SEGMENT REPORTING (Tables)

12 Months Ended

Dec. 31, 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):


	Year Ended December 31,
		2023			2022			2021
Hosting Segment1
Revenue:
Hosting revenue		$	112,067		$	159,688		$	79,323
Equipment sales		—			82,829			248,235
Total revenue		112,067			242,517			327,558
Cost of revenue:
Cost of hosting services		87,245			169,717			77,678
Cost of equipment sales		—			67,114			177,785
Total cost of revenue		87,245			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.

Schedules of Customer Concentration Risk

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,
	2023		2022		2021		2023		2022		2021
	Percent of total revenue:						Percent of Hosting segment revenue:
Customer
A	N/A		N/A		15	%	N/A		N/A		26	%
B	N/A		N/A		14	%	N/A		N/A		23	%
E	N/A		14	%	N/A		N/A		38	%	N/A
F1	11	%	N/A		N/A		49	%	N/A		N/A

1 On the Effective Date, Customer F became a minority shareholder of the Company.

Reconciliation of Reportable Segment Gross Profit to Loss Before Income Taxes

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,
	2023		2022		2021
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, net	191,122		(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