JOINT VENTURE (Tables)

3 Months Ended

Mar. 31, 2022

JOINT VENTURE

Schedule of reconciliation of direct payments made on behalf of joint venture in the consolidated statement of cash flows

The Company’s direct payments to Minerva and Bitmain, among others, on behalf of Nautilus for the three months ended March 31, 2022, are included in investments in joint venture related to direct payments made on behalf of joint venture in the consolidated statement of cash flows. A reconciliation of amounts included within this footnote to captions in the consolidated statement of cash flows for the three months ended March 31, 2022 follows (in thousands):

Payment of TeraWulf 50% share of Bitmain deposits	$	(11,402)
Investments in joint venture related to direct payments made on behalf of joint venture		(11,402)
Direct investments in joint venture		(7,670)
Investments in joint venture, including direct payments made on behalf of joint venture	$	(19,072)
Payment of Talen 50% share of Bitmain deposits	$	(11,402)
Reimbursable payments for deposits on plant and equipment made on behalf of a joint venture partner	$	(11,402)
Talen reimbursement of 50% share of Bitmain deposits	$	11,402
Reimbursement of payments for deposits on plant and equipment made on behalf of a joint venture partner	$	11,402

Summary of interest in Nautilus and maximum exposure to loss as a result of its involvement with the VIE

Nautilus is a VIE accounted for using the equity method of accounting. The table below summarizes the Company’s interest in Nautilus and the Company’s maximum exposure to loss as a result of its involvement with the VIE as of March 31, 2022 (in thousands, except for percentages):

											Commitment to
									Company’s		Future		Company’s
							Net loss		Variable		Additional		Maximum
	%		Initial		Additional		Inception		Interest in		Contributions		Exposure to Loss
Entity	Ownership		Investment		Investment		to Date		Entity		(1)		in Entity (2)
Nautilus	50	%	$	18,000	$	107,372	$	2,326	$	123,046	$	31,168	$	154,214

(1) The Members may seek alternate financing for the Pennsylvania bitcoin mining facility, which could reduce the amount of investments each Member would be required to provide. The Members may mutually agree on changes to the Pennsylvania bitcoin mining facility, which could increase or decrease the amount of contributions each Member is required to provide.

(2) The maximum exposure at March 31, 2022 is determined by adding the Company’s variable interest in the entity and any explicit or implicit arrangements that could require the Company to provide additional financial support. The amount represents the contractually required capital contributions of the Company which are required for the initial phase of the Pennsylvania bitcoin mining facility buildout.

Condensed results of operations for the nine months ended December 31,2021 and the condensed financial position as of December 31, 2021, of Nautilus

The condensed results of operations for the three months ended March 31, 2022 and the condensed financial position as of March 31, 2022 and December 31, 2021, of Nautilus are summarized below (in thousands):

	Three Months Ended
	March 31, 2022
Condensed statement of operations information:
Revenue	$	—
Operating expense		1,576
Net loss	$	(1,576)

	March 31, 2022		December 31, 2021
Condensed balance sheet information:
Current assets	$	3,281	$	4,960
Noncurrent assets		260,730		214,803
Total assets	$	264,011	$	219,763
Current liabilities	$	18,999	$	11,317
Equity		245,012		208,446
Total liabilities and equity	$	264,011	$	219,763