Property, Plant, and Equipment and Other Assets

12 Months Ended

Dec. 31, 2019

Property, Plant and Equipment [Abstract]

Property, Plant, and Equipment and Other Assets

Note 4. Property, Plant, and Equipment and Other Assets

Property and equipment consisted of the following:	As of
	December 31, 2019			December 31, 2018
Land	$	57		$	-
Computer hardware and software		10			17
Bitcoin mining machines		2,313			-
Infrastructure		771			-
Containers		467			-
Property and equipment, gross		3,618			17
Less: Accumulated depreciation		(82	)		(17	)
Property and equipment, net	$	3,536		$	-

The Company recorded depreciation expense of $170 and $3,291 for the years ended December 31, 2019 and 2018, respectively.

Under the guidance of ASC 360, a long-lived asset (or asset group) should be tested for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. Based on the significant decline in the price of Bitcoin during the nine months ended September 30, 2018, the Company performed a recoverability test, in which it measured the undiscounted cash flows of its cryptocurrency mining assets. This recoverability test indicated that its cryptocurrency mining assets might be impaired. The Company then performed the second step of the analysis, whereby it measured the fair value of the cryptocurrency mining assets. The Company used a weighted approach where it measured both the discounted cash flows expected from the cryptocurrency mining assets as well as determining the market value of the assets. The Company determined that as of September 30, 2018, that it should record an impairment charge of $3,668 to its cryptocurrency mining assets. Based on the continual decline in Bitcoin during the fourth quarter of 2018, coupled with the unpredictable volatility of Bitcoin’s price, the Company believes that there are indications that the decrease in Bitcoin’s price is other than temporary.

Based on the aforementioned reasons, the Company determined to fully impair the remaining carrying value of its cryptocurrency mining assets as of December 31, 2018 with a fourth quarter impairment charge of $2,677. The total impairment charge recognized during the year ended December 31, 2018 was $6,345.

During the year ended December 31, 2019, the Company recorded an impairment charge of $64 in connection with the termination of its hosting agreement in Ohio. See Note 9 for a further description of this termination.

During 2018, the Company sold Bitcoin machines with an aggregate book value of $474 for gross proceeds of $427 and recorded a loss on the sale of $47. During 2019, the Company sold Bitcoin machines with an aggregate net book value of $18 for gross proceeds of $535 and received a vendor credit of $82 upon the conveyance of miners that were fully depreciated, resulting in a net gain of $599.

Other Assets consisted of the following:	As of
	December 31, 2019		December 31, 2018
Deposits on containers	$	203	$	-
Security deposits		118		204
Other Assets	$	321	$	204

During July 2019, the Company entered into a purchase agreement with Bitmain to purchase 1,100 Antminer-S-17 Bitcoin mining machines for an aggregate purchase price of approximately $2,770, subject to adjustments, with delivery in November 2019 to the Company’s facility in LaFayette, GA.

The Company paid a deposit of $1,385 in July 2019. Due to declining prices and price protection included in the purchase agreement, the Company was able to take ownership of about 1,100 S17 Pro miners with a further payment of $71,640 upon delivery in November 2019. The Company also acquired approximately 400 Bitcoin mining machines from Bitmain in November 2019, for a total of approximately 1,500 Bitcoin mining machines all located in the Company’s facility in LaFayette, GA. Once these Bitcoin mining machines were delivered and installed, the deposit was reclassified to property and equipment, and depreciation commenced over the 2-year estimated useful life using the straight-line method. All Bitcoin mining machines were placed in service during 2019, except approximately 600 which were placed in service in January 2020 upon delivery and installation of two additional containers.

During September 2019, the Company entered into an agreement to purchase two containers to house the Bitcoin mining machines and paid a deposit of $203. Full payment on these containers was made upon delivery and installation in January 2020, at which time the cost of containers was reclassified to property and equipment and depreciated over its estimated useful life of 5 years using the straight-line method.