PROPERTY AND EQUIPMENT, NET

12 Months Ended

Dec. 31, 2022

Property, Plant and Equipment [Abstract]

PROPERTY AND EQUIPMENT, NET

9. PROPERTY AND EQUIPMENT, NET

At December 31, 2022 and 2021, property and equipment consisted of:

	December 31, 2022			December 31, 2021
Building and improvements	$	81,102,000		$	68,959,000
Bitcoin mining equipment		54,438,000			10,763,000
Crane rental equipment		32,453,000			-
Land		25,646,000			25,696,000
Computer, software and related equipment		23,168,000			8,884,000
Aircraft		15,983,000			-
Vehicles		3,314,000			-
Office furniture and equipment		2,854,000			702,000
Oil and natural gas properties, unproved properties		972,000			-
		239,960,000			115,004,000
Accumulated depreciation and amortization		(21,344,000	)		(5,096,000	)
Property and equipment placed in service, net		218,586,000			109,908,000
Deposits on cryptocurrency machines		11,328,000			64,117,000
Property and equipment, net	$	229,914,000		$	174,025,000

Summary of depreciation expense:

	For the Year Ended December 31,
	2022		2021
Depreciation expense	$	17,262,000	$	2,103,000

Ault Energy Oil and Gas Properties

On July 11, 2022, the Company announced the formation of Ault Energy, LLC (“Ault Energy”), as an indirect wholly owned subsidiary of the Company. Ault Energy is partnering with White River Holdings Corp. (“White River”), a majority owned subsidiary of BitNile Metaverse, Inc., formerly known as Ecoark Holdings, Inc. (“BMI”), on expects to partner on multiple drilling projects across 30,000 acres in Texas, Louisiana and Mississippi. Ault Energy, as the designee of Ault Lending, has the right to purchase up to 25%, or such higher percentages at the discretion of White River, in various drilling projects of White River. In August 2022, Ault Energy purchased a 40% working interest of the Harry O’Neal 20-9 No.1 drilling project in Mississippi for $1.0 million included in property and equipment. The Company has not recorded any depletion as the Harry O’Neal 20-9 No.1 drilling project was considered an unproved property as of December 31, 2022.

Compute North Bankruptcy

On September 22, 2022, Compute North Holdings, Inc. (along with its affiliated debtors, collectively, “Compute North”), filed for bankruptcy protection. The Company has a deposit of approximately $2.0 million with Compute North for services yet to be performed by Compute North. The ultimate outcome of the bankruptcy process, and its impact on the deposit held by the Company, remains to be determined. The Company assessed this financial exposure and recorded an impairment of the deposit totaling $2 million during the year ended December 31, 2022. The Company has removed the Bitcoin miners that were installed at the hosting facility in Texas.

Impairment of Bitcoin Mining Equipment

During the year ended December 31, 2022, adverse changes in business climate, including decreases in the price of Bitcoin and resulting decrease in the market price of miners, indicated that an impairment triggering event had occurred. Testing performed indicated the estimated fair value of the Company’s miners to be less than their net carrying value as of December 31, 2022, and an impairment charge of $79.6 million was recognized, decreasing the net carrying value of the Company’s Bitcoin mining equipment to their estimated fair value. The estimated fair value of the Company’s miners is classified in Level 2 of the fair value hierarchy due to the quoted market prices for similar assets.