Leases

9 Months Ended

Sep. 30, 2022

Leases

Leases

Note 9. Leases

In December 2019, the Company entered an office lease in connection with the relocation of its executive office to Raleigh, North Carolina. The Company accounted for this lease as an operating lease under the guidance of Topic 842. Rent expense under the new lease is $3 per month, with annual increases of 3% during the three-year term. The Company used an incremental borrowing rate of 29.91% based on the weighted average effective interest rate of its outstanding debt. In December 2019, the Company recorded a Right of Use Asset of $79 and a corresponding Lease Liability of $79. The Right to Use Asset is accounted for as an operating lease and has a balance, net of amortization, of $12 as of September 30, 2022.

On November 1, 2021, the Company entered into a lease agreement to lease a contiguous portion of land to its existing property, as a planting area for trees intended to mitigate noise from the Company’s cryptocurrency mining operations. The agreement calls for yearly installments of $3 for the first five years, with an option to extend this lease for another five-year period at a rate not to exceed 105% of the current lease payment. On each anniversary date, the Company will pay $3 in advance, with payment for the first year paid upon execution of the lease. The Company used an incremental borrowing rate of 8.0% based on the interest rate of incorporated in the most recent promissory note. At lease inception, the Company recorded a Right of Use Asset of $22 and a corresponding Lease Liability of $22. The Right to Use Asset is accounted for as an operating lease and has a balance, net of amortization, of $20 as of September 30, 2022.

Total future minimum payments required under the lease agreement are as follows:

	Amount
2022	$	13
2023		3
2024		3
2025		3
2026		3
Thereafter		12
Total undiscounted minimum future lease payments	$	37
Less Imputed interest		(7	)
Present value of operating lease liabilities	$	30
Disclosed as:
Current portion	$	11
Non-current portion		19

The Company recorded rent expense of $9 and $9 for the three months ended September 30, 2022 and 2021, respectively, and $29 and $27 for the nine months ended September 30, 2022 and 2021, respectively.

At September 30, 2022 the weighted average interest rate for the operating lease was 14.88%. At September 30, 2022, the weighted average remaining lease term for operating lease was 6.3 years. The Company’s lease agreement does not contain any material residual value guarantees or material restrictive covenants.