TERAWULF INC

Previous wording

Presently, we liquidate the bitcoin mined as part of our routine treasury management processes to acquire U.S. dollars for operational, capital, or other corporate expenses. Our bitcoin holdings are securely stored in a cold storage wallet managed by our custodian, NYDIG Trust Company LLC, a duly chartered New York limited liability trust company (“NYDIG”).

Current wording

We are primarily engaged in, and all of our revenues are derived from, bitcoin mining for our own account. Our digital asset mining involves solving complex cryptographic algorithms that validate transactions on the bitcoin blockchain— a process known as “mining.” Competing on a global scale, we aim to complete new blocks on the blockchain to secure bitcoin rewards. With a large fleet of high-performance miners, primarily sourced from Bitmain Technologies Limited, we strive to increase bitcoin production while continuously enhancing operational efficiencies to reduce costs. We generate revenue by providing hash computation services to a mining pool operator to mine bitcoin and validate transactions using application-specific integrated circuit computers (“ASIC” or “miners”) owned by us. Beyond block rewards, we also earn transaction fees for confirming blockchain transactions. These earnings are routinely converted into U.S. dollars. Presently, we liquidate the bitcoin mined as part of our routine treasury management processes to acquire U.S. dollars for operational, capital, or other corporate expenses. Our bitcoin holdings are securely stored in a cold storage wallet managed by our custodian, NYDIG Trust Company LLC, a duly chartered New York limited liability trust company (“NYDIG”).

Previous wording

Bitcoin, introduced in 2008, fundamentally transformed the landscape of digital currency by providing a decentralized mechanism for exchanging and preserving value. It operates on a consensus-based network, utilizing a public ledger termed as the “blockchain” to meticulously record every bitcoin transaction, allowing users to send and receive payments without the need for banks and other intermediaries. Bitcoin is not linked to any fiat currency or country’s monetary policy, therefore serves as a store of value outside of government control. TeraWulf’s vertically integrated bitcoin mining facilities capitalize on predominantly zero-carbon energy sources, primarily sourced from baseload nuclear and hydroelectric power.

Current wording

Bitcoin, introduced in 2008, fundamentally transformed the landscape of digital currency by providing a decentralized mechanism for exchanging and preserving value. It operates on a consensus-based network, utilizing a public ledger termed as the “blockchain” to meticulously record every bitcoin transaction, allowing users to send and receive payments without the need for banks and other intermediaries. Bitcoin is not linked to any fiat currency or country’s monetary policy, therefore serves as a store of value outside of government control.

Previous wording

Bitcoin mining involves validating transactions through a proof-of-work consensus method, where miners solve complex mathematical problems to add transactions to the blockchain. The blockchain is maintained by a robust and public open-source architecture consisting of a network of computers, known as nodes, that work together to verify and validate new transactions. Because the blockchain is decentralized and transparent, all users can verify the legitimacy of a transaction without having to rely on a third party. This eliminates the need for intermediaries, which can be slow and expensive, and makes the network resistant to censorship and fraud. Bitcoin mining plays a key role in the maintenance and growth of the Bitcoin network by providing the computational power needed to verify transactions and add new blocks to the blockchain. TeraWulf invests in computation networks (mining rigs) equipped with application-specific integrated circuit (“ASIC”) chips and secures power to validate transactions and maintain the bitcoin ledger. Factors such as computing capacity, electricity costs, and location play pivotal roles in mining operations. Generally, the greater the share a single mining rig can capture of the blockchain’s total network hashrate, or the aggregate hashrate deployed to solving a block on the Bitcoin blockchain, the greater the rig’s chances of solving a block and therefore earning the reward.

Current wording

Bitcoin mining involves validating transactions through a proof-of-work consensus method, where miners solve complex mathematical problems to add transactions to the blockchain. The blockchain is maintained by a robust and public open-source architecture consisting of a network of computers, known as nodes, that work together to verify and validate new transactions. Because the blockchain is decentralized and transparent, all users can verify the legitimacy of a transaction without having to rely on a third party. This eliminates the need for intermediaries, which can be slow and expensive, and makes the network resistant to censorship and fraud. Bitcoin mining plays a key role in the maintenance and growth of the Bitcoin network by providing the computational power needed to verify transactions and add new blocks to the blockchain. Factors such as computing capacity, electricity costs, and location play pivotal roles in mining operations. Generally, the greater the share a single mining rig can capture of the blockchain’s total network hashrate, or the aggregate hashrate deployed to solving a block on the Bitcoin blockchain, the greater the rig’s chances of solving a block and therefore earning the reward.

Previous wording

As of June 30, 2024, these two industrial scale projects had a combined operating capacity of 8.8 EH/s with approximately 71,700 miners deployed, comprised of 55,900 deployed miners at the Lake Mariner Facility and 15,800 deployed at the Nautilus Cryptomine Facility. As of the date of this Quarterly Report, the Company has a total operational capacity of 245 megawatts (“MW”) and is currently constructing an additional 50 MW at its Lake Mariner Facility, which is expected to be substantially complete by the end of 2024.

Current wording

As of September 30, 2024, TeraWulf conducted its bitcoin mining operations at two established data centers: the Lake Mariner Facility in upstate New York and the jointly owned Nautilus Cryptomine Facility located in central Pennsylvania, which had a combined operating capacity of 10.0 EH/s with approximately 74,200 miners deployed, comprised of 58,400 deployed miners at the Lake Mariner Facility and 15,800 deployed at the Nautilus Cryptomine Facility. As of the date of this Quarterly Report, the Company has a total operational bitcoin mining capacity of approximately 195 MW at the Lake Mariner Facility and is currently constructing an additional 50 MW facility, which we expect to be operational in the first quarter of 2025.

Previous wording

Located at a site adjacent to the now decommissioned coal-fired power plant in Barker, New York, the Lake Mariner Facility began sustainably mining bitcoin in March 2022. As of the date of this Quarterly Report, the Lake Mariner Facility is operating approximately 195 MW of bitcoin mining capacity and the Company has an agreement in place with the Power Authority of the State of New York (“NYPA”) for 90 MW of high load factor power to support its bitcoin mining operations (the “PPA”). The PPA was executed in February 2022 and has a term of ten years from the date of commencement of NYPA’s power delivery. The Lake Mariner Facility is situated on an expansive site on the shores of Lake Ontario and has the ability to scale up to 500 MW of capacity.

Current wording

Located at a site adjacent to the now decommissioned coal-fired power plant in Barker, New York, the Lake Mariner Facility began sustainably mining bitcoin in March 2022. As of the date of this Quarterly Report, the Lake Mariner Facility is operating approximately 195 MW of bitcoin mining capacity and the Company is currently constructing an additional 50 MW, which we expect to be operational in the first quarter of 2025. The Company has an agreement in place with the Power Authority of the State of New York (“NYPA”) for 90 MW of high load factor power to support its bitcoin mining operations (the “PPA”). The PPA was executed in February 2022 and has a term of ten years from the date of commencement of NYPA’s power delivery. The Lake Mariner Facility is situated on an expansive site on the shores of Lake Ontario and has the capacity to scale up to 500 MW, and potentially up to 750 MW with certain transmission upgrades.

Previous wording

As of June 30, 2024, we own approximately 55,900 miners of which approximately 51,300 are operational at the Lake Mariner Facility with the remainder undergoing maintenance, awaiting disposal or on standby to replace miners under repair. These miners were comprised as follows:

Current wording

As of September 30, 2024, we own approximately 58,400 miners of which approximately 55,200 are operational at the Lake Mariner Facility with the remainder undergoing maintenance, awaiting disposal or on standby to replace miners under repair. These miners were comprised as follows:

Previous wording

As of June 30, 2024, our fleet of miners ranged in age from 0.1 to 2.1 years with an average age of approximately 0.8 year. We do not have scheduled downtime for our miners; however, while we periodically perform unscheduled maintenance on our miners, such downtime has not been significant historically. When performing unscheduled maintenance, depending on the length of estimated repair time, we may replace a miner with a substitute miner to limit overall downtime. As of June 30, 2024, our fleet of miners at the Lake Mariner Facility had a range of energy efficiency from 15 to 31 joules per terahash (“"j/th”) and has an average energy efficiency of 23.1 j/th.

Current wording

As of September 30, 2024, our fleet of miners ranged in age from 0.2 to 2.5 years with an average age of approximately 1.0 years. We do not have scheduled downtime for our miners; however, while we periodically perform unscheduled maintenance on our miners, such downtime has not been significant historically. When performing unscheduled maintenance, depending on the length of estimated repair time, we may replace a miner with a substitute miner to limit overall downtime. As of September 30, 2024, our fleet of miners at the Lake Mariner Facility had a range of energy efficiency from 15 to 31 joules per terahash (“"j/th”) and has an average energy efficiency of 22.3 j/th.

Previous wording

Located in Berwick, Pennsylvania, Nautilus Cryptomine LLC (“Nautilus”) is a joint venture between TeraWulf and a subsidiary of Talen Energy Corporation (“Talen”). Nautilus currently owns a 200 MW bitcoin mining facility located adjacent to the 2.5 gigawatt nuclear-powered Susquehanna Station. The Nautilus Cryptomine Facility represents the first bitcoin mining facility site that is powered by 100% “behind the meter” zero-carbon nuclear energy, which is contracted at a fixed rate of 2.0 cents per kilowatt hour (“kWh”) for a term of five years with two successive three-year renewal options. Under the Nautilus joint venture agreement, the Company holds a 25% equity interest in Nautilus and Talen holds a 75% equity interest, each subject to adjustment based on relative capital contributions. TeraWulf began mining bitcoin at the Nautilus Cryptomine Facility in the first quarter of 2023 and, as of June 30, 2024, had an allotted 50 MW of operational bitcoin mining capacity at the Nautilus Cryptomine Facility. Furthermore, TeraWulf plans to expand mining capacity at the Nautilus Cryptomine Facility by another 50 MW in 2025, solidifying its position for scalable growth. Accordingly, in February 2024, the Company exercised its option to increase its energy requirement at the Nautilus Cryptomine Facility by an incremental 50 MW at its own cost (for a total of 100 MW of bitcoin mining capacity attributable to TeraWulf). As of the date of this Quarterly Report, no additional capital calls for expansion have been made and no additional energy supply has been procured.

Current wording

Located in Berwick, Pennsylvania, Nautilus was a joint venture between TeraWulf and a subsidiary of Talen Energy Corporation (“Talen”) (each a “Member” and collectively the “Members”). Nautilus owned and operated a 200 MW bitcoin mining facility located adjacent to the 2.5 gigawatt nuclear-powered Susquehanna Station. The Nautilus Cryptomine Facility represented the first bitcoin mining facility site that was powered by 100% “behind the meter” zero-carbon nuclear energy, which was contracted at a fixed rate of 2.0 cents per kilowatt hour (“kWh”) for a term of five years with two successive three-year renewal options. Under the Nautilus joint venture agreement and prior to the sale of TeraWulf’s interests in Nautilus in October 2024, the Company held a 25% equity interest in Nautilus and Talen held a 75% equity interest, each subject to adjustment based on relative capital contributions. TeraWulf began mining bitcoin at the Nautilus Cryptomine Facility in the first quarter of 2023 and, as of September 30, 2024, had an allotted 50 MW of operational bitcoin mining capacity at the Nautilus Cryptomine Facility.

Previous wording

As of June 30, 2024, approximately 48,000 miners have been deployed at the Nautilus Cryptomine Facility of which 46,000 are operational with the remainder undergoing maintenance or on standby to replace miners under repair. Approximately 15,800 of the deployed miners are attributed to TeraWulf’s contributions to Nautilus in order to utilize TeraWulf's allotted 50 MW of bitcoin mining capacity. These miners are comprised as follows:

Current wording

As of September 30, 2024, approximately 48,000 miners were deployed at the Nautilus Cryptomine Facility of which 46,000 were operational. Approximately 15,800 of the deployed miners were attributed to TeraWulf’s contributions to Nautilus in order to utilize TeraWulf's allotted 50 MW of bitcoin mining capacity. These miners were comprised as follows:

Previous wording

As of June 30, 2024, these miners ranged in age from 1.2 to 1.3 years with an average age of approximately 1.3 years. Nautilus does not have scheduled downtime for our miners; however, while Nautilus periodically performs unscheduled maintenance on miners, such downtime has not been significant historically. When performing unscheduled maintenance, depending on the length of estimated repair time, Nautilus may replace a miner with a substitute miner to limit overall downtime. As of June 30, 2024, these miners had a range of energy efficiency from 22 to 30 j/th and an average energy efficiency of 25.5 j/th. While the Company holds a 25% equity interest in Nautilus, the distributions of mined bitcoin are determined by each of TeraWulf’s and Talen’s respective hashrate contributions. Accordingly, the Company has contributed approximately 1.9 EH/s of a total 5.2 EH/s of miners which results in an approximate 35.7% of the hashrate share attributed to the Company.

Current wording

As of September 30, 2024, these miners ranged in age from 1.5 to 1.6 years with an average age of approximately 1.5 years. Nautilus did not have scheduled downtime for our miners; however, while Nautilus periodically performed unscheduled maintenance on miners, such downtime had not been significant historically. When performing unscheduled maintenance, depending on the length of estimated repair time, Nautilus may have replaced a miner with a substitute miner to limit overall downtime. As of September 30, 2024, these miners had a range of energy efficiency from 22 to 30 j/th and an average energy efficiency of 25.5 j/th. While the Company held a 25% equity interest in Nautilus, the distributions of mined bitcoin were determined by each of TeraWulf’s and Talen’s respective hashrate contributions. Accordingly, the Company had contributed approximately 1.9 EH/s of a total 5.2 EH/s of miners which resulted in an approximate 35.7% of the hashrate share attributed to the Company. In connection with the sale of TeraWulf’s interest in Nautilus in October 2024, Nautilus distributed to TeraWulf all of Nautilus’ right, title and interest in and to all of its miners, as well as certain other related equipment owned by Nautilus.

Previous wording

4 While nameplate inventory for TeraWulf’s two facilities is 8.8 EH/s, inclusive of gross total hosted miners, actual monthly hashrate performance depends on a variety of factors, including (but not limited to) performance tuning to increase efficiency and maximize margin, scheduled outages (scopes to improve reliability or performance), unscheduled outages, curtailment due to participation in various cash generating demand response programs, derate of ASICS due to adverse weather and ASIC maintenance and repair.

Current wording

4 While nameplate inventory for TeraWulf’s two facilities is 10.0 EH/s, inclusive of gross total hosted miners, actual monthly hashrate performance depends on a variety of factors, including (but not limited to) performance tuning to increase efficiency and maximize margin, scheduled outages (scopes to improve reliability or performance), unscheduled outages, curtailment due to participation in various cash generating demand response programs, derate of ASICS due to adverse weather and ASIC maintenance and repair.

Previous wording

As of June 30, 2024 our operating hashrate was approximately 1.4% of the total global hashrate, and we received approximately the same percentage of the global blockchain rewards, which as of that date, equaled approximately 6 to 7 bitcoin per day. Ultimately, in order to mine profitably, we work to ensure that these mining rewards cover our direct operating costs.

Current wording

As of September 30, 2024 our operating hashrate was approximately 1.3% of the total global hashrate, and we received approximately the same percentage of the global blockchain rewards, which as of that date, equaled approximately 6 to 7 bitcoin per day. Ultimately, in order to mine profitably, we work to ensure that these mining rewards cover our direct operating costs.

Previous wording

The table below presents the average cost of mining each bitcoin, including bitcoin mined at the Lake Mariner Facility and the Company’s net share of bitcoin mined at the Nautilus Cryptomine Facility, for the three and six months ended June 30, 2024 and 2023 and the total energy cost per kWh utilized within the facilities:

Current wording

The table below presents the average cost of mining each bitcoin, including bitcoin mined at the Lake Mariner Facility and the Company’s net share of bitcoin mined at the Nautilus Cryptomine Facility, for the three and nine months ended September 30, 2024 and 2023 and the total energy cost per kWh utilized within the facilities:

Previous wording

(1) “Cost to mine one bitcoin” is a cash cost metric and does not include depreciation. Although the Company recognizes depreciation with respect to its mining assets, it does not consider depreciation in determining whether it is economical to operate its mining equipment. As a result, the Company does not consider the sunk costs or depreciation of past capital investments in its historical or forecasted breakeven analysis. If depreciation of our miner fleet were factored into the above cost of mining analysis, it would add $21,532 and $17,660 per bitcoin mined for the three and six months ended June 30, 2024, respectively, bringing the total “cost to mine one bitcoin” to $44,527 and $36,166 for the three and six months ended June 30, 2024, respectively. If depreciation of our miner fleet were factored into the above cost of mining analysis, it would add $9,513 and $9,820 per bitcoin mined for the three and six months ended June 30, 2023, respectively, bringing the total “cost to mine one bitcoin” to $16,235 and $16,972 for the three and six months ended June 30, 2023, respectively.

Current wording

(1) “Cost to mine one bitcoin” is a cash cost metric and does not include depreciation. Although the Company recognizes depreciation with respect to its mining assets, it does not consider depreciation in determining whether it is economical to operate its mining equipment. As a result, the Company does not consider the sunk costs or depreciation of past capital investments in its historical or forecasted breakeven analysis. If depreciation of our miner fleet were factored into the above cost of mining analysis, it would add $28,827 and $20,477 per bitcoin mined for the three and nine months ended September 30, 2024, respectively, bringing the total “cost to mine one bitcoin” to $59,326 and $41,873 for the three and nine months ended September 30, 2024, respectively. If depreciation of our miner fleet were factored into the above cost of mining analysis, it would add $10,002 and $10,025 per bitcoin mined for the three and nine months ended September 30, 2023, respectively, bringing the total “cost to mine one bitcoin” to $19,354 and $18,076 for the three and nine months ended September 30, 2023, respectively.

Previous wording

(3) Excludes bitcoin earned from profit sharing associated with a hosting agreement that expired in February 2024 at the Lake Mariner Facility of 0 and 17 bitcoin for the three months ended June 30, 2024 and 2023, respectively, and 6 and 37 bitcoin for the six months ended June 30, 2024 and 2023, respectively, and includes TeraWulf’s net share of bitcoin mined at the Nautilus Cryptomine Facility, based on the hashrate share attributed to the Company.

Current wording

(3) Excludes bitcoin earned from profit sharing associated with a hosting agreement that expired in February 2024 at the Lake Mariner Facility of 0 and 14 bitcoin for the three months ended September 30, 2024 and 2023, respectively, and 6 and 51 bitcoin for the nine months ended September 30, 2024 and 2023, respectively, and includes TeraWulf’s net share of bitcoin mined at the Nautilus Cryptomine Facility, based on the hashrate share attributed to the Company.

Previous wording

Power prices are the most significant cost driver for our bitcoin mining operations, and energy costs represented 34.8% and 31.5% as expressed as a percentage of value of total bitcoin mined during the three and six months ended June 30, 2024, respectively, and 23.9% and 27.2% during the three and six months ended June 30, 2023, respectively. Power prices expressed as a percentage of value of total bitcoin mined during the three and six months ended June 30, 2024 increased as compared to the same periods in 2023 primarily due to an approximate doubling in network difficulty and the bitcoin reward halving in April 2024, partially offset by increases in average operating hashrate and increases in average value of each bitcoin mined.

Current wording

Power prices are the most significant cost driver for our bitcoin mining operations, and energy costs represented 49.9% and 36.0% as expressed as a percentage of value of total bitcoin mined during the three and nine months ended September 30, 2024, respectively, and 33.2% and 29.7% during the three and nine months ended September 30, 2023, respectively. Power prices expressed as a percentage of value of total bitcoin mined during the three and nine months ended September 30, 2024 increased as compared to the same periods in 2023 primarily due to an approximate doubling in network difficulty and the bitcoin reward halving in April 2024, partially offset by increases in average operating hashrate and increases in average value of each bitcoin mined.

Previous wording

Energy prices can be highly volatile and global events can cause power prices to increase or decrease nationwide. Our wholly-owned Lake Mariner Facility in New York is subject to variable prices and market rate fluctuations with respect to wholesale power costs. Such prices are governed by market power prices and said prices can change hour to hour. While this renders energy prices less predictable, it also gives us greater ability and flexibility to actively manage the energy we consume with an eye towards increasing profitability and energy efficiency. Energy prices are also highly sensitive to weather events, such as winter storms and polar vortices, which increase the demand for power regionally. When such events occur, we may curtail our operations to avoid using power at increased rates or we may be curtailed under demand response programs in which we participate. The average power prices incurred at the Lake Mariner Facility and the Nautilus Cryptomine Facility was $0.037 and $0.039 during each of the three and six months ended June 30, 2024, respectively, and $0.027 and $0.031 per kilowatt hour during each of the three and six months ended June 30, 2023, respectively.

Current wording

Energy prices can be highly volatile and global events can cause power prices to increase or decrease nationwide. Our wholly-owned Lake Mariner Facility in New York is subject to variable prices and market rate fluctuations with respect to wholesale power costs. Such prices are governed by market power prices and said prices can change hour to hour. While this renders energy prices less predictable, it also gives us greater ability and flexibility to actively manage the energy we consume with an eye towards increasing profitability and energy efficiency. Energy prices are also highly sensitive to weather events, such as winter storms and polar vortices, which increase the demand for power regionally. When such events occur, we may curtail our operations to avoid using power at increased rates or we may be curtailed under demand response programs in which we participate. The average power prices incurred at the Lake Mariner Facility and the Nautilus Cryptomine Facility was $0.038 and $0.039 per kWh during the three and nine months ended September 30, 2024, respectively, and $0.031 per kWh during the three and nine months ended September 30, 2023.

Previous wording

During the three and six months ended June 30, 2024 and 2023, the Company curtailed operations at the Lake Mariner Facility due to weather events, energy price spikes, and demand response program participation. The Company records expected payments to be received for demand response programs as a reduction in cost of revenue, which amounted to $1.9 million and $3.2 million for the three and six months ended June 30, 2024, respectively, and $0.6 million and $0.7 million for the three and six months ended June 30, 2023, respectively.

Current wording

During the three and nine months ended September 30, 2024 and 2023, the Company curtailed operations at the Lake Mariner Facility due to weather events, energy price spikes, and demand response program participation. The Company records expected payments to be received for demand response programs as a reduction in cost of revenue, which amounted to $4.1 million and $7.3 million for the three and nine months ended September 30, 2024, respectively, and $1.7 million and $2.5 million for the three and nine months ended September 30, 2023, respectively.

Previous wording

The Company has purchased all miners with cash and has not used limited recourse equipment financing to complete its miner purchases. The Company has raised capital through both the issuance of equity and corporate level debt. These funds have been utilized to support operations, invest in our joint venture, and purchase miners and other fixed assets. Costs related to such issuances are not included in this analysis. Additionally, miner acquisition costs, or capital expenditures, are not factored into the above cost of mining analysis as capital expenditures do not impact the marginal cost of production of one bitcoin. Miner acquisition costs, or capital expenditures, are generally recorded at cost in property, plant and equipment in the consolidated balance sheets. Depreciation of property, plant and equipment is computed using the straight-line method over the estimated useful lives of the equipment: generally 4 years for miners and 5 years for computer equipment. Additionally, during the three and six months ended June 30, 2024, the Company recorded accelerated depreciation expense of $1.3 million and $5.1 million, respectively, related to certain miners of which the Company shortened their estimated useful lives based on replacement by April 30, 2024. While we currently depreciate our miners over a 4-year period, given our historical low cost of power, it is possible the average actual useful life of our miners may exceed the depreciation period in certain circumstances. Nevertheless, if depreciation of our miner fleet were factored into the above cost of mining analysis, it would add $21,532 and $17,660 per bitcoin mined in the three and six months ended June 30, 2024, respectively, and $9,513 and $9,820 per bitcoin mined in the three and six months ended June 30, 2023, respectively.

Current wording

The Company has purchased all miners with cash and has not used limited recourse equipment financing to complete its miner purchases. The Company has raised capital through both the issuance of equity and corporate level debt. These funds have been utilized to support operations, invest in our joint venture, and purchase miners and other fixed assets. Costs related to such issuances are not included in this analysis. Additionally, miner acquisition costs, or capital expenditures, are not factored into the above cost of mining analysis as capital expenditures do not impact the marginal cost of production of one bitcoin. Miner acquisition costs, or capital expenditures, are generally recorded at cost in property, plant and equipment in the condensed consolidated balance sheets. Depreciation of property, plant and equipment is computed using the straight-line method over the estimated useful lives of the equipment: generally 4 years for miners and 5 years for computer equipment. Additionally, during the three and nine months ended September 30, 2024, the Company recorded accelerated depreciation expense of $0 and $5.1 million, respectively, related to certain miners of which the Company shortened their estimated useful lives based on replacement by April 2024. While we currently depreciate our miners over a 4-year period, given our historical low cost of power, it is possible the average actual useful life of our miners may exceed the depreciation period in certain circumstances. Nevertheless, if depreciation of our miner fleet were factored into the above cost of mining analysis, it would add $28,827 and $20,477 per bitcoin mined in the three and nine months ended September 30, 2024, respectively, and $10,002 and $10,025 per bitcoin mined in the three and nine months ended September 30, 2023, respectively.

Previous wording

TeraWulf completed its business combination with IKONICS Corporation (“IKONICS”) on December 13, 2021 pursuant to which, among other things, the Company effectively acquired IKONICS and became a publicly traded company on the Nasdaq, which was the primary purpose of the business combination. The consideration in the Merger included, among other things, contractual contingent value rights (“CVR”) per a Contingent Value Rights Agreement (the “CVR Agreement”) pursuant to which each shareholder of IKONICS as of immediately prior to the Merger, received one non-transferable CVR for each outstanding share of common stock of IKONICS then held. The holders of the CVRs were entitled to receive 95% of the Net Proceeds (as defined in the CVR Agreement), if any, from the sale, transfer, disposition, spin-off, or license of all or any part of the pre-merger business of IKONICS. During the six months ended June 30, 2023, the Company made payments of the CVR liability related to proceeds from sales of net assets held for sale of $9.6 million. Additionally, the Company made payments of the CVR liability of $1.4 million in November 2023 such that as of December 31, 2023, the Company had made all of the aggregate required distributions of $11.0 million of proceeds to the CVR Holders and the CVR Agreement was deemed terminated.

Current wording

TeraWulf completed its business combination with IKONICS Corporation (“IKONICS”) on December 13, 2021 pursuant to which, among other things, the Company effectively acquired IKONICS and became a publicly traded company on the Nasdaq, which was the primary purpose of the business combination. The consideration in the Merger included, among other things, contractual contingent value rights (“CVR”) per a Contingent Value Rights Agreement (the “CVR Agreement”) pursuant to which each shareholder of IKONICS as of immediately prior to the Merger, received one non-transferable CVR for each outstanding share of common stock of IKONICS then held. The holders of the CVRs were entitled to receive 95% of the Net Proceeds (as defined in the CVR Agreement), if any, from the sale, transfer, disposition, spin-off, or license of all or any part of the pre-merger business of IKONICS. During the nine months ended September 30, 2023, the Company made payments of the CVR liability related to proceeds from sales of net assets held for sale of $9.6 million. Additionally, the Company made payments of the CVR liability of $1.4 million in November 2023 such that as of December 31, 2023, the Company had made all of the aggregate required distributions of $11.0 million of proceeds to the CVR Holders and the CVR Agreement was deemed terminated.

Previous wording

The Company generates revenue in the form of bitcoin by providing hash computation services to a mining pool operator to mine bitcoin and validate transactions on the global Bitcoin network using application-specific integrated circuit computers owned by the Company. The earned bitcoin are routinely sold for U.S. dollars. The Company also earned revenue by providing miner hosting services to third parties. While the Company may choose to mine other digital currencies, it has no plans to do so currently. The Company's plan of operation for the next twelve months is to continue to increase the mining capacity at its operating mining facilities, including completion of the construction of the fifth building at its Lake Mariner Facility.

Current wording

The Company generates revenue in the form of bitcoin by providing hash computation services to a mining pool operator to mine bitcoin and validate transactions on the global Bitcoin network using application-specific integrated circuit computers owned by the Company. The earned bitcoin are routinely sold for U.S. dollars. The Company also earned revenue by providing miner hosting services to third parties. While the Company may choose to mine other digital currencies, it has no plans to do so currently.

Previous wording

Revenue for the three months ended June 30, 2024 and 2023 was $35.6 million and $15.5 million, respectively, an increase of $20.1 million. Revenue for the six months ended June 30, 2024 and 2023 was $78.0 million and $27.0 million, respectively, an increase of $51.0 million. These increases were primarily due to the increase in mining capacity due to infrastructure constructed and placed in service between June 30, 2023 and June 30, 2024 as well as an increase in the quoted price of bitcoin, partially offset by the impact of the halving in April 2024. The Company began mining bitcoin at the Lake Mariner Facility in March 2022 and, as of June 30, 2024, the Company had energized four buildings and additional infrastructure comprising 195 MW of capacity as compared to 110 MW of capacity as of June 30, 2023. Bitcoin prices averaged $65,771 and $59,515 per bitcoin during the three and six months ended June 30, 2024, respectively, as compared to $28,009 and $25,390 per bitcoin during the three and six months ended June 30, 2023, respectively. During the three and six months ended June 30, 2024 the Company mined 539 and 1,312 bitcoin, respectively, as compared to 508 and 936 bitcoin during the three and six months ended June 30, 2023, respectively. During the three and six months ended June 30, 2024, revenue from mining was $35.6 million and $77.2 million, respectively, as compared to $13.8 million and $23.0 million during the three and six months ended June 30, 2023, respectively. During the three and six months ended June 30, 2024, revenue from hosting was $0 and $0.8 million, respectively, as compared to $1.7 million and $4.0 million during the three and six months ended June 30, 2023, respectively, a decrease due to the expiration of the Company’s one data center hosting contract with a customer in February 2024.

Current wording

During the three and nine months ended September 30, 2024, revenue from hosting was $0 and $0.8 million, respectively, as compared to $1.8 million and $5.8 million during the three and nine months ended September 30, 2023, respectively, a decrease due to the expiration of the Company’s one data center hosting contract with a customer in February 2024.

Previous wording

The following table presents revenue and cost of revenue (exclusive of depreciation) (in thousands):

Current wording

The following table presents cost of revenue (exclusive of depreciation) (in thousands):

Previous wording

Cost of revenue (exclusive of depreciation) for the three months ended June 30, 2024 and 2023 was $13.9 million and $5.1 million, respectively, an increase of $8.8 million. Cost of revenue (exclusive of depreciation) for the six months ended June 30, 2024 and 2023, was $28.3 million and $10.1 million, respectively, an increase of approximately $18.2 million. Cost of revenues is primarily comprised of power expense and the increases were primarily due to the increase in mining and hosting capacity due to infrastructure constructed and placed in service between June 30, 2023 and June 30, 2024 and, to a lesser extent, slight increase in realized power prices during the three and six months ended June 30, 2024 as compared to the same periods in 2023. The Company records proceeds related to participation in demand response programs as a reduction in cost of revenue in the period corresponding to the underlying demand response program period; the amount of aggregate proceeds received or expected to be received were $1.9 million and $3.2 million for the three and six months ended June 30, 2024, respectively, and $0.6 million and $0.7 million for the three and six months ended June 30, 2023, respectively. The Company is actively expanding its enrollment in such available programs in New York State.

Current wording

Cost of revenue (exclusive of depreciation) for the three months ended September 30, 2024 and 2023 was $14.7 million and $8.3 million, respectively, an increase of $6.4 million. Cost of revenue (exclusive of depreciation) for the nine months ended September 30, 2024 and 2023, was $43.0 million and $18.4 million, respectively, an increase of approximately $24.6 million. Cost of revenues is primarily comprised of power expense and the increases were primarily due to the increase in mining and hosting capacity due to infrastructure constructed and placed in service between September 30, 2023 and September 30, 2024 and, to a lesser extent, slight increase in realized power prices during the three and nine months ended September 30, 2024 as compared to the same periods in 2023. The Company records proceeds related to participation in demand response programs as a reduction in cost of revenue in the period corresponding to the underlying demand response program period; the amount of aggregate proceeds received or expected to be received were $4.1 million and $7.3 million for the three and nine months ended September 30, 2024, respectively, and $1.7 million and $2.5 million for the three and nine months ended September 30, 2023, respectively. The Company is actively expanding its enrollment in such available programs in New York State.

Previous wording

Operating expenses (including related party expenses) for the three months ended June 30, 2024 and 2023, were $1.7 million and $1.1 million, respectively, a net increase of $0.6 million. Operating expenses (including related party expenses) for the six months ended June 30, 2024 and 2023, were $3.3 million and $2.0 million, respectively, a net increase of $1.3 million. Operating expenses increased due to higher property insurance and miner repair costs. Operating expenses – related party increased due to increased staffing at the Lake Mariner Facility. These increases related to infrastructure constructed and placed in service between June 30, 2023 and 2024.

Current wording

Operating expenses (including related party expenses) for the three months ended September 30, 2024 and 2023, were $1.6 million and $1.2 million, respectively, a net increase of $0.4 million primarily due to higher property insurance. Operating expenses (including related party expenses) for the nine months ended September 30, 2024 and 2023, were $4.9 million and $3.2 million, respectively, a net increase of $1.7 million primarily due to higher property insurance and miner repair costs as well as $0.5 million in operating expenses – related party increased due to increased staffing at the Lake Mariner Facility. These increases related to infrastructure constructed and placed in service between September 30, 2023 and 2024.

Previous wording

Selling, general and administrative expenses (including related party expenses) for the three months ended June 30, 2024 and 2023 were $11.9 million and $8.6 million, respectively, a net increase of $3.3 million. Selling, general and administrative expenses are comprised primarily of professional fees, legal fees, employee compensation and benefits, stock-based compensation to employees and consultants, insurance and general corporate expenses. The increase was primarily due to increased expense during the three months ended June 30, 2024 as compared to the same period in the prior year of stock-based compensation of $3.1 million and employee compensation and benefits of $0.4 million. These increases were partially offset by decreased expenses during the three months ended June 30, 2024 as compared to the same period in the prior year of legal fees of $0.6 million and insurance expense of $0.2 million.

Current wording

Selling, general and administrative expenses (including related party expenses) for the three months ended September 30, 2024 and 2023 were $11.5 million and $10.3 million, respectively, a net increase of $1.2 million. Selling, general and administrative expenses are comprised primarily of professional fees, legal fees, employee compensation and benefits, stock-based compensation to employees and consultants, insurance and general corporate expenses. The increase was primarily due to increased expense during the three months ended September 30, 2024 as compared to the same period in the prior year of stock-based compensation of $1.0 million, employee compensation and benefits of $0.4 million, and legal and other professional fees of $1.5 million. These increases were partially offset by decreased expenses during the three months ended September 30, 2024 as compared to the same period in the prior year of insurance expense of $0.3 million. Selling, general and administrative expenses – related party decreased $1.7 million primarily due to performance milestone expense under the Administrative and Infrastructure Services Agreement (the “Services Agreement”) with Beowulf Electricity & Data Inc. (“Beowulf E&D”).

Previous wording

Selling, general and administrative expenses (including related party expenses) for the six months ended June 30, 2024 and 2023 were $26.8 million and $17.9 million, respectively, a net increase of $8.9 million. The increase was primarily due to increased expense during the six months ended June 30, 2024 as compared to the same period in the prior year of stock-based compensation of $9.2 million and employee compensation and benefits of $0.7 million. These increases were partially offset by decreased expenses during the six months ended June 30, 2024 as compared to the same period in the prior year of legal fees of $0.7 million and insurance expense of $0.5 million. Selling, general and administrative expenses – related party decreased due to performance milestone expense of $0.4 million under the Administrative and Infrastructure Services Agreement with Beowulf Electricity & Data Inc.

Current wording

Selling, general and administrative expenses (including related party expenses) for the nine months ended September 30, 2024 and 2023 were $38.3 million and $28.2 million, respectively, a net increase of $10.1 million. The increase was primarily due to increased expense during the nine months ended September 30, 2024 as compared to the same period in the prior year of stock-based compensation of $10.2 million, employee compensation and benefits of $1.0 million, travel expenses of $0.6 million and legal and other professional fees of $0.4 million. These increases were partially offset by decreased expenses during the nine months ended September 30, 2024 as compared to the same period in the prior year of insurance expense of $0.7 million. Selling, general and administrative expenses – related party decreased primarily due to performance milestone expense of $2.1 million under the Services Agreement with Beowulf E&D for the nine months ended September 30, 2023.

Previous wording

Depreciation for the three months ended June 30, 2024 and 2023 was $14.1 million and $6.4 million, respectively, an increase of $7.7 million. Depreciation for the six months ended June 30, 2024 and 2023 was $29.2 million and $11.9 million, respectively, an increase of $17.3 million. The increases were primarily due to the increase in mining capacity due to infrastructure constructed and placed in service between June 30, 2023 and June 30, 2024. Additionally, during the three and six months ended June 30, 2024, the Company recorded accelerated depreciation expense of $1.3 million and $5.1 million, respectively, related to certain miners of which the Company shortened their estimated useful lives based on expected replacement by April 30, 2024.

Current wording

Depreciation for the three months ended September 30, 2024 and 2023 was $15.6 million and $8.2 million, respectively, an increase of $7.4 million. Depreciation for the nine months ended September 30, 2024 and 2023 was $44.9 million and $20.1 million, respectively, an increase of $24.8 million. The increases were primarily due to the increase in mining capacity due to infrastructure constructed and placed in service between September 30, 2023 and September 30, 2024. Additionally, during the three and nine months ended September 30, 2024, the Company recorded accelerated depreciation expense of $0 and $5.1 million, respectively, related to certain miners of which the Company shortened their estimated useful lives based on expected replacement by April 30, 2024.

Previous wording

Loss (gain) on fair value of digital currency, net during the three and six months ended June 30, 2024 was $0.7 million and $(0.6) million, respectively, as a result of the Company adopting Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) No. 2023-08, Intangible – Goodwill and Other – Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets (“ASU 2023-08”) on January 1, 2024 which requires entities with certain crypto assets to subsequently measure such assets at fair value, with changes in fair value recorded in net income in each reporting period. Prior to the adoption of ASU 2023-08, the Company recorded impairment of digital currency of $0.7 million and $1.3 million during the three and six months ended June 30, 2023, respectively, representing the decline in bitcoin prices during the Company’s holding period of its bitcoin, which was not reversed during its holding period, and realized gain on sale of digital currency for the three and six months ended June 30, 2023 of $0.6 million and $1.2 million, respectively, upon subsequent liquidation of bitcoin held. The Company elected to early adopt ASU 2023-08 effective January 1, 2024, resulting in a cumulative-effect change of $37,000 to increase the balance of digital currency with a corresponding decrease in the opening balance of accumulated deficit in the consolidated balance sheet as of January 1, 2024.

Current wording

Gain on fair value of digital currency, net during the three and nine months ended September 30, 2024 was $1.0 million and $1.6 million, respectively, as a result of the Company adopting Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) No. 2023-08, Intangible – Goodwill and Other – Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets (“ASU 2023-08”) on January 1, 2024 which requires entities with certain crypto assets to subsequently measure such assets at fair value, with changes in fair value recorded in net income in each reporting period. Prior to the adoption of ASU 2023-08, the Company recorded impairment of digital currency of $0.9 million and $2.2 million during the three and nine months ended September 30, 2023, respectively, representing the decline in bitcoin prices during the Company’s holding period of its bitcoin, which was not reversed during its holding period, and realized gain on sale of digital currency for the three and nine months ended September 30, 2023 of $0.7 million and $1.9 million, respectively, upon subsequent liquidation of bitcoin held. The Company elected to early adopt ASU 2023-08 effective January 1, 2024, resulting in a cumulative-effect change of $37,000 to increase the balance of digital currency with a corresponding decrease in the opening balance of accumulated deficit in the condensed consolidated balance sheet as of January 1, 2024.

Previous wording

Interest expense was $5.3 million and $8.5 million for the three months ended June 30, 2024 and 2023, respectively, a decrease of $3.2 million primarily due to a decrease in amortization of debt issuance costs and debt discount as well as decrease in cash interest expense related to the stated interest rate, which remained unchanged, on the Term Loans, each resulting from the reduction in principal balance due to principal repayments made between June 30, 2023 and June 30, 2024. Interest expense was $16.4 million and $15.3 million for the six months ended June 30, 2024 and 2023, respectively, an increase of $1.1 million. Interest expense relates primarily to the Company’s Term Loans which had a principal balance of $75.8 million as of June 30, 2024. The increase in interest expense for the six months ended June 30, 2024 as compared to the same period in the prior year is primarily due to (i) an increase of amortization of debt issuance costs and debt discount of $2.4 million during the six months ended June 30, 2024 as compared to the same period in 2023 due to the recognition of debt discount in March 2023 in connection with the issuance of warrants concurrent with the Fifth Amendment to the LGSA, partially offset by (ii) a decrease of $1.4 million in interest expense related to the stated interest rate, which remained unchanged, on the Term Loans resulting from the reduction in principal balance due to principal repayments made between June 30, 2023 and June 30, 2024. The Company’s term loan financing had a maturity date of December 1, 2024. In July 2024, the Company fully repaid the remaining outstanding balance of the Term Loans.

Current wording

Interest expense was $0.4 million and $10.3 million for the three months ended September 30, 2024 and 2023, respectively, a decrease of $9.9 million. Interest expense relates primarily to the borrowings under the Loan, Guaranty and Security Agreement (the “LGSA”) with Wilmington Trust (the “Term Loans”), which had an original maturity date of December 1, 2024 and was fully repaid in July 2024 ahead of maturity. Interest expense was $16.8 million and $25.5 million for the nine months ended September 30, 2024 and 2023, respectively, an decrease of $8.7 million. The decrease in interest expense for the nine months ended September 30, 2024 as compared to the same period in the prior year is primarily due to repayments of the Term Loans principal balance subsequent to September 30, 2023 resulting in (i) a decrease of amortization of debt issuance costs and debt discount of $3.4 million during the nine months ended September 30, 2024 as compared to the same period in 2023 and (ii) a decrease of $5.5 million in interest expense related to the stated interest rate, which remained unchanged.

Previous wording

Loss on extinguishment of debt was $0 and $2.0 million for the three and six months ended June 30, 2024, respectively, related to prepayment fees of $0.3 million incurred to voluntarily prepay $18.6 million of the Company’s Term Loans in February 2024 and the derecognition of unamortized debt discount of $1.7 million associated with the principal repaid. The Company made no repayments on the principal balance of the Term Loans during the three and six months ended June 30, 2023.

Current wording

Loss on extinguishment of debt was $4.3 million and $6.3 million for the three and nine months ended September 30, 2024, respectively, related to voluntary prepayments of the Term Loans in February and July 2024. During the three and nine months ended September 30, 2024, the Company incurred prepayment fees of $1.0 million and $1.3 million, respectively, to voluntarily prepay $56.0 million and $74.5 million of the Company’s Term Loans, respectively, and the derecognition of unamortized debt discount of $3.3 million and $5.0 million associated with the principal repaid, respectively. The Company made no repayments on the principal balance of the Term Loans during the three and nine months ended September 30, 2023.

Previous wording

Income tax benefit was $0 for the three and six months ended June 30, 2024 and 2023. Based upon the level of historical U.S. losses and future projections over the period in which the net deferred tax assets are deductible, at this time, management believes it is more likely than not that the Company will not realize the benefits of the remaining deductible temporary differences, and as a result the Company has recorded a full valuation allowance against its gross deferred tax assets as of June 30, 2024 and December 31, 2023.

Current wording

Income tax benefit was $0 for the three and nine months ended September 30, 2024 and 2023. Based upon the level of historical U.S. losses and future projections over the period in which the net deferred tax assets are deductible, at this time, management believes it is more likely than not that the Company will not realize the benefits of the remaining deductible temporary differences, and as a result the Company has recorded a full valuation allowance against its gross deferred tax assets as of September 30, 2024 and December 31, 2023.

Previous wording

Equity in net income (loss) of investee, net of tax for the three and six months ended June 30, 2024 was $0.8 million and $6.0 million, respectively as compared to $(3.3) million and $(13.5) million for the three and six months ended June 30, 2023, respectively, which represents TeraWulf’s proportional share of income or losses of Nautilus, which commenced principal operations in February 2023. For the three and six months ended June 30, 2023, the amount also includes an impairment loss of $4.6 million and $13.6 million, respectively, on the distribution of miners from Nautilus to the Company whereby the miners were marked to fair value from book value on the date distributed. The impairment loss was the result of decreasing prices for miners between initial purchase and distribution.

Current wording

Equity in net income (loss) of investee, net of tax for the three and nine months ended September 30, 2024 was $(2.7) million and $3.4 million, respectively as compared to $0.9 million and $(12.6) million for the three and nine months ended September 30, 2023, respectively, which represents TeraWulf’s proportional share of income or losses of Nautilus, which commenced principal operations in February 2023. For the three and nine months ended September 30, 2023, the amount also includes an impairment loss of $0 and $13.6 million, respectively, on the distribution of miners from Nautilus to the Company whereby the miners were marked to fair value from book value on the date distributed. The impairment loss was the result of decreasing prices for miners between initial purchase and distribution.

Previous wording

To provide investors with additional information in connection with our results as determined in accordance with generally accepted accounting principles in the United States (“GAAP”), we disclose Adjusted EBITDA as a non-GAAP measure. This measure is not a financial measure calculated in accordance with GAAP, and it should not be considered as a substitute for net income, operating income, or any other measure calculated in accordance with GAAP, and may not be comparable to similarly titled measures reported by other companies.

Current wording

To provide investors with additional information in connection with our results as determined in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”), we disclose Adjusted EBITDA as a non-GAAP measure. This measure is not a financial measure calculated in accordance with U.S. GAAP, and it should not be considered as a substitute for net income, operating income, or any other measure calculated in accordance with U.S. GAAP, and may not be comparable to similarly titled measures reported by other companies.

Previous wording

The Company’s Adjusted EBITDA measure may not be directly comparable to similar measures provided by other companies in the Company’s industry, as other companies in the Company’s industry may calculate non-GAAP financial results differently. The Company’s Adjusted EBITDA is not a measurement of financial performance under GAAP and should not be considered as an alternative to operating loss or any other measure of performance derived in accordance with GAAP. Although management utilizes internally and presents Adjusted EBITDA, the Company only utilizes that measure supplementally and does not consider it to be a substitute for, or superior to, the information provided by GAAP financial results. Accordingly, Adjusted EBITDA is not meant to be considered in isolation of, and should be read in conjunction with, the information contained in the Company’s consolidated financial statements, which have been prepared in accordance with GAAP.

Current wording

The Company’s Adjusted EBITDA measure may not be directly comparable to similar measures provided by other companies in the Company’s industry, as other companies in the Company’s industry may calculate non-GAAP financial results differently. The Company’s Adjusted EBITDA is not a measurement of financial performance under U.S. GAAP and should not be considered as an alternative to operating loss or any other measure of performance derived in accordance with U.S. GAAP. Although management utilizes internally and presents Adjusted EBITDA, the Company only utilizes that measure supplementally and does not consider it to be a substitute for, or superior to, the information provided by U.S. GAAP financial results. Accordingly, Adjusted EBITDA is not meant to be considered in isolation of, and should be read in conjunction with, the information contained in the Company’s condensed consolidated financial statements, which have been prepared in accordance with U.S. GAAP.

Previous wording

The following table is a reconciliation of the Company’s non-GAAP Adjusted EBITDA to its most directly comparable GAAP measure (i.e., net loss attributable to common stockholders) for the periods indicated (in thousands):

Current wording

The following table is a reconciliation of the Company’s non-GAAP Adjusted EBITDA to its most directly comparable U.S. GAAP measure (i.e., net loss attributable to common stockholders) for the periods indicated (in thousands):

Previous wording

As of June 30, 2024, the Company had cash and cash equivalents of $104.1 million, a working capital balance of $18.5 million, total stockholders’ equity of $386.2 million and an accumulated deficit of $280.3 million. The Company incurred a net loss attributable to common stockholders of $21.1 million for the six months ended June 30, 2024. The Company began mining bitcoin in March 2022 and had 8.8 EH/s of operating capacity across the Lake Mariner Facility and the Nautilus Cryptomine Facility as of June 30, 2024. To date, the Company has relied primarily on proceeds from its issuances of debt and equity and sale of bitcoin, both self-mined and distributed from the joint venture which owns the Nautilus Cryptomine Facility, to fund its principal operations.

Current wording

As of September 30, 2024, the Company had cash and cash equivalents of $23.9 million, a working capital balance of $0, total stockholders’ equity of $372.6 million and an accumulated deficit of $303.1 million. The Company incurred a net loss attributable to common stockholders of $44.1 million for the nine months ended September 30, 2024. The Company began mining bitcoin in March 2022 and had 10.0 EH/s of operating capacity across the Lake Mariner Facility and the Nautilus Cryptomine Facility as of September 30, 2024. To date, the Company has relied primarily on proceeds from sale of bitcoin, both self-mined and distributed from the joint venture which owns the Nautilus Cryptomine Facility, and its issuances of debt and equity to fund its principal operations.

Previous wording

Cash used in investing activities for continuing operations was $93.6 million and $18.8 million for the six months ended June 30, 2024 and 2023, respectively. The Company invested $93.6 million and $16.0 million in the buildout of its mining facilities at the Lake Mariner Facility for the six months ended June 30, 2024 and 2023, respectively. Additionally, during the six months ended June 30, 2023, the Company invested $2.8 million, on a net basis, in its joint venture.

Current wording

Cash used in investing activities for continuing operations was $82.4 million and $44.2 million for the nine months ended September 30, 2024 and 2023, respectively. The Company invested $114.3 million and $41.4 million in the buildout of its mining facilities at the Lake Mariner Facility for the nine months ended September 30, 2024 and 2023, respectively. Additionally, during the nine months ended September 30, 2023, the Company invested $2.8 million, on a net basis, in its joint venture. Furthermore, the Company received $31.9 million of proceeds from sales of digital currency not converted nearly immediately into cash during the nine months ended September 30, 2024.

Previous wording

Cash provided by financing activities for continuing operations was $104.0 million and $27.8 million for the six months ended June 30, 2024 and 2023, respectively primarily related to proceeds from Common Stock issued, net of issuance costs, of $173.2 million and $36.1 million for the six months ended June 30, 2024 and 2023, respectively. The Company also received proceeds from warrant exercises of $1.9 million and $2.5 million for the six months ended June 30, 2024 and 2023, respectively. The Company made principal payments in excess of proceeds from insurance premium financings of $1.6 million and $1.7 million for the six months ended June 30, 2024 and 2023, respectively. In addition, for the six months ended June 30, 2024, the Company made principal payments on long-term debt of $63.6 million and payments of $5.7 million related to tax withholdings related to net share settlements of stock-based compensation awards. For the six months ended June 30, 2023, the Company (i) received proceeds from issuance of a convertible promissory note of $1.3 million, and (ii) made payments of contingent value rights liability related to proceeds from sale of net assets held for sale of $9.6 million.

Current wording

Cash provided by financing activities for continuing operations was $33.6 million and $49.1 million for the nine months ended September 30, 2024 and 2023, respectively primarily related to proceeds from issuances of Common Stock, net of issuance costs, of $192.9 million and $60.2 million for the nine months ended September 30, 2024 and 2023, respectively, which included proceeds from warrant issuances of $4.2 million and $2.5 million, respectively. In addition, for the nine months ended September 30, 2024, the Company made principal payments on long-term debt of $140.7 million and payments of $16.8 million related to tax withholdings related to net share settlements of stock-based compensation awards. For the nine months ended September 30, 2023, the Company received proceeds from issuance of a convertible promissory note of $1.3 million, and made payments of contingent value rights liability related to proceeds from sale of net assets held for sale of $9.6 million.

Previous wording

As of June 30, 2024, the Company has one Future Sales and Purchase Agreement (the “March 2024 Bitmain Purchase Agreement”) with Bitmain Technologies Delaware Limited (“Bitmain Delaware”) which, as supplemented, provides the Company has the right, but not the obligation, to purchase up to 6,000 PH (approximately 30,000 miners) of S21 Pro miners, pursuant to certain payment timing conditions, by December 31, 2024 for a purchase price of $112.3 million. As of June 30, 2024, the Company had paid Bitmain Delaware $11.2 million, calculated as 10% of the purchase price (the “Call Option Fee”). The Call Option Fee shall be applied to the settlement of future down payments of purchases under the Bitmain Call Option, in whole or in part in proportion to the ratio of quantity to be purchased to the maximum PH available under the Bitmain Call Option. In May 2024, the Company exercised an option to purchase 5,000 S21 Pro units and, prior to June 30, 2024, paid Bitmain Delaware an additional $16.8 million for these units.

Current wording

As of September 30, 2024, the Company has one Future Sales and Purchase Agreement (the “March 2024 Bitmain Purchase Agreement”) with Bitmain Technologies Delaware Limited (“Bitmain Delaware”) which, as supplemented, provides the Company has the right, but not the obligation, to purchase up to 7,020 PH (approximately 30,000 miners) of S21 Pro miners, pursuant to certain payment timing conditions, by December 31, 2024 for a purchase price of $112.3 million (“Bitmain Call Option”). As of September 30, 2024, the Company had paid Bitmain Delaware $11.2 million, calculated as 10% of the purchase price (the “Call Option Fee”). The Call Option Fee shall be applied to the settlement of future down payments of purchases under the Bitmain Call Option, in whole or in part in proportion to the ratio of quantity to be purchased to the maximum PH available under the Bitmain Call Option. In May 2024, the Company exercised an option pursuant to the Bitmain Call Option to purchase 5,000 S21 Pro units and paid Bitmain Delaware an additional $16.8 million for these units. In October 2024, the Company exercised an option pursuant to the Bitmain Call Option to purchase 10,600 S21 Pro units and paid Bitmain Delaware an additional $35.7 million for these units. In October 2024, the Company entered into an agreement to sell 3,200 S21 Pro units to a third party for a purchase price of $12.0 million.