XML 65 R24.htm IDEA: XBRL DOCUMENT v3.24.0.1
SEGMENT REPORTING
 12 Months Ended
Dec. 31, 2023
Segment Reporting [Abstract]  
SEGMENT REPORTING
15. SEGMENT REPORTING
The Company’s operating segments are aggregated into reportable segments only if they exhibit similar economic characteristics and have similar business activities.
The Company has two operating segments: “Hosting” which consists primarily of its blockchain infrastructure and third-party hosting business; and “Mining” consisting of digital asset mining for its own account. The blockchain hosting business generates revenue through the sale of consumption-based contracts for its hosting services which are recurring in nature. During 2022, our “Hosting” segment also included sales of mining equipment to customers and was referred to as “Hosting and Equipment Sales”. The Mining segment generates revenue from operating owned computer equipment as part of a pool of users that process transactions conducted on one or more blockchain networks. In exchange for these services, the Company receives digital assets.
The primary financial measures used by the chief operating decision maker (“CODM”) to evaluate performance and allocate resources are revenue and gross profit. The CODM does not evaluate performance or allocate resources based on segment asset or liability information; accordingly, the Company has not presented a measure of assets by segment. The segments’ accounting policies are the same as those described in the summary of significant accounting policies. The Company excludes certain operating expenses and other expense from the allocations to operating segments.
The following table presents revenue and gross profit by reportable segment for the periods presented (in thousands):
Year Ended December 31,
202320222021
Hosting Segment1
Revenue:
Hosting revenue$112,067 $159,688 $79,323 
Equipment sales— 82,829 248,235 
Total revenue112,067 242,517 327,558 
Cost of revenue:
Cost of hosting services87,245 169,717 77,678 
Cost of equipment sales— 67,114 177,785 
Total cost of revenue87,245 236,831 255,463 
Gross profit
$24,822 $5,686 $72,095 
Gross margin2
22 %2 %22 %
Mining Segment
Digital asset mining revenue
$390,333 $397,796 $216,925 
Total revenue
390,333 397,796 216,925 
Cost of revenue
291,696 395,082 50,158 
Gross profit
$98,637 $2,714 $166,767 
Gross margin2
25 %1 %77 %
Consolidated total revenue
$502,400 $640,313 $544,483 
Consolidated cost of revenue
$378,941 $631,913 $305,621 
Consolidated gross profit
$123,459 $8,400 $238,862 
Consolidated gross margin(2)
25 %1 %44 %
1 During the year ended December 31. 2022, our “Hosting” segment also included sales of mining equipment to customers and was referred to as “Hosting and Equipment Sales”.
2 Gross margin is calculated as gross profit as a percentage of total revenue.
For the years ended December 31, 2023, 2022 and 2021, cost of revenue included depreciation expense of $6.9 million, $12.1 million and $7.4 million, respectively for the Hosting segment. For the years ended December 31, 2023, 2022 and 2021, cost of revenue included depreciation expense of $88.5 million, $214.8 million and $24.3 million, respectively for the Mining segment.
Concentrations of Revenue and Credit Risk
Financial instruments that potentially subject the Company to concentration of credit risk consist primarily of cash and cash equivalents and accounts receivable. Credit risk with respect to accounts receivable is concentrated with a small number of customers. The Company places its cash and cash equivalents with major financial institutions, which management assesses to be of high credit quality, in order to limit the exposure to credit risk. As of December 31, 2023 and 2022, all of the Company’s fixed assets were located in the United States. For the years ended December 31, 2023 and 2022, 100% and 99% of the Company’s revenue was generated in the United States, respectively. For the years ended December 31, 2023 and 2022, 78% and 62%, respectively, of the Company’s total revenue was generated from digital asset mining of bitcoin, which is subject to extreme price volatility. As of December 31, 2023 and 2022, substantially all of our digital assets were held by two third-party digital asset services.
For the years ended December 31, 2023, 2022 and 2021, the concentration of customers comprising 10% or more of the Company’s total revenue are as follows:

Year Ended December 31,Year Ended December 31,
202320222021202320222021
Percent of total revenue:
Percent of Hosting segment revenue:
Customer
A
N/AN/A15 %N/AN/A26 %
B
N/AN/A14 %N/AN/A23 %
E
N/A14 %N/AN/A38 %N/A
F1
11 %N/AN/A49 %N/AN/A
1 On the Effective Date, Customer F became a minority shareholder of the Company.
A reconciliation of the reportable segment gross profit to (loss) income before income taxes included in the Company’s Consolidated Statements of Operations for the years ended December 31, 2023, 2022 and 2021, is as follows (in thousands):
Year Ended December 31,
202320222021
Reportable segment gross profit
$123,459 $8,400 $238,862 
(Loss) gain on legal settlement
— — (2,636)
Gain from sales of digital assets
3,893 44,298 4,814 
Impairment of digital assets(4,406)(231,315)(37,206)
Change in fair value of derivative instruments(3,918)— — 
Impairment of goodwill and other intangibles— (1,059,265)— 
Impairment of property, plant and equipment— (590,673)— 
Losses on exchange or disposal of property, plant and equipment(1,956)(28,025)(118)
Operating expense:
Research and development
7,184 26,962 7,674 
Sales and marketing
7,019 12,731 4,062 
General and administrative
93,908 213,280 60,486 
Total operating expense
108,111 252,973 72,222 
Operating income (loss)
8,961 (2,109,553)131,494 
Non-operating expense, net:
(Gain) loss on debt extinguishment and other
(20,065)287 8,016 
Interest expense, net
86,238 96,826 44,354 
Fair value adjustment on convertible notes— 186,853 16,047 
Fair value adjustment on derivative warrant liabilities— (37,937)— 
Reorganization items, net191,122 (197,405)— 
       Other non-operating (income) expenses, net
(2,530)5,232 2 
Total non-operating expense, net
254,765 53,856 68,419 
(Loss) income before income taxes
$(245,804)$(2,163,409)$63,075