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Leases | 3 Months Ended
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Mar. 31, 2023
Leases [Abstract] |
Leases | NOTE 11. LEASES Combined Luminant Lease Agreement The Company entered into a series of agreements with affiliates of Luminant, including the Lease Agreement dated June 29, 2021, with amendment and restatement on July 9, 2021 (as amended and restated, the “Luminant Lease Agreement”). The Luminant Lease Agreement leases a plot of land to the Company for the data center, ancillary infrastructure and electrical system (the “Interconnection Electrical Facilities” or “substation”) of the Odessa Facility. The Company entered into the Luminant Lease Agreement and the Luminant Purchase and Sale Agreement to build the infrastructure necessary to support its Odessa Facility operations. The Company determined that the Luminant Lease Agreement and the Luminant Purchase and Sale Agreement should be combined for accounting purposes under ASC 842 (collectively, the “Combined Luminant Lease Agreement”) and that amounts exchanged under the combined contract should be allocated to the various components of the overall transaction based on relative fair values. The Company’s management determined that the Combined Luminant Lease Agreement contains two lease components; and the components should be accounted for together as a single lease component, because the effect of accounting for the land lease separately would be insignificant. Financing for use of the land and substation is provided by Luminant affiliates, with monthly installments of principal and interest due over a five-year period starting upon transfer of legal title of the substation to the Company (estimated total undiscounted principal payments of $15.0 million). The Combined Luminant Lease Agreement commenced on November 22, 2022 and has an initial term of five years, with renewal provisions that are aligned with the Luminant Power Agreement. Despite lease commencement in November 2022, the Company has not been required by Luminant to make any lease payments for the substation, therefore the Company is continuing to accrue amounts due under the Combined Luminant Lease Agreement in accrued expenses and other current liabilities on its unaudited condensed consolidated balance sheet. At the end of the lease term for the Interconnection Electrical Facilities, the substation will be sold back to Luminant’s affiliate, Vistra Operations Company, LLC at a price to be determined based upon bids obtained in the secondary market. Office headquarters lease The Company entered into an operating lease for office space located in New York. The lease has an initial term of 64 months and commenced on February 1, 2022. The lease does not provide the Company with renewal options. Additional lease information Components of the Company’s lease expenses are as follows (in thousands):
|  | Three Months Ended March 31, |
|  | 2023 |  |  | 2022 |
Finance lease: |  |  |  |  |  |
Amortization of ROU asset (1) |  | $ | 789 |  |  | $ | - |
Interest on lease liability |  |  | 401 |  |  |  | - |
Total finance lease expense |  |  | 1,190 |  |  |  | - |
Operating leases: |  |  |  |  |  |
Operating lease expense |  |  | 371 |  |  |  | 247 |
Short-term lease rent expense |  |  | 83 |  |  |  | - |
Total lease expense |  | $ | 1,644 |  |  | $ | 247 |
__________ (1) Amortization of finance lease ROU asset is included within depreciation expense. The Company did no t incur any variable lease costs during the three months ended March 31, 2023 and 2022. Other information related to the Company’s leases is shown below (dollar amounts in thousands):
|  | Three Months Ended March 31, |
|  | 2023 |  |  | 2022 |
Operating cash flows - operating lease |  | $ | 395 |  |  | $ | - |
Right-of-use assets obtained in exchange for operating lease liabilities |  | $ | - |  |  | $ | 5,859 |
|  | March 31, 2023 |  |  | December 31, 2022 |
Weighted-average remaining lease term – finance lease (in years) |  |  | 4.4 |  |  |  | 4.7 |
Weighted-average remaining lease term – operating lease (in years) |  |  | 4.2 |  |  |  | 4.4 |
Weighted-average discount rate – finance lease |  |  | 11.0 | % |  |  | 11.0 | %
Weighted-average discount rate – operating lease |  |  | 10.9 | % |  |  | 10.9 | %
Finance lease ROU asset (1) |  | $ | 13,682 |  |  | $ | 14,471 |
__________ (1) As of March 31, 2023 and December 31, 2022, the Company had recorded accumulated amortization of approximately $1.3 million and $0.5 million, respectively, for the finance lease ROU asset. Finance lease ROU assets are recorded within property and equipment, net on the Company’s consolidated balance sheets. As of March 31, 2023, future minimum lease payments during the next five years are as follows (in thousands):
|  | Finance Lease |  |  | Operating Lease |  |  | Total |
Remaining Period Ended December 31, 2023 |  | $ | 3,051 |  |  | $ | 1,186 |  |  | $ | 4,237 |
Year Ended December 31, 2024 |  |  | 4,068 |  |  |  | 1,581 |  |  |  | 5,649 |
Year Ended December 31, 2025 |  |  | 4,068 |  |  |  | 1,581 |  |  |  | 5,649 |
Year Ended December 31, 2026 |  |  | 4,068 |  |  |  | 1,581 |  |  |  | 5,649 |
Year Ended December 31, 2027 |  |  | 2,712 |  |  |  | 659 |  |  |  | 3,371 |
Total lease payments |  |  | 17,967 |  |  |  | 6,588 |  |  |  | 24,555 |
Less present value discount |  |  | (3,787 | ) |  |  | (1,312 | ) |  |  | (5,099 | )
Total |  | $ | 14,180 |  |  | $ | 5,276 |  |  | $ | 19,456 |

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