Quarterly report pursuant to Section 13 or 15(d)

Liquidity and Financial Condition

v3.22.2.2
Liquidity and Financial Condition
9 Months Ended
Sep. 30, 2022
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Liquidity and Financial Condition

Note 2. Liquidity and Financial Condition 

At September 30, 2022, the Company had approximate balances of cash and cash equivalents of $255.0 million, working capital of $369.8 million, total stockholders’ equity of $1.3 billion and an accumulated deficit of $591.6 million. To date, the Company has, in large part, relied on equity financings to fund its operations. During the nine months ended September 30, 2022, the Company sold 1,925 Bitcoin for proceeds of approximately $52.5 million. The Company monitors its balance sheet on an ongoing basis, evaluating the level of Bitcoin retained from monthly production in consideration of operational and expansion cash requirements. The Company continues to have a positive long-term view on its Bitcoin holdings and believes it is in the best interest of its stockholders to have Bitcoin on its balance sheet. The Company believes its current cash and Bitcoin on hand is sufficient to meet its operating and capital requirements for at least one year from the date these unaudited condensed consolidated financial statements are issued. 

During the nine months ended September 30, 2022, the Company paid approximately $194.9 million as deposits primarily for miners and reclassified $288.1 million of deposits to property and equipment in connection with the deployment of miners at the Rockdale Facility. As of September 30, 2022, all 55,728 of the Company’s miners were located at the Rockdale Facility.

2022 ATM Offering:

As disclosed in Note 13, “Stockholders’ Equity”, the Company entered into a Sales Agreement with Cantor Fitzgerald & Co., B. Riley Securities, Inc., BTIG, LLC, Roth Capital Partners, LLC, D.A. Davidson & Co., Macquarie Capital (USA) Inc., and Northland Securities, Inc. (the “Sales Agents”) dated March 31, 2022 (the “Sales Agreement”), pursuant to which the Company may, from time to time, sell up to $500 million in shares of the Company’s common stock through the Sales Agents, acting as the Company’s sales agent and/or principal, in a continuous at-the-market offering (the “2022 ATM Offering”). The Company paid the Sales Agents a commission of up to 3.0% of the aggregate gross proceeds the Company receives from all sales of the Company’s common stock under the Sales Agreement. As of September 30, 2022, the Company had received net proceeds of approximately $298.4 million (after deducting $6.5 million in commissions and expenses) on sales of 37,052,612 shares of common stock under the Sales Agreement at a weighted average price of $8.23 per share.

 

COVID-19: 

The COVID-19 global pandemic has been unprecedented and unpredictable; there continues to be widespread impact resulting from the COVID-19 pandemic and this is likely to continue to result in significant national and global economic disruption, which may adversely affect our business. Based on our current assessment, however, we do not expect any material impact on our long-term development, our operations, or our liquidity due to the worldwide spread of COVID-19, other than the potential impact of COVID-19 on global logistics discussed below. We continue to monitor this situation and the possible effects on our financial condition, liquidity, operations, suppliers, and industry.

In addition, nationally, we have experienced and are experiencing varying degrees of inflation, resulting in part from various supply chain disruptions, increased shipping and transportation costs, and increased raw material and labor costs as well as other disruptions resulting from the continuing COVID-19 pandemic and general global economic conditions. This inflationary impact on our cost structure has contributed to adjustments in operations and our ability to obtain materials and retain talent, despite a continued focus on reducing our costs where possible.

Global Logistics:

Ongoing global supply logistics have caused delays across all channels of distribution. Similarly, we have also experienced delays in certain of our miner delivery schedules and in our infrastructure development schedules due to constraints on the globalized supply chains for miners, electricity distribution equipment and construction materials. Through the date of this Quarterly Report, we have been able to effectively mitigate delivery delays to avoid materially impacting our miner deployment schedule; however, there are no assurances we will be able to continue to mitigate delivery delays in the future. Additionally, the expansion of the Rockdale Facility and the development of our new Corsicana Facility requires large quantities of construction materials, specialized electricity distribution equipment and other component parts that can be difficult to source. In anticipation of the development of the Corsicana Facility, we have procured and hold much of the required materials to help mitigate against global supply logistic and pricing issues. We also monitor developments in the global supply chain on an ongoing basis and make efforts to determine how that may potentially impact our expansion plans. See the discussion under the heading “Risk Factors” in Part II, Item 1A of this Quarterly Report and under Part I, Item 1A of the 2021 Annual Report for additional discussion regarding potential impacts the global supply chain crisis may have on our operations and plans for expansion.