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Deposits on Mining Equipment

9 Months Ended

Sep. 30, 2022

Note 4. Deposits on Mining Equipment

Deposits on mining equipment, consisted of the following:

Schedule of Mining Equipment

	Cryptocurrency Miners			Mobile Data Centers			Total
Balance December 31, 2020	$	—		$	—		$	—
Deposits on equipment during the period		7,089,000			524,230			7,613,230
Equipment delivered during the period		—			—			—
Balance December 31, 2021	$	7,089,000		$	524,230		$	7,613,230
Deposits on equipment during the period		1,220,100			178,090			1,398,190
Equipment delivered during the period		(2,106,000	)		—			(2,106,000	)
Balance March 31, 2022	$	6,203,100		$	702,320		$	6,905,420
Deposits on equipment during the period		382,200			352,340			734,540
Equipment delivered during the period		(2,616,300	)		(349,980	)		(2,966,280	)
Balance June 30, 2022	$	3,969,000		$	704,680		$	4,673,680
Deposits on mining equipment, Balance	$	3,969,000		$	704,680		$	4,673,680
Deposits on equipment during the period		—			—			—
Equipment delivered during the period		—			—			—
Balance September 30, 2022	$	3,969,000		$	704,680		$	4,673,680
Deposits on mining equipment, Balance	$	3,969,000		$	704,680		$	4,673,680

All of our miners were manufactured by Bitmain, and incorporate application-specific integrated circuit (“ASIC”) chips specialized to solve blocks on the Bitcoin blockchains using the 256-bit secure hashing algorithm (“SHA-256”) in return for Bitcoin cryptocurrency rewards. As of September 30, 2022, we had 510 Bitmain S19J Pro miners with 51.0 Ph/s of hashing capacity and 270 Bitmain S19 miners with 24.3 Ph/s of hashing capacity, none of which were in service.

On December 17, 2021 the Company entered into the Bitmain Agreement with Bitmain for 600 Bitmain S19XP miners with a reference price of approximately $11,250 per miner. The miners have a total of 84 Ph/s of hashing capacity and an initial estimated purchase commitment of $6,762,000 (the “total reference price”), subject to price adjustments and related offsets, including potential adjustments related to the market price of miners. The Company has made payments of $3,969,000 (classified as deposits on mining equipment) to Bitmain pursuant to the Bitmain Agreement.

The remaining amount due under the Bitmain Agreement based on the initial total reference price is $2,793,000, however, as of September 30, 2022, the market price of miners has dropped significantly from $11,250 to approximately $5,810 per miner. The estimated remaining amount due under the Bitmain Agreement based on the current market price of miners (assuming no contract interpretation disputes are asserted by, and no liquidated damaged or penalties are assessed by, Bitmain) is presented below:

	Market Price per Miner			Total Amount
July 2022 batch (100 miners)	$	7,756		$	775,600
August 2022 batch (100 miners)		7,140			714,000
September 2022 batch (100 miners)		7,140			714,000
October 2022 batch (100 miners)		6,510			651,000
November 2022 batch (100 miners)		5,810			581,000
December 2022 batch (100 miners)		5,810	⁽¹⁾		581,000
Estimated total amount due					4,016,600
Less: Payments made					3,969,000
Estimated remaining amount due ⁽²⁾				$	47,600

	⁽¹⁾	Estimate based on the November 2022 market price.
	⁽²⁾	Assuming no contract interpretation disputes are asserted by, and no liquidated damaged or penalties are assessed by, Bitmain.