SEGMENT REPORTING (Tables)

9 Months Ended

Sep. 30, 2023

Schedule of Revenue and Gross Profit by Reporting Segment

The following table presents revenue and gross profit by reportable segment for the periods presented (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Hosting Segment
Revenue:
Hosting revenue	$	29,848	$	44,916	$	82,307	$	117,066
Equipment sales	—		37,161		—		78,660
Total revenue	29,848		82,077		82,307		195,726
Cost of revenue:
Cost of hosting services	24,882		44,975		64,187		119,850
Cost of equipment sales	—		27,917		—		63,993
Total cost of revenue	24,882		72,892		64,187		183,843
Gross profit	$	4,966	$	9,185	$	18,120	$	11,883
Mining Segment
Revenue:
Digital asset mining income	$	83,056	$	80,495	$	278,164	$	323,337
Total revenue	83,056		80,495		278,164		323,337
Cost of revenue:
Cost of digital asset mining	72,603		116,756		212,125		279,576
Total cost of revenue	72,603		116,756		212,125		279,576
Gross profit (loss)	$	10,453	$	(36,261)	$	66,039	$	43,761
Consolidated
Consolidated total revenue	$	112,904	$	162,572	$	360,471	$	519,063
Consolidated cost of revenue	$	97,485	$	189,648	$	276,312	$	463,419
Consolidated gross profit (loss)	$	15,419	$	(27,076)	$	84,159	$	55,644

Schedules of Customer Concentration Risk

For the three and nine months ended September 30, 2023 and September 30, 2022, the concentration of customers comprising 10% or more of the Company’s total revenue are as follows:


	Three Months Ended September 30,				Three Months Ended September 30,
	2023		2022		2023		2022
	Percent of total revenue:				Percent of Hosting segment revenue:
Customer

E (related party)1	N/A		23	%	N/A		46	%
F2	12	%	N/A		45	%	N/A


	Nine Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	Percent of total revenue:				Percent of Hosting segment revenue:
Customer

E (related party)1	N/A		16	%	N/A		42	%
F2	11	%	N/A		48	%	N/A

1 This customer was labeled as Customer A in the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2023. The label was updated to conform to the Company's Annual Report on Form 10-K for the year ended December 31, 2022.

2 This customer was labeled as Customer D in the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2023.

Reconciliation of Reportable Segment Gross Profit to Loss Before Income Taxes

A reconciliation of the reportable segment gross profit to loss before income taxes included in the Company’s Consolidated Statements of Operations for the three and nine months ended September 30, 2023 and 2022, is as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Reportable segment gross profit (loss)	$	15,419	$	(27,076)	$	84,159	$	55,644

Gain from sales of digital assets	363		11,036		2,358		25,007
Impairment of digital assets	(681)		(7,986)		(2,864)		(212,184)
Impairment of goodwill and other intangibles	—		(268,512)		—		(1,059,265)
Impairment of property, plant and equipment	—		(59,259)		—		(59,259)
Losses on exchange or disposal of property, plant and equipment	(340)		—		(514)		(13,057)
Operating expenses:
Research and development	2,253		6,192		5,308		24,305
Sales and marketing	1,041		39		3,133		11,675
General and administrative	23,511		43,346		69,671		174,380
Total operating expenses	26,805		49,577		78,112		210,360
Operating (loss) income	(12,044)		(401,374)		5,027		(1,473,474)
Non-operating expenses, net:
Gain on debt extinguishment	(374)		—		(21,135)		—
Interest expense, net	2,196		25,942		2,317		74,734
Fair value adjustment on convertible notes	—		(4,123)		—		186,853
Fair value adjustment on derivative warrant liabilities	—		(521)		—		(32,985)
Reorganization items, net	28,256		—		78,270		—
Other non-operating (income) expenses, net	(1,090)		1,478		(3,978)		4,997
Total non-operating expenses, net	28,988		22,776		55,474		233,599
Loss before income taxes	$	(41,032)	$	(424,150)	$	(50,447)	$	(1,707,073)