Quarterly report pursuant to Section 13 or 15(d)

ADVANCES TO VENDORS AND PROPERTY AND EQUIPMENT

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ADVANCES TO VENDORS AND PROPERTY AND EQUIPMENT
3 Months Ended
Mar. 31, 2022
Advances To Vendors And Property And Equipment  
ADVANCES TO VENDORS AND PROPERTY AND EQUIPMENT

NOTE 3 – ADVANCES TO VENDORS AND PROPERTY AND EQUIPMENT

 

The Company contracts with bitcoin mining server manufacturers in procuring equipment necessary for the operation of its bitcoin mining operations. A typical agreement calls for a certain percentage of the total order to be paid in advance at specific intervals, usually (1) within several days of execution of a specific contract (2) approximately six months before each shipment date and (3) approximately one month before each shipment date. We account for these payments as Advances to vendor on the balance sheet.

 

As of March 31, 2022 and December 31, 2021, such advances totaled approximately $594.2 million and $466.3 million, respectively.

 

In addition, the Company contracts with other service providers for hosting of its equipment and operational support in data centers where the company’s equipment is deployed. These arrangements also call for advance payments to be made to vendors in conjunction with the contractual obligations associated with these services. We classify these payments as deposits on the balance sheet.

 

The components of property and equipment as of March 31, 2022 and December 31, 2021 are:

 

 

    Useful life (Years)     March 31, 2022     December 31, 2021  
Website     7       121,787       121,787  
Mining equipment     5       182,247,691       163,868,283  
Construction in Progress     N/A       186,125,986       133,565,908  
Mining patent     17       -       1,210,000  
Gross property, equipment and intangible assets             368,495,464       298,765,978  
Less: Accumulated depreciation and amortization             (35,178,006 )     (21,591,958 )
Property, equipment and intangible assets, net           $ 333,317,458     $ 277,174,020  

 

The Company’s depreciation expense related to property and equipment for the three months ended March 31, 2022 and March 31, 2021 was $13,864,132 and $720,142, respectively. Amortization expense for the three months ended March 31, 2022 and March 31, 2021 was $12,552 and $17,794, respectively.