NOTES PAYABLE

6 Months Ended

Jun. 30, 2023

Debt Disclosure [Abstract]

NOTES PAYABLE

5. NOTES PAYABLE

The commencement of the Chapter 11 Cases constituted an event of default under certain of the Company's debt agreements. Accordingly, all debt not reclassified as liabilities subject to compromise with original long-term stated maturities was classified as current on the Company’s Consolidated Balance Sheets as of June 30, 2023 and December 31, 2022. However, any efforts to enforce payment obligations under the debt instruments are automatically stayed as a result of the Chapter 11 Cases and the creditors' rights in respect of the debt instruments are subject to the applicable provisions of the Bankruptcy Code. See Note 3 — Chapter 11 Filing and Other Related Matters for further information.

Notes payable as of June 30, 2023 and December 31, 2022, consist of the following (in thousands):

	Interest Rates	Maturities	June 30, 2023		December 31, 2022
Kentucky note	5.0%	2023	$	572	$	529
NYDIG loan	11.0% - 15.0%	Various	—		38,573
Stockholder loan	10.0%	2023	10,000		10,000
Trinity loan	11.0%	2024	23,356		23,356
Bremer loan	5.5%	2026	18,331		18,331
Blockfi loan	9.7% - 13.1%	2023	53,913		53,913
Anchor Labs loan	12.5%	2024	25,159		25,159
Mass Mutual Barings loans	13.0%	2025	63,844		63,844
B. Riley Bridge Notes	7.0%	2023	41,777		41,777
Liberty loan	10.6%	2024	6,968		6,968
Secured Convertible Notes1	10.0%	2025	237,584		237,584
Other Convertible Notes2	10.0%	2025	322,396		322,396
Original DIP Credit Agreement3	10.0%	2023	—		35,547
Replacement DIP Credit Agreement4	10.0%	2023	26,987		—
Other			2,732		2,960
Notes payable, prior to reclassification to Liabilities subject to compromise			833,619		880,937
Less: Notes payable in Liabilities subject to compromise5			805,876		844,695
Unamortized discount and debt issuance costs6			—		(36,456)
Fair value adjustment on convertible notes7			—		(808,148)
Total notes payable, net			$	27,743	$	36,242

1 Secured Convertible Notes includes principal balance at issuance and PIK interest.

2 Other Convertible Notes includes principal balance at issuance and PIK interest.

3 Original DIP Credit Agreement, see Note 3 - Chapter 11 Filing and Other Related Matters for further information.

4 Replacement DIP Credit Agreement, see Note 3 - Chapter 11 Filing and Other Related Matters for further information.

5 In connection with the Company's Chapter 11 Cases, $805.9 million and $844.7 million of outstanding notes payable have been reclassified to Liabilities subject to compromise in the Company's Consolidated Balance Sheets as of June 30, 2023 and December 31, 2022, respectively, at their expected allowed amount. Up to the Petition Date, the Company continued to accrue interest expense in relation to these reclassified debt instruments. As of June 30, 2023 and December 31, 2022, $12.5 million and $12.6 million, respectively, of accrued interest was classified as Liabilities subject to compromise.

As discussed in Note 3 — Chapter 11 Filing and Other Related Matters, under the NYDIG Order, the final shipment of miners that served as collateral under the NYDIG loan occurred during the quarter ended March 31, 2023, after which the NYDIG Loan was extinguished in full and the Company recorded a $20.8 million Gain on extinguishment of debt in the Company’s Consolidated Statements of Operations.

The principal amount of the Convertible Notes as of June 30, 2023, reflects the proceeds received plus any PIK interest added to the principal balance of the notes. Upon the closing of the merger agreement with XPDI in January 2022, the conversion price for the Convertible Notes became fixed at 80% of the financing price ($8.00 per share of common stock) and the holders now have the right to convert at any time until maturity. At maturity, any Secured Convertible Notes not converted will be owed two times the original face value plus accrued interest; any Other Convertible Notes not converted will be owed the original face value plus accrued interest. In addition, at any time (both before and after the merger with XPDI), the Company has the right to prepay the Convertible Notes at the minimum payoff of two times the outstanding principal amount plus accrued interest. All of the Convertible Notes, totaling $560.0 million as of June 30, 2023, are scheduled to mature on April 19, 2025, which includes $237.6 million for the principal amount of the Secured Convertible Notes which have payoff at maturity of two times the principal amount of the note plus accrued interest. The total amount that would be owed on the Secured Convertible Notes outstanding as of June 30, 2023, if held to maturity was $475.2 million.