Investments in Equity Investees

3 Months Ended

Mar. 31, 2024

Equity Method Investments and Joint Ventures [Abstract]

NOTE 7. INVESTMENTS IN EQUITY INVESTEES

The Company uses the equity method of accounting to account for its 49% equity interest in its partially owned mining operations Alborz LLC, Bear LLC and Chief, LLC (the “Data Center LLCs”).

During fiscal year 2022, the Company contributed miners and mining equipment to the Alborz, Bear and Chief Facilities. The majority of these contributed miners had a fair value that was lower than the cost paid by the Company to obtain them, and the Company recognized losses at the time of the contributions, resulting in basis differences related to the Company’s investments in the Data Center LLCs, which recorded the contributions of equipment from the Company at the historical cost paid by the Company to obtain the equipment. As the Data Center LLCs depreciate the historical cost of these miners on their respective financial statements over the expected depreciation period of five years, the Company accretes these basis differences over the same period and records the accretion amount for each reporting period within equity in losses of equity investees on its statements of operations until these miners are fully depreciated and the corresponding basis differences are fully accreted. As of March 31, 2024, the Company had remaining basis differences totaling approximately $23.1 million that have not yet been accreted.

Activity in the Company’s investments in equity investees during the three months ended March 31, 2024, and 2023, consisted of the following (in thousands):


Balance as of December 31, 2022	$	37,478
Cost of contributed mining equipment and other capital contributions		1,925
Accretion of basis differences related to miner contributions		1,670
Capital distributions		(3,807	)
Bitcoin received from equity investees		(317	)
Equity in net losses of equity investees		(2,420	)
Balance as of March 31, 2023	$	34,529

Balance as of December 31, 2023	$	35,258
Cost of contributed mining equipment and other capital contributions		18,319
Accretion of basis differences related to miner contributions		1,671
Capital distributions		-
Bitcoin received from equity investees		(1,694	)
Equity in net losses of equity investees		(933	)
Balance as of March 31, 2024	$	52,621