Greenidge Generation Holdings Inc

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 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.

Current wording

The following discussion should be read together with the audited financial statements and the related notes thereto of Greenidge Generation Holdings Inc., together with its consolidated subsidiaries ("Greenidge" or 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 nine months ended September 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"), 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.

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"), lease property for purposes of operating a cryptocurrency datacenter in the Town of Underwood, North Dakota (the "North Dakota Facility") and previously owned and operated 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 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.

Current wording

Our datacenter operations consists of approximately 29,200 miners with approximately 3.1 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 11,000 miners, or 1.3 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

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 wording

In the first nine months of 2024, Greenidge made significant efforts to reduce costs, leading to selling, general and administrative expense reductions of $9.3 million compared to the same period in 2023. Greenidge also reported a reduction in overall operating costs for its Bitcoin mining operations inthe third quarter of 2024, when compared to the same period of 2024, while expanding its footprint.

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 $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.

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, all of which was paid during the nine months ended September 30, 2024. This property provides us with access to 32.5 MW of additional power capacity. The transaction closed in April 2024, and we deployed 8.5 MW of miners on the property as of September 30, 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 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 wording

Our successful execution of 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 our miners being non-operational for a period. We anticipate such actions will positively impact its profitability in the near term by reducing operational costs and maintaining elevated uptime levels. We also continue to explore additional opportunities to further streamline operations and improve efficiency across its business units.

Previous wording

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 wording

In July 2024, we announced the launch of our Pod X portable cryptocurrency mining infrastructure solution, which is deployed at our facilities across the United States and reflects a culmination of our experience in maintaining optimal temperature control and uptime using portable mining equipment.

Previous wording

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 wording

On August 1, 2024, we announced our new bitcoin self-mining retention strategy, which enables us to accumulate bitcoin from our owned miners in order to increase our bitcoin holdings.

Previous wording

In late June 2022, the New York State Department of Environmental Conservation ("NYSDEC") announced its denial of the Title V Air Permit renewal for our New York Facility. We filed a notice with NYSDEC in July 2022 requesting a hearing on NYSDEC’s decision. In September 2023, the administrative law judge presiding over the hearing issued a ruling with respect to the status of the parties and certain issues to be adjudicated in the hearing. We submitted an interim appeal with NYSDEC thereafter challenging such ruling with a motion to stay the broader appeals process while the interim appeal was being resolved. On May 8, 2024, our interim appeal to NYSDEC and request for an adjudicatory hearing were ultimately denied, and the June 2022 non-renewal of our Title V Air Permit was affirmed by NYSDEC’s Regional Director for Region 7, which rendered NYSDEC’s decision final for purposes of seeking judicial review. We have four months from May 8, 2024 to continue to operate the New York Facility uninterrupted under a State Administrative Procedures Act extension, in full compliance with our existing Title V Air Permit, and to bring an action challenging the denial of our permit renewal application. While no further adjudication proceedings have been scheduled to date, we intend to challenge the June 2022 non-renewal and simultaneously bring a request for temporary restraining order/preliminary injunction to allow the New York Facility to continue operating during the pendency of the litigation. This challenge will cause us to incur additional costs and result in the diversion of management attention, which could adversely affect our business, financial condition and results of operations. We expect that the judicial proceedings related to the challenge of NYSDEC’s denial of our Title V Air Permit renewal application may take a number of years to fully resolve, and there can be no assurance that our efforts will be successful. Our inability to secure a temporary restraining order or preliminary injunction to allow the New York Facility to continue operating during the pendency of the litigation or to otherwise succeed in securing a renewal of our Title V Air Permit for the New York Facility could have a material adverse effect on us and our ability to continue operating as a going concern. See Note 2, “Summary of Significant Accounting Policies,” in the Notes to Condensed Consolidated Financial Statements.

Current wording

In late June 2022, NYSDEC announced its denial of the Title V Air Permit renewal for our New York Facility. We filed a notice with NYSDEC in July 2022 requesting a hearing on NYSDEC’s decision. In September 2023, the administrative law judge presiding over the hearing issued a ruling with respect to the status of the parties and certain issues to be adjudicated in the hearing. We submitted an interim appeal with NYSDEC thereafter challenging such ruling with a motion to stay the broader appeals process while the interim appeal was being resolved. On May 8, 2024, our interim appeal to NYSDEC and request for an adjudicatory hearing were ultimately denied, and the June 2022 non-renewal of our Title V Air Permit was affirmed by NYSDEC’s Regional Director for Region 7, which rendered NYSDEC’s decision final for purposes of seeking judicial review.

Previous wording

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 three months ended June 30, 2024 versus the three months ended June 30, 2023, unless otherwise specified.

Current wording

The following table (in thousands) 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 three months ended September 30, 2024 versus the three months ended September 30, 2023, unless otherwise specified.

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. 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 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 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 September 30, 2024, Greenidge datacenter operations consisted of approximately 29,200 miners with approximately 3.1 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 11,000 miners, or 1.3 EH/s, is associated with Greenidge’s cryptocurrency mining.

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 $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 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 decreased $3.3 million, or 51%, to $3.3 million. We estimate that approximately 77% of the decrease was due to increases in the global bitcoin mining difficulty factor and the bitcoin halving that occurred in April 2024, which was partially offset by 26% due to the increase in the average price of bitcoin. Bitcoin mining difficulty was 60% 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 117% higher and our average hash rate decreased 26%. The decline in average hashrate is attributable to the Company's focus on maximizing profitability by prioritizing operations of its most efficient miners, curtailing operations of less efficient miners during periods of decreased profitability, and the ongoing efforts to redeploy miners previously hosted at third party locations.

Previous 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.

Current wording

As of September 30, 2024, our fleet of miners ranged in age from 0.1 to 3.1 years and had an average age of approximately 2.3 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 September 30, 2024, our fleet of miners ranged in efficiency from approximately 15.0 to 34.0 joules per terahash (“J/TH”) and had an average efficiency of 27.1 J/TH.

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 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.

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 $6.5 million for the three months ended September 30, 2024 and $12.1 million for the three months ended September 30, 2023. This decrease of $5.6 million was mainly due to the sale of the South Carolina Facility and partially offset by a 117% increase in price of bitcoin. In addition, we managed approximately 1.7 EH/s of average active hash rate in our hosting services, of which produced approximately 113 bitcoins.

Previous wording

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 wording

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 $0.5 million, or 21%, to $2.6 million during the three months ended September 30, 2024. We estimate that higher average power and capacity prices caused revenue increases of approximately 29%, which was partially offset by lower power and capacity sales volume of 8%, as compared to the prior period.

Previous wording

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 wording

Total cost of revenue, exclusive of depreciation, decreased $6.1 million, or 39%, to $9.3 million during the three months ended September 30, 2024 as compared to the prior year period. We estimate the decrease is comprised of approximately 22% 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 17% due to our transition away from third party hosting service agreements for our own miners, lower natural gas and electricity charges, and lower MWh power consumption by our power plant and operating miner fleet.

Previous 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:

Current wording

Selling, general and administrative expenses decreased $2.9 million, or 44%, to $3.7 million for the three months ended September 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 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 wording

•Total insurance expense decreased approximately $1.0 million in the third 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;

Previous 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

Current wording

•Total payroll and benefits and other employee costs decreased approximately $0.8 million in the third 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;

Previous wording

•Decrease of approximately $2.1 million due to reductions in professional fees and consulting expenses caused by reductions in discretionary costs and higher regulatory costs in the prior year period associated with permit renewals and environmental matters at the New York plant; and

Current wording

•Decrease of approximately $0.8 million due to reductions in professional fees and consulting expenses caused by reductions in discretionary costs and higher regulatory costs in the prior year period associated with permit renewals and environmental matters at the New York Facility;

Previous wording

•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 wording

•Total administrative overhead costs decreased approximately $0.2 million in the third quarter of 2024 compared to the prior year period, primarily related to reduced spending on information technology and business development; and

Previous wording

•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 wording

•Total stock compensation decreased approximately $0.1 million in the third 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.

Previous wording

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 wording

We reported an operating loss for the three months ended September 30, 2024 of $4.6 million compared with an operating loss of $10.1 million in the three months ended September 30, 2023. The favorable variance of $5.5 million is primarily related to the decrease in impairment expense of $4.0 million, as well as additional cost savings related to selling, general, and administrative expenses.

Previous 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.

Current wording

Adjusted loss from operations was $3.9 million for the three months ended September 30, 2024 as compared to adjusted loss from operations of $3.9 million in the three months ended September 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

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 wording

During the three months ended September 30, 2024, Greenidge incurred a decrease of $1.2 million, or 40%, to $1.8 million of other expense due to a reduction in interest expense of $1.2 million. The decrease is a result of the reductions in debt that occurred in the first and fourth quarters of 2023.

Previous 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.

Current wording

Our effective tax rate for the three months ended September 30, 2024 was a 2% benefit which was lower than the statutory rate of 21% because we have a full valuation allowance on deferred tax assets, as well as an adjustment for the New York State income tax receivable upon completion of the 2023 tax return. 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. The 2%, or $0.1 million benefit for the three months ended September 30, 2024 was the result of an adjustment for the New York State income tax receivable upon completion of our 2023 tax return.

Previous 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.

Current wording

As a result of the factors described above, Greenidge incurred a net loss of $6.3 million for the three months ended September 30, 2024 as compared to a net loss of $13.2 million for the three months ended September 30, 2023.

Previous 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.

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 September 30, 2024 would have been $5.6 million as compared to $6.9 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 $0.4 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 wording

We have reported the Support.com business as discontinued operations in the consolidated financial statements. Loss from discontinued operations, net of tax net of tax decreased $1.0 million, or 96%, to $0.0 million for the three months ended September 30, 2024. The decrease is primarily related to the closing of operations.

Previous wording

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 wording

The following table (in thousands) 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 nine months ended September 30, 2024 versus the nine months ended September 30, 2023, unless otherwise specified.

Previous wording

The following table provides a summary of key metrics related to the six months ended June 30, 2024 and 2023.

Current wording

The following table provides a summary of key metrics related to the nine months ended September 30, 2024 and 2023.

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. 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.

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 September 30, 2024, Greenidge datacenter operations consisted of approximately 29,200 miners with approximately 3.1 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 11,000 miners, or 1.3 EH/s, is associated with Greenidge’s cryptocurrency mining.

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 $0.8 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%.

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 ASICs owned or leased by us. Our cryptocurrency mining revenue decreased $2.0 million, or 12%, to $15.0 million. We estimate that approximately 66% of the decrease was due to the increase in the global bitcoin mining difficulty factor and the bitcoin halving that occurred in April 2024, which was partially offset by 54% due to the increase in the average price of bitcoin. Bitcoin mining difficulty was 72% 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 128% higher and our average hash rate decreased 10%. The decline in average hashrate is attributable to the Company's focus on maximizing profitability by prioritizing operations of its most efficient miners, curtailing operations of less efficient miners during periods of decreased profitability, and the ongoing efforts to redeploy miners previously hosted at third party locations.

Previous 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.

Current wording

As of September 30, 2024, our fleet of miners ranged in age from 0.1 to 3.1 years and had an average age of approximately 2.3 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 September 30, 2024, our fleet of miners ranged in efficiency from approximately 15.0 to 34.0 J/TH and had an average efficiency of 27.1 J/TH.

Previous wording

The table below presents the average cost of mining each bitcoin for the six months ended June 30, 2024:

Current wording

The table below presents the average cost of mining each bitcoin for the nine months ended September 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 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 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 $22.2 million for the first nine months of 2024 and $28.7 million for the first nine months of 2023. Approximately $10.0 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 nine months ended September 30, 2024 as compared to the prior year. In addition, we managed approximately 1.7 EH/s of average active hash rate in our hosting services, of which produced approximately 532 bitcoins.

Previous wording

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.

Current wording

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 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.

Previous 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.

Current wording

Our power and capacity revenue increased $2.1 million, or 43%, to $7.1 million during the nine months ended September 30, 2024. We estimate higher average power and capacity prices and higher power and capacity sales volume caused revenue increases of approximately 25% and 18%, respectively, as compared to the prior period.

Previous 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.

Current wording

Total cost of revenue, exclusive of depreciation, decreased $5.3 million, or 15%, to $30.9 million during the nine months ended September 30, 2024 as compared to the prior year period. We estimate the decrease is comprised of approximately 7% due to higher natural gas costs for Datacenter Hosting, as well as revenue share expense. This was partially offset by 18% due to the decrease in electricity utilization within production, mainly as a result of the sale of the facility in South Carolina, along with 4% due to the reduction in monthly hosting fees paid to third parties for hosting Company-owned miners.

Previous wording

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 wording

Selling, general and administrative expenses decreased $9.3 million, or 41%, to $13.4 million for the nine months ended September 30, 2024 as compared to the prior year period. The main drivers of the decrease in selling, general and administrative expenses were: