Quarterly report pursuant to Section 13 or 15(d)

Property and equipment

v3.8.0.1
Property and equipment
3 Months Ended
Mar. 31, 2018
Property, Plant and Equipment [Abstract]  
Property and equipment
Note 4. Property and equipment:

As of March 31, 2018, the Company’s property and equipment primarily consisted of its approximately 8,000 cryptocurrency machines. During the first quarter of 2018, the Company determined that certain events occurred that were indicators of potential impairments to the miners.  Based upon the significant decline in the price of bitcoins during the 1st quarter of 2018 and the decline in projected cash flows over the life of the miners, the Company performed an undiscounted cash flow test to determine if the miners were impaired. The undiscounted cash flows were less than the carrying amount of the miners and when compared the discounted fair value of the miners to the carrying value of the miners, the Company determined that there was an $11,480,000 impairment charge to be recorded as of March 31, 2018. The breakdown of the impairment charge is as follows:

   
March 31, 2018
(unaudited)
 
Prive miners
 
$
10,677,603
 
BMSS miners
   
406,652
 
Kairos miners
   
396,236
 
Total impairment charge
 
$
11,480,491
 

In the first quarter of 2018 the Company commenced the relocation of the servers acquired in the Kairos transaction to the newly leased facility in Oklahoma City Oklahoma. Kairos noted that due to storm water leakage into a previously utilized facility as of December 31, 2017, servers consisting of 90 AntMiner S9s and 29 AntMiner L3s had visible evidence of exposure to water. These servers were taken off line and Kairos investigated the extent of possible damage and functionality of the 119 servers. During the first quarter of 2018, the Company determined there was no damage to the 119 servers and they are being relocated to the Company’s facility in Oklahoma City, Oklahoma during the second quarter of 2018.
 
 
Property and equipment consisted of the following:
 
   
March 31, 2018
(unaudited)
   
December 31, 2017
 
Cryptocurrency machines, net of impairment
   
23,468,237
   
$
4,700,575
 
Leasehold improvements
   
852,512
     
-
 
Office and computer equipment
   
70,718
     
61,670
 
Total cost of property and equipment
   
24,391,467
     
4,762,245
 
Less accumulated depreciation
   
(1,899,041
)
   
(468,079
)
Property and equipment, net
 
$
22,492,426
   
$
4,294,166
 
 
Depreciation expense for the three months ended March 31, 2018 and 2017, totaled approximately $2,142,000 and $500, respectively.