MARA Holdings Inc
For the period ended Sep 30, 2024. Filed Nov 12, 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.
Sep 30, 2024 · Filed Nov 12, 2024
MARA$6.35+8.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-01.
0001628280-24-034196
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-12.
0001628280-24-047148
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 111 previous paragraphs and 122 current paragraphs.
40 unchanged; 56 reworded; 24 added; 14 removed; 1 previous and 2 current paragraphs rearranged.
Tables are not compared: 7 previous and 8 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 (24)
Current report
The following table presents the approximate number of digital assets held and the approximate fair value of a single digital asset, as of the following dates:
Current report
Highlights from the quarter ended September 30, 2024:
Current report
•On August 14, 2024, the Company issued an aggregate principal amount of $300.0 million of 2.125% Convertible Senior Notes due 2031 (the “2031 Notes”). Refer to Note 14 –Debt in the notes to the Company’s Condensed Consolidated Financial Statements included in this Quarterly Report, for further information. With the net proceeds of the 2031 Notes, the Company purchased an additional 4,144 bitcoin, or approximately $249.0 million, during the quarter.
Current report
•On September 5, 2024, the Company announced the appointment of Janet George and Barbara Humpton to its Board of Directors and announced the appointment of current board member Doug Mellinger as lead independent director, effective September 1, 2024. Ms. George and Ms. Humpton bring extensive expertise in artificial intelligence, data centers and energy. Their proven track records in driving innovation and growth across complex industries will be invaluable to the Company’s strategic growth.
Current report
•On October 15, 2024, the Company announced securing a $200 million line of credit, collateralized by a portion of the Company’s bitcoin holdings. The Company plans to use the funds to capitalize on strategic opportunities and for other general corporate purposes.
Current report
•First publicly traded digital bitcoin mining company to submit a climate-related disclosure report to the Climate Disclosure Project (CDP).
Current report
The Company acquired a commodity swap agreement, which meets the definition of a derivative, in conjunction with its acquisition of GC Data Center Equity Holdings, LLC on January 12, 2024. The change in fair value of this derivative instrument has fluctuated significantly since we acquired this contract, and we believe these fluctuations do not reflect the performance of our core operations. In addition, we believe excluding the change in fair value of derivative instruments enables us to more effectively evaluate our performance period-over-period and relative to our competitors who make similar adjustments to adjusted EBITDA. As such, beginning with the period ended September 30, 2024, the Company has updated its calculation of adjusted EBITDA to exclude the change in fair value of derivative instrument. Accordingly, certain prior period information has been reclassified to conform to the current period presentation.
Current report
(7)For the three months ended March 31, 2024, the reported adjusted EBITDA was $528.8 million, revised for the change in fair value of derivative instrument of a $15.3 million loss, results in a revised adjusted EBITDA of $541.5 million. For the three months ended June 30, 2024, the reported adjusted EBITDA loss was $85.1 million, revised for the change in fair value of derivative instrument of $38.3 million, results in a revised adjusted EBITDA loss of $125.6 million. Refer to the discussion within “Non-GAAP Financial Measures” herein for the reasons of the Company’s exclusion of change in fair value of derivative instrument from adjusted EBITDA.
Current report
Total margin excluding the impact of depreciation and amortization, for the three months ended September 30, 2024 was $34.1 million compared to $38.2 million in the prior year period.
Current report
Early termination expenses: During the three months ended September 30, 2024, the Company terminated the remaining hosting agreements with customers from the GC Data Center Equity Holdings, LLC acquisition, and recognized early termination expenses of $10.3 million, to expand self-mining capacity.
Current report
Loss on investments: During the three months ended September 30, 2024, the Company wrote-down a previous SAFE investment for a loss of $1.0 million.
Current report
Net gain on extinguishment of debt: In September 2023, the Company entered into agreements with certain holders of Convertible Senior Notes due 2026 (the “2026 Notes”) to exchange an aggregate $416.8 million principal amount of 2026 Notes for 31,722,417 shares of the Company's common stock and recorded a gain in the amount of $82.6 million.
Current report
Net loss: The Company recorded a net loss of $124.8 million for the three months ended September 30, 2024 compared to a net loss of $0.4 million in the prior year period. The $124.4 million decrease in net loss was primarily driven by a $92.1 million increase in operating loss, the absence of an $82.6 million net gain from the extinguishment of debt, partially offset by a $49.2 million income tax benefit in the current period compared to the prior year period.
Current report
Adjusted EBITDA: Adjusted EBITDA was $21.8 million for the three months ended September 30, 2024 compared to an adjusted EBITDA loss of $21.3 million in the prior year period. The $43.1 million increase was primarily impacted by an increase in net loss, adjusted for an increase in stock compensation expense, and an unfavorable change in fair value derivative instrument, early termination expenses during the current period and the absence of a net gain from the extinguishment of debt from the prior year period.
Current report
Nine Months Ended September 30, 2024 Compared to the Nine Months Ended September 30, 2023
Current report
(3)For the three months ended March 31, 2024, the reported adjusted EBITDA was $528.8 million, revised for the change in fair value of derivative instrument of a $15.3 million loss, results in a revised adjusted EBITDA of $541.5 million. For the six months ended June 30, 2024, the reported adjusted EBITDA was $443.7 million, revised for the change in fair value of derivative instrument of $23.0 million, results in a revised adjusted EBITDA of $415.9 million. Refer to the discussion within “Non-GAAP Financial Measures” herein for the reasons of the Company’s exclusion of change in fair value of derivative instrument from adjusted EBITDA.
Current report
Total margin excluding impact of depreciation and amortization for the nine months ended September 30, 2024 was $160.4 million compared to $82.5 million for the prior year period.
Current report
Gain on investments: During the nine months ended September 30, 2024, the Company purchased additional shares in Auradine, Inc. (“Auradine”) preferred stock and recorded a gain on investments of $5.2 million to adjust the carrying amount of its investment. Additionally, during the nine months ended September 30, 2024 the Company wrote-down a previous SAFE investment for a loss of $1.0 million.
Current report
$416.8 million aggregate principal amount of the 2026 Notes for shares of the Company’s common stock in September 2023 and the issuance of the 2031 Notes during the quarter ended September 30, 2024.
Current report
Income tax benefit (expense): The Company recorded income tax benefit of $42.8 million for the nine months ended September 30, 2024 compared to an income tax expense of $0.4 million in the prior year period. The $42.8 million income tax benefit primarily arises from the release of the valuation allowance on deferred tax assets, driven by the increase in bitcoin’s fair value and positive forecasts for its future value.
Current report
Net income: The Company recorded net income of $12.7 million for the nine months ended September 30, 2024 compared to net income of $109.3 million in the prior year period. The $96.6 million decrease in net income was primarily driven by a $70.8 million decrease in operating income (loss), the absence of an $82.3 million net gain from the extinguishment of debt, partially offset by a $7.3 million increase in interest income and a $43.1 million income tax benefit in the current period compared to the prior year period.
Current report
Adjusted EBITDA: Adjusted EBITDA was $437.7 million for the nine months ended September 30, 2024 compared to adjusted EBITDA of $158.1 million in the prior year period. The $279.6 million increase was primarily impacted by the increase in earnings before interest, taxes, depreciation and amortization; adjusted for the increase in stock compensation expense and early termination expenses during the current period, and the absence of the net gain from extinguishment of debt from the prior year period.
Current report
On October 15, 2024, the Company announced securing a $200.0 million line of credit, collateralized by a portion of the Company’s bitcoin holdings. The Company plan to use the funds to capitalize on strategic opportunities and for other general corporate purposes. As of October 17, 2024, the facility was fully utilized.
Current report
On October 16, 2024, the Company filed a renewed motion for judgement as a matter of law (or in the alternative for a new trial and remittitur), which, based on applicable law, seeks to overturn, or at minimum significantly reduce, the damage award. Also on October 16, 2024, the Company filed and a motion to correct the judgement’s interest rate. Accordingly, the Company acquired a surety bond for the amount owing. Refer to Note 16 –Legal Proceedings in the notes to the Company’s Condensed Consolidated Financial Statements included in this Quarterly Report, for further information.
Removed paragraphs (14)
Previous report
The Company has continued its recent focus on expanding its operational capabilities globally. Recent efforts include the following:
Previous report
•On April 1, 2024, the Company, through its wholly owned subsidiary MARA USA Corporation, completed the acquisition of a bitcoin mining data center in Garden City, Texas, with a capacity of 200 megawatts, from Applied Digital Corporation, for a purchase price of $96.8 million cash consideration, including customary working capital adjustments that were paid during the second quarter of 2024. This is the Company’s second major acquisition of data centers dedicated to bitcoin mining and increases the amount of self-owned and operated megawatts in the Company’s mining portfolio to 54%. The bitcoin mining data center in Garden City, Texas is located adjacent to a wind farm and uses predominantly renewable energy. We are currently converting approximately 100 megawatts into economic value via bitcoin mining. We expect to expand our presence at the site in 2024 by an additional 100 megawatts to accommodate a total of 200-megawatts of capacity dedicated exclusively to MARA’s bitcoin mining operations.
Previous report
•On April 19, 2024, a Bitcoin halving event occurred on the Bitcoin network. Halving is a key part of the Bitcoin protocol and serves to control the overall supply and reduce the risk of inflation in digital assets using a proof-of-work consensus algorithm. The Bitcoin halving event reduced the block subsidy by half from 6.25 to 3.125 bitcoin per block. Transaction fees, which together with the block subsidy comprise the block reward for successfully solving a block, is not directly impacted by the halving.
Previous report
•During the second quarter of 2024, the Company introduced three business teams, primarily to better align the Company’s internal structure with its pursuit of growth opportunities, to further the Company’s focus on strategic initiatives, to bolster accountability by allowing the Company to better assess business team performance, and to help drive the Company’s efforts to diversify its business portfolio. The three business teams are as follows: (i) Utility Scale Mining, (ii) Energy Harvesting, and (iii) Technology, as well as support organizations.
Previous report
Holdings, LLC acquisition in the first quarter of 2024. The Company continues to exit this business to strategically focus on its owned and operated mining business.
Previous report
Early termination expenses: During the three months ended June 30, 2024, the Company finalized an agreement to early terminate a data center hosting agreement with one of its customers for $5.7 million, net of deposit refund.
Previous report
Net loss: The Company recorded a net loss of $199.7 million for the three months ended June 30, 2024 compared to a net loss of $9.0 million in the prior year period. The $190.7 million decrease in earnings was primarily driven by an increase in the average price of bitcoin, an increase in the change of fair value of derivative instrument, and revenues generated from providing hosting service. These increases were offset by an unfavorable mark-to-market adjustment of digital assets, a decrease in bitcoin production, increased mining costs associated with the growth in our energized hash rate as we deployed additional mining rigs, increased general and administrative expenses, and increased costs related to the acquisition and operation of our new data centers.
Previous report
Adjusted EBITDA: Adjusted EBITDA loss was $85.1 million for the three months ended June 30, 2024 compared to an adjusted EBITDA of $35.8 million in the prior year period. The $120.9 million decrease was primarily driven by an unfavorable fair value adjustment to digital assets of $148.0 million and lower production of bitcoin.
Previous report
Six Months Ended June 30, 2024 Compared to the Six Months Ended June 30, 2023
Previous report
Income tax expense: The Company recorded income tax expense of $6.4 million for the six months ended June 30, 2024 compared to an income tax expense of $0.3 million in the prior year period. The $6.4 million tax expense was primarily due to the establishment of deferred tax liabilities for the significant increase in fair value of bitcoin during the current year period partially offset by the release of its valuation allowance associated with deferred tax assets.
Previous report
Net income: The Company recorded net income of $137.5 million for the six months ended June 30, 2024 compared to net income of $109.7 million in the prior year period. The $27.8 million or approximately 25% increase in earnings was primarily driven by the favorable mark-to-market adjustment of digital assets, an increase in the average price of bitcoin, an increase in the change of fair value of derivative instruments, and revenues generated from providing hosting services. These increases were partially offset by a decrease in bitcoin production, increased mining costs associated with the growth in our energized hash rate as we deployed additional mining rigs, increased general and administrative expenses, and increased costs related to the acquisition and operation of our new data centers, including early termination fees incurred to exit customers in pursuit of the Company’s objective to self-mine at these sites.
Previous report
Adjusted EBITDA: Adjusted EBITDA was $443.7 million for the six months ended June 30, 2024 compared to adjusted EBITDA of $180.4 million in the prior year period. The $263.3 million increase was primarily driven by favorable fair value adjustments to digital assets of $340.8 million and an increase in the average price of bitcoin.
Previous report
OFF-BALANCE SHEET ARRANGEMENTS
Reworded paragraphs (56)
Previous wording
Unless otherwise indicated or the context otherwise requires, references to “MARA,” “we,” “us,” and the “Company” refer to Marathon Digital Holdings, Inc. and its consolidated subsidiaries.
Current wording
Unless otherwise indicated or the context otherwise requires, references to “MARA,” “we,” “us,” and the “Company” refer to MARA Holdings, Inc. and its consolidated subsidiaries.
Previous wording
MARA is a global leader in leveraging digital asset compute to support the energy transformation with operations in North America, the Middle East, Europe, and Latin America. As of June 30, 2024, the Company has established a globally diversified portfolio of 13 digital asset data centers across four continents, with 1,100 megawatts of available energy capacity for computing. The Company uses different strategies and structures (self-owned and operated, joint ventures, and third-party hosted) to diversify risk across the organization. It is the Company’s intent that self-owned and operated sites will represent a greater proportion of our portfolio over time. The Company’s core business is Utility-Scale Computing, which produces or “mines” bitcoin using one of the industry’s largest and most energy-efficient fleets of specialized computers. As of June 30, 2024, the Company had approximately 250,000 energized and operational mining rigs, capable of producing 31.5 exahashes per second with an efficiency of 25 joules per terahash, which the Company believes to be amongst the most efficient in the industry. Additionally, as of June 30, 2024, the Company held approximately 18,488 bitcoin on the Condensed Consolidated Balance Sheets.
Current wording
MARA is a global leader in leveraging digital asset compute to support the energy transformation with operations in four continents and 14 data centers in North America, the Middle East, Europe and Latin America. As of September 30, 2024, the Company had 1,100 megawatts of available energy capacity for computing. The Company uses different strategies and structures (self-owned and operated, joint ventures, and third-party hosted) to diversify risk across the organization. It is the Company’s intent that self-owned and operated sites will represent a greater proportion of our portfolio over time. The Company’s core business is Utility-Scale Computing, which produces or “mines” bitcoin using one of the industry’s largest and most energy-efficient fleets of specialized computers while providing dispatchable compute as an optionality to the electric grid operators to balance electric demands on the grid. As of September 30, 2024, the Company had approximately 268,000 energized and operational mining rigs, capable of producing 36.9 exahashes per second with an efficiency of 22.7 joules per terahash, which the Company believes to be amongst the most efficient in the industry. The Company also operates its own mining pool that it believes provides it a competitive advantage over other mining companies, has its own firmware and state of the art liquid cooling technology, all of which help enhance its margins. The Company tripled its compute capacity in 2023 and is slated to double the capacity again in 2024 as it gears towards 50.0 exahash. Additionally, as of September 30, 2024, the Company held approximately 26,747 bitcoin on the Condensed Consolidated Balance Sheets.
Previous wording
•On July 25, 2024 the Company purchased $100.0 million of bitcoin, increasing our bitcoin holdings to over 20,000 BTC on the Condensed Consolidated Balance Sheets. The Company announced the intent to adopt a full holding onto bitcoin approach (“HODL”) towards its bitcoin treasury policy, retaining all bitcoin mined in its operations, periodically making strategic open market purchases.
Current wording
•On July 25, 2024, the Company purchased $100.0 million of bitcoin using cash on hand, increasing our bitcoin holdings to over 20,000 BTC on the Condensed Consolidated Balance Sheets. The Company announced the intent to adopt a full holding onto bitcoin approach (“HODL”) towards its bitcoin treasury policy, retaining all bitcoin mined in its operations, periodically making strategic open market purchases.
Previous wording
The Company defines adjusted EBITDA as (a) GAAP net income (loss) plus (b) adjustments to add back the impacts of (1) depreciation and amortization, (2) interest expense, (3) income tax expense (benefit) and (4) adjustments for non-cash and non-recurring items which currently include (i) stock compensation expense, (ii) early termination expenses, (iii) gain on investments and (iv) losses from extinguishment of debt. The Company defines total margin excluding depreciation and amortization as (a) GAAP total margin less (b) depreciation and amortization.
Current wording
The Company defines adjusted EBITDA as (a) GAAP net income (loss) plus (b) adjustments to add back the impacts of (1) interest income (2) interest expense, (3) income tax expense (benefit), (4) depreciation and amortization and (5) adjustments for non-cash and/or non-recurring items which currently include (i) stock compensation expense, (ii) change in fair value of derivative instrument, (iii) early termination expenses and other and (iv) net gain from extinguishment of debt. The Company defines total margin excluding depreciation and amortization as (a) GAAP total margin less (b) depreciation and amortization.
Previous wording
(1) Includes 97 bitcoin representing the Company’s share of the equity method investee for the three months ended June 30, 2024.
Current wording
(1) Includes 46 and 23 bitcoin representing the Company’s share of the equity method investee, Abu Dhabi Global Markets company (the “ADGM Entity”), for the three months ended September 30, 2024 and September 30, 2023, respectively.
Previous wording
(5) Cost per Petahash per day is calculated using mining cost of revenues, excluding depreciation and amortization, divided by the Average Operational Hash Rate, excluding the Company’s share of the hash rate for the equity method investee, Abu Dhabi Global Markets company (the “ADGM Entity”).
Current wording
(5) Cost per Petahash per day is calculated using mining cost of revenues, excluding depreciation and amortization, divided by the Average Operational Hash Rate, excluding the Company’s share of the hash rate for the equity method investee, the ADGM Entity, by a factor of 1,000.
Previous wording
(2) Includes approximately $6.1 million of depreciation and amortization from the Company’s share in the results of its equity method investee, the ADGM entity, reported in Equity in net earnings of unconsolidated affiliate for the six months ended June 30, 2024.
Current wording
(6) Includes approximately $3.1 million of depreciation and amortization from the Company’s share in the results of its equity method investee, the ADGM Entity, reported in “Equity in net earnings of unconsolidated affiliate” for the three months ended September 30, 2024 on the Condensed Consolidated Statements of Operations.
Previous wording
(7) Early termination expenses represent amounts recognized as the cost to early terminate data center hosting agreements.
Current wording
(8) Early termination expenses represent amounts recognized as the cost to early terminate data center hosting agreements in addition to the gain (loss) on investments during the period.
Previous wording
Revenues: The Company generated revenues of $145.1 million for the three months ended June 30, 2024, compared to $81.8 million in the prior year period. The $63.4 million or approximately 78% increase in revenues was primarily driven by a $78.6 million increase in the average price of bitcoin, partially offset by a $23.9 million decrease in bitcoin production, and the inclusion of $8.7 million in revenues generated from providing hosting services as a result of the GC Data Center Hosting, LLC acquisition in January of 2024. The average price of bitcoin mined was 136% higher than the average price of bitcoin mined in the prior year period and average daily bitcoin production was 22.9 bitcoin in the current year period compared with 32.2 in the prior year period. The Company produced 868 less bitcoin for the three months ended June 30, 2024 as compared to the prior year period primarily due to the halving event in April 2024, increased global hashrate and the continued impact of unexpected equipment failures at third-party operated sites and transmission line maintenance, partially offset by an improvement in average operational hashrate. Subsequent to June 30, 2024, the third-party site equipment failure and transmission line maintenance was completely resolved.
Current wording
Revenues: The Company generated revenues of $131.6 million for the three months ended September 30, 2024, compared to $97.8 million in the prior year period. The $33.8 million or approximately 35% increase in revenues was primarily driven by a $74.0 million increase in the average price of bitcoin, partially offset by a $40.5 million decrease in bitcoin production due to the April 2024 halving event. The average price of bitcoin mined was 116% higher than the average price of bitcoin mined in the prior year period and average daily bitcoin production was 22.5 bitcoin in the current year period compared with 37.9 in the prior year period. The Company produced 1,420 less bitcoin for the three months ended September 30, 2024 compared to the prior year period primarily due to the halving event in April 2024 and increased global hashrate, partially offset by an increase in the Company’s share of the network hashrate, which resulted in a 14% increase in number of blocks won. During the three months ended September 30, 2024, the third-party site equipment failure and transmission line maintenance were completely resolved.
Previous wording
Cost of revenues – mining during the six months ended June 30, 2024, totaled $157.1 million compared to $88.6 million in the prior year period. The $68.5 million or approximately 77% increase was primarily driven by the growth in the Company’s hash rate from the deployment and energization of mining rigs in existing and new facilities, which increased hosting and energy costs, compared to the prior year period. Partially offsetting the increase was the impact of unexpected equipment failures and transmission line maintenance, which resulted in downtime that reduced hosting and energy costs. The Company’s Cost per Petahash per day improved from $51.7 to $42.8, or approximately 17.1%, in the six months ended June 30, 2024 when compared to the prior year period, primarily due to increased capacity, improved efficiencies and a reduction of third-party costs. The Company believes Cost per Petahash per day to be a key metric to evaluate its operating costs and expects it to reduce as the Company grows its operations towards 50.0 exahash.
Current wording
Cost of revenues – mining during the three months ended September 30, 2024 totaled $97.1 million compared to $59.6 million in the prior year period. The $37.5 million or approximately 63% increase was primarily driven by the growth in the Company’s hash rate from the deployment and energization of mining rigs compared to the prior year period. The Company’s Cost per Petahash per day improved to $37.1 from $45.2, or approximately 18%, in the three months ended September 30, 2024 when compared with the prior year period, primarily due to strategic acquisitions with more efficient cost structures and deployment of more efficient miners. The Company believes Cost per Petahash per day to be a key metric to evaluate its operating costs and expects it to reduce as the Company grows its operations towards 50.0 exahash by the end of 2024.
Previous wording
Cost of revenues – hosting services of $8.0 million primarily includes cost of power and other hosting related operating costs to provide hosting services, which the company acquired through the GC Data Center Equity
Current wording
Cost of revenues – hosting services during the three months ended September 30, 2024 totaled $0.4 million which includes cost of power and other hosting related operating costs to provide hosting services. The Company exited this business during the three months ended September 30, 2024 to strategically focus on its owned and operated mining business.
Previous wording
Cost of revenues – depreciation and amortization during the three months ended June 30, 2024 totaled $87.8 million compared to $37.3 million in the prior year period. The $50.5 million or approximately 136% increase was primarily due to the deployment of mining rigs since the prior year period from the increased scale of the business and the acquisitions of GC Data Center Equity Holdings, LLC and the Garden City Acquisition.
Current wording
Cost of revenues – depreciation and amortization during the three months ended September 30, 2024 totaled $101.1 million compared to $53.5 million in the prior year period. The $47.6 million or approximately 89% increase was primarily due to the deployment of mining rigs since the prior year period, the acquisitions of GC Data Center Equity Holdings, LLC and the Garden City Acquisition and overall increased scale of the business.
Previous wording
Total Margin was a loss of $36.6 million in the current year period compared to a loss of $10.7 million in the prior year period, a decrease of $25.8 million or approximately 240%. The following table summarizes the factors that impacted the decrease in total margin for the three months ended June 30, 2024 as compared to the prior year period:
Current wording
Total Margin was a loss of $67.0 million in the current year period compared to a loss of $15.3 million in the prior year period, a decrease of $51.7 million or approximately 337%. The following table summarizes the factors that impacted the decrease in total margin for the three months ended September 30, 2024 compared to the prior year period:
Previous wording
General and administrative expenses: General and administrative expenses were $57.1 million for the three months ended June 30, 2024, compared to $19.8 million in the prior year period, an increase of $37.3 million or approximately 188%. General and administrative expenses excluding stock-based compensation was $28.8 million in the current year period compared to $15.4 million in the prior year period. This $13.4 million or approximately 87% increase in expenses was primarily due to the increased scale of the business and acquisitions, including payroll and benefits, professional fees, facility and equipment expenses, and other third-party costs associated with growth in the business. The increase in stock-based compensation of $28.3 million in the current year period compared to $4.5 million in the prior year period resulted from issuing the Company's 2023 performance-based stock awards in January 2024 and the introduction of a new long-term performance-based stock award program for 2024 in May 2024. The Company’s increased headcount from 40 employees as of June 30, 2023 to approximately 109 employees as of June 30, 2024 further contributed to the increase in stock-based compensation expense.
Current wording
General and administrative expenses: General and administrative expenses were $63.7 million for the three months ended September 30, 2024, compared to $19.4 million in the prior year period, an increase of $44.3 million or approximately 228%. General and administrative expenses excluding stock-based compensation was $40.4 million in the current year period compared to $13.9 million in the prior year period. This $26.5 million or approximately 190% increase in expenses was primarily due to the increased scale of the business and acquisitions, including payroll and benefits, professional fees, facility and equipment repair and maintenance expenses and other third-party costs associated with growth in the business. The increase in stock-based compensation of $23.3 million in the current year period compared to $5.5 million in the prior year period resulted from issuing the Company's 2023 performance-based stock awards in January 2024 and the introduction in May 2024 of a new long-term performance-based stock award program for 2024 that, unlike the 2023 stock award, meets the criteria to begin expensing immediately. The Company’s headcount increased from 48 employees as of September 30, 2023 to approximately 130 employees as of September 30, 2024, further contributed to the increase in stock-based compensation expense.
Previous wording
Change in fair value of digital assets: The Company recognized a loss on digital assets of $148.0 million for the three months ended June 30, 2024, compared to a gain of $25.2 million in the prior year period. The $173.2 million or approximately 688% decrease was primarily related to the unfavorable mark-to-market adjustment in the current year period due to the decrease in bitcoin price from $71,289 to $62,668, from March 31, 2024 to June 30, 2024, respectively and the underlying digital assets held at the respective dates. As of June 30, 2024, the Company had 18,488 bitcoin, an increase of 47% compared to the prior year period. The Company views bitcoin on its Condensed Consolidated Balance Sheets an important treasury reserve asset and expects to continue to invest in future.
Current wording
Change in fair value of digital assets: The Company recognized a gain on digital assets of $30.1 million for the three months ended September 30, 2024, compared to a loss of $44.7 million in the prior year period. The $74.8 million or approximately 167% increase was primarily related to the favorable mark-to-market adjustment in the current year period due to the increase in bitcoin price from $62,668 to $63,301, from June 30, 2024 to September 30, 2024, respectively, and the underlying digital assets held at the respective dates. As of September 30, 2024, the Company had 26,747 bitcoin, an increase of 95% compared to the prior year period. The Company views bitcoin on its Condensed Consolidated Balance Sheets as an important treasury reserve asset and expects to continue to invest in the future.
Previous wording
Change in fair value of derivative: The Company acquired a commodity swap contract as a result of its January 12, 2024 acquisition of GC Data Center Equity Holdings, LLC. The commodity swap contract hedges price variability in electricity purchases and expires on December 31, 2027. The commodity swap contract is a derivative instrument and remeasured at fair value each reporting period with changes recognized on the Condensed Consolidated Statements of Operations. The fair value increased for the three months ended June 30, 2024, primarily due to the increase in the electricity forward curve prices during the current period compared to the contracted fixed price.
Current wording
Change in fair value of derivative instrument: The Company acquired a commodity swap contract as a result of the GC Data Center Equity Holdings, LLC acquisition. The fair value decreased for the three months ended September 30, 2024, primarily due to the decrease in the electricity forward curve prices during the current period compared to the contracted fixed price.
Previous wording
Research and development: Research and development expenses were $3.8 million for the three months ended June 30, 2024 compared to $0.7 million in the prior year period. These expenses consisted primarily of contractor costs, equipment, supplies, personnel, and related expenses for our mining and technology businesses.
Current wording
Research and development: Research and development expenses were $2.8 million for the three months ended September 30, 2024 compared to $0.7 million in the prior year period. These expenses consisted primarily of contractor costs, supplies, personnel and related expenses for our mining and technology businesses.
Previous wording
Amortization of intangible assets: During the three months ended June 30, 2024, the Company fully amortized the customer relationships acquired in the GC Data Center Equity Holdings, LLC acquisition for $19.3 million, due to the Company’s strategic decision to exit hosting services business and termination of customer relationships during the period. There was no amortization expense of intangible assets in the prior year period.
Current wording
Amortization of intangible assets: During the three months ended September 30, 2024, the Company recorded a $0.2 million amortization expense for intangible assets. There was no amortization expense of intangible assets in the prior year period.
Previous wording
Interest income: Interest income was $2.2 million for the three months ended June 30, 2024 compared to $0.1 million in the prior year period. The $2.1 million increase was primarily due to the higher balance of cash and cash equivalents and an increase in interest rates in the current year period.
Current wording
Interest income: Interest income was $3.9 million for the three months ended September 30, 2024 compared to $0.4 million in the prior year period. The $3.5 million increase was primarily due to the higher average balance of cash and cash equivalents and interest earned on loaned bitcoin in the current year period.
Previous wording
Interest expense: Interest expense was $1.4 million for the three months ended June 30, 2024 compared to $2.8 million in the prior year period. The $1.5 million, or approximately 52% decrease was primarily a result of lower interest costs following the exchange of $416.8 million aggregate principal amount of Notes for shares of the Company’s common stock during the year ended December 31, 2023.
Current wording
Interest expense: Interest expense of $2.3 million for the three months ended September 30, 2024 remained relatively flat compared to the prior year period. Interest costs were impacted by the exchange of $416.8 million aggregate principal amount of 2026 Notes for shares of the Company’s common stock September 2023 and the issuance of the 2031 Notes during the three months ended September 30, 2024.
Previous wording
Income tax benefit (expense): The Company recorded income tax benefit of $31.7 million for the three months ended June 30, 2024 compared to an income tax expense of $0.2 million in the prior year period. The $31.7 million tax benefit was primarily due to the release of its valuation allowance associated with deferred tax assets and the reduction of deferred tax liabilities for the decrease in fair value of bitcoin during the current period.
Current wording
Income tax benefit (expense): The Company recorded income tax benefit of $49.2 million for the three months ended September 30, 2024 compared to an income tax expense of $0.1 million in the prior year period. The $49.2 million income tax benefit primarily arises from the release of the valuation allowance on deferred tax assets, driven by the increase in bitcoin’s fair value and positive forecasts for its future value.
Previous wording
(1) Includes 268 bitcoin representing the Company’s share of the equity method investee, the ADGM entity, for the six months ended June 30, 2024.
Current wording
(1) Includes 313 and 23 bitcoin representing the Company’s share of the equity method investee, the ADGM entity, for the nine months ended September 30, 2024 and September 30, 2023, respectively.
Previous wording
(6) Includes approximately $3.5 million of depreciation and amortization as the Company’s share in the results of its equity method investee reported in Equity in net earnings of unconsolidated affiliate for the three months ended June 30, 2024.
Current wording
(2) Includes approximately $9.2 million of depreciation and amortization from the Company’s share in the results of its equity method investee, the ADGM entity, reported in “Equity in net earnings of unconsolidated affiliate” for the nine months ended September 30, 2024 on the Condensed Consolidated Statements of Operations.
Previous wording
Revenues: The Company generated revenues of $310.3 million for the six months ended June 30, 2024, compared to $132.9 million in the prior year period. The $177.4 million or approximately 134% increase in revenues was primarily driven by a $161.5 million increase in the average price of bitcoin mined, partially offset by a $13.5 million decrease in bitcoin production, and the inclusion of $29.4 million in revenues generated from providing hosting services as a result of the GC Data Center Hosting, LLC acquisition in January of 2024. The average price of bitcoin mined was 125% higher than the average price of bitcoin mined in the prior year period and average daily bitcoin production was 26.8 bitcoin in the current year period compared with 28.3 in the prior year period. The Company produced 252 less bitcoin for the six months ended June 30, 2024 as compared to the prior year period primarily due to the halving event in April 2024, increased global hashrate and the continued impact of unexpected equipment failures at third-party operated sites and transmission line maintenance, partially offset by an improvement in average operational hashrate. Subsequent to June 30, 2024, the third-party site equipment failure and transmission line maintenance was completely resolved.
Current wording
Revenues: The Company generated revenues of $442.0 million for the nine months ended September 30, 2024, compared to $230.7 million in the prior year period. The $211.2 million or approximately 92% increase in revenues was primarily driven by a $234.0 million increase in the average price of bitcoin mined, partially offset by a $52.6 million decrease in bitcoin production due to the April 2024 halving, and the inclusion of $29.8 million in revenues generated from providing hosting services as a result of the GC Data Center Hosting, LLC acquisition in January of 2024. The average price of bitcoin mined was 120% higher than the average price of bitcoin mined in the prior year period and average daily bitcoin production was 25.3 bitcoin in the current year period compared with 31.5 in the prior year period. The Company produced 1,672 less bitcoin for the nine months ended September 30, 2024 compared to the prior year period primarily due to the halving event in April 2024, increased global hashrate and the continued impact of unexpected equipment failures at third-party operated sites and transmission line maintenance, partially offset by an increase in the Company’s share of the network hashrate. During the quarter ended September 30, 2024, the third-party site equipment failure and transmission line maintenance were completely resolved.
Previous wording
Cost of revenues – mining during the three months ended June 30, 2024 totaled $85.8 million compared to $55.2 million in the prior year period. The $30.6 million or approximately 55% increase was primarily driven by the growth in the Company’s hash rate from the deployment and energization of mining rigs in existing and new facilities, which increased hosting and energy costs, compared to the prior year period. Partially offsetting the increase was the impact of unexpected equipment failures and transmission line maintenance, which resulted in downtime that reduced hosting and energy costs. The Company’s Cost per Petahash per day improved from $50.4 to $41.0, or approximately 18.7%, in the three months ended June 30, 2024 when compared with the prior year period, primarily due to increased capacity, improved efficiencies and a reduction of third-party costs. The Company believes Cost per Petahash per day to be a key metric to evaluate its operating costs and expects it to reduce as the Company grows its operations towards 50.0 exahash.
Current wording
Cost of revenues – mining during the nine months ended September 30, 2024 totaled $254.2 million compared to $148.2 million in the prior year period. The $106.0 million or approximately 72% increase was primarily driven by the growth in the Company’s hash rate from the deployment and energization of mining rigs compared to the prior year period. Partially offsetting the increase was the impact of unexpected equipment failures and transmission line maintenance, which resulted in downtime that reduced hosting and energy costs. The Company’s Cost per Petahash per day improved to $40.7 from $48.9, or approximately 17%, in the nine months ended September 30, 2024 when compared to the prior year period, primarily due to strategic acquisitions with more efficient cost structures and deployment of more efficient miners. The Company believes Cost per Petahash per day to be a key metric to evaluate its operating costs and expects it to reduce as the Company grows its operations towards 50.0 exahash by the end of 2024.
Previous wording
Cost of revenues – hosting services of $27.0 million primarily includes cost of power and other hosting related operating costs to provide hosting services. Hosting services includes results beginning from January 12, 2024, the date of the acquisition of GC Data Center Equity Holdings, LLC.
Current wording
Cost of revenues – hosting services during the nine months ended September 30, 2024 totaled $27.4 million which includes cost of power and other hosting related operating costs to provide hosting services. Hosting services include results beginning January 12, 2024, the date of the acquisition of GC Data Center Equity Holdings, LLC. As of September 30, 2024, the Company exited all hosting facilities to strategically focus on its owned and operating mining business.
Previous wording
Cost of revenues – depreciation and amortization during the six months ended June 30, 2024 totaled $165.8 million compared to $55.0 million in the prior year period. The $110.8 million or approximately 201% increase was primarily due to the deployment of mining rigs since the prior year period from the increased scale of the business and the acquisitions of GC Data Center Holdings, LLC and the Garden City Acquisition.
Current wording
Cost of revenues – depreciation and amortization during the nine months ended September 30, 2024 totaled $266.9 million compared to $108.6 million in the prior year period. The $158.4 million or approximately 146% increase was primarily due to the deployment of mining rigs since the prior year period, the acquisitions of GC Data Center Equity Holdings, LLC and the Garden City Acquisition and overall increased scale of the business.
Previous wording
Total Margin was a loss of $39.6 million in the current year period compared to a loss of $10.7 million in the prior year period, a decrease of approximately $28.8 million. The following table summarizes the factors that impacted the decrease in total margin for the six months ended June 30, 2024 as compared to the prior year period:
Current wording
Total Margin was a loss of $106.6 million in the current year period compared to a loss of $26.0 million in the prior year period, a decrease of approximately $80.5 million. The following table summarizes the factors that impacted the decrease in total margin for the nine months ended September 30, 2024 compared to the prior year period.
Previous wording
General and administrative expenses: General and administrative expenses were $130.4 million for the six months ended June 30, 2024, compared to $35.0 million in the prior year period, an increase of $95.5 million or approximately 273%. General and administrative expenses excluding stock-based compensation was $50.2 million in the current year period compared to $26.6 million in the prior year period. The $23.6 million or approximately 89% increase in expenses was primarily due to the increased scale of the business and acquisitions, including payroll and benefits, professional fees, facility and equipment expenses, and other third-party costs associated with the growth in the business. The increase in stock-based compensation of $80.2 million in the current year period and $8.4 million in the prior year period resulted from issuing the Company's 2023 performance-based stock awards in January 2024 and the introduction of a new long-term performance-based stock award program for 2024 in May 2024. The Company’s headcount increased from 40 employees as of June 30, 2023 to 109 employees as of June 30, 2024, further contributed to the increase in stock-based compensation expense.
Current wording
General and administrative expenses: General and administrative expenses were $194.2 million for the nine months ended September 30, 2024, compared to $54.4 million in the prior year period, an increase of $139.8 million or approximately 257%. General and administrative expenses excluding stock-based compensation was $90.6 million in the current year period compared to $40.5 million in the prior year period. The $50.1 million or approximately 124% increase in expenses was primarily due to the increased scale of the business and acquisitions, including payroll and benefits, professional fees, facility and equipment repair and maintenance expenses, and other third-party costs associated with growth in the business. The increase in stock-based compensation of $103.6 million in the current year period compared to $13.9 million in the prior year period resulted from issuing the Company's 2023 performance-based stock awards in January 2024 and the introduction of a new long-term performance-based stock award program for 2024 in May 2024 that, unlike the 2023 stock award, meets the criteria to begin expensing immediately. The Company’s headcount increased from 48 employees as of September 30, 2023 to approximately 130 employees as of September 30, 2024, further contributed to the increase in stock-based compensation expense.
Previous wording
Change in fair value of digital assets: The Company recognized a gain on digital assets of $340.8 million, compared to a gain of $162.6 million in the prior year period. The $178.2 million or approximately 110% increase was primarily related to the increase in bitcoin price from $42,288 to $62,668 from December 31, 2023 to June 30, 2024, respectively and the underlying digital assets held at the respective dates. As of June 30, 2024, the Company had 18,488 bitcoin, an increase of 47% compared to the prior year period. The Company views bitcoin on its Condensed Consolidated Balance Sheets an important treasury reserve asset and expects to continue to invest in future.
Current wording
Change in fair value of digital assets: The Company recognized a gain on digital assets of $370.9 million, compared to a gain of $117.9 million in the prior year period. The $253.0 million or approximately 215% increase was primarily related to the increase in bitcoin price from $42,288 to $63,301 from December 31, 2023 to September 30, 2024, respectively and the underlying digital assets held at the respective dates. As of September 30,
Previous wording
Change in fair value of derivative: The Company acquired a commodity swap contract as a result of its acquisition of GC Data Center Equity Holdings, LLC. The commodity swap contract hedges price variability in electricity purchases and expires on December 31, 2027. The commodity swap contract is a derivative instrument and remeasured at fair value each reporting period with changes recognized on the Condensed Consolidated Statements of Operations. The fair value increased for the six months ended June 30, 2024, primarily due to the increase in the electricity forward curve prices during the current year period compared to the contracted fixed price.
Current wording
Change in fair value of derivative instrument: The Company acquired a commodity swap contract as a result of its acquisition of GC Data Center Equity Holdings, LLC. The commodity swap contract hedges price variability in electricity purchases and expires on December 31, 2027. The commodity swap contract is a derivative instrument and remeasured at fair value each reporting period with changes recognized on the Condensed Consolidated Statements of Operations. The fair value decreased for the nine months ended September 30, 2024, primarily due to the decrease in the electricity forward curve prices during the current year period compared to the contracted fixed price.
Previous wording
Research and development: Research and development expenses were $6.3 million for the six months ended June 30, 2024 compared to $0.9 million in the prior year period. These expenses consisted primarily of contractor costs, equipment, supplies, personnel, and related expenses for our mining and technology businesses.
Current wording
Research and development: Research and development expenses were $9.1 million for the nine months ended September 30, 2024 compared to $1.6 million in the prior year period. These expenses consisted primarily of contractor costs, supplies, personnel, and related expenses for our mining and technology businesses.
Previous wording
Early termination expenses: On January 30, 2024, the Company entered into a termination and transition agreement (“Agreement”) with the operator, US Bitcoin Corp (“USBTC”), of the two sites from the January 12, 2024, acquisition of GC Data Center Equity Holdings, LLC. The Company and USBTC agreed to terminate the acquired operating agreement for a termination fee of $19.5 million, net of deposit refund. In addition, the Company finalized an agreement to early terminate a data center hosting agreement with one of its customers and in accordance with the agreement, the Company forgave the outstanding accounts receivable balance of $8.3 million.
Current wording
Early termination expenses: On January 30, 2024, the Company entered into a termination and transition agreement (“Agreement”) with the operator, US Bitcoin Corp (“USBTC”), of the two sites from the January 12, 2024, acquisition of GC Data Center Equity Holdings, LLC. The Company and USBTC agreed to terminate the acquired operating agreement for a termination fee of $19.5 million, net of deposit refund. In addition, during the nine months ended September 30, 2024, the Company terminated the remaining hosting agreements with customers from the GC Data Center Equity Holdings, LLC acquisition, and recognized early termination expenses of $18.4 million, to expand self-mining capacity.
Previous wording
Amortization of intangible assets: During the six months ended June 30, 2024, the Company fully amortized the customer relationships acquired in the GC Data Center Equity Holdings, LLC acquisition for $22.0 million, due to the Company’s strategic decision to exit hosting services business and termination of customer relationships during the period. There was no amortization expense of intangible assets in the prior year period.
Current wording
Amortization of intangible assets: During the nine months ended September 30, 2024, the Company fully amortized the customer relationships acquired in the GC Data Center Equity Holdings, LLC acquisition for $22.0 million, due to the Company’s strategic decision to exit hosting services business and termination of customer relationships. There was no amortization expense of intangible assets in the prior year period.
Previous wording
Net loss from extinguishment of debt: In March 2023, the Company prepaid the outstanding balance on its term loan facility with Silvergate Bank and terminated the term loan facility. The Company and Silvergate agreed to also terminate the Company’srevolving credit facilities. In connection with the termination of the credit facility, the Company recorded a lossin the amount of $0.3 million to “Netloss from extinguishment of debt” in the Condensed Consolidated Statements of Operations.
Current wording
Net gain from extinguishment of debt: In March 2023, the Company prepaid the outstanding balance on its term loan facility with Silvergate Bank and terminated the term loan facility. The Company and Silvergate agreed to also terminate the Company’srevolving credit facilities. In connection with the termination of the credit facility, the Company recorded a lossin the amount of $0.3 million. Additionally, in September 2023, the Company entered into agreements with certain holders of 2026 Notes to exchange an aggregate $416.8 million principal amount of 2026 Notes for 31,722,417 shares of the Company's common stock and recorded a gain in the amount of $82.6 million.
Previous wording
Equity in net earnings of unconsolidated affiliate: During the six months ended June 30, 2024, the Company recorded its share of net earnings for its 20% interest in the ADGM Entity in the amount of $1.3 million, which began mining operations during the third quarter of 2023. The Company’s share of the ADGM Entity’s operating results included earnings from the production of 268 bitcoin, a $4.1 million impairment of property, plant and equipment and approximately $6.1 million of depreciation and amortization during the six months ended June 30, 2024.
Current wording
Equity in net earnings of unconsolidated affiliate: During the nine months ended September 30, 2024, the Company recorded its share of net losses for its 20% interest in the ADGM Entity in the amount of $0.8 million, compared to $0.6 million in the prior year period. The Company’s share of the ADGM Entity’s operating results included earnings from the production of 313 bitcoin, a $4.1 million impairment of property, plant and equipment and approximately $9.2 million of depreciation and amortization during the nine months ended September 30, 2024, whereas in the prior year period, the Company’s share of ADGM Entity’s operating results included earnings from production of 23 bitcoin and approximately $0.5 million of depreciation and amortization.
Previous wording
Loss on hedge instruments: During the six months ended June 30, 2024, the Company recorded a $2.3 million realized loss related to bitcoin hedging activities. The Company has significant bitcoin holdings on its balance sheet and from time to time will evaluate, as part of its risk management and treasury management process, short-term hedging or yield enhancing opportunities. The Company has an Investment Committee composed of cross functional members of its senior executive team that evaluates market conditions to set hedging, investments, and monetization of bitcoin strategies. There were no outstanding hedging transactions as of the six months ended June 30, 2024 and there were no such activities in the prior year period.
Current wording
Loss on hedge instruments: During the nine months ended September 30, 2024, the Company recorded a $2.3 million realized loss related to bitcoin hedging activities. The Company has significant bitcoin holdings on its balance sheet and from time to time will evaluate, as part of its risk management and treasury management process, short-term hedging or yield enhancing opportunities. The Company has an Investment Committee composed of cross functional members of its senior executive team that evaluates market conditions to set hedging, investments, and monetization of bitcoin strategies. There were no outstanding bitcoin hedging transactions as of the nine months ended September 30, 2024 and there were no such activities in the prior year period.
Previous wording
Interest income: Interest income was $4.8 million for the six months ended June 30, 2024 compared to $0.9 million in the prior year period. The $3.9 million increase was primarily due to the higher balance of cash and cash equivalents and an increase in interest rates in the current year period.
Current wording
Interest income: Interest income was $8.7 million for the nine months ended September 30, 2024 compared to $1.4 million in the prior year period. The $7.3 million increase was primarily due to the higher average balance of cash and cash equivalents and interest earned on loaned bitcoin in the current year period.
Previous wording
Interest expense: Interest expense was $2.6 million for the six months ended June 30, 2024 compared to $6.6 million in the prior year period. The $4.0 million or approximately 60% decrease was primarily a result of lower interest costs following the exchange of $416.8 million aggregate principal amount of the Notes for shares of the Company’s common stock in September 2023.
Current wording
Interest expense: Interest expense was $5.0 million for the nine months ended September 30, 2024 compared to $9.1 million in the prior year period. The $4.2 million or approximately 46% decrease was a result of the exchange of
Previous wording
The following table presents a summary of the Company’s cash flow activity for the six months ended June 30, 2024 and 2023:
Current wording
The following table presents a summary of the Company’s cash flow activity for the nine months ended September 30, 2024 and 2023:
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Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
Equity in net income of unconsolidated affiliate: During the three months ended September 30, 2024, the Company recorded its share of net earnings for its 20% interest in the ADGM Entity in the amount of $2.1 million, compared to $0.6 million in the prior year period. The Company’s share of the ADGM Entity’s operating results included earnings from the production of 46 bitcoin and approximately $3.1 million of depreciation and amortization during the three months ended September 30, 2024, whereas in the prior year period, the Company’s share of ADGM Entity’s operating results included earnings from production of 23 bitcoin and approximately $0.5 million of depreciation and amortization.
Current report — wording carried from elsewhere
2024, the Company had 26,747 bitcoin, an increase of 95% compared to the prior year period. The Company views bitcoin on its Condensed Consolidated Balance Sheets as an important treasury reserve asset and expects to continue to invest in the future.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
•During the second quarter of 2024, the Company announced its Kaspa mining operations, as a potential way to diversify revenue while continuing to utilize its current infrastructure and expertise in digital asset compute. After successfully deploying the first Kaspa Application Specific Integrated Circuit (“ASIC”) mining rigs, the Company began scaling its operations. As of June 30, 2024, the Company held approximately 89 million Kaspa coins on our Condensed Consolidated Balance Sheets. As of now we incur significantly less cost to produce Kaspa in US dollar terms, which helps pay for our expenses and allows us to hold a larger amount of bitcoin on our Condensed Consolidated Balance Sheets.