What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-11-08 compared with 2023-08-08 · 434 added, 500 removed, 701 unchanged (57% of the section changed)

4 unchanged sentences

thousands, except share and per share data)

September 30,

Current assets:

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Total long-term assets

LIABILITIES, SERIES A PREFERRED STOCK AND STOCKHOLDERS’ EQUITY

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

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Operating lease liabilities

Current portion of accrued interest

Accrued interest

Total current liabilities

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Total long-term liabilities

Series A Preferred Stock , 0.0001

par value, 50,000,000 shares

authorized, 15,000 and no

shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively (outstanding at redemption value)

Stockholders’ Equity:

Preferred stock, 0.0001 par value, 50,000,000 shares authorized and no shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively

Common stock, 0.0001 par value, 500,000,000 shares authorized;

174,209,038 and 145,565,916 issued and outstanding at June 30, 2023 and December 31, 2022, respectively

210,184,718 and 145,565,916 issued and outstanding at September 30, 2023 and December 31, 2022, respectively

Additional paid-in capital

1 unchanged sentence

Total stockholders’ equity

TOTAL LIABILITIES, SERIES A PREFERRED STOCK AND STOCKHOLDERS’ EQUITY

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

accompanying notes are an integral part to these unaudited condensed consolidated financial statements.

3 unchanged sentences

thousands, except share and per share data)

Three months ended June 30,

Six months ended June 30,

Three months ended

September 30,

Nine months ended

September 30,

(As Restated)

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Impairment of digital assets

Impairment of patents

Gains on digital assets and losses on digital assets loan receivable

Gain on sale of equipment, net of disposals

Gains on digital assets and gains (losses) on digital assets loan receivable

Losses on digital assets held within investment fund

Gain on sale of equipment, net of disposals

Legal reserves

Impairment of deposits due to vendor bankruptcy filing

Impairment of patents

Total operating expenses

Operating loss

Other non-operating income

Loss from extinguishment of debt

Net gain from extinguishment of debt

Equity in net earnings of unconsolidated affiliate

Impairment of loan and investment due to vendor bankruptcy filing

Interest expense

Loss before income taxes

Income tax expense

Other non-operating income

Income (loss) before income taxes

Income tax benefit (expense)

Net income (loss)

Series A Preferred Stock accretion to redemption value

Net loss attributable to common stockholders

$ ( 212,626 )

Net income (loss) attributable to common stockholders

$ ( 302,424 )

Net loss attributable to common stockholders per common stock - basic and

Weighted average common stock outstanding - basic and diluted

Net income (loss) attributable to common stockholders per common stock - basic

Weighted average common stock outstanding - basic

Net income (loss) attributable to common stockholders per common stock - diluted

Weighted average common stock outstanding - diluted

accompanying notes are an integral part to these unaudited condensed consolidated financial statements.

3 unchanged sentences

thousands, except share and per share data)

the Three Months Ended June 30, 2023

the Three Months Ended September 30, 2023

Stockholders’

Balance as of Balance as of March 31, 2023

Balance as of June 30, 2023

$ ( 866,709 )

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Issuance of common stock, net of offering costs/At-the-market offering

Series A Preferred Stock accretion to redemption value

Balance as of June 30, 2023

Exchange of convertible notes for common stock

Balance as of September 30, 2023

$ ( 802,572 )

the Six Months Ended June 30, 2023

the Nine Months Ended September 30, 2023

Stockholders’

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Series A Preferred Stock accretion to redemption value

Balance as of June 30, 2023

Exchange of convertible notes for common stock

Balance as of September 30, 2023

$ ( 802,572 )

the Three Months Ended June 30, 2022

the Three Months Ended September 30, 2022

Stockholders’

Balance as of Balance as of March 31, 2022 (As Restated)

Balance as of June 30, 2022 (As Restated)

$ ( 376,281 )

1 unchanged sentence

Issuance of common stock, net of offering costs/At-the-market offering

Balance as of Balance as of June 30, 2022 (As Restated)

Balance as of September 30, 2022 (As Restated)

$ ( 448,743 )

the Six Months Ended June 30, 2022

the Nine Months Ended September 30, 2022

Stockholders’

Balance as of December 31, 2021

Balance as of December 31, 2021 (As Restated)

$ ( 146,319 )

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Common stock issued for long term service contract

Balance as of Balance as of June 30, 2022 (As Restated)

Net Income (loss)

Balance as of September 30, 2022 (As restated)

$ ( 448,743 )

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CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended June 30,

Nine Months Ended September 30,

(As Restated)

OPERATING ACTIVITIES

Net income (loss)

$ ( 302,424 )

Adjustments to reconcile net loss to net cash used in operating activities:

Adjustments to reconcile net income (loss) to net cash used in operating activities:

Depreciation and amortization

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Losses on digital assets held within investment fund

Gains on digital assets and losses on digital assets loan receivable

(Gains) on digital assets and (gains) losses on digital assets loan receivables

Impairment of digital assets

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Amortization of debt issuance costs

Equity in net earnings of unconsolidated affiliate

Impairment of patents

Loss from extinguishment of debt

Impairment of assets related to vendor bankruptcy filing

Gain on extinguishment of debt, net

Other adjustments from operations, net

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Accounts payable and accrued expenses

Legal reserve payable

Accrued interest

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Proceeds from issuance of preferred stock, net of issuance costs

Redemption of preferred stock

Net change in revolving credit agreement borrowings

Proceeds from term loan borrowings, net of issuance costs

Repayment of term loan borrowings

1 unchanged sentence

Net cash provided by financing activities

Net increase (decrease) in cash, cash equivalents and restricted cash

Net decrease in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash — beginning of period

Cash, cash equivalents and restricted cash — end of period

Supplemental Information

Cash paid during the year for:

Supplemental schedule of non-cash investing and financing activities:

Series A Preferred Stock accretion to redemption value

Receivable due to share issuance

Operating lease assets obtained in exchange for new operating lease liabilities

Reclassifications from advances to vendor to property and equipment upon receipt of equipment

Common stock issued for service and license agreements

accompanying notes are an integral part to these unaudited condensed consolidated financial statements.

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on March 1, 2021.

As of June 30, 2023, the

Company is focused on the mining of bitcoin and ancillary opportunities within the Bitcoin ecosystem.

As of September 30, 2023,

the Company is focused on the mining of bitcoin and ancillary opportunities within the Bitcoin ecosystem.

businesses are those that relate to the Bitcoin ecosystem but are not directly related to the self-mining of bitcoin.

The ancillary businesses

that related directly to mining may include, but will not be limited to, management of bitcoin mining facilities for third party owners,

that relate directly to mining may include, but will not be limited to, management of bitcoin mining facilities for third party owners,

advisory and consulting services to third parties seeking to set up and operate bitcoin mining facilities and joint ventures for bitcoin

mining projects in domestic and international jurisdictions such as the Company’s project in Abu Dhabi, United Arab Emirates.

Company will also seek to be involved in Bitcoin related projects including, but not limited to, development of technologies in immersion,

Company also seeks to be involved in Bitcoin related projects including, but not limited to, development of technologies in immersion,

hardware, firmware, mining pools and side chains that use the blockchain cryptography.

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The term “bitcoin” with a lower case “b” is used to denote the token,

NOTE 2 – VOLUNTARY CHANGE IN ACCOUNTING PRINCIPLE

During the quarter ended March 31, 2023 and effective

January 1, 2023, we enacted a voluntary change in accounting principle from last-in-first-out (“LIFO”) to first-in-first-out

(“FIFO”) in order to more accurately reflect the disposition of our digital assets.

The change from LIFO to FIFO increased

the carrying value of digital assets, resulting in additional impairment of digital assets during the quarter ended March 31, 2022.

accordance with accounting principles generally accepted in the United States of America (“U.S.

GAAP”), the change has been

reflected in the consolidated statements of operations through retrospective application to the quarter ended March 31, 2022.

The impacts of the voluntary change in accounting

principle from LIFO to FIFO are as follows:

2 – VOLUNTARY CHANGE IN ACCOUNTING PRINCIPLE

the quarter ended March 31, 2023 and effective January 1, 2023, the Company enacted a voluntary change in accounting principle from last-in-first-out

(“LIFO”) to first-in-first-out (“FIFO”) in order to more accurately reflect the disposition of its digital assets.

The change from LIFO to FIFO impacted the carrying value of digital asset loans made in August 2021 and December 2021, which was terminated

at the point of repayment in kind for both loans in June 2022.

The change in accounting principle resulted in a decrease in the carrying

value of digital assets loaned and increased the gain on loaned digital assets for the year ended December 31, 2021.

The change in accounting

principle resulted in additional impairment of digital assets during the quarters ended March 31 and June 30, 2023.

In accordance with

accounting principles generally accepted in the United States of America (“U.S.

GAAP”), the change has been reflected in

the consolidated statements of operations through retrospective application to the quarter ended March 31, 2022.

impacts of the voluntary change in accounting principle from LIFO to FIFO are as follows:

OF VOLUNTARY CHANGE IN ACCOUNTING PRINCIPLE

For the three months ended

March 31, 2022 (unaudited)

Condensed Consolidated Statements of Operation Impact

December 31, 2021

Condensed Consolidated Balance Sheet Impact

Accumulated deficit

Three months ended (unaudited)

March 31, 2022 (Restated)

2022 (Restated)

September 30, 2022

Consolidated Statements of Comprehensive Income (Loss) Impact

Impairment of digital assets

Income tax benefit

Net loss impact

For the six months ended

June 30, 2022 (unaudited)

Condensed Consolidated Statements of Operation Impact

Income tax benefit (expense)

Net income (loss) impact

Net income (loss) per share, basic and diluted impact

Six months ended (unaudited)

Nine months ended (unaudited)

2022 (Restated)

September 30, 2022

December 31, 2022

Consolidated Statements of Comprehensive Income (Loss) Impact

Impairment of digital assets

Income tax expense

Net loss impact

March 31, 2022 (unaudited)

Condensed Consolidated Balance Sheet Impact

Digital assets

Deferred tax liabilities

June 30, 2022 (unaudited)

Income tax benefit (expense)

Net income (loss) impact

Net income (loss) per share, basic and diluted impact

As of (unaudited)

September 30, 2022 (Restated)

Condensed Consolidated Balance Sheet Impact

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Deferred tax liabilities

NOTE 3 – RESTATEMENT OF CONSOLIDATED FINANCIAL

STATEMENTS FOR THE QUARTERS ENDED MARCH 31, 2023 AND MARCH 31, 2022 AND VOLUNTARY CHANGE IN ACCOUNTING PRINCIPLE

Restatement Background

As disclosed in the Current Report

on Form 8-K, dated August 8, 2023, and filed by the Company with the SEC immediately preceding filing of this Quarterly Report, the

Company’s previously filed interim unaudited Consolidated Financial Statements for the three months ended March 31, 2023, as set

forth in the Company’s Quarterly Report on Form 10-Q for the Three Months Ended March 31, 2023 which was filed with the SEC on May

10, 2023, should no longer be relied upon and a restatement is required for the previously issued Consolidated Financial

The Restatement of the financial information and the

prior year period presented was necessary to correct the cash flow presentation for “Proceeds

from sale of digital assets” from operating activities to investing activities.

Cash Flow Presentation

The Company corrected its presentation of “proceeds

from sale of digital assets” by reclassifying from operating activities to investing activities as follows:

OF RECLASSIFICATION FROM OPERATING ACTIVITIES TO INVESTING ACTIVITIES

For the three months ended

March 31, 2023

CASH FLOWS FROM OPERATING ACTIVITIES

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization

Deferred tax expense

Gains on digital assets

Impairment of digital assets

Stock-based compensation

Amortization of debt issuance costs

Loss from extinguishment of debt

Other adjustments from operations, net

Changes in operating assets and liabilities:

Revenues from digital asset production

Proceeds from sale of digital assets

Prepaid expenses and other assets

Accounts payable and accrued expenses

Accrued interest

Net cash used in operating activities

CASH FLOWS FROM INVESTING ACTIVITIES

Advances to vendors

Purchase of property and equipment

Proceeds from sale of digital assets

Investments in Joint Venture

Net cash used in investing activities

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from issuance of common stock, net of issuance costs

Repayment of term loan borrowings

Value of shares withheld for taxes

Net cash provided by financing activities

Net increase in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash — beginning of period

Cash and cash equivalents — end of period

Change in Accounting Principle

During the quarter ended March 31,

2023, we made a voluntary change in accounting principle from LIFO to FIFO effective January 1, 2023, to better reflect the

disposition of our digital assets (the “Principle Change”).

The Principle Change increased the carrying value of digital

assets for the quarter ended March 31, 2022, resulting in the recognition of additional impairment of digital assets.

The following tables for the Unaudited Interim Consolidated

Condensed Balance Sheet, Consolidated Condensed Statement of Operations, and Consolidated Condensed Statement of Cash Flows present the

impact of the Principle Change for the three months ended March 31, 2022.

OF CHANGE IN ACCOUNTING PRINCIPLE FOR CONDENSED CONSOLIDATED BALANCE SHEET

As of March 31, 2022

Current assets:

Cash and cash equivalents

Restricted cash

Digital assets

Digital assets held in Fund

Other receivable

Prepaid expenses and other current assets

Total current assets

Other assets:

Property and equipment

Advances to vendors

Long term prepaids

Right-of-use assets

Total other assets

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable

Accrued expenses

Operating lease liabilities

Current portion of accrued interest

Total current liabilities

Long-term liabilities:

Notes payable

Operating lease liabilities

Deferred tax liabilities

Total long-term liabilities

Stockholders’ Equity:

Preferred stock

Additional paid-in capital

Accumulated deficit

Total stockholders’ equity

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

OF CHANGE IN ACCOUNTING PRINCIPLE FOR CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

For the three months ended

March 31, 2022

Total revenues

Costs and expenses

Cost of revenues

Cost of revenues - energy, hosting and other

Cost of revenues - depreciation and amortization

Total cost of revenues

Operating expenses

General and administrative expenses

Impairment of digital assets

Impairment of patents

Gains on digital assets and losses on digital assets loan receivable

Losses on digital assets held within Investment Fund

Total operating expenses

Operating loss

Other non-operating income

Interest expense

Loss before income taxes

Income tax benefit

Net loss per share, basic and diluted:

Weighted average shares outstanding, basic and diluted:

OF CHANGE IN ACCOUNTING PRINCIPLE FOR CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

For the three months ended

March 31, 2022

CASH FLOWS FROM OPERATING ACTIVITIES

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization

Amortization of prepaid service contract

Deferred tax benefit

Losses on digital assets held within Investment Fund

Losses on digital assets loan receivable

Impairment of digital assets

Stock-based compensation

Amortization of debt issuance costs

Impairment of patents

Other adjustments from operations, net

Changes in operating assets and liabilities:

Revenues from digital asset production

Prepaid expenses and other assets

Accounts payable and accrued expenses

Accrued interest

Net cash used in operating activities

CASH FLOWS FROM INVESTING ACTIVITIES

Advances to vendors

Purchase of property and equipment

Purchase of equity investments

Net cash used in investing activities

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from issuance of common stock, net of issuance costs

Net cash provided by financing activities

Net decrease in cash, cash equivalents and restricted cash

Cash and cash equivalents — beginning of period

Cash, cash equivalents and restricted cash — end of period

3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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financial statements in accordance with U.S.

and regulations of the U.S.

Securities and Exchange Commission applicable to interim financial information, which permit the omission

of certain disclosure to the extent they have not changed materially since the latest annual financial statements.

These condensed consolidated

financial statements reflect all adjustments (consisting only of normal recurring adjustments) which, in the opinion of management, are

necessary to present fairly the financial position, the results of operations and cash flows of the Company for the periods presented.

The results of operations for the interim periods are not necessarily indicative of the results to be expected for any future fiscal

periods in 2023 or for the full year ending December 31, 2023.

financial statements should be read in conjunction with the financial statements and related notes included in the Company’s Annual

Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on March 16, 2023.

GAAP and regulations of the U.S.

Securities and Exchange Commission applicable to interim

financial information, which permit the omission of certain disclosure to the extent they have not changed materially since the latest

annual financial statements.

These condensed consolidated financial statements reflect all adjustments (consisting only of normal recurring

adjustments) which, in the opinion of management, are necessary to present fairly the financial position, the results of operations and

cash flows of the Company for the periods presented.

The results of operations for the interim periods are not necessarily indicative

of the results to be expected for any future fiscal periods in 2023 or for the full year ending December 31, 2023.

financial statements should be read in conjunction with the financial statements and related notes included in the

Company’s Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on March 16, 2023.

of Estimates and Assumptions

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The Company maintains cash and cash equivalent balances at financial institutions that are insured by the FDIC.

As of June 30, 2023, substantially all of the Company’s cash and cash equivalents were FDIC insured.

In March 2023, the Company

began to participate, to the extent practicable, in insured cash sweep programs which “sweep” its deposits across multiple

FDIC insured accounts, each with deposits of no more than $ 250 .

cash as of June 30, 2023, represents the net proceeds held in escrow from the issuance of Series A Preferred Stock (refer to NOTE 11

– STOCKHOLDERS’ EQUITY, Series A Preferred Stock , for further discussion).

Restricted cash as of December 31, 2022, principally

represented those cash balances that support commercial letters of credit and are restricted from withdrawal.

During March 2023, the

Company eliminated its outstanding letters of credit.

The following table provides a reconciliation of the total cash, cash equivalents

and restricted cash reported on the condensed consolidated balance sheets to the corresponding amounts reported on the condensed consolidated

statements of cash flows.

During March 2023, the Company began to participate, to the extent practicable, in insured cash sweep programs which “sweep”

its deposits across multiple FDIC insured accounts, each with deposits of no more than $ 250 .

As of September 30, 2023, substantially

all of the Company’s cash and cash equivalents were FDIC insured.

cash as of December 31, 2022, principally represented those cash balances that support commercial letters of credit and are restricted

from withdrawal.

During March 2023, the Company eliminated its outstanding letters of credit.

The following table provides a reconciliation

of the total cash, cash equivalents and restricted cash reported on the condensed consolidated balance sheets to the corresponding amounts

reported on the condensed consolidated statements of cash flows.

OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH

September 30,

Cash and cash equivalents

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Assets and Digital Assets, Restricted

assets are included in current assets in the condensed consolidated balance sheets.

In addition, digital assets provided as collateral

for long-term loans were reported as Digital assets, restricted at December 31, 2022 and classified as long-term assets in the condensed

consolidated balance sheets.

During the first quarter of 2023, the long-term loan was terminated and the restrictions on digital assets

lapsed (refer to NOTE 12 – DEBT , for further discussion).

Digital assets are accounted for as indefinite-lived intangible assets,

and are initially measured in accordance with FASB Accounting Standards Codification (“ASC”) Topic 350 – Intangibles-Goodwill

The Company measures gains or losses on the disposition of digital assets in accordance with the first-in-first-out

(“FIFO”) method of accounting.

assets are not amortized, but are assessed for impairment annually, or more frequently, when events or changes in circumstances occur

indicating that it is more likely than not that the indefinite-lived intangible asset is impaired.

Whenever the exchange-traded price

of digital assets declines below its carrying value, the Company has determined that an impairment exists and records an impairment equal

to the amount by which the carrying value exceeds the fair value.

Refer to NOTE 4 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,

Out-of-Period Adjustment, for a discussion of an adjustment related to impairment of digital assets.

following table presents the activities of digital assets and digital assets, restricted for the six months ended June 30, 2023:

assets are included in current assets in the condensed consolidated balance sheets due to the Company’s ability to sell bitcoin

in a highly liquid marketplace and the selling of bitcoin to fund operating expenses to support operations.

In addition, digital assets

provided as collateral for long-term loans were reported as Digital assets, restricted at December 31, 2022 and classified as long-term

assets in the condensed consolidated balance sheets.

The proceeds from the sale of digital assets are included within investing activities

in the accompanying condensed consolidated statements of cash flows and any gains or losses from such sales are included in operating

expenses in the condensed consolidated statements of operations.

The Company measures gains or losses on the disposition of digital assets

in accordance with the first-in-first-out (“FIFO”) method of accounting.

assets are accounted for as indefinite-lived intangible assets, and are initially measured in accordance with FASB Accounting Standards

Codification (“ASC”) Topic 350 – Intangibles-Goodwill and Other .

Digital assets are not amortized, but are assessed

for impairment annually, or more frequently, when events or changes in circumstances occur indicating that it is more likely than not

that the indefinite-lived intangible asset is impaired.

Whenever the exchange-traded price of digital assets declines below its carrying

value, the Company has determined that an impairment exists and records an impairment equal to the amount by which the carrying value

exceeds the fair value.

Refer to NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Out-of-Period Adjustment, for

a discussion of an adjustment related to impairment of digital assets.

the first quarter of 2023, the term loan was terminated and the restrictions on digital assets lapsed (refer to NOTE 11 – DEBT ,

for further discussion).

following table presents the activities of digital assets and digital assets, restricted for the nine months ended September 30, 2023:

SCHEDULE OF ACTIVITY OF DIGITAL CURRENCIES

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Additions of digital assets

Digital assets received as dividends

Impairment of digital assets

Proceeds from sale of digital assets

Gains on sale of digital assets

Gain on digital assets

Payment of advisory fees

Digital assets at June 30, 2023

of June 30, 2023, the Company held approximately 12,538

bitcoin, classified on the condensed consolidated

Digital assets at September 30, 2023

of September 30, 2023, the Company held approximately 13,716 bitcoin classified on the condensed consolidated

balance sheets as “Digital assets”, with a carrying value of $ 286,801 .

At June 30, 2023, the fair market value of the Company’s bitcoin holdings was approximately $ 381,992

based on Level 1 inputs.

As of December 31, 2022,

the Company held approximately 12,232

bitcoin, relating to digital assets and digital

assets, restricted, with a carrying value of $ 190,717

and a fair value of $ 202,409

based on Level 1 inputs.

As of September 30, 2023, the Company had earned 10 bitcoin that were pending distribution from the Company’s equity method investee, the ADGM Entity.

September 30, 2023, the fair market value of the Company’s bitcoin holdings was approximately $ 369,797 based on Level 1 inputs.

As of December 31, 2022, the Company held approximately 12,232 bitcoin, relating to digital assets and digital assets, restricted, with

a carrying value of $ 190,717 and a fair value of $ 202,199 based on Level 1 inputs.

assets held in fund

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within 12 months of the condensed consolidated balance sheet date.

The Company had no derivative assets or liabilities as of September

30, 2023 and December 31, 2022.

Company contracts with service providers for hosting of its equipment and operational support in data centers where the Company’s

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to ASC 321 (refer to NOTE 14 – RELATED PARTY TRANSACTIONS ).

of the six months ended June 30, 2023 and year ended December 31, 2022, the Company has one remaining SAFE investment with a carrying

the third quarter ended September 30, 2023, the Company entered into an agreement with Auradine to secure certain rights to future purchases

by the Company from Auradine for which the Company paid $ 15,000 , which is included in Long-term prepaids in the condensed consolidated

balance sheets.

of the nine months ended September 30, 2023 and year ended December 31, 2022, the Company has one remaining SAFE investment with a carrying

value of $ 1,000 , with no noted impairments or other adjustments.

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the date of acquisition.

January 27, 2023, the Company and FS Innovation, LLC (“FSI”) entered into a Shareholders’ Agreement regarding the formation

of an Abu Dhabi Global Markets company (the “ADGM Entity”).

The ADGM Entity did not start mining operations during the six months ended June 30, 2023, and did not

have significant earnings or losses.

As of June 30, 2023, the carrying value of the Company’s 20 % ownership in the ADGM Entity was $ 62,918 .

The equity method investment is included in non-current assets in the condensed consolidated balance sheets under “Investments.”

January 27, 2023, the Company and Zero Two (formerly known as FS Innovation, LLC) entered into a Shareholders’ Agreement regarding

the formation of an Abu Dhabi Global Markets company (the “ADGM Entity”) in which the Company has a 20 % ownership interest.

The Company accounts for this investment under the equity method.

The ADGM Entity started mining operations during the quarter ended

September 30, 2023.

The Company’s share of net losses was $ 647 for the three and nine months ended September 30, 2023.

As of September

30, 2023, the Company’s investment in the ADGM Entity was $ 66,038 and is included in Investments in the condensed consolidated

balance sheets.

Company expenses stock-based compensation to employees and non-employees over the requisite service period based on the grant date fair

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not be recoverable.

Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to undiscounted

The recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to undiscounted

future cash flows expected to be generated by the asset.

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the consideration to which the entity expects to be entitled in exchange for those goods or services.

Refer to NOTE 5 – REVENUE FROM CONTRACTS WITH CUSTOMERS , for further discussion.

effective tax rate (“ETR”) from continuing operations was 1.07 % and 1.07 % for the three and six months ended June 30, 2023,

respectively, and 5.38 % and 2.31 % for the three and six months ended June 30, 2022, respectively.

The difference between the US statutory

tax rate of 21 % was primarily due to the change in valuation allowance as a result of current year activity.

Refer to NOTE 4 – REVENUE

FROM CONTRACTS WITH CUSTOMERS , for further discussion.

effective tax rate (“ETR”) from continuing operations was 0.11 %

for the three and nine months ended September 30, 2023, respectively, and 7.75 %

for the three and nine months ended September 30, 2022, respectively.

The difference between the US statutory tax rate of 21 %

was primarily due to the change in valuation allowance as a result of current year activity.

Tax in Interim Periods

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condensed consolidated financial statements properly reflect the change.

Recently Issued Accounting Pronouncements

Not Yet Adopted

On March 28, 2023, the Financial Accounting

Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

Issued Accounting Pronouncements

March 28, 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)

2023-01, Leases (Topic 842):

Control Arrangements .

The amendments in ASU 2023-01 improve current GAAP by clarifying the accounting for leasehold improvements associated

with common control leases, thereby reducing diversity in practice.

Additionally, the amendments provide investors and other allocators

of capital with financial information that better reflects the economics of those transactions.

The new standard is effective for the

Company for its fiscal year beginning January 1, 2024, with early adoption permitted.

The Company is currently evaluating the impact of

adopting the standard.

On June 30, 2022, FASB issued ASU No.

Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions.

ASU 2022-03 clarifies that a contractual

sale restriction prohibiting the sale of an equity security is a characteristic of the reporting entity holding the equity security and

is not included in the equity security’s unit of account.

The new standard is effective for the Company for its fiscal year beginning

January 1, 2024, with early adoption permitted.

Common Control Arrangements .

The amendments in ASU 2023-01 improve current GAAP by clarifying

the accounting for leasehold improvements associated with common control leases, thereby reducing diversity in practice.

Additionally,

the amendments provide investors and other allocators of capital with financial information that better reflects the economics of those

transactions.

The new standard is effective for the Company for its fiscal year beginning January 1, 2024, with early adoption permitted.

The Company is currently evaluating the impact of adopting the standard.

June 30, 2022, the FASB issued ASU No.

2022-03, Fair Value Measurement of Equity Securities Subject to Contractual Sale

Restrictions.

ASU 2022-03 clarifies that a contractual sale restriction prohibiting the sale of an equity security is a

characteristic of the reporting entity holding the equity security and is not included in the equity security’s unit of

The new standard is effective for the Company for its fiscal year beginning January 1, 2024, with early adoption permitted.

The Company adopted ASU 2022-03 on July 1, 2023, which adoption did not have a material impact on the Company’s condensed

consolidated financial statements.

4 – REVENUE FROM CONTRACTS WITH CUSTOMERS

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payable to a customer

consideration is included in the transaction price only to the extent that it is probable that a significant reversal in the amount of

cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved.

consideration is included in the transaction price only to the extent that it is probable that a significant reversal in the amount

of cumulative revenue recognized under the accounting contract will not occur when the uncertainty associated with the variable

consideration is subsequently resolved.

transaction price is allocated to each performance obligation on a relative standalone selling price basis.

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of the five-step model to the Company’s mining operations

Company’s ongoing major or central operation is to provide bitcoin transaction verification services to the bitcoin network through

a Company-operated mining pool as the operator and a participant in a private pool (“Operator”) (such activity as Participant

and Operator, collectively, “mining”) and to provide computing power to collectives of third-party bitcoin miners (such collectives,

“mining pools”) as a participant (“Participant”).

The Company currently mines in a self-operated pool, which

was previously open to third-party pool participants from September 2021 until May 2022.

Company’s ongoing major or central operation is to provide bitcoin transaction verification services to the bitcoin network

through a Company-operated mining pool as the operator (“Operator”) (such activity, “mining”) and to provide

computing power to perform hash calculations to pool operators alongside collectives of third-party bitcoin miners (such

collectives, “mining pools”) as a participant (“Participant”).

The Company currently mines in a

self-operated pool, which was previously open to third-party pool participants from September 2021 until May 2022.

following table presents the Company’s revenues disaggregated for those arrangements in which the Company is the Operator and Participant:

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Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Revenues from contracts with customers

Operator - Block rewards

Operator - Transaction fees

Other revenue

Operator - Block rewards

Total revenues

Operator, the Company provides transaction verification services.

Transaction verification services are an output of the Company’s

ordinary activities;

therefore, the Company views the transaction requestor as a customer and accounts for the transaction fees it earns

as revenue from a contract with a customer under ASC 606.

The bitcoin network is not an entity such that it may not meet the definition

of a customer;

however, the Company has concluded it is appropriate to apply ASC 606 by analogy to block rewards earned from the network.

A contract exists under ASC 606 at the point the Company successfully validates a transaction to the distributed ledger.

At this point,

the performance obligation to validate the requested transaction has been satisfied and a contract is deemed to exist as follows:

Transaction verification services are an output of the

Company’s ordinary activities;

therefore, the Company views the transaction requestor as a customer and accounts for the

transaction fees it earns as revenue from a contract with a customer under ASC 606.

The bitcoin network is not an entity such that

it may not meet the definition of a customer;

however, the Company has concluded it is appropriate to apply ASC 606 by analogy to

block rewards earned from the network.

The Company is currently entitled to the block reward of 6.25 bitcoin from the bitcoin

network for each successful block.

The Company is also entitled to the transaction fee paid by the transaction requester payable in

bitcoin for each successful block.

A contract exists under ASC 606 at the point the Company successfully validates a transaction to

the distributed ledger.

At this point, the performance obligation to validate the requested transaction has been satisfied and a

contract is deemed to exist as follows:

transaction requester, the bitcoin network, and the Company have approved the contract and

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engaged third-party pool participants from September 2021 until May 2022.

During the three months ended June 30,

2023, the Company changed its operator accounting policy from measuring the block reward and transaction fees using the end of day spot

rate for bitcoin to the quoted spot rate at the time the block reward and transaction fees are earned.

accordance with ASC 606-10-32-21, the Company measures the estimated fair value of noncash consideration at contract inception, which

is the same time the block reward and transaction fee is earned and the performance obligation to the requester and the network is fulfilled

is at the time the block reward and transaction fee is earned and the performance obligation to the requester and the network is fulfilled

by successfully validating the applicable block of transactions.

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the Company’s primary trading platform for bitcoin at the time the block reward and transaction fee is earned to measure revenues.

associated with providing the bitcoin transaction verification services to the customers, such as rent, electricity cost, and transaction

fees and block rewards are recorded as cost of revenues.

Depreciation on digital asset mining equipment is recorded as a component of

cost of revenues.

During the three months ended June 30,

2023, the Company changed its participant accounting policy from measuring the block reward and transaction fees upon receipt of the reward

in the Company’s wallet measured at the end of day spot rate for bitcoin to the policy described below.

Company participates in multiple third-party operated mining pools only when our Company-operated mining pool is not available.

methodologies differ depending on the payout third-party operated mining pool.

Pay-Per-Share (PPS) and Full-Pay-Per-Share (FPPS) pools

pay rewards based on a contractual formula, which primarily calculates the hash rate provided by the Company to the mining pool as a

percentage of total network hash rate, and other inputs.

For PPS and FPPS pools, the Company is entitled to consideration even if a block

is not successfully placed by the mining pool operator.

The Company also participates in third-party mining pools that pay rewards only

when the pool successfully mines a block.

For these pools, the Company only earns a reward when the third-party pool successfully mines

a block and its reward is the fractional share of the successfully mined block and transaction fee based on the proportion of computing

power the Company contributed to the mining pool operator to the total computing power contributed by all mining pool participants in

solving the algorithm.

associated with providing the bitcoin transaction verification services to the customers, such as hosting fees, electricity costs, and

related fees are recorded as cost of revenues.

Depreciation on digital asset mining equipment is also recorded as a component of cost

Company participates in multiple third-party operated mining pools only when the Company-operated mining pool is not available.

methodologies differ depending on the type of third-party operated mining pool.

Pay-Per-Share (“PPS”) and Full-Pay-Per-Share

(“FPPS”) pools pay rewards based on a contractual formula, which primarily calculates the hash rate provided by the Company

to the mining pool as a percentage of total network hash rate, and other inputs.

For PPS and FPPS pools, the Company is entitled to consideration

even if a block is not successfully placed by the mining pool operator.

The Company also participates in third-party mining pools that

pay rewards only when the pool successfully mines a block.

For these pools, the Company only earns a reward when the third-party pool

successfully mines a block and its reward is the fractional share of the successfully mined block and transaction fees based on the proportion

of computing power the Company contributed to the mining pool operator to the total computing power contributed by all mining pool participants

in solving the algorithm.

the Company is a Participant in a third-party operated mining pool, the Company provides hash rate that is an output of the Company’s

ordinary activities in exchange for consideration.

The Company considers the third-party mining pool operators its customers under Topic

The Company considers the third-party mining pool operators to be its customers under

These contracts are period-to-period contracts because they are terminable at any time by either party without compensation.

contract is determined to exist each period (e.g., second, minute, hour) that neither the Company, nor the pool operator, terminates

A new contract is determined to exist each period (e.g., second, minute, hour) that neither the Company, nor the pool operator, terminates

the arrangement.

the Company participates in PPS and FPPS pools, which pay rewards based on a contractual formula, the Company recognizes revenue based

on the daily contributed hash rate and other inputs measured at the average daily spot rate of bitcoin determined using the Company’s

primary trading platform for bitcoin.

The Company participates in third-party operated pools only when our Company-operated mining pool

is not available, therefore, the duration of contributed hash rate will fluctuate during any given day.

Accordingly, we measure the reward

for PPS and FPPS pools based on the daily average spot rate to match the contribution of hash rate which can occur throughout the day.

Such implied renewal option is not a material right because the pricing in the renewal periods is the same as the

initial contract and there are no upfront or incremental fees in the initial contract or the terms, conditions, and compensation amounts

for the renewal options are at the then market rates.

the Company participates in PPS and FPPS pools, which pay rewards based on a contractual formula, the Company recognizes revenue

based on the Company’s daily contributed hash rate and other network-driven inputs, such as the total hash rate contributed by all pool participants.

The variable consideration (reward) the Company

will be entitled to for its contribution of hash rate can be reasonably estimated based on the contribution of hash rate and other network

inputs such as total contributed hash rate.

The Company measures revenue earned based on the average daily spot rate of

bitcoin determined using the Company’s primary trading platform for bitcoin.

the Company participates in third-party pools that pay rewards only when the pool successfully mines a block, the Company recognizes

its fractional share of the block and transaction fees using the spot rate of bitcoin at the time that the block is successfully mined.

computing power on mining rigs to solve complex cryptographic algorithms in support of blockchain mining (in a process known as

“solving a block”) is the primary output of the Company’s ordinary activities.

The provision of computing power is

the only performance obligation under the Company’s arrangements with third-party mining pool operators.

The transaction

consideration the Company receives is non-cash (i.e., bitcoin) and entirely variable as it is unknown at each contract inception

whether the Company will earn any consideration during the period, and if it does become entitled to consideration, how much

consideration to which it will be entitled.

computing power on mining rigs to solve complex cryptographic algorithms in support of blockchain mining (in a process known as “solving

a block”) is the primary output of the Company’s ordinary activities.

The provision of computing power is the only performance

obligation under the Company’s arrangements with third-party mining pool operators.

The transaction consideration the Company receives

is non-cash (i.e., bitcoin) and variable.

For third-party pools that pay rewards only when the pool successfully mines a block, the consideration

to which the Company will be entitled to for its efforts remain variable and is not estimable until the pool successfully solves a block,

at which point in time the Company can then estimate its fractional share of the bitcoin to which it is entitled to for its contribution

to the pool’s successful efforts.

For PPS and FPPS pools, which pay rewards based on a contractual formula that does not depend

on the pool successfully mining any blocks during the period in which the Company contributes computing power, the Company can reasonably

estimate the variable consideration to which it will be entitled to for providing computing power as such power is being provided based

on the contributed hash rate and other inputs.

Company satisfies its performance obligation to provide computing power to the pool operator over time as described in FASB ASC 606-10-25-27(a)

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continuously as an input to the pool’s efforts to solve a block.

associated with providing computing power services to third-party operated mining pools, such as rent and electricity costs, are recorded

as cost of revenues.

Depreciation on digital asset mining equipment is also recorded as a component of cost of revenues.

associated with providing computing power services to third-party operated mining pools, such as hosting fees, electricity costs, and

related fees, are recorded as cost of revenues.

Depreciation on digital asset mining equipment is also recorded as a component of cost

5 – ADVANCES TO VENDORS AND DEPOSITS

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The Company accounts for these payments as “Advances to vendors” on the condensed consolidated balance sheets.

of June 30, 2023 and December 31, 2022, such advances totaled approximately $ 7,351 and $ 488,299 , respectively.

of September 30, 2023 and December 31, 2022, such advances totaled approximately $ 23,964 and $ 488,299 , respectively.

addition, the Company contracts with other service providers for the hosting of its equipment and operational support in data centers

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with the contractual obligations associated with these services.

The Company classifies these payments as “Long-term deposits”

on the condensed consolidated balance sheets.

The Company classifies these payments as “Short-term prepaids”

and “Long-term deposits” on the condensed consolidated balance sheets.

6 – PROPERTY AND EQUIPMENT

components of property and equipment as of June 30, 2023 and December 31, 2022 are:

components of property and equipment as of September 30, 2023 and December 31, 2022 are:

OF COMPONENTS OF PROPERTY AND EQUIPMENT

Useful life (Years)

September 30, 2023

December 31, 2022

Construction in progress

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Property and equipment, net

Company’s depreciation expense related to property and equipment for the three months ended June 30, 2023 and 2022 was $ 37,275

Company’s depreciation expense related to property and equipment for the three months ended September 30, 2023 and 2022 was $ 53,548

and $ 26,295 , respectively.

The Company’s depreciation expense related to property and equipment for the six months ended June 30,

The Company’s depreciation expense related to property and equipment for the nine months ended September

30, 2023 and 2022 was $ 108,556 and $ 64,882 , respectively.

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measurement of fair value

of June 30, 2023, the Company’s cash and cash equivalents was $ 113,675 , none of which represented money market accounts.

The following

tables present information about the Company’s assets and liabilities measured at fair value on a recurring basis and the Company’s

estimated level within the fair value hierarchy of those assets and liabilities as of December 31, 2022, respectively:

following tables present information about the Company’s assets and liabilities measured at fair value on a recurring basis and

the Company’s estimated level within the fair value hierarchy of those assets and liabilities as of December 31, 2022, respectively:

SCHEDULE OF ASSETS AND LIABILITIES MEASURED AT FAIR VALUE ON RECURRING BASIS

Recurring fair value measured at September 30, 2023

(in thousands)

Total carrying value at September 30, 2023

Quoted prices in active markets

Significant other observable inputs

Significant unobservable inputs

Cash and cash equivalents (1)

Recurring fair value measured at December 31, 2022

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Cash and cash equivalents (1)

(1) Represents money

market accounts.

Excludes $ 11,661 of cash and cash equivalents as of December 31, 2022.

were no transfers among Levels 1, 2 or 3 during the six months ended June 30, 2023.

(1) Represents

money market accounts.

Excludes $55,222 and $ 11,661

of cash and cash equivalents as of September 30, 2023 and December

31, 2022, respectively.

were no transfers among Levels 1, 2 or 3 during the nine months ended September 30, 2023.

Non-recurring

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These assets include (a) digital assets and digital assets, restricted that are initially

recorded at cost and subsequently impaired as the fair value falls below its carrying value;

(b) mining rigs and advances to vendors

recorded at cost and subsequently impaired as the fair value falls below its carrying value and (b) mining rigs and advances to vendors

that are written down to fair value due to the decrease in the cost of bitcoin mining rigs that was driven by the drop in bitcoin prices

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The Company’s estimated level within the fair value hierarchy

of those assets and liabilities as of June 30, 2023 and December 31, 2022, respectively:

of these assets and liabilities as of September 30, 2023 and December 31, 2022, respectively, are:

SCHEDULE OF ASSETS AND LIABILITIES MEASURED AT FAIR VALUE ON NON-RECURRING BASIS

Non-recurring fair value measured at June 30, 2023

Total carrying value at June 30, 2023

Non-recurring fair value measured at September 30, 2023

Total carrying value at September 30, 2023

Quoted prices in active markets

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Digital assets

Notes payable

Non-recurring fair value measured at December 31, 2022

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Digital assets, restricted

Notes payable

(1) Represents mining

Excludes $ 1,746 of Property and equipment relating to containers, website and leasehold improvements.

the three months ended March 31, 2023, the fair value of digital assets were transferred from Level 2 to Level 1, as a result of using the

quoted price in the active market in accordance with ASC 820.

There were no other transfers among Levels 1, 2 or 3 during the six months

ended June 30, 2023.

As of June 30, 2023 and December 31, 2022, there were no other assets and liabilities measured at fair value on

a non-recurring basis.

9 – NET LOSS PER SHARE

the three months ended March 31, 2023, the fair value of digital assets were transferred from Level 2 to Level 1, as a result of

using the quoted price in the active market in accordance with ASC 820.

There were no other transfers among Levels 1, 2 or 3 during

the nine months ended September 30, 2023.

In addition, as of September 30, 2023 and December 31, 2022, the Company had

convertible notes outstanding with carrying values of $ 325,266 and $ 732,289 and fair values of $ 237,980 and $ 166,842 , respectively,

based on Level 1 quoted prices in active markets.

As of September 30, 2023 and December 31, 2022, there were no

other assets and liabilities measured at fair value on a non-recurring basis.

8 – NET INCOME (LOSS) PER SHARE

income per common share is calculated in accordance with ASC Topic 260 – Earnings Per Share .

Basic income per share is

computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period.

the three and six months ended June 30, 2023 and 2022, respectively, the Company incurred a loss position and as such, the

computation of diluted net loss per share does not include dilutive common stock equivalents in the weighted average shares

outstanding, as they would be anti-dilutive.

Basic income per share is computed

by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period.

For the three and

nine months ended September 30, 2023, the Company recorded net income and as such, the Company calculated the impact of dilutive common

stock equivalents for dilutive earnings per share.

For the three and nine months ended September 30, 2022, the Company had net losses

and as such, the computation of diluted net loss per share does not include dilutive common stock equivalents in the weighted average

shares outstanding, as they would be anti-dilutive.

that could potentially dilute loss per share in the future that were not included in the computation of diluted loss per share are as

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Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Warrants to purchase common stock

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Convertible notes to exchange common stock

Series A Preferred Stock

Total dilutive shares

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Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

(As Restated)

$ ( 212,626 )

Basic earnings per common share:

Net income (loss) attributable to common shareholders - basic

$ ( 302,424 )

Series A Preferred Stock accretion to redemption value

Net loss attributable to common stockholders

Weighted average common shares - basic

Net income (loss) attributable to common stockholders per common stock - basic

Diluted earnings per common share:

Net income (loss) attributable to common shareholders - basic

$ ( 302,424 )

Notes interest expense, net of tax

Net income (loss) attributable to common stockholders per common stock - diluted

$ ( 302,424 )

Weighted average common stock outstanding - basic and diluted

Net loss attributable to common stockholders per common stock - basic and diluted

Weighted average common shares - basic

Restricted stock awards

Convertible Notes

Preferred stock

Weighted average common shares - diluted

Net income (loss) attributable to common stockholders per common stock - diluted

9 – COMPUTE NORTH BANKRUPTCY

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Wolf Hollow hosting facilities.

Company recorded an impairment charge of $ 55,674 during 2022.

On February 16, 2023, the Bankruptcy Court approved the Debtors Plan of

Reorganization, pursuant to which Marathon’s claim was fixed at $ 40,000 as an unsecured claim to be paid out according to the timing

and percentages within the approved Debtor’s plan.

Company recorded an impairment charge of $ 39,000

for the nine months ended September 30, 2022

and $ 55,674 for

the year ended December 31, 2022.

On February 16, 2023, the Bankruptcy Court approved the Debtors Plan of Reorganization, pursuant to

which Marathon’s claim was fixed at $ 40,000

as an unsecured claim to be paid out according

to the timing and percentages within the approved Debtor’s plan.

The Company has yet to receive the settlement funds.

10 – STOCKHOLDERS’ EQUITY

July 27, 2023, the Company’s shareholders approved an amendment to the Company’s articles of incorporation that increased

the amount of common stock authorized for issuance to 500,000,000 with a par value of $ 0.0001 per share.

Registration Statement on Form S-3 and At-The-Market Offering Agreement

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as its sales agent.

As of June 30, 2023, the Company has sold 70,264,987 shares of common stock for an aggregate purchase price of $ 590,321 ,

net of offering costs, pursuant to this At-The-Market Offering Agreement.

As of September 30, 2023, the Company has sold 74,447,287 shares of common stock for an aggregate purchase price

of $ 627,272 , net of offering costs, pursuant to this At-The-Market Offering Agreement.

February 2022, the Company commenced an At The Market offering program with H.C.

Wainwright & Co., LLC, as sales agent, which allowed

it to sell and issue shares of up to approximately $ 750,000 of its Common Stock from time-to-time.

During the first three quarters of

2023, the Company issued 32,305,554 shares of Common Stock under the 2022 At The Market offering program for total proceeds of $ 265,786 ,

net of commissions and other offering related expenses.

Stock Warrants

summary of the Company’s issued and outstanding stock warrants and changes during the period ended June 30, 2023 is as follows:

summary of the Company’s issued and outstanding stock warrants and changes during the period ended September 30, 2023 is as follows:

OF OUTSTANDING STOCK WARRANTS

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Outstanding as of December 31, 2022

Outstanding as of June 30, 2023

summary of the restricted stock award activity (represented by restricted stock units (“RSUs”)) for the six months ended

June 30, 2023 is as follows:

Outstanding as of September 30, 2023

summary of the restricted stock award activity (represented by restricted stock units (“RSUs”)) for the nine months ended

September 30, 2023 is as follows:

SUMMARY OF RESTRICTED STOCK AWARD ACTIVITY

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Nonvested at December 31, 2022

Nonvested at June 30, 2023

Nonvested at September 30, 2023

A Preferred Stock

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of each share.

Each share of Series A Preferred Stock is convertible into shares of the Company’s common stock at an initial conversion

Each share of Series A Preferred Stock was convertible into shares of the Company’s common stock at an initial conversion

price of $ 14.52 per share, at the option of the holder, at any time following the Company’s receipt of stockholder approval for

an increase in its authorized shares of common stock.

The Company will be permitted to compel conversion of the Series A Preferred Stock

after the fulfillment of certain conditions and subject to certain limitations.

Series A Preferred Stock permits the holders thereof to vote together with the holders of the Company’s common stock on a proposal

to increase the authorized shares of the Company’s common stock at an annual or special meeting of the Company’s stockholders.

The Series A Preferred Stock permits the holder to cast 500,000 votes per share of Series A Preferred Stock on such proposal.

A Preferred Stock will not be permitted to vote on any other matter.

The holders of the Series A Preferred Stock agreed not to transfer

their shares of preferred stock until after the meeting of Company stockholders.

The holders of the Series A Preferred Stock agreed to

vote their shares on such proposal in the same proportions as the shares of common stock.

The holders of the Series A Preferred Stock

have the right to require the Company to redeem their shares of preferred stock for cash at 105% of the stated value of such shares commencing

after the earlier of the Company’s stockholders’ approval of the authorized share increase and 90 days after the closing

of the issuance of the Series A Preferred Stock and until 120 days after such closing .

Series A Preferred Stock was recorded outside of stockholder’s equity as mezzanine equity.

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the carrying value of Series A Preferred Stock to its redemption value and recorded the difference to additional paid-in capital.

method treats the end of the reporting period as if it were also the redemption date for the security.

the third quarter ended September 30, 2023, all of the outstanding Series A Preferred Stock were redeemed at 105 % of the $ 1,000 stated

value per share for $ 15,750 .

November 18, 2021, the Company issued $ 650,000 principal of its 1.0 % Convertible Senior Notes due 2026 (the “Notes”).

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Bank National Association, as trustee (the “Trustee”).

Pursuant to the purchase agreement between the

Company and the initial purchasers of the Notes, the Company also granted the initial purchasers an option, for settlement within a period

of 13 days from, and including, November 18, 2021 to purchase up to an additional $ 97,500 principal of Notes, which additional Notes

were purchased on November 23, 2021, for an aggregate principal amount of Notes purchased of $ 747,500 .

All references in this disclosure

to “Notes” includes the Notes issued on both November 18, 2021 and November 23, 2021.

As of June 30, 2023 and December 31,

2022, notes outstanding, net of unamortized discounts of approximately $ 13,269 and $ 15,211 , respectively, were $ 734,231 and $ 732,289 ,

respectively.

November 23, 2021, pursuant to terms of the Notes, the initial purchasers of the Notes purchased an additional $ 97,500 principal of Notes

for an aggregate principal amount of Notes purchased of $ 747,500 .

All references in this disclosure to “Notes” includes the

Notes issued on both November 18, 2021 and November 23, 2021.

Notes accrue interest at a rate of 1.00 % per annum, payable semi-annually in arrears on June 1 and December 1 of each year, beginning

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(as defined in the Indenture) occur, then the conversion rate will, in certain circumstances, be increased for a specified period of

September 2023, the Company entered into privately negotiated exchange agreements with certain holders of its Notes.

In total, the Company

exchanged $ 416,793 principal amount of Notes for an aggregate 31,722,417 shares of Company common stock.

The Company evaluated the exchange of debt to determine if it was an extinguishment or a modification of the debt.

Due to the addition of a substantive conversion feature, the Company determined that the exchange was an extinguished of debt.

measured the gain on extinguishment of debt based on the carrying value of the Notes, the fair value of the Company’s common stock issued

in the exchange and related transaction costs.

The Company recorded

a gain on the exchange of Notes for the Company’s common stock in the amount of $ 82,600 to “Net gain from extinguishment of

debt” on the Condensed Consolidated Statements of Operations.

of September 30, 2023 and December 31, 2022, Notes outstanding, net of unamortized discounts of approximately $ 5,441 and $ 15,211 , respectively,

were $ 325,266 and $ 732,289 , respectively.

July 28, 2022, the Company entered into a Revolving Credit and Security Agreement (the “Agreement”) with Silvergate Bank

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On March 8, 2023, the

term loan prepayment was completed, and the Company’s term loan and RLOC facilities with Silvergate Bank were terminated.

term loan prepayment was completed, and the Company’s term loan and RLOC facilities with Silvergate Bank were terminated and the

Company recorded a loss in the amount of $ 333 to “Net gain on extinguishment of debt” on the Condensed Consolidated Statements

of Operations.

Company leases office space in the United States under operating lease agreements.

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Payments made for these two

operating leases are therefore entirely variable and are based on usage of electricity, and the Company therefore does not record a right-of-use

operating leases are entirely variable and are based on usage of electricity, and the Company therefore does not record a right-of-use

asset or lease liability associated with the leases.

Variable lease cost during the six months ended June 30, 2023 are disclosed in the

Office space and mining facilities comprise the Company’s material underlying asset classes under operating lease

Variable lease cost during the nine months ended September 30, 2023 are disclosed

in the table below.

Office space and mining facilities comprise the Company’s material underlying asset classes under operating

lease agreements.

The Company has no material finance leases.

of June 30, 2023, the Company’s right-of-use (“ROU”) assets and total lease liabilities were $ 559 and $ 597 , respectively.

of September 30, 2023, the Company’s right-of-use (“ROU”) assets and total lease liabilities were $ 501 and $ 538 , respectively.

As of December 31, 2022, the Company’s ROU assets and total lease liabilities were $ 1,276 and $ 1,343 , respectively.

has amortized right-of-use assets totaling $ 71 and $ 29 for the three months ended June 30, 2023 and 2022, respectively.

The Company has

amortized right-of-use assets totaling $ 167 and $ 48 for the six months ended June 30, 2023 and 2022, respectively.

has amortized right-of-use assets totaling $ 57 and $ 79 for the three months ended September 30, 2023 and 2022, respectively.

has amortized right-of-use assets totaling $ 224 and $ 178 for the nine months ended September 30, 2023 and 2022, respectively.

lease costs are recorded on a straight-line basis within operating expenses.

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SCHEDULE OF COMPONENTS OF LEASE COST

For the Three Months Ended June 30,

For the Six Months Ended June 30,

For the Three Months Ended

September 30,

For the Nine Months Ended

September 30,

Operating leases

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OF MINIMUM LEASE PAYMENTS

For the Six Months Ended June 30,

For the Nine Months Ended

September 30,

Operating cash flows from operating leases

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Class Action Complaint

March 30, 2023, a putative class action complaint was filed in the United States District Court for the District of Nevada, against

the Company and present and former senior management, alleging claims under Section 10(b) and 20(a) of the Securities Exchange Act

of 1934 (the “Exchange Act”) arising out of the Company’s announcement of accounting restatements on February 28,

The defendants’ time to respond has been extended until after the appointment of a lead plaintiff.

To date, no lead

plaintiff has been appointed.

March 30, 2023, a putative class action complaint was filed in the United States District Court for the District of Nevada, against the

Company and present and former senior management, alleging claims under Section 10(b) and 20(a) of the Securities Exchange Act of 1934

(the “Exchange Act”) arising out of the Company’s announcement of accounting restatements on February 28, 2023.

defendants’ time to respond has been extended until after the appointment of a lead plaintiff.

To date, no lead plaintiff has been

June 22, 2023, a shareholder derivative complaint was filed in the Circuit Court of the 17th Judicial Circuit for Broward County, Florida,

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July 8, 2023, a second shareholder derivative complaint was filed in the United States District Court for the District of Nevada, against

current and former members of the Company’s board of directors and senior management, alleging claims under Sections 14(a), 10(b), and 21D of the Exchange Act, and for breach of fiduciary duty, unjust enrichment,

and waste of corporate assets, based on allegations substantially similar to the allegations in the March 30, 2023 putative class action complaint.

current and former members of the Company’s board of directors and senior management, alleging claims under Sections 14(a), 10(b),

and 21D of the Exchange Act, and for breach of fiduciary duty, unjust enrichment, and waste of corporate assets, based on allegations

substantially similar to the allegations in the March 30, 2023 putative class action complaint.

July 12, 2023, a third shareholder derivative complaint was filed in the United States District Court for the District of Nevada, against

current and former members of the Company’s board of directors and senior management, alleging claims under Section 14(a) of the Exchange Act and for breach of fiduciary duty, based on allegations substantially similar to the allegations in the March 30, 2023 putative class action complaint.

current and former members of the Company’s board of directors and senior management, alleging claims under Section 14(a) of the

Exchange Act and for breach of fiduciary duty, based on allegations substantially similar to the allegations in the March 30, 2023 putative

class action complaint.

July 13, 2023, a fourth shareholder derivative complaint was filed in the Circuit Court of the 17th Judicial Circuit for Broward County,

Florida, against current members of the Company’s board of directors and senior management, alleging claims for breach of fiduciary duty, unjust enrichment, and waste of corporate assets, based on allegations substantially similar to the allegations in the March 30, 2023 putative class action complaint.

Florida, against current members of the Company’s board of directors and senior management, alleging claims for breach of fiduciary

duty, unjust enrichment, and waste of corporate assets, based on allegations substantially similar to the allegations in the March 30,

2023 putative class action complaint.

August 14, 2023, the two derivative actions pending in the United States District Court for the District of Nevada were consolidated

(the “Nevada Derivative Action”).

On October 16, 2023, the parties to the derivative actions pending in the Circuit Court

of the 17th Judicial Circuit for Broward County, Florida filed an agreed order to stay both actions pending completion of the Nevada

Derivative Action.

October 6, 2020, the Company entered into a series of agreements with multiple parties to design and build a data center for up to 100-megawatts

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of Directors.

On November 3, 2022, the Company’s Board met and determined that Said Ouissal was no longer deemed to be an independent

director of the Company.

As a result, Mr.

Ouissal stepped down from all Board Committees.

15 – SUPPLEMENTAL CONSOLIDATED FINANCIAL INFORMATION

following table provides supplemental disclosure of Condensed Consolidated Statements of Cash Flows information:

OF SUPPLEMENTAL INFORMATION

Nine Months Ended

September 30,

Supplemental information

Cash paid during the year

Supplemental schedule of

non-cash investing and financing activities:

Series A Preferred Stock

accretion to redemption value

Operating lease assets

obtained in exchange for new operating lease liabilities

Digital currencies transferred

Unpaid proceeds from sale

of property and equipment

Reclassifications from

advances to vendor to property and equipment upon receipt of equipment

Common stock issued for

service and license agreements

Exchange of convertible notes for common stock

16 – SUBSEQUENT EVENTS

Company has evaluated other subsequent events through the date the consolidated financial statements were available to be issued and

has concluded that no such events or transactions took place that would require disclosure and in this Note

16 other than as disclosed below.

Results of the Company’s Annual Meeting and Amendment to the

Company’s Articles of Incorporation

July 27, 2023, the Company held an annual meeting of stockholders (the “Meeting”).

As of the record date for the Meeting,

shares of common stock were issued and outstanding 1 .

A total of 79,507,015

shares of common stock, constituting a quorum, were present and

accounted for at the Meeting.

At the Meeting, the Company’s stockholders approved the below proposals (with the Series A Preferred

Stock voting alongside the common stock (15,000

shares with 500,000 votes per share voting on proposal 3 in the same proportions as the shares of common stock were voted) ):

OF VOTES CAST

CAST COMMON STOCK:

Stock Increase

CAST SERIES A PREFERRED (CONVERTED BASIS):

5,172,875,000

# of Common shares as of June 16, 2023

# of Series A (converted basis into Common shares) as of June 16, 2023

5,351,250,000

shares voted through the meeting

shares (converted basis) voted through the meeting on Proposal # 3 only

5,172,875,000

5,252,382,015

As no other matters were brought for a vote before the meeting, the

votes on Proposal #5 of 14,846,275 shares in favor, 13,072,702 shares against, and 836,041 shares abstaining, have no impact.

has concluded that no such events or transactions took place that would require disclosure and in this Note 16 other than as disclosed

October 24, 2023, the Company commenced a new At The Market offering program with H.C.

Wainwright & Co., LLC, acting as sales

agent, under which it may offer and sell shares of its Common Stock from time to time through the sales agent having an aggregate

offering price of up to $ 750,000 .

The sales agent will be compensated at a commission rate equal to up to 3.0 %

of the gross sales price per share sold.

As of November 8, 2023, the Company had sold no shares under this program.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements