Note 6. Property and Equipment

The following table presents the Company’s property and equipment:

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The Company did not incur any impairment charges for its property and equipment during the three and six months ended June 30, 2023 and 2022.

During the three months ended June 30, 2023 and 2022, depreciation expense related to property and equipment totaled $64.7 million and $20.2 million, respectively, and during the six months ended June 30, 2023 and 2022, totaled $122.6 million and $34.1 million, respectively.

Miners and mining equipment

As of June 30, 2023, the Company had a total of 95,904 miners deployed in its Bitcoin mining operation at the Rockdale Facility, excluding 17,040 miners currently offline as a result of damage sustained to the facility’s infrastructure during severe winter storms affecting Texas in December 2022.

In June 2023, the Company entered into a purchase agreement with MicroBT Electronics Technology Co., LTD, through its manufacturing affiliate, SuperAcme Technology (Hong Kong) Limited (collectively, “MicroBT”) to acquire 8,320 M56S+ model miners and 24,960 M56S++ model miners, primarily for its Corsicana Facility, for a total purchase price of approximately $162.9 million. Delivery of the miners is expected to begin in December 2023, with all miners expected to be received and deployed by mid-2024. The purchase agreement also provides the Company an option to purchase up to an additional 66,560 additional M56S++ miners, on the same terms as the initial order, through December 31, 2024.

In July 2023, the Company entered into a purchase agreement with Midas Green Technologies, LLC (d/b/a “Midas Immersion Cooling”) (“Midas”) for the purchase of 200 MW of immersion cooling systems for its Corsicana Facility. Delivery of the immersion cooling systems is expected to begin in the third quarter of 2023 and be completed by the end of 2023. The purchase agreement also provides the Company an option to purchase up to an additional 400 MW of immersion cooling systems, on the same terms as the initial order, through December 31, 2025.

As of December 31, 2022, the Company had outstanding executed purchase agreements for the purchase of miners from Bitmain Technologies Limited (“Bitmain”) for a total of 5,130 S19 series miners, which were received in January 2023. As of June 30, 2023, the Company did not have any outstanding purchase agreements for the purchase of miners from Bitmain.

Casualty-related charges (recoveries), net

In December 2022, the Rockdale Facility was damaged during severe winter storms in Texas, impacting approximately 2.5 exahash per second (“EH/s”) of hash rate capacity.

The Company has estimated that total damages of $11.2 million were incurred. No insurance recoveries have been received. Recoveries will be recognized when they are probable of being received.

Construction in progress

In 2021, the Company commenced expansion of the Rockdale Facility to 700 MW from its initial 300 MW of developed capacity. As of June 30, 2023, the 400 MW expansion of the Rockdale Facility had been completed.

In 2022, the Company initiated development of the Corsicana Facility to expand its Bitcoin mining and data center hosting capabilities, on a 265-acre site in Navarro County, Texas, located next to the Navarro switch. Once complete, the Company expects the Corsicana Facility to have one gigawatt of developed capacity for its Bitcoin mining and data center operations.

The initial phase of the development of the Corsicana Facility involves the construction of 400 MW of immersion-cooled Bitcoin mining and data center hosting infrastructure, as well as a high-voltage power substation and transmission facilities to supply power and water to the facility. Construction of the substation and the data centers is ongoing and Bitcoin Mining and Data Center Hosting operations are expected to commence following the commissioning of the substation.

Through June 30, 2023, the Company had incurred costs of approximately $102.0 million related to the development of the Corsicana Facility, including $10.1 million paid to acquire the land on which the facility is being developed, $87.2 million of initial developments costs and equipment, and a $4.7 million deposit for future power usage.

Commitments

In July 2023, the Company paid a deposit of $48.9 million to MicroBT for the purchase of miners described herein, leaving an additional commitment of approximately $114.0 million due in installments through approximately April 2024 based on the estimated delivery schedule.

In July 2023, the Company paid a deposit of $20.8 million to Midas for the purchase of immersion cooling systems described herein, leaving an additional commitment of approximately $31.2 million due in installments through approximately February 2024 based on the estimated delivery schedule.

Related party land transaction

During the year ended December 31, 2022, the Company began an initiative to provide certain on-site temporary housing for stakeholders, including partners, analysts, stockholders, employees, vendors, and other visitors to the Rockdale Facility, which is located in a relatively remote area of central Texas, with limited accommodations for visitors. In July 2023, Riot completed its acquisition of the property and land for the development of temporary housing from Lyle Theriot (indirectly, through a limited liability company controlled by Mr. Theriot) for approximately $1.1 million, consisting of $0.2 million for land and $0.9 million for buildings and improvements. Mr. Theriot is part of the management team at Riot and is considered a related party of Riot. The transaction was accounted for as an asset acquisition.