XML 32 R19.htm IDEA: XBRL DOCUMENT
v3.24.0.1

Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2023
Income Tax Disclosure [Abstract] |
Income Taxes | (10) Income Taxes U.S. and international components of (loss) income before income taxes (in thousands) were comprised of the following for the periods indicated:
|  | Years Ended December 31, |
|  | 2023 |  |  | 2022 |  |  | 2021 |
U.S. |  | $ | (157,810 | ) |  | $ | (1,362,230 | ) |  | $ | (854,610 | )
Foreign |  |  | 33,285 |  |  |  | 39,765 |  |  |  | 43,221 |
Total |  | $ | (124,525 | ) |  | $ | (1,322,465 | ) |  | $ | (811,389 | )
The (benefit from) provision for income taxes (in thousands) consisted of the following for the periods indicated:
|  | Years Ended December 31, |
|  | 2023 |  |  | 2022 |  |  | 2021 |
Current: |  |  |  |  |  |  |  |  |
Federal |  | $ | 2,774 |  |  | $ | 9,278 |  |  | $ | (4,622 | )
State |  |  | 3,376 |  |  |  | 5,362 |  |  |  | 2,184 |
Foreign |  |  | 9,146 |  |  |  | 8,139 |  |  |  | 5,533 |
|  | $ | 15,296 |  |  | $ | 22,779 |  |  | $ | 3,095 |
Deferred: |  |  |  |  |  |  |  |  |
Federal |  | $ | (374,800 | ) |  | $ | 89,581 |  |  | $ | (204,784 | )
State |  |  | (194,374 | ) |  |  | 34,521 |  |  |  | (74,796 | )
Foreign |  |  | 232 |  |  |  | 451 |  |  |  | 576 |
|  | $ | (568,942 | ) |  | $ | 124,553 |  |  | $ | (279,004 | )
Total (benefit) provision |  | $ | (553,646 | ) |  | $ | 147,332 |  |  | $ | (275,909 | )
The benefit from or provision for income taxes differs from the amount computed by applying the federal statutory income tax rate to the Company’s loss before income taxes as follows for the periods indicated:
|  | Years Ended December 31, |
|  | 2023 |  |  | 2022 |  |  | 2021 |
Income tax expense at federal statutory rate |  |  | 21.0 | % |  |  | 21.0 | % |  |  | 21.0 | %
State taxes, net of federal tax effect |  |  | 8.4 | % |  |  | 7.3 | % |  |  | 9.1 | %
Other international components |  |  | (3.4 | )% |  |  | (0.1 | )% |  |  | 0.2 | %
Change in valuation allowance |  |  | 409.5 | % |  |  | (38.6 | )% |  |  | 0.0 | %
Non-deductible officers compensation |  |  | (5.5 | )% |  |  | (0.3 | )% |  |  | (1.0 | )%
Research and development tax credit |  |  | 2.7 | % |  |  | 0.1 | % |  |  | 0.8 | %
Share-based compensation |  |  | 3.4 | % |  |  | (0.1 | )% |  |  | 4.0 | %
Rate changes, including states |  |  | 11.0 | % |  |  | (0.3 | )% |  |  | 0.0 | %
Other permanent differences (1) |  |  | (2.5 | )% |  |  | (0.1 | )% |  |  | (0.1 | )%
Effective income tax rate |  |  | 444.6 | % |  |  | -11.1 | % |  |  | 34.0 | %
(1) Included in the “Other permanent differences” category in the table above are other permanent items, each below the threshold required for separate presentation in the table. The Company’s U.S. and foreign effective tax rates for loss before income taxes were as follows for the periods indicated:
|  | Years Ended December 31, |
|  | 2023 |  |  | 2022 |  |  | 2021 |
U.S. |  |  | 356.8 | % |  |  | (10.2 | )% |  |  | 33.0 | %
Foreign |  |  | 28.2 | % |  |  | 21.6 | % |  |  | 14.1 | %
Combined |  |  | 444.6 | % |  |  | (11.1 | )% |  |  | 34.0 | %
The change in the Company’s effective tax rate in 2023, as compared to 2022, was primarily due to (i) the release of the valuation allowance during 2023 on the Company’s deferred tax asset related to the impairment on its bitcoin holdings, attributable to the increase in the market value of bitcoin as of December 31, 2023 compared to December 31, 2022, compared to (ii) the establishment of a valuation allowance during 2022 on the Company’s deferred tax asset related to the impairment on its bitcoin holdings, attributable to the decrease in market value of bitcoin as of December 31, 2022 compared to December 31, 2021. As of December 31, 2023 and 2022, the amount of cash and cash equivalents held by the Company’s U.S. entities was $10.5 million and $14.8 million, respectively, and by the Company’s non-U.S. entities was $36.3 million and $29.0 million, respectively. The Company earns a significant amount of its revenues outside the United States. The Company repatriated foreign earnings and profits of $20.3 million during 2023 and $44.7 million during 2022. As of December 31, 2023, the Company has not indefinitely reinvested any of its undistributed foreign earnings and has recorded a deferred tax liability of $2.9 million on undistributed foreign earnings related to foreign withholding tax and U.S. state income taxes. Deferred income taxes reflect the net tax effects of the temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities (in thousands) were as follows for the periods indicated:
|  | December 31, |
|  | 2023 |  |  | 2022 |
Deferred tax assets, net: |  |  |  |  |  |
Net operating loss carryforwards |  | $ | 727 |  |  | $ | 723 |
Tax credit carryforwards |  |  | 1,841 |  |  |  | 1,677 |
Intangible assets, including capitalized R&D |  |  | 57,410 |  |  |  | 41,082 |
Deferred revenue |  |  | 1,481 |  |  |  | 24,747 |
Accrued compensation |  |  | 5,882 |  |  |  | 6,602 |
Share-based compensation expense |  |  | 30,345 |  |  |  | 23,305 |
Digital asset impairment losses |  |  | 652,280 |  |  |  | 607,659 |
Interest expense carryforward |  |  | 11,627 |  |  |  | 1,239 |
Lease liability |  |  | 18,197 |  |  |  | 14,861 |
Other |  |  | 4,699 |  |  |  | 1,887 |
Deferred tax assets before valuation allowance |  |  | 784,489 |  |  |  | 723,782 |
Valuation allowance |  |  | (1,427 | ) |  |  | (511,412 | )
Deferred tax assets, net of valuation allowance |  |  | 783,062 |  |  |  | 212,370 |
Deferred tax liabilities: |  |  |  |  |  |
Prepaid expenses and other |  |  | 3,681 |  |  |  | 4,372 |
Property and equipment |  |  | 1,062 |  |  |  | 1,786 |
Deferred tax on undistributed foreign earnings |  |  | 2,923 |  |  |  | 2,231 |
Right of use asset |  |  | 18,180 |  |  |  | 16,027 |
Total deferred tax liabilities |  |  | 25,846 |  |  |  | 24,416 |
Total net deferred tax asset |  | $ | 757,216 |  |  | $ | 187,954 |
Reported as: |  |  |  |  |  |
Non-current deferred tax assets, net |  |  | 757,573 |  |  |  | 188,152 |
Non-current deferred tax liabilities |  |  | (357 | ) |  |  | (198 | )
Total net deferred tax asset |  | $ | 757,216 |  |  | $ | 187,954 |
The Company had no U.S. NOL carryforwards as of December 31, 2023 and 2022. The Company had $3.0 million and $3.3 million of foreign NOL carryforwards as of December 31, 2023 and 2022, respectively. As of December 31, 2023, the Company also had gross state NOLs of $10.1 million of which $9.1 million will expire by 2042 and the remainder can be carried forward indefinitely. The Company’s valuation allowance of $1.4 million at December 31, 2023 primarily related to the Company’s deferred tax assets related to foreign tax credits in certain jurisdictions that, in the Company’s present estimation, more likely than not will not be realized. The Company’s valuation allowance of $511.4 million at December 31, 2022 primarily related to the Company’s deferred tax asset related to the impairment on its bitcoin holdings, and was based on the market value of bitcoin at December 31, 2022. Valuation allowances have been established where the Company has concluded that it is more likely than not that such deferred tax assets are not realizable. The Company’s ability to realize its net deferred tax assets of $757.6 million as of December 31, 2023 is primarily dependent upon generating sufficient taxable income of the proper character in future years. Management has concluded that there is sufficient positive evidence to support the expected realization of these deferred tax assets primarily due to the fact that the excess of the market value of the Company’s bitcoin over the cost basis of the Company’s bitcoin as of December 31, 2023 results in a significant built-in gain for tax purposes and is therefore a source of future taxable income that is expected to allow all of the U.S. net deferred tax assets to be realized. As part of the assessment of the amount of the valuation allowance, management has asserted that it has the ability and intent to execute tax planning strategies if necessary, including selling bitcoin with a built-in gain. After consideration of all available evidence, the Company has concluded that, as of December 31, 2023, it is more likely than not that its deferred tax assets, with the exception of certain foreign tax credits for which a valuation allowance has been established, will be realized. If the market value of bitcoin declines in future periods, the Company would need to assess other sources of forecasted taxable income of proper character, which could result in additional valuation allowances being recorded. As of December 31, 2023 and 2022, the Company had income taxes receivable of $15.3 million and $2.5 million, respectively, recorded in “Prepaid expenses and other current assets” in the Company’s Consolidated Balance Sheets. As of December 31, 2023, the Company had gross unrecognized income tax benefits of $8.3 million, including accrued interest, all of which was recorded in “Other long-term liabilities” in the Company’s Consolidated Balance Sheets. The change in unrecognized income tax benefits (in thousands) is presented in the table below for the periods indicated:
|  | 2023 |  |  | 2022 |  |  | 2021 |
Unrecognized income tax benefits at beginning of year |  | $ | 5,811 |  |  | $ | 5,960 |  |  | $ | 4,293 |
Increase (decrease) related to positions taken in prior period |  |  | 1,458 |  |  |  | (67 | ) |  |  | 1,082 |
Increase related to positions taken in current period |  |  | 930 |  |  |  | 318 |  |  |  | 1,146 |
Decrease related to settlement with tax authorities |  |  | 0 |  |  |  | (40 | ) |  |  | 0 |
Decrease related to expiration of statute of limitations |  |  | (301 | ) |  |  | (360 | ) |  |  | (561 | )
Unrecognized income tax benefits at end of year |  |  | 7,898 |  |  |  | 5,811 |  |  |  | 5,960 |
Accrued interest |  |  | 352 |  |  |  | 276 |  |  |  | 272 |
Gross unrecognized income tax benefits at end of year |  | $ | 8,250 |  |  | $ | 6,087 |  |  | $ | 6,232 |
If recognized, $8.0 million of the gross unrecognized income tax benefits as of December 31, 2023 would impact the Company’s effective tax rate. Over the next 12 months, the amount of the Company’s liability for unrecognized income tax benefits shown above is not expected to change materially. The Company recognizes estimated accrued interest related to unrecognized income tax benefits in the (benefit from) provision for income taxes. During the years ended December 31, 2023, 2022, and 2021, the Company released or recognized an immaterial amount of accrued interest. The amount of accumulated accrued interest related to the above unrecognized income tax benefits was approximately $0.4 million and $0.3 million as of December 31, 2023 and 2022, respectively. The Company files tax returns in numerous foreign countries as well as the United States and its tax returns may be subject to audit by tax authorities in all countries in which it files. Each country has its own statute of limitations for making assessment of additional tax liabilities. The Company’s U.S. tax returns for tax years from 2019 and forward are subject to potential examination by the Internal Revenue Service. However, due to the Company’s use of state NOL carryovers in the United States, state tax authorities may attempt to reduce or fully offset the amount of state NOL carryovers from tax years ended 2011 and forward that the Company used in later tax years. The Company’s major foreign tax jurisdictions and the tax years that remain subject to potential examination are Italy for tax years 2017 and forward; Poland and China for tax years 2019 and forward; and Spain, Germany, and the United Kingdom for tax years 2020 and forward. To date there have been no material audit assessments related to audits in the United States or any of the applicable foreign jurisdictions.

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 946 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 13 -Publisher FASB -URI https://asc.fasb.org//1943274/2147480990/946-20-50-13 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 235 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480678/235-10-S99-1 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//740/tableOfContent Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 14 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-14 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 21 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-21 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 270 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482526/740-270-50-1 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 17 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-17 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479360/740-10-S99-1 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479360/740-10-S99-2 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 30 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482603/740-30-50-2 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration