Annual report pursuant to Section 13 and 15(d)

Segment Information

v3.22.2.2
Segment Information
 12 Months Ended
Dec. 31, 2021
Segment Reporting [Abstract]  
Segment Information

Note 18. Segment Information

The Company applies ASC 280, Segment Reporting, in determining its reportable segments. The Company has three reportable segments: Mining, Hosting, and Engineering. The guidance requires that segment disclosures present the measure(s) used by the Chief Operating Decision Maker (“CODM”) to decide how to allocate resources and for purposes of assessing such segments’ performance. The Company’s CODM is comprised of several members of its executive management team who use revenue and cost of revenues of our three reporting segments to assess the performance of the business of our reportable operating segments.

No operating segments have been aggregated to form the reportable segments. The Company does not allocate all assets to the reporting segments as these are managed on an entity-wide basis. Therefore, the Company does not separately disclose the total assets of its reportable operating segments. $29.4 million of goodwill from the ESS Metron acquisition is allocated to our Engineering segment and $306.2 million of goodwill from the Whinstone Acquisition is allocated to our Hosting segment.

The Mining segment generates revenue from the cryptocurrency the Company earns through its mining activities. The Hosting segment generates revenue from long-term customer contracts for the provision/consumption of electricity, construction of infrastructure, operation of data centers and maintenance/management of computing capacity from the Company’s high performance data center facility in Rockdale, Texas. The Engineering segment generates revenue through customer contracts for custom engineered electrical products.

The Hosting segment purchases custom engineered electrical products from the Engineering segment in the ordinary course of business. The revenue and cost of revenues from intersegment transactions have been eliminated in the consolidated statements of operations in accordance with US GAAP. For purposes of segment reporting, the revenues and cost of revenues for each segment are presented in the table below on a stand-alone basis, with the intersegment eliminations presented separately, such that total revenue and total cost of revenue total to the consolidated statements of operations. All other revenues are from external customers. No single customer or related group of customers contributed 10% or more of the Company’s total revenue during the years ended December 31, 2021, 2020 and 2019. However, two customers accounted for approximately 97% of the Company’s Hosting revenue.

For the year ended December 31, 2021, approximately 75% of the Company’s Mining revenue was generated from the Coinmint Facility in New York, and the remaining 25% was generated from our Whinstone Facility in Rockdale, Texas.

The following table details revenue and cost of revenues for the Company’s reportable segments for the years ended December 31, 2021, 2020 and 2019, and reconciles to net income (loss) in the consolidated statements of operations (in thousands):

Years Ended December 31,

2021

2020

2019

Reportable segment revenue:

Revenue, net - mining

$

184,422

$

11,984

$

6,741

Revenue, net - hosting

24,546

-

-

Revenue, net - engineering

5,265

-

-

Other revenue

97

97

96

Eliminations

(1,087

)

-

-

Total segment and consolidated revenue

213,243

12,081

6,837

Reportable segment cost of revenue (exclusive of depreciation and amortization shown below):

Cost of revenues - mining

45,513

6,251

6,097

Cost of revenues - hosting

32,998

-

-

Cost of revenues - engineering

4,351

-

-

Eliminations

(769

)

-

-

Total segment and consolidated cost of revenues (exclusive of depreciation and amortization shown below)

82,093

6,251

6,097

Reconciling Items:

Acquisition-related costs

(21,198

)

-

-

Selling, general and administrative

(87,429

)

(10,251

)

(9,159

)

Depreciation and amortization

(26,324

)

(4,494

)

(119

)

Change in fair value of derivative asset

18,626

-

-

Change in fair value of contingent consideration

(975

)

-

-

Realized gain on sale/exchange of cryptocurrencies

253

5,184

665

Impairment of intangible rights acquired

-

-

(700

)

Impairment of long-term investment

-

(9,413

)

-

Impairment of cryptocurrencies

(36,462

)

(989

)

(844

)

Loss on issuance of convertible notes, common stock and warrants

-

-

(6,155

)

Change in fair value of warrant liability

-

-

(2,869

)

Change in fair value of convertible notes

-

-

(3,896

)

Reversal of registration rights penalty

-

1,358

-

Gain on deconsolidation of Tess

-

-

1,139

Gain (loss) on sale of equipment

-

29

-

Interest income (expense)

-

85

-

Interest expense

(296

)

-

(122

)

Other income (expense)

2,378

(6

)

874

Realized gain on sale/exchange of long-term investment

26,260

-

-

Unrealized loss on marketable equity securities

(13,655

)

-

-

Current income tax expense

(254

)

-

-

Deferred income tax benefit

-

-

143

Net loss

$

(7,926

)

$

(12,667

)

$

(20,303

)