Greenidge Generation Holdings Inc
For the period ended Jun 30, 2024. Filed Aug 14, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 14, 2024
VIP$0.96-4.6%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-15.
0001628280-24-023622
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-14.
0001628280-24-037288
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 151 previous paragraphs and 164 current paragraphs.
80 unchanged; 36 reworded; 26 added; 33 removed; 2 previous and 22 current paragraphs rearranged.
Tables are not compared: 8 previous and 14 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (26)
Current report
In the first six months of 2024, Greenidge has made significant efforts to reduce costs, leading to selling, general and administrative expense reductions of $6.4 million compared to the same period in 2023. Greenidge also reported a reduction in operating costs for its Bitcoin mining operations in the second quarter of 2024, when compared to the first quarter of 2024, while expanding its footprint.
Current report
The Company’s successfully executed the June 2024 planned maintenance outage of the New York Facility and relocation of owned miners from third-party operated sites to Company-operated facilities in the second quarter of 2024 resulted in the Company’s miners being non-operational for a period. The Company anticipates such actions will positively impact its profitability in the near term by reducing operational costs and maintaining elevated uptime levels. The Company also continues to explore additional opportunities to further streamline operations and improve efficiency across its business units.
Current report
In July 2024, the Company announced the launch of its Pod X portable cryptocurrency mining infrastructure solution, which is deployed at the Company's facilities across the country and reflects a culmination of the Company's experience in maintaining optimal temperature control and uptime using portable mining equipment.
Current report
On August 1, 2024, the Company announced its new bitcoin self-mining retention strategy, which enables it to accumulate bitcoin from its owned miners in order to increase its bitcoin holdings.
Current report
•Sale of Greenidge Pod X infrastructure solutions for miners
Current report
Total cost of revenue, exclusive of depreciation, decreased $1.8 million, or 16%, to $9.3 million during the three months ended June 30, 2024 as compared to the prior year period. We estimate the decrease is comprised of approximately 13% due to the lower utilization of electricity involved in production as a result of the sale of our South Carolina facility in the fourth quarter of 2023 and 8% due to fewer monthly hosting fees paid to third parties for hosting company owned miners. These decreases were partially offset by a 2% increase in pipeline transportation costs and another 2% due to a rise in the usage of natural gas.
Current report
•Total restructuring costs decreased approximately $0.7 million in the second quarter of 2024 compared to the prior year period, mainly as a result of non-recurring restructuring that occurred in the prior year; and
Current report
•Total administrative overhead costs decreased approximately $0.5 million in the second quarter of 2024 compared to the prior year period, primarily related to taxes and fees; and
Current report
•Total stock compensation decreased approximately $0.3 million in the second quarter of 2024 compared to the prior year period, as a result of a decline in amortized expense relating to RSUs with a higher grant date fair value, as well as a decline in amortized expense relating to options granted in prior periods.
Current report
Depreciation expense increased $0.1 million, or 4%, to $3.3 million for the three months ended June 30, 2024 as compared to the prior year period, due to a higher asset base resulting from the purchase of additional miners in 2024.
Current report
During the three months ended June 30, 2024, Greenidge incurred a decrease of $1.3 million, or 42%, to $1.8 million of other expense due to a reduction in interest expense of $1.3 million. The decrease is a result of the reductions in debt that occurred in the first and fourth quarters of 2023.
Current report
Results from Continuing Operations - Six Months Ended June 30, 2024
Current report
Key Metrics
Current report
Revenue
Current report
Selling, general and administrative expenses
Current report
•Total payroll and benefits and other employee costs decreased approximately $2.2 million in the first six months of 2024 compared to the prior year period, as a result of declines in employee expenses related to the corporate overhead cost reduction efforts that occurred in 2023 as well as a decrease in incentive compensation; and
Current report
•Total administrative overhead costs decreased approximately $0.8 million in the first six months of 2024 compared to the prior year period, primarily as a result of declines in taxes and fees; and
Current report
•Total restructuring costs decreased approximately $0.6 million in the first six months of 2024 compared to the prior year period, mainly as a result of non-recurring restructuring costs incurred in the prior year
Current report
Depreciation
Current report
Total other expense, net
Current report
Benefit from income taxes
Current report
Net loss from continuing operations
Current report
Income from discontinued operations
Current report
Non-GAAP Measures and Reconciliations
Current report
In addition to revenue generated from hosting arrangements, we continue to operate Company-owned miners at our own facilities, including migrating miners from third-party hosting providers to our recent expansion sites in North Dakota and Mississippi. On May 31, 2024, the only order entered into between Greenidge and Core pursuant to the Core Hosting Agreement terminated pursuant to its terms and all Greenidge-owned miners previously hosted by Core were redeployed at Greenidge-owned sites. We expect the migration of miners to Greenidge-owned sites will increase the profitability of Company-owned miners.
Current report
•issuances of equity, including but not limited to issuances under the Common Stock Purchase Agreement and/or the ATM Agreement.
Removed paragraphs (33)
Previous report
Pursuant to the SPA, filed a resale registration statement with the SEC covering the SPA Shares, the Pre-Funded Warrant Shares, and the Warrant Shares.
Previous report
The SPA Shares and the shares of Class A common stock issuable pursuant to the Pre-Funded Warrant and the 5-Year Warrant were offered and sold in a transaction exempt from registration under the Securities Act, in reliance on Section 4(a)(2) of the Securities Act. Armistice represented to the Company in the SPA that it is an “accredited investor,” as defined in Rule 501(a) of Regulation D under the Securities Act.
Previous report
Additionally, we entered into the Promissory Note Amendment with B. Riley Commercial, which adjusted payments so that no principal and interest payments were required until June 2023, except for a requirement to repay principal using a portion of net proceeds from sales of equity, which was reduced from 65% to 15% of the net proceeds received. B. Riley Commercial and Atlas Holdings LLC each purchased $1 million of our Class A common stock pursuant to the ATM Agreement. In addition to the net proceeds from the sale of Class A common stock to B. Riley Commercial and Atlas Holdings LLC, during 2023, we received net proceeds of $20.6 million from sales of Class A common stock pursuant to the ATM Agreement. We repaid all $6.8 million of principal on the Secured Promissory Note during the year ended December 31, 2023.
Previous report
In March 2023, we entered into the Conifex Hosting Agreement, in which Conifex agreed to provide hosting services to Greenidge utilizing renewable power. In April 2023, we entered into the Core Hosting Agreement with Core, in which Core agreed to host and operate Greenidge-owned bitcoin miners at its facilities. In addition, we installed approximately 2,200 of additional company-owned miners at our existing facilities. The installation of these miners at Conifex and Core facilities along with our facilities improved our profits and liquidity during the remainder of 2023 and beginning of 2024, and we expect these improvements to continue.
Previous report
In August 2023, in connection with a non-binding term sheet that the Company entered into with NYDIG in June to effect a deleveraging transaction, we completed an electrical upgrade at the South Carolina Facility increasing the capacity to 44 MW. Upon completion of this expansion, on August 10, 2023, we and NYDIG amended the NYDIG Hosting Agreement to increase the number of miners being hosted by Greenidge utilizing all of the expansion. The NYDIG Hosting Agreement was amended in furtherance of the broader transaction contemplated by the non-binding term sheet pursuant to which the Company would sell to NYDIG all of the upgraded mining facilities at the South Carolina site and would also subdivide and sell to NYDIG the approximately 22 acres of land on which the facilities are located. This deleveraging transaction with NYDIG closed on November 9, 2023. In exchange for the sale to NYDIG of the upgraded South Carolina mining facilities and the subdivided approximate 22 acres of land, Greenidge received total consideration of approximately $28 million:
Previous report
•The remaining principal of approximately $17.7 million on our Senior Secured Loan with NYDIG, which we entered into on January 30, 2023, was extinguished;
Previous report
•The remaining principal of approximately $4.1 million as of September 30, 2023, on our Secured Promissory Note in favor of B. Riley Commercial Capital, LLC, which we issued on March 18, 2022 and NYDIG purchased from B. Riley Commercial on July 20, 2023 at par, was extinguished;
Previous report
•A cash payment of approximately $4.5 million; and
Previous report
•A bonus payment of approximately $1.6 million as a result of the completion of the expansion of the upgraded mining facility and the facility's uptime performance.
Previous report
In conjunction with the sale, the Company and NYDIG terminated the South Carolina Hosting Order. As a result, at the time of closing the Company returned NYDIG's security deposit, resulting in a cash outflow of $2.2 million. As a result of the sale, the Company received a cash inflow of $3.5 million from the return of its security deposit held by the local utility.
Previous report
Additionally, the Company paid the remaining accrued interest on the Senior Secured Loan and Secured Promissory Note of $0.9 million. The Company also settled certain third party transaction costs and Greenidge's share of local taxes of $0.5 million.
Previous report
•lowering the operating cost and increasing the profitability of the Company’s fleet of bitcoin mining, hosting, and power generation assets;
Previous report
•a sale of a portion of the Company’s unused electrical and mining infrastructure equipment assets; and
Previous report
•issuances of equity.
Previous report
Revenue Recognition
Previous report
Greenidge has entered into digital asset mining pools by executing contracts with the mining pool operators to perform hash computations for a mining pool. The contracts are terminable at any time at no cost by either party and Greenidge’s enforceable right to compensation begins only when, and lasts as long as, Greenidge performs hash computations for the mining pool operator. In exchange for performing hash computations, Greenidge is entitled to a fractional share of the cryptocurrency award the mining pool operator theoretically receives less the mining pool fees. The agreements entered into with the pool operators pay out based on a Full-Pay-Per-Share (“FPPS”) payout formula, which is a conceptual formula that entitles Greenidge to consideration upon the provision of hash computations to the pool even if a block is not successfully placed by the pool operator. Revenue is measured as the value of the consideration received in the form of cryptocurrency from the pool operator, less the mining pool fees retained by the mining pool operator. Greenidge does not expect any material future changes in mining pool fee rates.
Previous report
In exchange for performing hash computations for the mining pool, the Company is entitled to a fractional share of the cryptocurrency award the mining pool operator theoretically receives (less pool operator fees to the mining pool operator which are netted as a reduction of the transaction price). Greenidge’s fractional share is based on the proportion of hash computations the Company performed for the mining pool operator to the total hash computations contributed by all miners in solving the current algorithm during the 24-hour period. Daily earnings calculated under the FPPS payout formula are calculated from midnight-to-midnight UTC time and are credited to pool members’ accounts at 1:00:00 A.M. UTC. The pool sends Greenidge’s cryptocurrency balance in the account to a digital wallet designated by the Company between 9:00 A.M. and 5:00 P.M. UTC time each day, which Greenidge automatically sells for cash within minutes of receipt.
Previous report
The service of performing hash computations for the mining pool operators is an output of Greenidge’s ordinary activities and is the only performance obligation in Greenidge’s contracts with mining pool operators. The cryptocurrency that Greenidge receives as transaction consideration is noncash consideration, which Greenidge measures at fair value on the contract inception date at 0:00:00 UTC on the start date of the contract. The duration of each contract is 24 hours or less and provides the same rate of payment upon renewal. Since the pricing remains the same upon contract renewal, the contract does not provide the applicable mining pool operator with a material right that represents a separate performance obligation. The fair value is based on Greenidge’s primary exchange of the related cryptocurrency which is considered to be Coinbase. The consideration Greenidge earns is variable since it is based on the amount of hash computations provided by both Greenidge and the bitcoin network as a whole. The Company does not constrain this variable consideration because it is probable that a significant reversal in the amount of revenue recognized from the contract will not occur when the uncertainty is subsequently resolved and recognizes the non-cash consideration on the same day that control is transferred, which is the same day as contract inception.
Previous report
We generate revenue from contracts with customers from providing hosting services to a single third-party customer. Hosting revenue is recognized as services are performed on a variable basis. We recognize variable hosting revenue each month as the uncertainty related to the consideration is resolved, hosting services are provided to our customer, and our customer utilizes the hosting service (the customer simultaneously receives and consumes the benefits of our performance). Our performance obligation related to these services is satisfied over time. We recognize revenue for services that are performed on a consumption basis (the amount of electricity utilized by the customer) as well as through a fixed fee that is earned monthly and a profit sharing component based on the net proceeds earned by the customer in the month from bitcoin mining activities. We bill our customer at the beginning of each month based on the anticipated consumption under the contract. Invoices are collected in the month of invoicing under the terms of the contract. We recognize revenue based on actual consumption in the period.
Previous report
Greenidge recognizes power revenue at a point in time when the electricity is delivered to the NYISO and its performance obligation is met. Greenidge recognizes revenue on capacity agreements over the life of the contract as its series of performance obligations are met as capacity to provide power is maintained.
Previous report
Sales tax, value-added tax, and other taxes Greenidge collects concurrent with revenue-producing activities are excluded from revenue. Incidental contract costs that are not material in the context of the delivery of goods and services are recognized as expense. There is no significant financing component in these transactions.
Previous report
The Company has entered into contracts with customers to perform engineering procurement and construction management services for customers developing cryptocurrency mining facilities. The services defined in the contracts are generally separated into phases, being 1) engineering 2) construction and 3) procurement.
Previous report
While the services discussed above are capable of being distinct and separately identifiable, the Company concluded that the services provided are inputs to produce the combined output to the customer, which is the completed site buildout. Further, the services provided are significantly modified by the other services in the contract. As such, while the performance obligations may be capable of being distinct, they are not distinct in the context of the contract and therefore the promises in the contract are combined into one single performance obligation.
Previous report
The Company recognizes EPCM revenue over time, as performance obligations are satisfied, due to the continuous transfer of control to the customer. The Company utilizes the percentage-of-completion method, based primarily on contract cost incurred to date compared to total estimated contract cost. The percentage-of-completion method, and input method, is used as management considers it to be the best available measure of progress on these contracts.
Previous report
To the extent a contract is cancelled, the Company assesses whether there are any remaining goods or services to be provided after cancellation. If there are any remaining goods or services to be provided, the Company follows the guidance under ASC 606 for contract modifications. If there are no remaining goods or services to be provided, the Company considers whether consideration received is refundable or nonrefundable. To the extent consideration received is refundable, the Company recognizes a refund liability, otherwise, it recognizes revenue for the consideration received.
Previous report
Valuation of Long-Lived Assets
Previous report
In accordance with ASC 360-10, the Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable. To determine recoverability of a long-lived asset, management evaluates whether the estimated future undiscounted net cash flows, based on prevailing market conditions, from the asset are less than its carrying amount. If impairment is indicated, the long-lived asset is written down to fair value.
Previous report
During 2022, we determined that triggering events had occurred as of June 30, 2022 and December 31, 2022 due to the negative impact on our cash flows resulting from the significant market declines in the price of bitcoin and increases in natural gas and energy costs during those periods. For the purposes of performing the recoverability test we consider all the long-lived assets of the Company to be a single asset group as we operate as an integrated power and crypto datacenter operations business and this grouping represents the lowest level of identifiable independent cash flows. We concluded that projected undiscounted cash flows did not support the recoverability of the long-lived assets as of June 30, 2022 and December 31, 2022; therefore, a valuation was performed using the market approach in order to determine the fair value of the asset grouping. The carrying value exceeded the fair value of the asset group and impairment loss was recorded for the difference in the carrying value and fair value. The Company recognized a noncash impairment charge of $176.3 million for the year ended December 31, 2022.
Previous report
In determining the fair value of long-lived assets under the market approach, we relied on the guideline public company method, which considered the market capitalization of Greenidge, as well as the market capitalizations of other publicly traded companies and determined their revenue and hash rate multiples to compare to the market capitalization of Greenidge. Estimates using the guideline public company method is subject to uncertainties caused by potential differences in outlook caused by differing facts and circumstances surrounding the comparable companies, such as susceptibility to fluctuations in energy prices, liquidity of each company, environmental liabilities and any market perceptions of the companies in the peer group that may not apply across the industry. Valuing the Company under the market value approach changed significantly during 2022 as market perceptions of the cryptocurrency mining industry changed as bitcoin prices continued to decline and remained depressed for the latter part of 2022. We analyzed the estimates using this market approach by estimating the values using a cost approach, which resulted in similar asset values as of December 31, 2022. Considering the estimates from these different approaches, we believe the fair value of the asset group would have been within an approximate 15% to 20% range.
Previous report
The Company is evaluating future uses of the remaining real estate assets in South Carolina, which includes the land and the original building which was classified as construction in process as it was not used in cryptocurrency mining. The impairment assessment was performed using a market approach by obtaining third party appraisals for the value of the site. An impairment charge of $4.0 million was recorded for the year ended December 31, 2023, which is the remaining value of the building which was determined to no longer be recoverable through a sale transaction. An impairment charge of $0.2 million was recorded for the three months ended March 31, 2024, which is the remaining value of a group of miners which were determined to no longer be recoverable through sale or repairs.
Previous report
Remeasurement of Environmental Liabilities
Previous report
We recognize environmental liabilities in accordance with ASC 410-30, Asset Retirement and Environmental Obligations. As of December 31, 2023 we have recognized environmental liabilities for a coal ash pond and landfill which were inherited due to the legacy coal operations at the Company's property in the Town of Torrey, New York. These costs are considered to be both probable and estimable. We have recorded a total environmental liability of $30.2 million as of both March 31, 2024 and December 31, 2023, for the remediation of these sites. The Company recognized no charges for the remeasurement of environmental liabilities for both the three months ended March 31, 2024 and 2023.
Previous report
The Company has estimated the cost of remediation by developing a remediation plan in consultation with environmental engineers, periodically obtaining quotes for estimated construction costs and adjusting estimates for inflationary factors based on the expected timing of the remediation work. Estimates include anticipated post-closure costs including monitoring and maintenance of the site. Estimates are based on various assumptions that are sensitive to changes including, but not limited to, closure and post-closure cost estimates, timing of expenditures, escalation factors, and requirements of granted permits. Additional material adjustments to the environmental liability may occur in the future due to required changes to the scope and timing of the remediation, changes to regulations governing the closure and remediation of CCR sites and changes to cost estimates due to inflationary or other economic factors.
Reworded paragraphs (36)
Previous wording
The following discussion should be read together with the audited financial statements and the related notes thereto of Greenidge Generation Holdings Inc. (“Greenidge”), together with its consolidated subsidiaries (the “Company”) for the years ended December 31, 2023 and 2022 included in our Annual Report on Form 10-K and the unaudited interim financial statements and related notes thereto of the Company for the three months ended March 31, 2024 included elsewhere in this Quarterly Report on Form 10-Q. This discussion contains certain forward-looking statements that reflect plans, estimates and beliefs and involve numerous risks and uncertainties, including but not limited to those described in the “Risk Factors” disclosed in Item 1A to Part I of Greenidge's Annual Report on Form 10-K for the year ended December 31, 2023 and in this Quarterly Report on Form 10-Q, and “Cautionary Statement Regarding Forward-Looking Statements” sections of this Quarterly Report on Form 10-Q. Actual results may differ materially from those contained in any forward-looking statements. For purposes of this section, “the Company,” “we,” “us” and “our” refer to Greenidge Generation Holdings Inc. together with its consolidated subsidiaries. You should carefully read “Cautionary Statement Regarding Forward-Looking Statements” in this Quarterly Report on Form 10-Q.
Current wording
The following discussion should be read together with the audited financial statements and the related notes thereto of Greenidge Generation Holdings Inc. (“Greenidge”), together with its consolidated subsidiaries (the “Company”) for the years ended December 31, 2023 and 2022 included in our Annual Report on Form 10-K and the unaudited interim financial statements and related notes thereto of the Company for the three and six months ended June 30, 2024 included elsewhere in this Quarterly Report on Form 10-Q. This discussion contains certain forward-looking statements that reflect plans, estimates and beliefs and involve numerous risks and uncertainties, including but not limited to those described in the “Risk Factors” disclosed in Item 1A to Part I of Greenidge's Annual Report on Form 10-K for the year ended December 31, 2023 and in this Quarterly Report on Form 10-Q, and “Cautionary Statement Regarding Forward-Looking Statements” sections of this Quarterly Report on Form 10-Q. Actual results may differ materially from those contained in any forward-looking statements. For purposes of this section, “Greenidge“, “the Company,” “we,” “us” and “our” refer to Greenidge Generation Holdings Inc. together with its consolidated subsidiaries. You should carefully read “Cautionary Statement Regarding Forward-Looking Statements” in this Quarterly Report on Form 10-Q.
Previous wording
We own cryptocurrency datacenter operations in the Town of Torrey, New York (the "New York Facility"), the Town of Columbia, Mississippi (the "Mississippi Facility") owned and operated a facility in Spartanburg, South Carolina (the "South Carolina Facility") and lease property for purposes of operating a cryptocurrency datacenter in the Town of Underwood, North Dakota (the "North Dakota Facility" and, together with the New York Facility, Mississippi Facility, and South Carolina Facility, the "facilities"). The New York Facility is a vertically integrated cryptocurrency datacenter and power generation facility with an approximately 106 megawatt ("MW") nameplate capacity, natural gas power generation facility. We generate revenue from four primary sources: (1) datacenter hosting, which we commenced on January 30, 2023, (2) cryptocurrency mining, (3) power and capacity, and (4) engineering procurement and construction management.
Current wording
We own cryptocurrency datacenter operations in the Town of Torrey, New York (the "New York Facility"), the Town of Columbia, Mississippi (the "Mississippi Facility"), and lease property for purposes of operating a cryptocurrency datacenter in the Town of Underwood, North Dakota (the "North Dakota Facility" and, together with the New York Facility, Mississippi Facility, and a facility in Spartanburg, South Carolina (the "South Carolina Facility", and collectively, the "facilities"). The New York Facility is a vertically integrated cryptocurrency datacenter and power generation facility with an approximately 106 megawatt ("MW") nameplate capacity, natural gas power generation facility. We generate revenue from four primary sources: (1) datacenter hosting, which we commenced on January 30, 2023, (2) cryptocurrency mining, (3) power and capacity, and (4) engineering procurement and construction management.
Previous wording
Our datacenter operations consisted of approximately 42,300 miners with approximately 4.6 EH/s of combined capacity for both datacenter hosting and cryptocurrency mining, of which 32,100 miners, or 3.4 EH/s, were associated with datacenter hosting and 10,200 miners, or 1.2 EH/s, were associated with Greenidge's cryptocurrency mining. Subsequent to the South Carolina transaction, datacenter operations consists of approximately 28,800 miners with approximately 3.0 EH/S of combined capacity for both datacenter hosting and cryptocurrency mining, of which 18,100 miners or 1.8 EH/s, is associated with datacenter hosting and 10,700 miners, or 1.2 EH/s is associated with our cryptocurrency mining.
Current wording
Our datacenter operations consists of approximately 28,910 miners with approximately 3.0 EH/S of combined capacity for both datacenter hosting and cryptocurrency mining, of which 18,200 miners or 1.8 EH/s, is associated with datacenter hosting and 10,710 miners, or 1.2 EH/s is associated with our cryptocurrency mining. In 2023, prior to the South Carolina transaction, our datacenter operations consisted of approximately 42,300 miners with approximately 4.6 EH/s of combined capacity for both datacenter hosting and cryptocurrency mining, of which 32,100 miners, or 3.4 EH/s, were associated with datacenter hosting and 10,200 miners, or 1.2 EH/s, were associated with Greenidge’s cryptocurrency mining.
Previous wording
On April 10, 2024, we closed on the purchase of a parcel of land containing approximately 12 acres located in Columbus, Mississippi, including over 73,000 square feet of industrial warehouse space, from a subsidiary of Motus Pivot Inc., a portfolio company of Atlas, our controlling shareholder and a related party. The purchase price was $1.45 million, of which $500,000 is to be paid no later than 60 days after the closing and $350,000 is to be paid no later than 120 days after the closing, This property provides us with access to 32.5 MW of additional power capacity. The transaction closed in April 2024 and we deployed 7 MW of miners on the property in the second quarter of 2024. We have also deployed additional miners in conjunction with a 7.5 MW mining capacity lease in North Dakota, which has a term of five years and provides us with energy to power mining.
Current wording
On April 10, 2024, we closed on the purchase of a parcel of land containing approximately 12 acres located in Columbus, Mississippi, including over 73,000 square feet of industrial warehouse space, from a subsidiary of Motus Pivot Inc., a portfolio company of Atlas, our controlling shareholder and a related party. The purchase price was $1.45 million, of which $1.1 million was paid during the six months ended June 30, 2024 and $0.4 million paid in August 2024. This property provides us with access to 32.5 MW of additional power capacity. The transaction closed in April 2024, and we deployed 7.5 MW of miners on the property in the second quarter of 2024. We have also deployed additional miners in conjunction with a 7.5 MW mining capacity lease in North Dakota, which has a term of five years and provides us with energy to power mining.
Previous wording
The contract with the Support.com's largest customer expired on December 31, 2022 and was not renewed. As a result, we have classified the Support.com business as held for sale and discontinued operations in these condensed consolidated financial statements as a result of management and the board of directors making a decision to pursue alternatives for the Support.com business and to strictly focus on its cryptocurrency mining, datacenter hosting and power generation operations. See Note 3, "Discontinued Operations" of our unaudited condensed consolidated financial statements for additional information.
Current wording
The contract with Support.com’s largest customer expired on December 31, 2022 and was not renewed. As a result, we have classified the Support.com business as held for sale and discontinued operations in these condensed consolidated financial statements as a result of management and the board of directors making a decision to pursue alternatives for the Support.com business and to strictly focus on its cryptocurrency mining, datacenter hosting and power generation operations. See Note 3, "Discontinued Operations" of our unaudited condensed consolidated financial statements for additional information.
Previous wording
The Company is in the process of purchasing GPUs for a pilot program related to the rental of computing power for AI and HPC. We are utilizing the pilot program to ensure our investments in the AI/GPU data center space efficiently utilize capital to align with the anticipated growth and demand for our offerings.
Current wording
The Company has purchased GPUs for a pilot program related to the rental of computing power for AI and HPC. We are utilizing the pilot program to ensure our investments in the AI/GPU data center space efficiently utilize capital to align with the anticipated growth and demand for our offerings.
Previous wording
For our cryptocurrency mining revenue, we generate revenue in the form of bitcoin by earning bitcoin as rewards and transaction fees for supporting the global bitcoin network with application-specific integrated circuit computers ("ASICs" or "miners") owned or leased by the Company. Our cryptocurrency mining revenue increased $0.5 million, or 9%, to $7.0 million. We estimate that approximately 69% of the increase was due to the increase in the average price of bitcoin, which was partially offset by 52% as a result of the decrease in the global bitcoin mining difficulty factor and 9% as a result of the decline in the Greenidge mining hashrate due to the transition of capacity to hosting during the course of Q1 2023. Bitcoin mining difficulty was 93% higher compared to the prior year due to increases in the difficulty index associated with the complexity of the algorithmic solution required to create a block and receive a bitcoin award, the average bitcoin price was 133% higher and our average hash rate decreased 15% primarily related to the reallocation of our mining equipment to datacenter hosting services.
Current wording
For our cryptocurrency mining revenue, we generate revenue in the form of bitcoin by earning bitcoin as rewards and transaction fees for supporting the global bitcoin network with application-specific integrated circuit computers ("ASICs" or "miners") owned or leased by the Company. Our cryptocurrency mining revenue increased $0.8 million, or 20%, to $4.8 million. We estimate that approximately 69% of the increase was due to the increase in the average price of bitcoin, which was partially offset by 49% as a result of the increase in the global bitcoin mining difficulty factor and the bitcoin halving that occurred in April 2024. Bitcoin mining difficulty was 71% higher compared to the prior year due to increases in the difficulty index associated with the complexity of the algorithmic solution required to create a block and receive a bitcoin award, the average bitcoin price was 135% higher and our average hash rate increased 28%.
Previous wording
As of March 31, 2024, our fleet of miners ranged in age from 1.0 to 2.6 years and had an average age of approximately 1.85 years. We do not have scheduled downtime for our miners. When we have unscheduled downtime, we may from time to time replace a miner with a substitute miner in order to minimize overall fleet downtime. As of March 31, 2024, our fleet of miners ranged in efficiency from approximately 22.0 to 34.0 joules per terahash (“J/TH”) and had an average efficiency of 28.7 J/TH.
Current wording
As of June 30, 2024, our fleet of miners ranged in age from 0.2 to 2.8 years and had an average age of approximately 2.10 years. We do not have scheduled downtime for our miners. When we have unscheduled downtime, we may from time to time replace a miner with a substitute miner in order to minimize overall fleet downtime. As of June 30, 2024, our fleet of miners ranged in efficiency from approximately 18.0 to 34.0 joules per terahash (“J/TH”) and had an average efficiency of 28.7 J/TH.
Previous wording
The table below presents the average cost of mining each bitcoin for the year ended March 31, 2024:
Current wording
The table below presents the average cost of mining each bitcoin for the three months ended June 30, 2024:
Previous wording
On January 30, 2023, we entered into the NYDIG Hosting Agreement to provide datacenter hosting services. Under the NYDIG Hosting Agreement, we generate revenue from a reimbursement fee that covers the cost of power and direct costs associated with management of the mining facilities, a hosting fee and a gross profit-sharing arrangement. The arrangement covers substantially all of our current mining capacity at the New York Facility and South Carolina Facility. We generated revenue of $9.1 million for the first three months of 2024 and $6.9 million for the first three months of 2023. This increase of $2.2 million was mainly due to datacenter hosting services not starting until the very end of January in 2023. In addition, we managed approximately 1.7 EH/s of average active hash rate in our hosting services, of which produced approximately 275 bitcoins.
Current wording
On January 30, 2023, we entered into the NYDIG Hosting Agreement to provide datacenter hosting services. Under the NYDIG Hosting Agreement, we generate revenue from a reimbursement fee that covers the cost of power and direct costs associated with management of the mining facilities, a hosting fee and a gross profit-sharing arrangement. The arrangement covers substantially all of our current mining capacity at the New York Facility and the South Carolina Facility during the 2023 comparative period, prior to the sale of the facility on November 15, 2023. We generated revenue of $6.6 million for the three months ended June 30, 2024 and $9.7 million for the three months ended June 30, 2023. This decrease of $3.0 million was mainly due to the sale of the South Carolina Facility and partially offset by the increase in price of bitcoin. In addition, we managed approximately 1.5 EH/s of average active hash rate in our hosting services, of which produced approximately 144 bitcoins.
Previous wording
Selling, general and administrative expenses decreased $3.5 million, or 39%, to $5.5 million for the three months ended March 31, 2024 as compared to the prior year period. The main drivers of the decrease in selling, general and administrative expenses were:
Current wording
Selling, general and administrative expenses decreased $2.9 million, or 41%, to $4.2 million for the three months ended June 30, 2024 as compared to the prior year period. The main drivers of the decrease in selling, general and administrative expenses were:
Previous wording
•Total payroll and benefits and other employee costs decreased approximately $1.1 million in first quarter of 2024 compared to the prior year period, as a result of declines in employee expenses including incentive compensation; and
Current wording
•Total payroll and benefits and other employee costs decreased approximately $1.1 million in the second quarter of 2024 compared to the prior year period, as a result of declines in employee expenses related to the corporate overhead cost reduction efforts that occurred in 2023 as well as a decrease in incentive compensation; and
Previous wording
Adjusted loss from operations was $1.3 million for the three months ended March 31, 2024 as compared to adjusted loss from operations of $5.8 million in the three months ended March 31, 2023. The adjusted loss from operations was driven by the same factors described above impacting loss from operations. A reconciliation of reported amounts to adjusted amounts can be found in the "Non-GAAP Measures and Reconciliations" section of this MD&A.
Current wording
Adjusted loss from operations was $3.7 million for the three months ended June 30, 2024 as compared to adjusted loss from operations of $6.1 million in the three months ended June 30, 2023. The adjusted loss from operations was driven by the same factors described above impacting loss from operations. A reconciliation of reported amounts to adjusted amounts can be found in the "Non-GAAP Measures and Reconciliations" section of this MD&A.
Previous wording
Our effective tax rate for the three months ended March 31, 2024 was 0.0% which was lower than the statutory rate of 21% because we have a full valuation allowance on deferred tax assets. We recorded and will continue to carry a full valuation allowance against our gross deferred tax assets that will not reverse against deferred tax liabilities within the scheduled reversal period. Our effective tax rate for the three months ended March 31, 2023 was 0.0%, which was lower than the statutory rate of 21% primarily due to state income taxes and tax benefits associated with stock-based compensation.
Current wording
Our effective tax rate for the three months ended June 30, 2024 was 0% which was lower than the statutory rate of 21% because we have a full valuation allowance on deferred tax assets. We recorded and will continue to carry a full valuation allowance against our gross deferred tax assets that will not reverse against deferred tax liabilities within the scheduled reversal period. Our effective tax rate for the three months ended June 30, 2023 was 0%, which was lower than the statutory rate of 21% primarily due to state income taxes and tax benefits associated with stock-based compensation.
Previous wording
As a result of the factors described above, Greenidge incurred a net loss of $4.0 million for the three months ended March 31, 2024 as compared to a net loss of $8.8 million for the three months ended March 31, 2023.
Current wording
As a result of the factors described above, Greenidge incurred a net loss of $5.5 million for the three months ended June 30, 2024 as compared to a net loss of $9.8 million for the three months ended June 30, 2023.
Previous wording
On an adjusted basis, excluding the impact of a gain on sale of assets, debt restructure costs and expansions costs, adjusted net loss during the three months ended March 31, 2024 would have been $3.4 million as compared to $9.0 million in the same period in 2023. Adjusted net loss is a non-GAAP performance measure. A reconciliation of reported amounts to adjusted amounts can be found in the "Non-GAAP Measures and Reconciliations" section of this MD&A.
Current wording
On an adjusted basis, excluding the impact of a gain on sale of assets and debt restructure costs, adjusted net loss during the three months ended June 30, 2024 would have been $5.5 million as compared to $9.2 million in the same period in 2023. Adjusted net loss is a non-GAAP performance measure. A reconciliation of reported amounts to adjusted amounts can be found in the "Non-GAAP Measures and Reconciliations" section of this MD&A.
Previous wording
We have reported the Support.com business as discontinued operations in the consolidated financial statements. Income from discontinued operations, net of tax decreased $0.6 million, or 86%, to $0.1 million for the three months ended March 31, 2024. The decrease is primarily related to lower operating income caused by the loss of Support.com's largest customer and the winding down of operations.
Current wording
We have reported the Support.com business as discontinued operations in the consolidated financial statements. Income from discontinued operations, net of tax decreased $0.2 million, or 78%, to $0.1 million for the three months ended June 30, 2024. The decrease is primarily related to the closing of operations.
Previous wording
The following non-GAAP measures are intended to supplement investors’ understanding of our financial information by providing measures which investors, financial analysts and management use to help evaluate our operating performance. Items which we do not believe to be indicative of ongoing business trends are excluded from these calculations so that investors can better evaluate and analyze historical and future business trends on a consistent basis. Definitions of these non-GAAP measures may not be comparable to similar definitions used by other companies. These results should be considered in addition to, not as a substitute for, results reported in accordance with United States Generally Accepted Accounting Principals ("U.S. GAAP").
Current wording
The following non-GAAP measures are intended to supplement investors’ understanding of our financial information by providing measures which investors, financial analysts and management use to help evaluate our operating performance. Items which we do not believe to be indicative of ongoing business trends are excluded from these calculations so that investors can better evaluate and analyze historical and future business trends on a consistent basis. Definitions of these non-GAAP measures may not be comparable to similar definitions used by other companies. These results should be considered in addition to, not as a substitute for, results reported in accordance with United States Generally Accepted Accounting Principles ("U.S. GAAP").
Previous wording
On January 30, 2023, upon entering into the NYDIG Hosting Agreement, we transitioned the majority of the capacity of our owned datacenter facilities to datacenter hosting operations. We entered into hosting arrangements at third party sites for the majority of our remaining owned miners in the first and second quarters of 2023. At March 31, 2024, Greenidge datacenter operations consisted of approximately 28,800 miners with approximately 3.0 EH/s of combined capacity for both datacenter hosting and cryptocurrency mining, of which 18,100 miners, or 1.8 EH/s, is associated with datacenter hosting and 10,700 miners, or 1.2 EH/s, is associated with Greenidge's cryptocurrency mining.
Current wording
On January 30, 2023, upon entering into the NYDIG Hosting Agreement, we transitioned the majority of the capacity of our owned datacenter facilities to datacenter hosting operations. In November 2023, we sold the South Carolina Facility, which was part of our datacenter hosting operations. We entered into hosting arrangements at third party sites for the majority of our remaining owned miners in the first and second quarters of 2023. In the second quarter of 2023, the hosting agreements to operate miners at third party sites were terminated. As a result, we deployed miners operated at the host’s site to our own self-mining sites. At June 30, 2024, Greenidge datacenter operations consisted of approximately 28,910 miners with approximately 3.0 EH/s of combined capacity for both datacenter hosting and cryptocurrency mining, of which 18,200 miners, or 1.8 EH/s, is associated with datacenter hosting and 10,710 miners, or 1.2 EH/s, is associated with Greenidge’s cryptocurrency mining.
Previous wording
Our power and capacity revenue increased $1.3 million, or 72%, to $3.0 million during the three months ended March 31, 2024. We estimate that higher power and capacity sales volume due to our decreased behind-the-meter consumption and higher average power and capacity prices caused revenue increases of approximately 57% and 15%, respectively, as compared to the prior period.
Current wording
Our power and capacity revenue increased $1.7 million, or 60%, to $4.5 million during the six months ended June 30, 2024. We estimate that higher power and capacity sales volume due to higher average power and capacity prices caused revenue increases of approximately 39% and 21%, respectively, as compared to the prior period.
Previous wording
Total cost of revenue, exclusive of depreciation, increased $2.6 million, or 27%, to $12.3 million during the three months ended March 31, 2024 as compared to the prior year period. We estimate the increase is comprised of approximately 20% due to monthly hosting fees paid to third parties for hosting company owned miners, which was an expense that did not occur for the full first quarter of 2023, and further increased by 14% for natural gas costs due to forward purchases of gas at fixed prices for Datacenter Hosting. This was partially offset by 7% due to decreases in sales tax on gas.
Current wording
Total cost of revenue, exclusive of depreciation, increased $0.8 million, or 4%, to $21.6 million during the six months ended June 30, 2024 as compared to the prior year period. We estimate the increase is comprised of approximately 7% due to higher natural gas costs for Datacenter Hosting and approximately another 7% due to the increase in costs associated with emissions, along with 5% due to monthly hosting fees paid to third parties for hosting company owned miners. This was partially offset by 17% due to the decrease in electricity utilization within production, mainly as a result of the sale of the facility in South Carolina.
Previous wording
The significant portions of cost of revenue are allocated between datacenter hosting, cryptocurrency mining and power and capacity based on MWh used by each. Power and capacity Cost of revenue declined due to lower natural gas costs, while MWh utilized by cryptocurrency mining declined due to the transition to the Hosting Agreements during the three months ended March 31, 2024.
Current wording
The significant portions of cost of revenue are allocated between datacenter hosting, cryptocurrency mining and power and capacity based on MWh used by each. Power and capacity Cost of revenue declined due to lower natural gas costs, while MWh utilized by cryptocurrency mining declined due to the transition to the Hosting Agreements during the six months ended June 30, 2023.
Previous wording
•Total insurance expense decreased approximately $0.4 million in the first quarter of 2024 compared to the prior year period, as a result of declines in coverage costs related to umbrella, property, and liability policies
Current wording
•Total insurance expense decreased approximately $0.7 million in the first six months of 2024 compared to the prior year period, as a result of declines in coverage costs related to umbrella, property, and liability policies due to a lower asset base; and
Previous wording
Depreciation expense decreased $0.6 million, or 15%, to $3.2 million for the three months ended March 31, 2024 as compared to the prior year period, due to a lower asset base resulting from impairments recognized in 2023 and the sale of miners in during the first quarter of 2023.
Current wording
Depreciation expense decreased $0.5 million, or 7%, to $6.5 million for the six months ended June 30, 2024 as compared to the prior year period, due to a lower asset base resulting from the sale of the South Carolina Facility in 2023.
Previous wording
We reported an operating loss for the three months ended March 31, 2024 of $1.9 million compared with an operating loss of $5.7 million in the three months ended March 31, 2023. The favorable variance of $3.8 million is primarily related to higher revenue, in the aggregate, from hosting, mining, and power operations, along with additional cost savings related to selling, general, and administrative expenses. These favorable variances were partially offset by increases in cost of revenue, exclusive of depreciation.
Current wording
We reported an operating loss for the six months ended June 30, 2024 of $5.5 million compared with an operating loss of $12.3 million in the six months ended June 30, 2023. The favorable variance of $6.8 million is primarily related to higher revenue, in the aggregate, from hosting, mining, power operations, and EPCM consulting along with additional cost savings related to selling, general, and administrative expenses. These favorable variances were partially offset by increases in cost of revenue, exclusive of depreciation.
Previous wording
During the three months ended March 31, 2024, Greenidge incurred a decrease of $1.0 million, or 32%, to $2.2 million of other expense due to a reduction in interest expense of $1.8 million, partially offset by a lower gain on sale of digital assets of $0.3 million and a change in fair value of warrant asset of $0.4 million.
Current wording
During the six months ended June 30, 2024, we incurred a decrease of $2.3 million, or 36%, to $4.0 million of other expense due to a reduction in interest expense of $3.1 million, partially offset by a change in fair value of warrant asset of $0.4 million. The decrease in interest expense is a result of the reductions in debt that occurred in the first and fourth quarters of 2023.
Previous wording
On March 31, 2024, we had cash and cash equivalents of $14.3 million. To date, we have primarily relied on debt and equity financing to fund our operations, including meeting ongoing working capital needs. Our management took certain actions during 2023 and during the first quarter of 2024 to improve the Company's liquidity.
Current wording
On June 30, 2024, we had cash and cash equivalents of $10.3 million. To date, we have primarily relied on debt and equity financing to fund our operations, including meeting ongoing working capital needs. Our management took certain actions during 2023 and during the first six months of 2024 to improve the Company’s liquidity.
Previous wording
We also entered into the NYDIG Hosting Agreement with NYDIG affiliates. The terms of the NYDIG Hosting Agreement require NYDIG affiliates to pay a hosting fee that covers the cost of power and direct costs associated with management of the mining facilities as well as a gross profit-sharing arrangement. This allows us to participate in the upside should bitcoin prices rise, but reduces our downside risk of bitcoin price deterioration and cost increases related to natural gas.
Current wording
We also entered into the NYDIG Hosting Agreement with NYDIG affiliates. The terms of the NYDIG Hosting Agreement require NYDIG affiliates to pay a hosting fee that covers the cost of power and direct costs associated with management of the mining facilities as well as a gross profit-sharing arrangement. This allows us to participate in profit upside, but reduces our downside risk of bitcoin price deterioration and cost increases related to natural gas.
Previous wording
We continued to improve our liquidity position in the first three months of 2024. On February 12, 2024, we entered into a securities purchase agreement (the “Armistice SPA”) with Armistice Capital Master Fund Ltd. (“Armistice”). Pursuant to the Armistice SPA, Armistice purchased (i) 450,300 shares of Class A common stock (the “SPA Shares”), and (ii) a pre-funded warrant (the “Pre-Funded Warrant”) to purchase 810,205 shares of Class A common stock (the “Pre-Funded Warrant Shares”). The per share purchase price of the SPA Shares and the Pre-Funded Warrant Shares was $4.76, resulting in aggregate gross proceeds of $6.0 million, and after giving effect to the exercise price of $0.0001 per Pre-Funded Warrant Share, we received net proceeds of $6.0 million. In addition, we issued to Armistice a five-year warrant to purchase up to 1,260,505 shares of Class A common stock, exercisable commencing on August 14, 2024 at an exercise price of $5.25 per share.
Current wording
We continued to improve our liquidity position in the first six months of 2024. On February 12, 2024, we entered into a securities purchase agreement (the “Armistice SPA”) with Armistice Capital Master Fund Ltd. (“Armistice”). Pursuant to the Armistice SPA, Armistice purchased (i) 450,300 shares of Class A common stock (the “SPA Shares”), and (ii) a pre-funded warrant (the “Pre-Funded Warrant”) to purchase 810,205 shares of Class A common stock (the “Pre-Funded Warrant Shares”). The per share purchase price of the SPA Shares and the Pre-Funded Warrant Shares was $4.76, resulting in aggregate gross proceeds of $6.0 million, and after giving effect to the exercise price of $0.0001 per Pre-Funded Warrant Share, we received net proceeds of $6.0 million. In addition, we issued to Armistice a five-year warrant to purchase up to 1,260,505 shares of Class A common stock, exercisable commencing on August 14, 2024 at an exercise price of $5.25 per share.
Previous wording
•monetizing the Company's remaining real estate in South Carolina via a development or sale arrangement;
Current wording
•a sale of the Company’s remaining real estate in South Carolina and/or sale of the remaining miner infrastructure equipment inventory, which was not used in the South Carolina expansion.
Previous wording
Our operating cash flows generated by mining, hosting, and power are affected by several factors including the price of bitcoin, bitcoin mining difficulty, and the costs of electricity, natural gas, and emissions credits. While bitcoin prices began to recover during 2023 from the significant declines experienced in 2022, and have continued to rise in the first quarter of 2024, management cannot predict the future price of bitcoin, nor can we predict the volatility of energy costs. While the Company continues to work to implement options to improve liquidity, we can provide no assurance that these efforts will be successful and our liquidity could be negatively impacted by factors outside of our control, in particular, significant decreases in the price of bitcoin, regulatory changes concerning cryptocurrency, increases in energy costs or other macroeconomic conditions and other matters identified in Item 1A, "Risk Factors" in our Annual Report for the year ended December 31, 2023.
Current wording
Our operating cash flows generated by mining, hosting, and power are affected by several factors including the price of bitcoin, bitcoin mining difficulty, and the costs of electricity, natural gas, and emissions credits. Increases in the price of bitcoin benefit the Company by increasing the amount of revenue earned for each bitcoin mined. Increases in the difficulty to mine a bitcoin adversely affect the Company by decreasing the number of bitcoin it can mine. Increases in the costs of electricity, natural gas, and emissions credits adversely affect the Company by increasing the cost to mine bitcoin. In April 2024, a bitcoin halving occurred, which decreased the reward for successfully placing a block from 6.25 bitcoin to 3.125 bitcoin. There are no assurances that favorable changes in the price of bitcoin will occur as a result of the bitcoin halving to offset the decrease in mining revenues as a result therefrom. Therefore, the most recent bitcoin halving may have a material adverse effect on the profitability of the Company's future self-mining and hosting operations. While the Company continues to work to implement options to improve liquidity, we can provide no assurance that these efforts will be successful and our liquidity could be negatively impacted by factors outside of our control, in particular, significant decreases in the price of bitcoin or increases in the difficulty of mining bitcoin, our inability to procure and comply with the permits and licenses required to operate our facilities, including the Title V Air Permit for the New York Facility, or the cost to us of such procurement or compliance, regulatory changes concerning cryptocurrency, increases in energy costs or other macroeconomic conditions and other matters identified in Item 1A, "Risk Factors" in our Annual Report for the year ended December 31, 2023 and in this Quarterly Report on Form 10-Q.
Previous wording
The following table provides information about our net cash flow for the three months ended March 31, 2024 and 2023.
Current wording
The following table provides information about our net cash flow for the six months ended June 30, 2024 and 2023.
Previous wording
Net cash used for was $5.0 million for the three months ended March 31, 2024, as compared to net cash used of $0.6 million for the three months ended March 31, 2023. The variance in the operating cash flow during the first three months of 2024 as compared to 2023 was driven primarily by the purchase of additional Regional Greenhouse Gas Initiative ("RGGI") credits, as well as the advantageous change in net loss.
Current wording
Net cash used for operating activities was $6.4 million for the six months ended June 30, 2024, as compared to net cash used of $2.8 million for the six months ended June 30, 2023. The variance in the operating cash flow during the first six months of 2024 as compared to 2023 was driven primarily by the purchase of additional Regional Greenhouse Gas Initiative ("RGGI") credits in Q1 2024, which was required to settle the accrued emissions liability for the three-year control period ended December 31, 2023, as well as the advantageous change in net loss.
Previous wording
Net cash used in investing activities was $1.0 million for the three months ended March 31, 2024, as compared to $5.9 million for the three months ended March 31, 2023. The decrease is primarily related to $5.1 million of lower purchases of and deposits for property and equipment as compared to the prior year due to the significant expansion of our miner fleet and infrastructure for cryptocurrency datacenter operations that was occurring during the prior year.
Current wording
Net cash used in investing activities was $3.6 million for the six months ended June 30, 2024, as compared to $6.4 million for the six months ended June 30, 2023. The decrease is primarily related to $2.9 million of lower purchases of and deposits for property and equipment as compared to the prior year due to the lower miner purchases.
Previous wording
Net cash provided by financing activities was $7.0 million for the three months ended March 31, 2024, as compared to $4.8 million for the three months ended March 31, 2023. The increase is primarily related to the increase of $6.0 million of proceeds from the issuance of common stock and pre-funded warrant, along with the $3.3 million elimination of principal payments on debt due to its restructuring. These increases were partially offset by a $7.1 million reduction in sales of Class A common stock under the Company's ATM Agreement.
Current wording
Net cash provided by financing activities was $7.0 million for the six months ended June 30, 2024, as compared to $5.9 million for the six months ended June 30, 2023. The increase is primarily related to the increase of $6.0 million of proceeds from the issuance of common stock and pre-funded warrant, along with the $5.3 million elimination of principal payments on debt due to its restructuring. These increases were partially offset by a $10.1 million reduction in sales of Class A common stock under the Company’s ATM Agreement.
Previous wording
Our significant accounting policies related to these accounts in the preparation of our condensed consolidated financial statements are described under the heading “Management Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Estimates” in our Annual Report on Form 10-K for the year ended December 31, 2023. As of the date of this filing, there were no significant changes to any of the critical accounting policies and estimates previously described in our Annual Report on Form 10-K for the year ended December 31, 2023 with the exception of those described below.
Current wording
Our significant accounting policies related to these accounts in the preparation of our condensed consolidated financial statements are described under the heading “Management Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Estimates” in our Annual Report on Form 10-K for the year ended December 31, 2023. See Note 2. Summary of Significant Accounting Policies in Part I, Item 1 herein, which describes changes to the critical accounting policies and methods used in the preparation of our condensed consolidated financial statements.
Rearranged current paragraphs (22)
Current report — wording carried from elsewhere
On January 30, 2023, upon entering into the NYDIG Hosting Agreement, we transitioned the majority of the capacity of our owned datacenter facilities to datacenter hosting operations. In November 2023, we sold the South Carolina Facility, which was part of our datacenter hosting operations. We entered into hosting arrangements at third party sites for the majority of our remaining owned miners in the second quarter of 2023. In the second quarter of 2024, the hosting agreements to operate miners at third party sites were terminated. As a result, we deployed miners operated at the host’s sites to our own self-mining sites. At June 30, 2024, Greenidge datacenter operations consisted of approximately 28,910miners with approximately 3.0 EH/s of combined capacity for both datacenter hosting and cryptocurrency mining, of which 18,200 miners, or 1.8 EH/s, is associated with datacenter hosting and 10,710 miners, or 1.2 EH/s, is associated with Greenidge’s cryptocurrency mining.
Current report — wording carried from elsewhere
Power and capacity revenue at our New York Facility is earned when we sell capacity and energy and ancillary services to the wholesale power grid managed by the New York Independent System Operator ("NYISO"). Through these sales, we earn revenue in three streams, including: (1) power revenue received based on the hourly price of power, (2) capacity revenue for committing to sell power to the NYISO when dispatched and (3) other ancillary service revenue received as compensation for the provision of operating reserves. Our power and capacity revenue increased $0.4 million, or 39%, to $1.5 million during the three months ended June 30, 2024. We estimate that higher average power and capacity prices and higher power and capacity sales volume caused revenue increases of approximately 23% and 16%, respectively, as compared to the prior period.
Current report — wording carried from elsewhere
The significant portions of cost of revenue are allocated between datacenter hosting, cryptocurrency mining and power and capacity based on MWh used by each. Power and capacity Cost of revenue decreased due to lower natural gas costs, while MWh utilized by cryptocurrency mining increased due to the transition away from the Hosting Agreements during the three months ended June 30, 2024.
Current report — wording carried from elsewhere
•Total insurance expense decreased approximately $0.3 million in the second quarter of 2024 compared to the prior year period, as a result of a decline in coverage costs related to umbrella, property, and liability policies due to a lower asset base; and
Current report — wording carried from elsewhere
We reported an operating loss for the three months ended June 30, 2024 of $3.7 million compared with an operating loss of $6.6 million in the three months ended June 30, 2023. The favorable variance of $2.9 million is primarily related to cost savings related to selling, general, and administrative expenses.
Current report — wording carried from elsewhere
The following table sets forth key components of our results from continuing operations and should be read in conjunction with our condensed consolidated financial statements and related notes. All comparisons below refer to the six months ended June 30, 2024 versus the six months ended June 30, 2023, unless otherwise specified.
Current report — wording carried from elsewhere
(a)Adjusted Amounts and Other Financial Data are non-GAAP performance measures. A reconciliation of reported amounts to adjusted amounts can be found in the "Non-GAAP Measures and Reconciliations" section of this MD&A.
Current report — wording carried from elsewhere
The following table provides a summary of key metrics related to the six months ended June 30, 2024 and 2023.
Current report — wording carried from elsewhere
For our cryptocurrency mining revenue, we generate revenue in the form of bitcoin by earning bitcoin as rewards and transaction fees for supporting the global bitcoin network with application-specific integrated circuit computers ("ASICs" or "miners") owned or leased by the Company. Our cryptocurrency mining revenue increased $1.3 million, or 13%, to $11.8 million. We estimate that approximately 72% of the increase was due to the increase in the average price of bitcoin, which was partially offset by 59% as a result of the increase in the global bitcoin mining difficulty factor and the bitcoin halving that occurred in April 2024. Bitcoin mining difficulty was 81% higher compared to the prior year due to increases in the difficulty index associated with the complexity of the algorithmic solution required to create a block and receive a bitcoin award, the average bitcoin price was 134% higher and our average hash rate increased less than 1%.
Current report — wording carried from elsewhere
The miners associated with Greenidge’s cryptocurrency mining were comprised as follows:
Current report — wording carried from elsewhere
As of June 30, 2024, our fleet of miners ranged in age from 0.2 to 2.8 years and had an average age of approximately 2.10 years. We do not have scheduled downtime for our miners. When we have unscheduled downtime, we may from time to time replace a miner with a substitute miner in order to minimize overall fleet downtime. As of June 30, 2024, our fleet of miners ranged in efficiency from approximately 18.0 to 34.0 joules per terahash (“J/TH”) and had an average efficiency of 28.7 J/TH.
Current report — wording carried from elsewhere
The table below presents the average cost of mining each bitcoin for the six months ended June 30, 2024:
Current report — wording carried from elsewhere
On January 30, 2023, we entered into the NYDIG Hosting Agreement to provide datacenter hosting services. Under the NYDIG Hosting Agreement, we generate revenue from a reimbursement fee that covers the cost of power and direct costs associated with management of the mining facilities, a hosting fee and a gross profit-sharing arrangement. The arrangement covers substantially all of our current mining capacity at the New York Facility and the South Carolina Facility during the 2023 comparative period, prior to the sale of the facility on November 15, 2023. We generated revenue of $15.8 million for the first six months of 2024 and $16.6 million for the first six months of 2023. Approximately $4.7 million of this decrease is a result of the sale of the South Carolina in November 2023, which was partially offset by an increase in the price of bitcoin during the six months ended June 30, 2024 as compared to the prior year. In addition, we managed approximately 1.5 EH/s of average active hash rate in our hosting services, of which produced approximately 144 bitcoins.
Current report — wording carried from elsewhere
Cost of revenue (exclusive of depreciation)
Current report — wording carried from elsewhere
Selling, general and administrative expenses decreased $6.4 million, or 40%, to $9.7 million for the six months ended June 30, 2024 as compared to the prior year period. The main drivers of the decrease in selling, general and administrative expenses were:
Current report — wording carried from elsewhere
Operating (loss) income from continuing operations
Current report — wording carried from elsewhere
Adjusted loss from operations was $5.0 million for the six months ended June 30, 2024 as compared to adjusted loss from operations of $11.9 million in the six months ended June 30, 2023. The adjusted loss from operations was driven by the same factors described above impacting loss from operations. A reconciliation of reported amounts to adjusted amounts can be found in the "Non-GAAP Measures and Reconciliations" section of this MD&A.
Current report — wording carried from elsewhere
Our effective tax rate for the six months ended June 30, 2024 was 0% which was lower than the statutory rate of 21% because we have a full valuation allowance on deferred tax assets. We recorded and will continue to carry a full valuation allowance against our gross deferred tax assets that will not reverse against deferred tax liabilities within the scheduled reversal period. Our effective tax rate for the six months ended June 30, 2023 was 0%, which was lower than the statutory rate of 21% primarily due to state income taxes and tax benefits associated with stock-based compensation.
Current report — wording carried from elsewhere
As a result of the factors described above, Greenidge incurred a net loss of $9.5 million for the six months ended June 30, 2024 as compared to a net loss of $18.6 million for the six months ended June 30, 2023.
Current report — wording carried from elsewhere
On an adjusted basis, excluding the impact of a gain on sale of assets and debt restructure costs, adjusted net loss during the six months ended June 30, 2024 would have been $9.0 million as compared to $18.2 million in the same period in 2023. Adjusted net loss is a non-GAAP performance measure. A reconciliation of reported amounts to adjusted amounts can be found in the "Non-GAAP Measures and Reconciliations" section of this MD&A.
Current report — wording carried from elsewhere
We have reported the Support.com business as discontinued operations in the consolidated financial statements. Income from discontinued operations, net of tax decreased $0.4 million, or 92%, to $0.03 million for the six months ended June 30, 2024. The decrease is primarily related to the closing of operations.
Current report — wording carried from elsewhere
Revenue per MWh for datacenter hosting, cryptocurrency mining and power and capacity are used by management to consider the extent to which we may generate electricity to either produce cryptocurrency or sell power to the New York wholesale power market. Cost of revenue (excluding depreciation) per MWh represents a measure of the cost of natural gas, emissions credits, payroll and benefits and other direct production costs associated with the MWhs produced to generate the respective revenue category for each MWh utilized. Depreciation expense is excluded from the cost of revenue (exclusive of depreciation) per MWh metric; therefore, not all cost of revenues for datacenter hosting, cryptocurrency mining and power and capacity are fully reflected. To the extent any other cryptocurrency datacenters are public or may go public, the cost of revenue (exclusive of depreciation) per MWh metric may not be comparable because some competitors may include depreciation in their cost of revenue figures.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
On February 12, 2024, we entered into a securities purchase agreement (the “SPA”) with Armistice Capital Master Fund Ltd. (“Armistice”). Pursuant to the SPA, Armistice purchased (i) 450,300 shares of our Class A common stock (the “SPA Shares”), and (ii) a pre-funded warrant (the “Pre-Funded Warrant”) to purchase 810,205 shares of our Class A common stock (the “Pre-Funded Warrant Shares”). The per share purchase price of the SPA Shares and the Pre-Funded Warrant Shares was $4.76, resulting in proceeds of $6.0 million. In addition, we issued to Armistice a five-year warrant (the “5-Year Warrant”) to purchase up to 1,260,505 shares of Class A common stock (the "Warrant Shares"), exercisable commencing on August 14, 2024 at an exercise price of $5.25 per share.
Previous report — wording carried elsewhere
Engineering Procurement and Construction Management ("EPCM")