XML 36 R25.htm IDEA: XBRL DOCUMENT v3.24.3
FAIR VALUE MEASUREMENTS
 9 Months Ended
Sep. 30, 2024
Fair Value Disclosures [Abstract]  
FAIR VALUE MEASUREMENTS FAIR VALUE MEASUREMENTS
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial assets and liabilities measured at fair value are classified and disclosed in one of the following categories based on the inputs used to derive the fair value:
Level 1 — Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
Level 2 — Quoted prices in markets that are not active and financial instruments for which all significant inputs are observable, either directly or indirectly; or
Level 3 — Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable
The Company’s financial assets and liabilities subject to fair value measurement on a recurring basis and the level of inputs used for such measurements were as follows as of the dates indicated (in thousands):
Fair Value Measured as of September 30, 2024
Level 1Level 2Level 3Total
Assets included in:
Cash and cash equivalents
Money market securities$24,900 $- $- $24,900 
Restricted cash
Money market securities14,392 $- $- 14,392 
Bitcoin95,459 $- $- 95,459 
Accounts receivable226 - - 226 
Derivative asset- - 74,410 74,410 
$134,977 $- $74,410 $209,387 
Fair Value Measured as of December 31, 2023
Level 1Level 2Level 3Total
Assets included in:   
Cash and cash equivalents   
Money market securities$65,945 $- $- $65,945 
Bitcoin32,978 $- - 32,978 
Accounts receivable622 - - 622 
Derivative asset- - 93,591 93,591 
$99,545 $- $93,591 $193,136 
Liabilities included in:  
Warrant liability$- $- $250 $250 
$- $- $250 $250 
The carrying values reported in the Company’s consolidated balance sheets for cash (excluding cash equivalents which are recorded at fair value on a recurring basis), accounts payable and accrued expenses and other current liabilities are reasonable estimates of their fair values due to the short-term nature of these items.
There were no transfers of financial instruments between Level 1, Level 2 and Level 3 during the nine months ended September 30, 2024 or the year ended December 31, 2023.
Level 3 asset
The Company’s derivative asset, related to the Luminant Power Agreement, is divided between current and noncurrent assets, and was initially recorded on its unaudited condensed consolidated balance sheets on the derivative asset’s effective date of July 1, 2022, with an offsetting amount recorded to change in fair value of derivative asset in costs and operating expenses on the unaudited condensed consolidated statements of operations. Subsequent changes in fair value are also recorded to change in fair value of derivative asset. The Luminant Power Agreement was not designated as a hedging instrument. The estimated fair value of the Company’s derivative asset was derived from Level 2 and Level 3 inputs (i.e., unobservable inputs) due to a lack of quoted prices for similar type assets and as such, is classified in Level 3 of the fair value hierarchy. Specifically, the discounted cash flow estimation models contain quoted spot and forward prices for electricity, as well as estimated usage rates consistent with the terms of the Luminant Power Agreement, the initial term of which is five years, and a remaining term of approximately 2.8 years. The valuations performed by the third-party valuation firm engaged by the Company utilized pre-tax discount rates of 5.36% and 6.11% as of September 30, 2024 and December 31, 2023, respectively, and include observable market inputs, but also include unobservable inputs based on qualitative judgment related to company-specific risk factors. Unrealized gains associated with the derivative asset within the Level 3 category include changes in fair value that were attributable to amendments to the Luminant Power Agreement,
changes to the quoted forward electricity rates, as well as unobservable inputs (e.g., changes in estimated usage rates and discount rate assumptions).
The following table presents the changes in the estimated fair value of the derivative asset measured using significant unobservable inputs (Level 3) for the nine months ended September 30, 2024 and 2023 (amounts in thousands):
Nine months ended September 30,
20242023
Opening balance$93,591 $66,702 
Change in fair value(19,181)13,348 
Ending balance$74,410 $80,050 
Level 3 liability
The Company’s Private Placement Warrants (as defined in Note 15. Warrants) were its only liability classified within Level 3 of the fair value hierarchy because the fair value is based on significant inputs that are unobservable in the market. The valuation of the Private Placement Warrants used assumptions and estimates the Company believes would be made by a market participant in making the same valuation. As of March 31, 2024, all Private Placement Warrants were converted to Public Warrants, and as such no Private Placement Warrants were outstanding as of September 30, 2024.
The Company engaged a valuation firm to determine the fair value of the Private Placement Warrants using a Black-Scholes option-pricing model and the quoted price of Common Stock. The following table presents significant assumptions utilized in the valuations of the Private Placement Warrants as of the dates indicated:
December 31, 2023
Risk-free rate4.00%
Dividend yield rate0.00%
Volatility124.0%
Contractual term (in years)2.7
Exercise price$11.50
The following table presents changes in the estimated fair value of the Private Placement Warrants (amounts in thousands):
Balance as of December 31, 2023$250 
Change in fair value(250)
Balance as of September 30, 2024$— 
Balance as of December 31, 2022$7 
Change in fair value49 
Balance as of September 30, 2023$56