it is not probable that these payments will be made and therefore this has been classified as a contingent liability.

2. During June 2022 Mawson AU Limited entered into a share subscription and equipment sale with Tasmania Data Infrastructure Pty Ltd (“TDI”).  TDI has a 100% renewable energy Bitcoin Mining facility at the Que River Mine Site in Tasmania, Australia. Mawson AU Limited has agreed to exchange approximately 1975 ASIC Bitcoin Miners for 107,042,254 fully paid issued shares in TDI. This transaction is expected to finalize later this fiscal year.

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Borrowings

6 Months Ended

Jun. 30, 2022

Debt Disclosure [Abstract]

BORROWINGS

NOTE 11 – BORROWINGS

Short-term Borrowings

Whatsminers

On October 15, 2021, the Company acquired 2,000 Whatsminers M30’s for delivery in October 2021 from Foundry Digital LLC for a total consideration of $16,481,328. The Company paid a deposit of $3,202,766 and entered into an extension of the original Foundry finance agreement with Foundry for the balance of the consideration over a 12-month term, of which $4,914,329 is outstanding at June 30, 2022.

Marshall loan

In December 2021 MIG No. 1 Pty Ltd entered into a Secured Loan Facility Agreement with Marshall Investments MIG Pty Ltd which was payable in three tranches. The first tranche was received during December 2021 with an amount of $7.86 million. Tranche two and three were received during January and February 2022 with a total amount of $7.11 million. The loan matures in 2024 and bears interest at a rate of 12.00% per annum, payable monthly which commenced December 2021. This loan facility is secured by a general security agreement given by the Company. Principal repayments begin during 2023. 

The amount classified as a current liability is $2.54 million with the remaining balance classified as a long-term liability.

Celsius loan

On February 23, 2022, Luna Squares LLC entered into the Co-Location Agreement with Celsius Mining LLC, in connection with this agreement, Celsius Mining loaned Luna Squares LLC a principal amount of US$20,000,000, for the purpose of funding the infrastructure required to meet the obligations of the Co-Location Agreement, for which Luna Squares LLC issued a Secured Promissory Note for repayment of such amount. The Secured Promissory Note accrues interest daily at a rate of 12% per annum. Luna Squares LLC is required to amortize the loan at a rate of 15% per quarter, with principal repayments starting in the third quarter of 2022. The Secured Promissory Note has a maturity date of August 23, 2023. Celsius Mining LLC filed for Chapter 11 bankruptcy protection on July 13, 2022. The Company does not anticipate any changes to the terms of the loan agreement due to Celsius Mining LLC’s bankruptcy filing.

The amount classified as a current liability is $12.02 million with the remaining balance considered a long term liability.

Long-term Borrowings

Marshall loan

The total classified as payable after more than one year under this arrangement is $11.24 million.

Celsius loan

The total classified as payable after more than one year under this arrangement is $7.98 million.

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Related Party Transactions

6 Months Ended

Jun. 30, 2022

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

NOTE 12 – RELATED PARTY TRANSACTIONS

On March 16, 2022, Luna Squares LLC entered into a lease with respect to a property in the City of Sharon, Mercer County, Pennsylvania with Vertua Property, Inc, a subsidiary entity in which Vertua Ltd has a 100% ownership interest. James Manning, CEO, a director and a significant shareholder of the Company, is also a director of Vertua Ltd and has a material interest in the Sharon lease as a large shareholder of Vertua Ltd. The lease contains market standard legal terms, and will be for a term of 5 years, and Luna Squares LLC has 2 options to extend for 5 years each. The Company’s Audit Committee has compared the rent and terms to other arms’ length leases the Company has entered into and formed the view the rent is in line with the market for similar properties. Rent is subject to annual increases equal to the amount of the Consumer Price Index for the Northeast Region, or 4%, whichever is higher. The base rental amount in the first year is $0.24 million. Depending on power energization and usage, variable additional rent may be payable, with charges ranging from $500 to $10,000 per month, depending on power energized and whether it is available. Upon the recommendation from the Audit Committee, the directors of the Company, other than James Manning, were made aware of the material facts as to Mr. Manning’s interest in the lease and authorized the Company in good faith to enter the lease after determining the lease to be fair to the Company.

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Subsequent Events

6 Months Ended

Jun. 30, 2022

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

NOTE 13 – SUBSEQUENT EVENTS

On July 8, 2022, the Company issued secured convertible promissory notes to investors in the aggregate principal amount of $3,600,000 (the “Secured Convertible Promissory Notes”) in exchange for an aggregate of $3,600,000. In connection with each Secured Convertible Promissory Note, the Company and its subsidiaries, Luna Squares LLC and Cosmos Infrastructure LLC, entered into a Guarantee and Security Agreement (the “Security Agreements”) with each investor, securing such investor’s Secured Convertible Promissory Note by specific, and separate application-specific integrated circuit (ASIC) mining hardware of Cosmos Infrastructure LLC. Each Security Agreement contains customary covenants and customary events of default, the occurrence of which could result in an acceleration of the Secured Convertible Promissory Notes. The Secured Convertible Promissory Notes are convertible at the option of the holder at a price of $0.85 per share of our common stock, except in the case of an event of default, during which the Secured Convertible Promissory Notes are convertible at the option of the holder into shares of the Company’s common stock, at a price of $0.80 per share. The Secured Convertible Promissory Notes bear interest of twenty percent (20%) per annum, except in the case of an event of default, during which they will bear interest of twenty-five percent (25%) per annum. One-half of the interest that accrues each month on the Secured Convertible Promissory Notes must be paid monthly. All unpaid principal, together with any then unpaid and accrued interest and other amounts payable under the Secured Convertible Promissory Notes, is due and payable if not converted pursuant to the terms and conditions of the Secured Convertible Promissory Note on the earlier of (i) one year after its issuance, or (ii) following an event of default.

On July 17, 2022, the Company entered into a Securities Purchase Agreement with an institutional investor providing for the issuance and sale by the Company of 8,000,000 shares of the Company’s common stock, at a price of $0.80 per share, accompanied by warrants to purchase 10,000,000 shares of the Company’s common stock in a registered direct offering pursuant to a “shelf” registration statement on Form S-3 (File No. 333-264062). The warrants issued in this offering have an exercise price of $1.01 per share of our common stock, are exercisable 6 months after issuance and will expire five and one-half years following issuance. The exercise price of the warrants issued in this offering is subject to adjustment for stock splits, reverse splits, and similar capital transactions as described in the warrants. This offering closed on July 20, 2022. The net amount raised was $5.62 million.

On August 12, 2022, Mawson AU entered into a non-binding Memorandum of Understanding to, amongst other things, discuss the possibility of selling certain assets to its supplier, Faith Technologies Inc. (“FTI”) in return for FTI reducing amounts outstanding to FTI by Mawson AU by $4,598,800.

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Accounting Policies, by Policy (Policies)

6 Months Ended

Jun. 30, 2022

Accounting Policies [Abstract]

Principles of Consolidation and basis of preparation

Principles of Consolidation and basis of preparation

The accompanying consolidated financial statements of the Company include the accounts of the Company and its wholly or majority owned and controlled subsidiaries, other than those subsidiaries subject to the CVR described more in NOTE 10. Intercompany investments, balances and transactions have been eliminated in consolidation. Non–controlling interests represent the minority equity investment in the Company’s subsidiaries, plus the minority investors’ share of the net operating results and other components of equity relating to the non–controlling interest.

Any changes in the Company’s ownership interest in a consolidated subsidiary, through additional equity issuances by the consolidated subsidiary or from the Company acquiring the shares from existing shareholders, in which the Company maintains control is recognized as an equity transaction, with appropriate adjustments to both the Company’s additional paid-in capital and the corresponding non-controlling interest.

On March 9, 2021, Mawson AU was acquired by the Company. For accounting purposes, this was accounted for as a reverse asset acquisition with Mawson AU as the accounting acquirer (refer to significant accounting policies below). The result of which is that these financial statements are taken to be a continuation of Mawson AU’s financial statements, with the Company incorporated within the acquisition and therefore the historical financial information of Mawson AU (then known as Cosmos Capital Limited) prior to March 9, 2021, became the historical financial information of Mawson AU, which have been consolidated into the financial statements of the Company. 

Use of Estimates and Assumptions

Use of Estimates and Assumptions

The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported in the financial statements and accompanying notes. The Company evaluates on an ongoing basis its assumptions. The Company’s management believes that the estimates, judgments and assumptions used are reasonable based upon information available at the time they are made.

These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the consolidated financial statements, and the reported amounts of income and expenses during the reporting periods. Actual results could differ from those estimates. The Company has considered the following to be significant estimates made by management, including but not limited to, going concern assumptions, estimating the useful lives of fixed assets, realization of long-lived assets, unrealized tax positions and the realization of digital currencies, valuing the derivative asset classified under Level 3 fair value hierarchy, business combinations, reverse asset acquisition, and the contingent obligation with respect to future revenues.

Critical Accounting Policies

Critical Accounting Policies

Critical accounting policies are described in the consolidated financial statements for Mawson included in the Company’s Annual Report on Form10-K filed with SEC on March 21, 2022. There have been some changes to critical accounting policies in the six months period ended June 30, 2022. The reverse asset acquisition accounting policy which is no longer considered to be a critical accounting policy and has therefore been included in significant accounting policies and the fair value of financial instruments has been moved from significant accounting policies to critical accounting policies.

Revenue Recognition – Digital asset mining revenue

The Company recognizes revenue under ASC 606, Revenue from Contracts with Customers. The core principle of ASC 606 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. Five steps are required to be followed in evaluating revenue recognition: (i) identify the contract with the customer; (ii) identity the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price; and (v) recognize revenue when or as the entity satisfied 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).

There is currently no specific definitive guidance in U.S. GAAP or alternative accounting frameworks for the accounting of managing digital currencies and management has exercised significant judgement in determining appropriate accounting treatment for the recognition of revenue for such operations.

The Company has entered into a contract with mining pools and has undertaken the performance obligation of providing computing power in exchange for non-cash consideration in the form of cryptocurrency. The provision of computing power is the only performance obligation in the Group’s contract with its pool operators. In certain pools the amount of reward for computing power depends on the pool’s success in mining blocks. In other pools, the amount of reward includes no such contingency, although the fees payable to such pools are typically higher as a result. Where the consideration received is variable (for example, due to payment only being made upon successful mining), it is recognized when it is highly probable that the variability is resolved, which is generally when the cryptocurrency is received.

The Company measures the non-cash consideration received at the fair market value of the cryptocurrency received. Management estimates fair value on a daily basis, as the quantity of cryptocurrency received multiplied by the price quoted on the crypto exchanges that the Company uses to dispose of cryptocurrency on the day it was received.

Property and equipment

Property and equipment are stated at cost, net of accumulated depreciation. The cost includes any cost of replacing part of the property and equipment with the original cost of the replaced part being derecognized. All other repair and maintenance costs are recognized in profit or loss incurred. The present value of the expected cost for the decommissioning of an asset after its use is included in the cost of the respective asset if the recognition criteria for a provision are met. Property, plant and equipment transferred from customers is initially measured at the fair value at the date on which control is obtained.

The depreciable amount of fixed assets is depreciated on a straight-line or declining balance basis based on the asset classification, over their useful lives to the economic entity commencing from the time the assets arrive at their destination where they are ready for use. Depreciation is calculated over the following estimated useful lives:

Asset class	Useful life	Depreciation Method
Fixtures and Fittings	5 years	Straight-Line
Plant and equipment	10 years	Straight-Line
Modular data center	5 years	Declining
Motor Vehicles	5 years	Straight-Line
Computer equipment	3 years	Straight-Line
Processing Machinery (Miners)	2 years	Declining
Transformers	15 years	Straight-Line
Leasehold improvements	10 years	Straight-Line

An item of property, plant and equipment and any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income statement when the asset is derecognized.

The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.

The Company changed its policy in relation to freight costs in relation to processing machines with effect from October 1, 2021. Prior to this date these costs were expensed to the statement of operations and profit and loss, and afterwards these costs are capitalized into processing machinery. This change resulted in an increase in processing machines in the balance sheet of $2,978,232 at June 30, 2022, and an increase in the depreciation charge to the six months to June 30, 2022 statement of operations and profit and loss of $84,735 over the prior treatment.

The Company’s long-lived assets are reviewed for impairment in accordance with Accounting Standards Codification (“ASC”) 360, “Property, Plant and Equipment”, whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by the assets. If such asset is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds its fair value. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. During the six month periods ended June 30, 2022, and 2021, no impairment losses have been identified.

Fair value of financial instruments:

The Company accounts for financial instruments under FASB Accounting Standards Codification Topic (“ASC”) 820, Fair Value Measurements. This statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements, ASC 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels as follows:

Level 1 — quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 — observable inputs other than Level 1, quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, and model-derived prices whose inputs are observable or whose significant value drivers are observable; and

Level 3 — assets and liabilities whose significant value drivers are unobservable. Observable inputs are based on market data obtained from independent sources, while unobservable inputs are based on the Company’s market assumptions. Unobservable inputs require significant management judgment or estimation. In some cases, the inputs used to measure an asset or liability may fall into different levels of the fair value hierarchy. In those instances, the fair value measurement is required to be classified using the lowest level of input that is significant to the fair value measurement. Such determination requires significant management judgment.

	Fair value measured at June 30, 2022
	Total carrying value at June 30, 2022		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Derivative asset	$	17,714,357	$	-	$	-	$	17,714,357
Financial assets	$	1,638,027	$	172,198	$	-	$	1,465,829

	Fair value measured at December, 2021
	Total carrying value at December, 2021		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Derivative asset	$	-	$	-	$	-	$	-
Financial assets	$	326,801	$	326,801	$	-	$	-

Level 3 Assets: 

Power Supply Agreement

During the quarter ended June 30, 2022, the Company recorded a derivative asset related to its Power Supply Agreement with Energy Harbor LLC, the energy supplier to the Company’s Pennsylvania Facility. The Power Supply Agreement was classified as a derivative asset and measured at fair value on the date of Power Supply Agreement, with changes in fair value recognized in the accompanying unaudited condensed consolidated statements of operations. The estimated fair value of the Company’s derivate asset is classified in Level 3 of the fair value hierarchy due to the significant unobservable inputs utilized in the valuation. Specifically, our discounted cash flow estimation models contain quoted commodity exchange spot and forward prices and are adjusted for basis spreads for load zone-to-hub differentials through the term of the Power Supply Agreement, which ends in December 2026. In addition, the Group adopted a further discount rate utilized of approximately 20% above the terminal value of the observable market inputs, but also includes unobservable inputs based on qualitative judgment related to company-specific risk factors. The terms of the Power Supply Agreement require pre-payment of collateral, calculated as forward cost based on the market cost rate of electricity versus the fixed price stated in the contract.

Tasmania Data Infrastructure Pty Ltd (“TDI”)

During June 2022 Mawson AU Limited entered into a License and Services Agreement with TDI in exchange for 42,562,432 fully paid issued shares in TDI, this is held at fair value of $1.47 million as at June 30, 2022 the fair value uses unobservable inputs.

Level 1 Assets: 

The company holds 50 million shares in DXN Limited (“DXN”), an Australian Securities Exchange (“ASX”) listed company. This is recorded at fair value with changes in fair value recognized in the accompanying unaudited condensed consolidated statements of operations. The fair value of the DXN investment is classified in Level 1 of the fair value hierarchy as it is quoted on an active market, that being the ASX. 

Accounting for Power Supply Contract

In June 2022, the company entered into a Power Supply Agreement with Energy Harbor LLC to provide the delivery of a fixed portion of the total amount of electricity for a fixed price through to December 2026. If the Pennsylvania site uses more electricity than contracted, the cost of the excess is incurred at a new price quoted by Energy Harbor.

While the Company manages operating costs at the Pennsylvania Facility in part by periodically selling unused or uneconomical power back to the market, we do not consider such actions trading activities. That is, the Company does not engage in speculation in the power market as part of our ordinary activities. Because the sale of any electricity under a curtailment program allows for net settlement, we have determined the Power Supply Agreement meets the definition of a derivative under ASC 815, Derivatives and Hedging, (“ASC 815”). However, because the Company has the ability to sell the power back to the grid rather than take physical delivery, physical delivery is not probable through the entirety of the contract and therefore, we do not believe the normal purchases and normal sales scope exception applies to the Power Supply Agreement. Accordingly, the Power Supply Agreement (the non-hedging derivative contract) is recorded at estimated fair value each reporting period with the change in the fair value recorded in change in fair value of derivative asset in the consolidated statements of operations (refer to fair value of financial instruments policy).

Share based payments

The Company follows FASB Codification Topic ASC 718-10 Compensation-Stock Compensation. The Company expenses stock-based compensation to employees and non-employees over the requisite service period based on the estimated grant-date fair value of the awards. The Company determines the grant date fair value of the restricted stock units (“RSUs”) and options using the Black-Scholes option-pricing model. The assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment. These assumptions are the expected stock volatility, the risk–free interest rate, the expected life of the option, the dividend yield on the underlying stock and the expected forfeiture rate. Expected volatility computes stock price volatility over expected terms based on its historical common stock trading prices. Risk–free interest rates are calculated based on the implied yield available on U. S. 10-year Treasury bond.

Significant Accounting Policies

Significant Accounting Policies

Revenue Recognition - Hosting Co-location revenue

The Company provides power for our co-location hosting customers on a variable basis which is received monthly from the customer based on the power usage at the rate outlined in each customer contract.

We recognize variable power revenue each month as the uncertainty related to the consideration is resolved, power is provided to our customers, and our customers utilize the power (the customer simultaneously receives and consumes the benefits of the Company’s performance).

The customer contracts contain performance obligations, variable consideration in such contracts to be allocated to and recognized in the period to which the consideration relates. Usually this is when it is invoiced, rather than obtaining an estimation of variable consideration at the beginning of the customer contracts.

Customers also are invoiced a fixed monthly fee for maintenance services which include, cleaning, cabling and other services to maintain the customers’ equipment.

Revenue Recognition - Sale of crypto currency mining equipment

Crypto currency mining equipment sales revenue includes revenues related to the sale of Miners. This is recognized as revenue upon delivery to the customer, which is when the control of the Miner transfers. Payments are typically received at the point control transfers or in accordance with payment terms customary to the business.

Revenue recognition – equipment sales

The Company earned revenues from the sale of earlier generation cryptocurrency mining units and modular data centers that have been assembled or refurbished for resale (collectively “Hardware”). Revenue from the sale of Hardware is recognized when all of the following conditions are satisfied: (i) persuasive evidence of a sales arrangement exists, (ii) the sales terms are fixed or determinable, (iii) title and risk of loss have transferred, and (iv) payment is received. At the date of sale, the net book value is expensed in cost of revenues.

Cost of revenues:

Cost of revenue consists primarily of expenses that are directly related to providing the Company’s service to its paying customers. These primarily consist of costs associated with operating our co-location facilities such as direct power costs, energy costs (including any carbon offset acquired during the year), freight costs and material costs related to cryptocurrency mining.

Research and development expenses:

Research and development expenses are charged to the statement of comprehensive loss as incurred.

Income taxes:

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance may be established to reduce the deferred tax asset to the level at which it is “more likely than not” that the tax asset or benefits will be realized. Realization of tax benefits of deductible temporary differences and operating loss carryforwards depends on having sufficient taxable income of an appropriate character within the carryback or carryforward periods.

The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained upon review by the taxing authority. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs.

Functional currency:

All subsidiaries of Company have a functional currency of United States dollar (“USD”) with the exceptions of Mawson Infrastructure Group Pty Ltd, MIG No.1 Pty Ltd, Cosmos Trading Pty Ltd and Mawson AU Limited whose functional currency is the Australian Dollar (“AUD”). The financial statements of foreign businesses have been translated into USD at current exchange rates for balance sheet items and at the average rate for income statement items. Translation of all the consolidated companies’ financial records into USD is required due to the reporting currency for these consolidated financial statements presented as USD and the functional currency of the parent company being that of AUD. Translation adjustments are accumulated in other comprehensive loss. Revenue and expense accounts are converted at prevailing rates throughout the year. Gains or losses on foreign currency transactions and translation adjustments in highly inflationary economies are recorded in income in the period in which they are incurred.

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 is composed of the chief executive officer. We currently operate in one segment surrounding our cryptocurrency mining operation.

Cash and cash equivalents:

Cash and cash equivalents include cash on hand, deposits held at call with financial institutions, cash held with digital currency exchanges, and other short-term and highly liquid investments that are readily convertible to known amounts of cash and have original maturities of three months or less.

Digital Currencies

Digital currencies are included in current assets in the consolidated balance sheets. Digital currencies are classified as indefinite-lived intangible assets in accordance with ASC 350, Intangibles - Goodwill and Other, and are accounted for in connection with the Company’s revenue recognition policy detailed above.

The following table presents the Company’s digital currency (Bitcoin) activities for the three months and six months ended June 30, 2022:

	Three months to June 30, 2022			Six months to June 30, 2022
Opening number of Bitcoin held as at March 31, 2022 and December 31, 2021		0.00			0.92
Number of Bitcoin added		489.60			948.27
Number of Bitcoin sold		(487.39	)		(946.98	)
Closing number of Bitcoin held as at June 30, 2022		2.21			2.21

Digital currency is not amortized but assessed for impairment annually, or more frequently, when events or changes in circumstances occur indicating that it is more likely than not that the indefinite-lived asset is impaired. Impairment exists when the carrying amount exceeds its fair value. In testing for impairment, the Company has the option to first perform a qualitative assessment to determine whether it is more likely than not that an impairment exists. If it is determined that it is not more likely than not that an impairment exists, a quantitative impairment test is not necessary. If the Company concludes otherwise, it is required to perform a quantitative impairment test. 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.

The Company’s policy is to dispose of production at the earliest opportunity, therefore the holding period is minimal, usually no more than a few days. Due to the short period which Bitcoin are held prior to sale and the consequent small numbers held, the risk of impairment is not material.

Equipment deposits:

The Company records a prepaid expense for costs paid but not yet incurred. Those expected to be incurred within one year are recognized and shown as equipment deposits. Equipment deposits result from advance payments to suppliers for goods to be received in the future. Equipment deposits are initially recognized as assets at the date the amount is paid, and are subsequently recorded as equipment as the Company takes delivery and control of the equipment from the supplier. Amounts are recognized initially at the amount of the unconditional consideration. They are subsequently measured at cost, less loss allowance.

Reverse Asset Acquisition:

On March 9, 2021, the Company acquired the shares of Cosmos Capital Limited (now known as Mawson Infrastructure Group Pty Ltd and referred to herein as Mawson AU) in a stock for stock exchange. This transaction has been accounted for as a reverse asset acquisition. This transaction reverse asset acquisition and the associated impact is referred to as the “Cosmos Transaction”.

Under the terms of the Cosmos Transaction Bid Implementation Agreement, the Company was required to make share-based payments consisting of up to 40,000,000 shares under an Incentive Compensation Program and warrants issued to HC Wainwright as a fee related to the acquisition by Mawson of Mawson AU. In addition, Mawson AU had an outstanding obligation to W Capital Advisors Pty Ltd (“W Capital”) for options over the equity of Mawson AU which was terminated for consideration of warrants over the Company’s shares being issued to W Capital.

Concentrations of credit risk:

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash, cash equivalents, marketable securities. Cash and cash equivalents and restricted bank deposits are invested in banks in Australia and the U.S. If the counterparty completely failed to perform in accordance with the terms of the contract, is the maximum amount of loss the Company would be the balance. Management believes that the financial institutions that hold the Company’s investments are financially sound and, accordingly, minimal credit risk exists with respect to these investments. The Company has no off-balance-sheet concentration of credit risk such as foreign exchange contracts, option contracts or other foreign hedging arrangements.

Legal and other contingencies: 

The Company accounts for its contingent liabilities in accordance with ASC 450 “Contingencies”. A provision is recorded when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. With respect to legal matters, provisions are reviewed and adjusted to reflect the impact of negotiations, estimated settlements, legal rulings, advice of legal counsel and other information and events pertaining to a particular matter. Legal costs incurred in connection with loss contingencies are expensed as incurred. As of June 30, 2022, the Company is not a party to any litigation that would reasonably be expected to have a material adverse effect on the Company’s business, financial position, results of operations or cash flows.

Leases:

The Company accounts for its leases under ASC 842, Leases which was effective January 1, 2019. The Company determines if an arrangement is a lease at inception. Using ASC 842 leases are classified as operating or finance leases on the Balance Sheet as a right of use (“ROU”) assets and lease liabilities within current liabilities and long-term liabilities on our consolidated balance sheet. ROU assets and lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. The Company’s lease does not provide an implicit rate and therefore the Company measured the ROU asset and lease obligation based upon the present value of future minimum lease payments. The Company’s incremental borrowing rate is estimated based on risk-free discount rate for the lease, determined using a period comparable with that of the lease term and in a similar economic environment. The lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise such options. The Company does not record leases on the consolidated balance sheets with a term of one year or less. The Company does not separate lease and non-lease components but rather account for each separate component as a single lease component for all underlying classes of assets. Where leases contain escalation clauses, rent abatements, or concessions, such as rent holidays and landlord or tenant incentives or allowances, the Company applies them in the determination of straight-line operating lease cost over the lease term.

Recent Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (FASB) or other standard setting bodies and adopted by the Company as of the specified effective date. For information with respect to recent accounting pronouncements, see Note 2 to the consolidated financial statements for Mawson as of December 31, 2021, included in the Company’s Annual Report on Form 10-K filed with SEC on March 21, 2022, recent accounting pronouncements since that date include:

In March 2022, the FSAB issued ASU update 2022-01—Derivatives and Hedging (Topic 815): Fair Value Hedging—Portfolio Layer Method. The adoption of ASU 2021-01 did not have a material impact on the Company’s financial statements or disclosures.

In March 2022, the FSAB issued ASU 2022-02—Financial Instruments—Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures. The adoption of ASU 2022-02 did not have a material impact on the Company’s financial statements or disclosures.

In June 2022, the FSAB issued ASU 2022-03—Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions. The adoption of ASU 2022-03 did not have a material impact on the Company’s financial statements or disclosures.

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Summary of Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2022

Accounting Policies [Abstract]

Schedule of estimated useful lives of the assets

Asset class	Useful life	Depreciation Method
Fixtures and Fittings	5 years	Straight-Line
Plant and equipment	10 years	Straight-Line
Modular data center	5 years	Declining
Motor Vehicles	5 years	Straight-Line
Computer equipment	3 years	Straight-Line
Processing Machinery (Miners)	2 years	Declining
Transformers	15 years	Straight-Line
Leasehold improvements	10 years	Straight-Line

Schedule of input that is significant to the fair value measurement

	Fair value measured at June 30, 2022
	Total carrying value at June 30, 2022		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Derivative asset	$	17,714,357	$	-	$	-	$	17,714,357
Financial assets	$	1,638,027	$	172,198	$	-	$	1,465,829

	Fair value measured at December, 2021
	Total carrying value at December, 2021		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Derivative asset	$	-	$	-	$	-	$	-
Financial assets	$	326,801	$	326,801	$	-	$	-

Schedule of digital currency

	Three months to June 30, 2022			Six months to June 30, 2022
Opening number of Bitcoin held as at March 31, 2022 and December 31, 2021		0.00			0.92
Number of Bitcoin added		489.60			948.27
Number of Bitcoin sold		(487.39	)		(946.98	)
Closing number of Bitcoin held as at June 30, 2022		2.21			2.21

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Basic and Diluted Net Loss Per Share (Tables)

6 Months Ended

Jun. 30, 2022

Earnings Per Share [Abstract]

Schedule of computation of diluted loss per share

	As at June 30,
	2022		2021
Warrants to purchase common stock		6,391,667		1,698,727
Options to purchase common stock		29,459		-
Mandatory convertible notes to exchange common stock		-		6,362,690
Restricted Stock-Units (“RSUs”) issued under a management equity plan		2,449,725		4,000,000
		8,870,851		12,061,417

Schedule of computation of basic and diluted loss per share

	For the three months ended June 30,						For the six months ended June 30,
	2022			2021			2022			2021
Net Loss attributable to common shareholders	$	(2,117,403	)	$	(6,239,923	)	$	(13,453,059	)	$	(44,803,128	)
Denominator:
Weighted average common shares - basic and diluted		71,598,552			50,264,283			71,790,772			47,298,702
Loss per common share - basic and diluted	$	(0.03	)	$	(0.12	)	$	(0.19	)	$	(0.95	)

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Leases (Tables)

6 Months Ended

Jun. 30, 2022

Leases [Abstract]

Schedule of income and comprehensive loss

	For the three months ended June 30,				For the six months ended June 30,
	2022		2021		2022		2021
Operating lease charges (1)	$	434,977	$	24,557	$	802,112	$	35,780
Finance lease charges:
Amortization of right-of-use assets		8,094		-		12,396		-
Interest on lease obligations	$	2,468	$	-	$	3,946	$	-

⁽¹⁾ Included in Selling, General & Administrative Expenses.

Schedule of selling, general & administrative expenses

	Operating leases			Finance Leases
2023	$	1,823,308		$	38,248
2024		1,799,315			38,248
2025		862,083			38,248
2026		553,715			29,352
2027		281,105			4,818
Total undiscounted lease obligations		5,319,526			148,914
Less imputed interest		(649,325	)		(20,225	)
Total present value of lease liabilities		4,670,201			128,689
Less current portion of lease liabilities		1,451,655			29,643
Non-current lease liabilities	$	3,218,546		$	99,046

	Operating leases			Finance Leases
Operating cash flows from operating and finance leases	$	922,332		$	14,676
Weighted-average remaining lease term – operating and finance leases (years)		3.21			3.88
Weighted-average discount rate – operating and leases (%)		8.0	%		7.5	%

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Property and Equipment (Tables)

6 Months Ended

Jun. 30, 2022

Property, Plant and Equipment [Abstract]

Schedule of property and equipment, net

	June 30, 2022			December 31, 2021
Plant and equipment		6,583,193			1,046,866
Computer equipment		469,966			216,099
Furniture & fixtures		29,851			31,474
Processing machines (Miners)		144,010,826			81,341,098
Modular data center		21,678,051			9,819,796
Motor Vehicles		327,053			250,425
Transformers		6,978,071			1,190,609
Low-cost assets		872,612			246,154
Assets under construction		13,630,192			1,008,001
Leasehold improvements		360,000			-
Total		194,939,815			95,150,522
Less: Accumulated depreciation		(46,001,594	)		(18,213,672	)
Property and equipment, net		148,938,221			76,936,850

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Income Taxes (Tables)

6 Months Ended

Jun. 30, 2022

Schedule of effective tax rates [Abstract]

Schedule of effective tax rates

	For the three months ended June 30,
	2022			2021
Income/(Loss) before income taxes		(2,405,632	)		(6,348,860	)
Tax Expense/(Benefit) for income taxes		12,128			-
Effective income tax rate		(0.50	)%		0.00	%

	For the six months ended June 30,
	2022			2021
Income/(Loss) before income taxes		(13,975,707	)		(44,868,930	)
Tax Expense/(Benefit) for income taxes		12,128			-
Effective income tax rate		(0.09	)%		0.00	%

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Stockholders Equity (Tables)

6 Months Ended

Jun. 30, 2022

Schedule of outstanding stock warrants [Abstract]

Schedule of outstanding stock warrants

	Number of Warrants			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in years)
Outstanding as of December 31, 2021		3,524,189
Issued		4,143,478		$	8.57		1.5
Exercised		(1,276,000	)
Expired		-
Outstanding as of June 30, 2022		6,391,667		$	8.57		1.5
Warrants exercisable as of June 30, 2022.		6,391,667		$	8.57		1.5

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General (Details) - USD ($) $ in Thousands	1 Months Ended	6 Months Ended
	Jul. 31, 2022	Jun. 30, 2022
General (Details) [Line Items]
Loss after tax		$ 13,980
Accumulated deficit		82,950
Cash		$ 2,500
Issued promissory notes	$ 3,600
Net proceeds	5,620
Mawson AU [Member]
General (Details) [Line Items]
Ordered shares (in Shares)		35,329
Wainwright & Co.LLC [Member]
General (Details) [Line Items]
Aggregate sales price	$ 100,000

XML

Summary of Significant Accounting Policies (Details)	6 Months Ended
	Jun. 30, 2022 USD ($) shares
Summary of Significant Accounting Policies (Details) [Line Items]
Increase in processing machines | $	$ 2,978,232
Depreciation charge | $	$ 84,735
Percentage value of the observable market inputs	20.00%
Issued, shares	107,042,254
Fair value uses unobservable inputs | $	$ 1,470,000
Fair value of level 1 assets shares	50,000,000
Tax benefit percentage	50.00%
Warrant issued	40,000,000
Tasmania Data Infrastructure Pty Ltd [Member]
Summary of Significant Accounting Policies (Details) [Line Items]
Issued, shares	42,562,432

XML

Summary of Significant Accounting Policies (Details) - Schedule of estimated useful lives of the assets	6 Months Ended
	Jun. 30, 2022
Fixtures and Fittings [Member]
Summary of Significant Accounting Policies (Details) - Schedule of estimated useful lives of the assets [Line Items]
Financial asset useful life	5 years
Financial asset depreciation method	Straight-Line
Plant and Equipment [Member]
Summary of Significant Accounting Policies (Details) - Schedule of estimated useful lives of the assets [Line Items]
Financial asset useful life	10 years
Financial asset depreciation method	Straight-Line
Modular Data Center [Member]
Summary of Significant Accounting Policies (Details) - Schedule of estimated useful lives of the assets [Line Items]
Financial asset useful life	5 years
Financial asset depreciation method	Declining
Motor Vehicles [Member]
Summary of Significant Accounting Policies (Details) - Schedule of estimated useful lives of the assets [Line Items]
Financial asset useful life	5 years
Financial asset depreciation method	Straight-Line
Computer Equipment [Member]
Summary of Significant Accounting Policies (Details) - Schedule of estimated useful lives of the assets [Line Items]
Financial asset useful life	3 years
Financial asset depreciation method	Straight-Line
Processing Machinery [Member]
Summary of Significant Accounting Policies (Details) - Schedule of estimated useful lives of the assets [Line Items]
Financial asset useful life	2 years
Financial asset depreciation method	Declining
Transformers [Member]
Summary of Significant Accounting Policies (Details) - Schedule of estimated useful lives of the assets [Line Items]
Financial asset useful life	15 years
Financial asset depreciation method	Straight-Line
Leasehold improvements [Member]
Summary of Significant Accounting Policies (Details) - Schedule of estimated useful lives of the assets [Line Items]
Financial asset useful life	10 years
Financial asset depreciation method	Straight-Line

XML

Summary of Significant Accounting Policies (Details) - Schedule of input that is significant to the fair value measurement - USD ($)	Jun. 30, 2022	Dec. 31, 2021
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative asset	$ 17,714,357
Financial assets	1,638,027	326,801
Quoted prices in active markets (Level 1) [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative asset
Financial assets	172,198	326,801
Significant other observable inputs (Level 2) [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative asset
Financial assets
Significant unobservable inputs (Level 3) [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative asset	17,714,357
Financial assets	$ 1,465,829

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Summary of Significant Accounting Policies (Details) - Schedule of digital currency - $ / shares	3 Months Ended	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2022
Schedule Of Digital Currency Abstract
Opening number of Bitcoin held	$ 0	$ 0.92
Number of Bitcoin added	489.6	948.27
Number of Bitcoin sold	(487.39)	(946.98)
Closing number of Bitcoin held	$ 2.21	$ 2.21

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Basic and Diluted Net Loss Per Share (Details)	Aug. 16, 2021 shares
Earnings Per Share [Abstract]
Common stock authorized	120,000,000

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Basic and Diluted Net Loss Per Share (Details) - Schedule of computation of diluted loss per share - shares	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021
Schedule Of Computation Of Diluted Loss Per Share Abstract
Warrants to purchase common stock	6,391,667	1,698,727
Options to purchase common stock	29,459
Mandatory convertible notes to exchange common stock		6,362,690
Restricted Stock-Units (“RSUs”) issued under a management equity plan	2,449,725	4,000,000
Total	8,870,851	12,061,417

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Basic and Diluted Net Loss Per Share (Details) - Schedule of computation of basic and diluted loss per share - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Schedule Of Computation Of Basic And Diluted Loss Per Share Abstract
Net Loss attributable to common shareholders	$ (2,117,403)	$ (6,239,923)	$ (13,453,059)	$ (44,803,128)
Denominator:
Weighted average common shares - basic and diluted	71,598,552	50,264,283	71,790,772	47,298,702
Loss per common share - basic and diluted	$ (0.03)	$ (0.12)	$ (0.19)	$ (0.95)

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Basic and Diluted Net Loss Per Share (Details) - Schedule of computation of basic and diluted loss per share (Parentheticals) - $ / shares	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Schedule Of Computation Of Basic And Diluted Loss Per Share Abstract
Weighted average common shares - diluted	71,598,552	50,264,283	71,790,772	47,298,702
Loss per common share - diluted	$ (0.03)	$ (0.12)	$ (0.19)	$ (0.95)

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Deposit, Property and Equipment (Details) - USD ($)	Aug. 09, 2021	Jun. 30, 2022
Deposit, Property and Equipment [Abstract]
Purchase price, description	On August 9, 2021, Cosmos Infrastructure LLC entered into a second Long-Term Purchase Contract with Canaan for the purchase of 15,000 next generation Avalon A1246 ASIC Miners. The average purchase price per unit is $4,908 for a total purchase price of $73,620,000. The final shipment for contract was received during May 2022, in total there were 11,000 Miners delivered, there was a final adjustment to the purchase price based on the actual tera hash and number of Miners delivered based on the agreed price per tera hash under the terms of the contract. The purchase price adjustment resulted in a $0.3 million reduction in the purchase price, this is due to be received in cash from Canaan.
Cash paid		$ 32,054,326

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Leases (Details)	1 Months Ended	6 Months Ended
	Mar. 16, 2022	Jun. 30, 2022 ft² a
Leases [Abstract]
Lease description		The lease term was originally for 1 acre from May 1, 2020, until April 30, 2023. An amendment to the lease and exercise of option to lease four additional acres was signed and became effective February 23, 2021. A further amendment to the lease and exercise of option to lease was signed and became effective August 24, 2021. The Lease Amendment covers an additional 11.35 acres of the property, bringing the total to 16.35 acres under the lease. It also includes 5, 3-year extension options bringing the total lease period to run potentially until 2038.
Office space | ft²		1,076
New lease of land | a		6
Lease description	The term of the lease is for 5 years, with 2 options to extend for 5 years each.

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Leases (Details) - Schedule of income and comprehensive loss - USD ($)		3 Months Ended		6 Months Ended
		Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Leases [Abstract]
Operating lease charges	[1]	$ 434,977	$ 24,557	$ 802,112	$ 35,780
Finance lease charges:
Amortization of right-of-use assets		8,094		12,396
Interest on lease obligations		$ 2,468		$ 3,946

[1] Included in Selling, General & Administrative Expenses.

XML

Leases (Details) - Schedule of selling, general & administrative expenses	Jun. 30, 2022 USD ($)
Operating leases [Member]
Leases (Details) - Schedule of selling, general & administrative expenses [Line Items]
2023	$ 1,823,308
2024	1,799,315
2025	862,083
2026	553,715
2027	281,105
Total undiscounted lease obligations	5,319,526
Less imputed interest	(649,325)
Total present value of lease liabilities	4,670,201
Less current portion of lease liabilities	1,451,655
Non-current lease liabilities	3,218,546
Operating cash flows from operating and finance leases	$ 922,332
Weighted-average remaining lease term – operating and finance leases (years)	3 years 2 months 15 days
Weighted-average discount rate – operating and leases (%)	8.00%
Finance Leases [Member]
Leases (Details) - Schedule of selling, general & administrative expenses [Line Items]
2023	$ 38,248
2024	38,248
2025	38,248
2026	29,352
2027	4,818
Total undiscounted lease obligations	148,914
Less imputed interest	(20,225)
Total present value of lease liabilities	128,689
Less current portion of lease liabilities	29,643
Non-current lease liabilities	99,046
Operating cash flows from operating and finance leases	$ 14,676
Weighted-average remaining lease term – operating and finance leases (years)	3 years 10 months 17 days
Weighted-average discount rate – operating and leases (%)	7.50%

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Property and Equipment (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Property, Plant and Equipment [Abstract]
Depreciation and amortization expense	$ 16,023,817	$ 2,533,242	$ 29,826,849	$ 3,848,142

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Property and Equipment (Details) - Schedule of property and equipment, net - USD ($)	Jun. 30, 2022	Dec. 31, 2021
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 194,939,815	$ 95,150,522
Less: Accumulated depreciation	(46,001,594)	(18,213,672)
Property and equipment, net	148,938,221	76,936,850
Plant and equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	6,583,193	1,046,866
Computer equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	469,966	216,099
Furniture & fixtures [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	29,851	31,474
Processing machines (Miners) [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	144,010,826	81,341,098
Modular data center [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	21,678,051	9,819,796
Motor Vehicles [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	327,053	250,425
Transformers [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	6,978,071	1,190,609
Low-cost assets [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	872,612	246,154
Assets under construction [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	13,630,192	1,008,001
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 360,000

XML

Financial Assets (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2022 USD ($) shares
Transfers and Servicing [Abstract]
Issued shares | shares	42,562,432
Fair value | $	$ 1,470

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Income Taxes (Details) - Schedule of effective tax rates - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Schedule Of Effective Tax Rates Abstract
Income/(Loss) before income taxes	$ (2,405,632)	$ (6,348,860)	$ (13,975,707)	$ (44,868,930)
Tax Expense/(Benefit) for income taxes	$ 12,128		$ 12,128
Effective income tax rate	(0.50%)	0.00%	(0.09%)	0.00%

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Stockholders Equity (Details) - USD ($) $ / shares in Units, $ in Millions	1 Months Ended	3 Months Ended	6 Months Ended
	Feb. 23, 2022	Jun. 30, 2022	Jun. 30, 2022	May 31, 2022
Stockholders Equity (Details) [Line Items]
Shares issued		107,042,254	107,042,254
Shares of common stock		901,000
Warrants expiry date	Aug. 23, 2023
Purchase to shares	3,850,000
Exercise price per share (in Dollars per share)	$ 6.5
Loan amount (in Dollars)	$ 20
Exercise of warrants			1,276,000
TraDigital Marketing Group LLC [Member]
Stockholders Equity (Details) [Line Items]
Shares issued				5,000

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Stockholders Equity (Details) - Schedule of outstanding stock warrants	6 Months Ended
	Jun. 30, 2022 $ / shares shares
Schedule Of Outstanding Stock Warrants Abstract
Number of Warrants, Outstanding beginning	3,524,189
Weighted Average Exercise Price, Outstanding beginning (in Dollars per share) | $ / shares
Number of Warrants, Issued	4,143,478
Weighted Average Exercise Price, Issued (in Dollars per share) | $ / shares	$ 8.57
Weighted Average Remaining Contractual Life (in years), Issued	1 year 6 months
Number of Warrants, Exercised	(1,276,000)
Number of Warrants, Expired
Weighted Average Exercise Price, Expired (in Dollars per share) | $ / shares
Number of Warrants, Outstanding ending	6,391,667
Weighted Average Exercise Price, Outstanding ending (in Dollars per share) | $ / shares	$ 8.57
Weighted Average Remaining Contractual Life (in years), Outstanding ending	1 year 6 months
Number of Warrants exercisable	6,391,667
Weighted Average Exercise Price, Warrants exercisable (in Dollars per share) | $ / shares	$ 8.57
Weighted Average Remaining Contractual Life (in years), Warrants exercisable	1 year 6 months

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Commitments and Contingencies (Details)	6 Months Ended
	Jun. 30, 2022 USD ($) shares
Commitments and Contingencies Disclosure [Abstract]
Development amount | $	$ 300,000
Interest rate	100.00%
Paid issued shares | shares	107,042,254

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Borrowings (Details) - USD ($)	Feb. 23, 2022	Dec. 31, 2021	Oct. 15, 2021	Jun. 30, 2022
Borrowings (Details) [Line Items]
Short term borrowings description			On October 15, 2021, the Company acquired 2,000 Whatsminers M30’s for delivery in October 2021 from Foundry Digital LLC for a total consideration of $16,481,328. The Company paid a deposit of $3,202,766 and entered into an extension of the original Foundry finance agreement with Foundry for the balance of the consideration over a 12-month term, of which $4,914,329 is outstanding at June 30, 2022.
Long-term borrowings description		In December 2021 MIG No. 1 Pty Ltd entered into a Secured Loan Facility Agreement with Marshall Investments MIG Pty Ltd which was payable in three tranches. The first tranche was received during December 2021 with an amount of $7.86 million. Tranche two and three were received during January and February 2022 with a total amount of $7.11 million. The loan matures in 2024 and bears interest at a rate of 12.00% per annum, payable monthly which commenced December 2021. This loan facility is secured by a general security agreement given by the Company. Principal repayments begin during 2023.
Current liability				$ 2,540,000
Celsius mining loan	$ 20,000,000
Interest rate	12.00%
Amortize loan	15.00%
Maturity date	Aug. 23, 2023
Current liability	$ 12,020,000.00
Marshall Loan [Member]
Borrowings (Details) [Line Items]
Long term borrowings payable				11,240,000
Celsius loan [Member]
Borrowings (Details) [Line Items]
Long term borrowings payable				$ 7,980,000

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Related Party Transactions (Details)	Mar. 16, 2022 USD ($)
Related Party Transactions (Details) [Line Items]
Lease term	5 years
Lease extend term	5 years
Rent expenses percentage	4.00%
Rental amount	$ 240,000
Vertua Ltd [Member]
Related Party Transactions (Details) [Line Items]
Ownership interest	100.00%
Minimum [Member]
Related Party Transactions (Details) [Line Items]
Additional rent payable	$ 500
Maximum [Member]
Related Party Transactions (Details) [Line Items]
Additional rent payable	$ 10,000

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Subsequent Events (Details) - Subsequent Event [Member] - USD ($)			1 Months Ended
	Aug. 12, 2022	Jul. 08, 2022	Jul. 17, 2022
Subsequent Events (Details) [Line Items]
Principal amount		$ 3,600,000
Bear interest		25.00%
Issuance, term		1 year
Warrants issuance, description			The warrants issued in this offering have an exercise price of $1.01 per share of our common stock, are exercisable 6 months after issuance and will expire five and one-half years following issuance.
Raised warrant amount			$ 5,620,000
Common Stock [Member]
Subsequent Events (Details) [Line Items]
Sales of common stock shares			8,000,000
Common stock, per share			$ 0.8
Purchase to warrants of common stock			10,000,000
Warrants issued an exercise price			$ 1.01
Faith Technologies Inc. [Member]
Subsequent Events (Details) [Line Items]
Oustanding amount	$ 4,598,800
The Secured Convertible Promissory Notes [Member]
Subsequent Events (Details) [Line Items]
Principal amount		$ 3,600,000
Convertible price		$ 0.85
Bear interest		20.00%
The Secured Convertible Promissory Notes [Member] | Common Stock [Member]
Subsequent Events (Details) [Line Items]
Convertible price		$ 0.8