Item 7A. Quantitative and Qualitative Disclosures About Market Risk
ITEM 7A. QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK.
The following discussion about our market risk
exposures involves forward-looking statements. Actual results could differ materially from those projected in the forward-looking statements.
For more information regarding the forward-looking statements used in this section and elsewhere in this Annual Report, see the Cautionary
Note Regarding Forward-Looking Statements at the forepart of this Annual Report.
Risk Regarding the Price of Bitcoin .
Our business and development strategy is focused
on maintaining and expanding our Mining operations to maximize the amount of new Bitcoin rewards we earn. At December 31, 2021, we held
4,884 Bitcoin, with a carrying value of $159.5 million, all of which were produced from our Bitcoin mining operations. The carrying value
of our Bitcoin assets at December 31, 2021 reflects the $36.5 million of cumulative impairment charges we recorded against the value of
our Bitcoin assets during the fiscal year ended December 31, 2021 due to decreases in the fair value of our Bitcoin assets after receipt.
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As discussed in Note 3. “Basis of Presentation,
Summary of Significant Accounting Policies and Recent Accounting Pronouncements” of the Notes to Consolidated Financial Statements
disclosed under Part II, Item 8. “Financial Statements and Supplementary Data” of this Annual Report, under the heading “Cryptocurrencies”
on page F-16 below, we account for our Bitcoin assets as indefinite-lived intangible assets, which are recorded at fair value as of the
receipt, subject to impairment testing following their receipt. If the fair value of a Bitcoin asset has declined and we determine that
impairment of that Bitcoin asset is appropriate, we record an impairment charge and the carrying value of the Bitcoin asset is reduced.
Once an impairment charge has been assessed against the fair value of a Bitcoin asset, its carrying value cannot be recovered to reflect
subsequent increases in fair value.
We cannot accurately predict the future market
price of Bitcoin and, as such, we cannot accurately predict whether we will record impairment of the value of our Bitcoin assets. The
future value of Bitcoin will affect the revenue from our operations, and any future impairment of the value of the Bitcoin we mine and
hold for our account would be reported in our financial statements and results of operations as charges against net income, which could
have a material adverse effect on the market price for our securities.
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