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SEGMENT REPORTING | 9 Months Ended
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Sep. 30, 2025
Segment Reporting [Abstract] |
SEGMENT REPORTING | 14. 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 three operating segments: “Digital Asset Self-Mining”, consisting of performing digital asset mining for its own account; “Digital Asset Hosted Mining”, consisting of providing hosting services to third-parties for digital asset mining; and “Colocation”, consisting of providing high-density colocation services to customers employing AI and HPC related workloads. The Company’s Colocation operations met the criteria to be considered a new segment during the second quarter of 2024. During fiscal year 2024, our “Colocation” segment was referred to as “HPC Hosting.” The Digital Asset Self-Mining segment generates revenue from operating owned digital infrastructure and 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 Digital Asset Hosted Mining business generates revenue through the sale of consumption-based contracts for its digital asset hosted mining services which are recurring in nature. The Colocation operation generates revenue through licensing agreements and orders with licensees that include fixed and variable payments on a recurring basis. The Company’s Chief Executive Officer is the chief operating decision maker (“CODM”). The CODM uses gross profit to evaluate performance and allocate resources. Gross profit is used to evaluate actual results against expectations, which are based on comparable prior results, current budget, and current forecast. Gross profit is also used in deciding how profits and cash flows will be reinvested or otherwise deployed. 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 expenses from the allocations to operating segments. The following table presents revenue and gross profit by reportable segment for the periods presented (in thousands):
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2025 |  | 2024 |  | 2025 |  | 2024
Digital Asset Self-Mining Segment | (in thousands, except percentages)
Digital asset self-mining revenue | $ | 57,438 |  |  | $ | 68,138 |  |  | $ | 187,041 |  |  | $ | 328,840 |
Cost of digital asset self-mining: |  |  |  |  |  |  |
Power fees | 33,280 |  |  | 37,426 |  |  | 94,319 |  |  | 123,584 |
Depreciation expense | 15,474 |  |  | 27,415 |  |  | 52,792 |  |  | 83,067 |
Employee compensation | 7,803 |  |  | 4,995 |  |  | 23,411 |  |  | 15,712 |
Facility operations expense | 2,089 |  |  | 3,514 |  |  | 7,458 |  |  | 9,695 |
Other segment items | 792 |  |  | 1,205 |  |  | 2,217 |  |  | 4,062 |
Total cost of digital asset self-mining | 59,438 |  |  | 74,555 |  |  | 180,197 |  |  | 236,120 |
Digital Asset Self-Mining gross (loss) profit | $ | (2,000) |  |  | $ | (6,417) |  |  | $ | 6,844 |  |  | $ | 92,720 |
Digital Asset Self-Mining gross margin | (3) | % |  | (9) | % |  | 4 | % |  | 28 | %
Digital Asset Hosted Mining Segment |  |  |  |  |  |  |
Digital asset hosted mining revenue from customers | $ | 8,714 |  |  | $ | 16,878 |  |  | $ | 18,131 |  |  | $ | 71,050 |
Cost of digital asset hosted mining services: |  |  |  |  |  |  |
Power fees | 4,793 |  |  | 7,875 |  |  | 9,367 |  |  | 32,670 |
Depreciation expense | 376 |  |  | 934 |  |  | 856 |  |  | 3,245 |
Employee compensation | 1,115 |  |  | 1,200 |  |  | 2,225 |  |  | 4,244 |
Facility operations expense | 297 |  |  | 734 |  |  | 665 |  |  | 2,499 |
Other segment items | 113 |  |  | 1,171 |  |  | 201 |  |  | 6,730 |
Total cost of digital asset hosted mining services | 6,694 |  |  | 11,914 |  |  | 13,314 |  |  | 49,388 |
Digital Asset Hosted Mining gross profit | $ | 2,020 |  |  | $ | 4,964 |  |  | $ | 4,817 |  |  | $ | 21,662 |
Digital Asset Hosted Mining gross margin | 23 | % |  | 29 | % |  | 27 | % |  | 30 | %
Colocation Segment |  |  |  |  |  |  |
Colocation revenue: |  |  |  |  |  |  |
License fees | $ | 9,848 |  |  | $ | 7,806 |  |  | $ | 22,853 |  |  | $ | 11,625 |
Maintenance and other | 1,550 |  |  | 45 |  |  | 1,628 |  |  | 82 |
Licensing revenue | 11,398 |  |  | 7,851 |  |  | 24,481 |  |  | 11,707 |
Power fees passed through to customer | 3,553 |  |  | 2,487 |  |  | 9,603 |  |  | 4,150 |
Total Colocation revenue | 14,951 |  |  | 10,338 |  |  | 34,084 |  |  | 15,857 |
Cost of Colocation services: |  |  |  |  |  |  |
Depreciation expense | 219 |  |  | 42 |  |  | 389 |  |  | 57 |
Employee compensation | 2,209 |  |  | 1,399 |  |  | 4,651 |  |  | 1,477 |
Facility operations expense | 4,383 |  |  | 4,863 |  |  | 12,570 |  |  | 7,964 |
Other segment items | 702 |  |  | 250 |  |  | 1,388 |  |  | 284 |
Cost of licensing revenue | 7,513 |  |  | 6,554 |  |  | 18,998 |  |  | 9,782 |
Power fees passed through to customer | 3,553 |  |  | 2,487 |  |  | 9,604 |  |  | 4,150 |
Total cost of Colocation services | 11,066 |  |  | 9,041 |  |  | 28,602 |  |  | 13,932 |
Colocation gross profit | $ | 3,885 |  |  | $ | 1,297 |  |  | $ | 5,482 |  |  | $ | 1,925 |
Colocation licensing gross margin | 34 | % |  | 17 | % |  | 22 | % |  | 16 | %
Colocation gross margin | 26 | % |  | 13 | % |  | 16 | % |  | 12 | %
Consolidated |  |  |  |  |  |  |
Consolidated total revenue | $ | 81,103 |  |  | $ | 95,354 |  |  | $ | 239,256 |  |  | $ | 415,747 |
Consolidated cost of revenue | $ | 77,198 |  |  | $ | 95,510 |  |  | $ | 222,113 |  |  | $ | 299,440 |
Consolidated gross profit | $ | 3,905 |  |  | $ | (156) |  |  | $ | 17,143 |  |  | $ | 116,307 |
Consolidated gross margin | 5 | % |  | — | % |  | 7 | % |  | 28 | %
A reconciliation of the reportable segment gross profit (loss) to loss before income taxes included in the Company’s condensed c onsolidated statements of operations for the three and nine months ended September 30, 2025 and 2024, is as follows (in thousands):
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2025 (As Restated) |  | 2024 |  | 2025 (As Restated) |  | 2024
Reportable segment gross profit (loss) | $ | 3,905 |  |  | $ | (156) |  |  | $ | 17,143 |  |  | $ | 116,307 |
(Increase) decrease in fair value of digital assets | (10,957) |  |  | 206 |  |  | (30,066) |  |  | 247 |
Decrease in fair value of energy derivatives | — |  |  | — |  |  | — |  |  | 2,757 |
Loss on disposal of property, plant and equipment | 300 |  |  | 509 |  |  | 4,472 |  |  | 4,061 |
Impairment of property, plant and equipment | — |  |  | — |  |  | — |  |  | 97,261 |
Selling, general and administrative | 69,354 |  |  | 40,348 |  |  | 170,851 |  |  | 88,655 |
Operating loss | (54,792) |  |  | (41,219) |  |  | (128,114) |  |  | (76,674) |
Non-operating expense (income), net: |  |  |  |  |  |  |
Loss on debt extinguishment | — |  |  | 317 |  |  | 1,377 |  |  | 487 |
Interest (income) expense, net | (821) |  |  | 7,072 |  |  | (4,193) |  |  | 35,934 |
Change in fair value of warrants and contingent value rights | 74,864 |  |  | 408,520 |  |  | 363,358 |  |  | 1,144,441 |
Reorganization items, net | — |  |  | — |  |  | — |  |  | (111,439) |
Loss on legal settlements | 15,075 |  |  | 356 |  |  | 15,504 |  |  | 2,070 |
Other non-operating income, net | (8) |  |  | (2,359) |  |  | (73) |  |  | (1,926) |
Total non-operating expense, net | 89,110 |  |  | 413,906 |  |  | 375,973 |  |  | 1,069,567 |
Loss before income taxes | $ | (143,902) |  |  | $ | (455,125) |  |  | $ | (504,087) |  |  | $ | (1,146,241) |
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. 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 September 30, 2025 and December 31, 2024, all of the Company’s fixed assets were located in the United States. For the three and nine months ended September 30, 2025 and 2024, all of the Company’s revenue was generated in the United States. For the three and nine months ended September 30, 2025, 71% and 78% of the Company’s total revenue was generated from digital asset mining of bitcoin from one customer. For the three and nine months ended September 30, 2024, 71% and 79%, respectively, of the Company’s total revenue was generated from digital asset mining of bitcoin from one customer. As of September 30, 2025 and 2024, substantially all of our digital assets were held by one third-party digital asset service. For the three and nine months ended September 30, 2025, and 2024, the concentration of customers comprising 10% or more of the Company’s Digital Asset Self-Mining, Digital Asset Hosted Mining, and Colocation segment revenue were as follows:
| Three Months Ended September 30, |  | Three Months Ended September 30, |  | Three Months Ended September 30,
| 2025 |  | 2024 |  | 2025 |  | 2024 |  | 2025 |  | 2024
| Percent of Digital Asset Self-Mining segment revenue: |  | Percent of Digital Asset Hosted Mining segment revenue: |  | Percent of Colocation segment revenue:
Customer |  |  |  |  |  |  |  |  |  |  |
F | N/A |  | N/A |  | 23 | % |  | 73 | % |  | N/A |  | N/A
G | 100 | % |  | 100 | % |  | N/A |  | N/A |  | N/A |  | N/A
H | N/A |  | N/A |  | N/A |  | 19 | % |  | N/A |  | N/A
J | N/A |  | N/A |  | N/A |  | N/A |  | 100 | % |  | 100 | %
L | N/A |  | N/A |  | 77 | % |  | N/A |  | N/A |  | N/A
| Nine Months Ended September 30, |  | Nine Months Ended September 30, |  | Nine Months Ended September 30,
| 2025 |  | 2024 |  | 2025 |  | 2024 |  | 2025 |  | 2024
| Percent of Digital Asset Self-Mining segment revenue: |  | Percent of Digital Asset Hosted Mining segment revenue: |  | Percent of Colocation segment revenue:
Customer |  |  |  |  |  |  |  |  |  |  |
F | N/A |  | N/A |  | 42 | % |  | 59 | % |  | N/A |  | N/A
G | 100 | % |  | 100 | % |  | N/A |  | N/A |  | N/A |  | N/A
H | N/A |  | N/A |  | N/A |  | 23 | % |  | N/A |  | N/A
J | N/A |  | N/A |  | N/A |  | N/A |  | 100 | % |  | 100 | %
L | N/A |  | N/A |  | 54 | % |  | N/A |  | N/A |  | N/A

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- Definition The entire disclosure for reporting segments including data and tables. 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