Digital Currencies

12 Months Ended

Dec. 31, 2018

Digital Currencies [Abstract]

Digital Currencies

4. Digital Currencies

The following table presents additional information about digital currencies:

	Digital Currencies
Balance at January 1, 2017	$	—
Additions of digital currencies		1,634,941
Payment on convertible notes payable		(739,967	)
Payments to vendors		(449,479	)
Purchase of fixed assets		(250,460	)
Realized loss on sale of digital currencies		(127,602	)
Cash proceeds		(64,587	)
Unrealized loss on digital currencies		(1,311	)
Balance at December 31, 2018	$	1,535

Digital currencies (including Bitcoin and Litecoin) are included in current assets in the accompanying consolidated balance sheets. Digital currencies awarded to the Company through its mining activities are accounted for in connection with the Company’s revenue recognition policy disclosed above.

Digital currencies held are accounted for as intangible assets with indefinite useful lives. An intangible asset with an indefinite useful life 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, which is measured using the quoted price of the digital currency at the time its fair value is being measured. 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. Fair value is determined by taking the closing price from the most liquid exchanges. Subsequent reversal of impairment losses is not permitted.

Digital currencies awarded to the Company through its mining activities are included within operating activities on the accompanying consolidated statements of cash flows. During 2018, we used digital assets for debt reduction, capital purchases, consulting fees, data center costs and other operating expenses. Such transactions were based on agreements denominated in U.S. Dollars, but satisfied with digital currencies, based on the quoted price of the digital currency at the time of the transaction. Any realized gains or losses from such transactions are included in other income (expense) in the consolidated statements of operations. The Company accounts for its gains or losses in accordance with the first in first out (FIFO) method of accounting.