Greenidge Generation(US:GREE)2023-08-14 20:31Operations and Capacity - Greenidge operates cryptocurrency datacenter facilities in New York and South Carolina, with a combined capacity of approximately 106 MW[109]. - The company has approximately 38,700 miners with a total capacity of 4.1 EH/s, including 28,500 miners for datacenter hosting and 10,200 miners for cryptocurrency mining[111]. - An electrical upgrade at the South Carolina facility increased capacity to 44 MW, supporting approximately 8,500 additional miners[118]. - The hosting agreements with NYDIG affiliates allow Greenidge to operate as a hosting facility, covering most of its current mining capacity[117]. - The company installed approximately 1,500 additional miners at existing facilities, which is expected to enhance profits and liquidity in 2023 and beyond[185]. Financial Performance - Total revenue decreased by $8.22 million, or 36%, to $14.71 million in Q2 2023 compared to $22.93 million in Q2 2022[125]. - Cryptocurrency mining revenue fell by $16.09 million, or 80%, to $3.98 million, attributed to a 67% increase in global bitcoin mining difficulty and a 64% decrease in average hash rate[130]. - Power and capacity revenue decreased by $1.79 million, or 63%, to $1.07 million, impacted by a 56% lower price per MWh sold and a 15% decrease in volume[132]. - Datacenter hosting revenue for Q2 2023 was $9.66 million, with no revenue in the same period of 2022, representing a significant transition to hosting operations[129]. - Total revenue for the six months ended June 30, 2023, was $29.9 million, down $22.2 million, or 43%, from $52.1 million in 2022[152]. Debt and Liquidity - A debt reduction of $58.5 million was achieved, lowering the secured debt with NYDIG from $75.8 million to $17.3 million[113]. - The restructuring of NYDIG debt is expected to improve liquidity, with 2023 interest payments reduced to $2.0 million compared to $62.7 million previously required[115]. - The company anticipates receiving approximately $4.9 million in cash upon closing a transaction with NYDIG, along with potential bonus payments of up to $2.6 million[121]. - The minimum cash requirement was reduced from $10 million to $6 million under a Limited Waiver, contingent on the sale of the South Carolina facility by December 29, 2023[189]. Operating Costs and Losses - Total operating costs and expenses dropped by $88.30 million, or 81%, to $21.35 million, primarily due to the absence of impairment charges from long-lived assets[125]. - Net loss from continuing operations improved to $9.75 million in Q2 2023, compared to a loss of $109.04 million in Q2 2022, reflecting a reduction of $99.28 million, or 91%[125]. - Adjusted operating loss from continuing operations was $6.10 million, an increase of $1.45 million, or 31%, compared to the prior year[125]. - EBITDA loss from continuing operations improved to $3.48 million, a reduction of $78.69 million, or 96%, from the previous year[125]. - The operating loss from continuing operations was $12.3 million for the six months ended June 30, 2023, an improvement of $73.2 million compared to an operating loss of $85.5 million in the same period in 2022[166]. Market Conditions and Challenges - Average bitcoin price decreased by 14% to $28,038 in Q2 2023, while total bitcoins produced increased by 8% to 670[125]. - The average active hash rate for company-owned miners decreased by 64% to 577,090 EH/s, reflecting the sale of miners and transition to hosting services[128]. - Cryptocurrency mining revenue decreased by $32.9 million, or 76%, to $10.4 million, attributed to a 59% increase in bitcoin mining difficulty and a 31% decrease in average bitcoin price[158]. Discontinued Operations - The company has classified the Support.com business as discontinued operations, focusing solely on cryptocurrency datacenter and power generation[120]. - Income from discontinued operations decreased by $1.3 million, or 114%, resulting in a loss of $0.3 million for the three months ended June 30, 2023[142]. - Income from discontinued operations decreased by $2.1 million, or 85%, to $0.4 million for the six months ended June 30, 2023, primarily due to lower operating income from the loss of the largest customer[173]. Tax and Regulatory Matters - The effective tax rate for the three months ended June 30, 2023 was 0%, lower than the statutory rate of 21% due to a full valuation allowance on deferred tax assets[139]. - The effective tax rate for the six months ended June 30, 2023, was 0%, lower than the statutory rate of 21%, due to a full valuation allowance on deferred tax assets[170]. - The company qualifies as an "emerging growth company" under the JOBS Act, allowing it to rely on exemptions from certain disclosure requirements[209]. - The company has elected to take advantage of the extended transition period for complying with new or revised accounting standards, which may affect comparability with other companies[211].