Annual report pursuant to Section 13 and 15(d)

Digital Asset Mining

v3.19.1
Digital Asset Mining
12 Months Ended
Dec. 31, 2018
Digital Asset Mining  
Digital Asset Mining

NOTE 4 – DIGITIAL ASSET MINING

 

On February 7, 2018, Marathon Crypto Mining, Inc. (“MCM”), a Nevada corporation and wholly owned subsidiary of the Company, entered into an agreement to acquire 1,400 Bitmain’s Antminer S9 miners (“Antminer S9s”). The purchase price was $4,557,072. The Company also paid installation costs of $694,647 (total paid and capitalized was $5,251,719). The Company will depreciate the Antminer S9’s and related installation costs over a two-year period. Depreciation for the year ended December 31, 2018 was $2,003,696 million. During the year ended December 31, 2018, the Company recorded a $2,222,688 charge for the impairment of the mining equipment.

 

On February 12, 2018, in connection with the intended mining operations of MCM, the Company assumed a lease contract dated November 11, 2017 (the “Lease Agreement”) by and between 9349-0001 Quebec Inc. (the “Lessor”) and Blocespace Inc., formerly known as Cryptoespace Inc. (the “Lessee”). Pursuant to the Lease Agreement, among other things, the Lessee leases a building of 26,700 square feet (the “Property”) in Quebec, Canada, for an initial term of five (5) years (the “Term”), commencing on December 1, 2017 and terminating on November 30, 2022. The Lessee shall pay a monthly rent of $10,013 Canadian Dollars (“CAD”) plus tax, or an annual rent of $120,150 CAD plus tax (“Yearly Rent”). At the signing of the Lease Agreement, the Lessee paid the Lessor a deposit equal to the Yearly Rent which amount will be dispersed during the Term as set forth in the Lease Agreement. Lease expense for the year ended December 31, 2018 was $88,043.

 

The Lessee assigned the Lease Agreement to MCM pursuant to an Assignment and Assumption Agreement (the “Assignment”) by and between the Company and the Lessee’s parent company, Bloctechnologies Canada Inc. Subject to the terms and conditions of the Assignment, MCM agreed to observe all the covenants and conditions of the Lease Agreement, including the payment of all rents due. The Company shall be responsible for all necessary capital expenditures in connection with capital improvements to the Property to set up MCM’s mining operations.

 

The components of property, equipment and intangible assets as of December 31, 2018 and 2017 are:

 

    Useful life (Years)     December 31, 2018     December 31, 2017  
Website     7     $ 121,787     $ 121,787  
Mining equipment     2       3,029,031       -  
Mining patent     17       1,210,000       -  
Gross property, equipment and intangible assets             4,360,818       121,787  
Less: Accumulated depreciation and amortization             (2,181,488 )     (111,776 )
Property, equipment and intangible assets, net           $ 2,179,330     $ 10,011  

 

The Company’s depreciation expense for the years ended December 31, 2018 and 2017 were $2.0 million and $0, and amortization expense were $66,017 and $24,802 for the year ended December 31, 2018 and 2017, respectively.