The following discussion and analysis should be read in conjunction with our consolidated financial statements and the related notes and other financial information included elsewhere in this Quarterly Report and with our audited consolidated financial statements for the fiscal year endedDecember 31, 2020 , as included in our 2020 Annual Report on Form 10-K. In addition to historical consolidated financial information, the following discussion includes forward-looking statements about our business, financial condition and results of operations, including discussions about management's expectations for our business. These statements represent projections, beliefs and expectations based on current circumstances and conditions and our actual results could differ materially from those discussed in these forward-looking statements. Further, these forward-looking statements should not be construed either as assurances of performance or as promises of a given course of action. You should review the sections entitled "Cautionary Note Regarding Forward-Looking Statements" and "Item 1A. Risk Factors" of this Quarterly Report for a discussion of factors that could cause actual results to differ materially - and potentially adversely - from the results described in or implied by the forward-looking statements contained in the following discussion and analysis and elsewhere in this Quarterly Report. Overview: The Company's current focus is on growing its cryptocurrency mining operation, primarily with the goal of mining Bitcoin utilizing specialized ASIC miners manufactured by Bitmain, known as Antminers. During 2020 and into 2021, the Company continued an ongoing process of upgrading and expanding its existing miner fleet and evaluating its mining operations, with the objective to increase the Company's operational efficiency and performance. With theMay 2021 acquisition of Whinstone, the Company expanded its operations into hosting services for Bitcoin miners and providing expanded capacity for Riot's self-mining operations. Cryptocurrency Mining:
The Company's current focus is on its cryptocurrency mining operation, and
during the nine months ended
During the nine months endedSeptember 30, 2021 , the Company received 18,603 additional Antminer model S19-Pro miners related to its 2020 purchase contracts with Bitmain and, as ofSeptember 30, 2021 , had deployed a total of 25,646 miners in its mining operation. During the nine months endedSeptember 30, 2021 , the Company entered into two additional purchase agreements with Bitmain to acquire 43,500 Antminer model S19j (90 Terahash per second) ("TH/s") miners, for a total purchase price of approximately$145.7 million . Pursuant to these agreements, approximately$56.0 million of the total purchase price was initially paid by the Company to Bitmain as refundable deposits, with the remainder payable in installments in advance of shipment of the miners, which is scheduled to occur on a monthly basis betweenOctober 2021 andOctober 2022 . Subsequent toSeptember 30, 2021 , inOctober 2021 , the Company entered into a purchase agreement with Bitmain to acquire 9,000 S19j Pro (100 TH/s) miners, for a total purchase price of approximately$54 million , with an anticipated delivery and deployment schedule set forMay 2022 throughOctober 2022 . During the year endedDecember 31, 2020 , the Company purchased 33,646 Antminer series of miners from Bitmain, including 12,000 model S19j-Pro miners, 20,606 model S19-Pro miners and 1,040 model S19 miners. As ofDecember 31, 2020 , the Company had received and deployed 7,043 total miners at the Company's mining operation at the Coinmint Facility inNew York , including 4,000 model S17-Pro miners purchased from Bitmain in 2019, as well as 3,043 of the miners purchased from Bitmain in 2020, consisting of 2,003 model S19-Pro miners and 1,040 model S19 miners. 40 Data Center Hosting: OnMay 26, 2021 , we completed the Whinstone Acquisition, our wholly owned subsidiary, which owns and operates the Whinstone Facility, a commercial data center located inRockdale, Texas , which is among the largest Bitcoin mining and hosting facilities inNorth America . The Whinstone Facility provides third-party hosting services to other companies, including other cryptocurrency mining companies, through co-location services agreements, and also provides us with a self-owned facility where we can deploy our miners and carry out future strategic expansion initiatives. Upon completion of the Whinstone Acquisition, we commenced an expansion of the Whinstone facility to 750 megawatts ("MW"), from its existing 300 MW developed capacity. We expect the expanded Whinstone Facility to be completed during 2022, including four new buildings totaling approximately 240,000 square feet of finished space, with sufficient developed electricity power capacity to support an estimated 112,000 Antminer model S19j miners based upon current configurations. We believe this expansion of the Whinstone Facility will provide sufficient capacity to enable us to deploy a significant quantity of our miners (including our current deployed fleet and those expected to be delivered in future shipments) in a self-hosted facility, while allowing Whinstone to continue to operate and grow its existing data center hosting business. We believe deploying our miners at the expanded Whinstone Facility has many advantages for our mining operations, including allowing us to operate our miners without incurring third-party co-location services fees and to do so at the fixed low energy costs available to the Whinstone Facility under its long-term power supply agreement. We also anticipate this expansion of the Whinstone Facility will provide space for third-party Miner co-location services and for other enterprise-level data center hosting services. Whinstone currently hosts Bitcoin mining operations for institutional customers. In addition to hosting revenue, Whinstone also generates engineering and construction services revenue from hosting customers on site, including revenue derived from the fabrication and deployment of immersion cooling technology for Bitcoin mining. From theMay 26, 2021 acquisition date throughSeptember 30, 2021 , Whinstone's total revenue and net income was approximately$14.1 million and$13.8 million , respectively. Additionally, the majority of our$22.8 million of deferred revenue as ofSeptember 30, 2021 is related to advance payments made by Whinstone customers, which will be primarily recognized over the remaining lives of the underlying contracts, or approximately eight years.
Strategic Opportunities:
The Company engaged XMS to assist with evaluating strategic growth opportunities. XMS is an independent global financial services firm with expertise in M&A and strategic advisory. The Company engaged XMS to help with navigating the dynamic Bitcoin landscape and advise the Company on potential strategic transactions in Bitcoin mining related operations. XMS acted as exclusive financial advisor to the Company in connection with the Whinstone Acquisition. The Company does not have a defined timeline for any future transactions and cannot provide any assurance whether or when future transactions may be announced or consummated.
Investments in
InSeptember 2017 andFebruary 2018 , the Company acquired a minority interest for$9.4 million inCoinsquare Ltd. ("Coinsquare"), which operates a digital crypto currency exchange platform inCanada . The investment resulted in an ownership in Coinsquare by the Company of approximately 11.7%, on a fully diluted basis. In 2020, the Company determined there were indicators that would cause a 100% impairment of the Coinsquare investment, resulting in the Company recording an impairment expense of$9.4 million in 2020. The Company elected under ASU 2016-01 to account for the Coinsquare investment using the measurement alternative at cost, less any impairment, plus or minus changes resulting from observable price changes. During the nine months endedSeptember 30, 2021 , under agreements generally between Coinsquare, Coinsquare's shareholders (including Riot) andMogo Inc. (NASDAQ: MOGO) ("Mogo Agreement"), a digital payments and financial technology company ("Mogo"), Riot sold its 3.4 million common shares of Coinsquare (the "Coinsquare Shares") in exchange for approximately 3.2 million common shares of Mogo (the "Mogo Shares") and approximately US$1.8 million in cash. 41 During the nine months endedSeptember 30, 2021 , the Company recorded a gain on sale/exchange of long-term investments of$26.3 million for the sale of its shares of Coinsquare. Concurrently, in accordance with ASC 321, we recorded the fair value of the MOGO shares, received in the exchange of$24.8 million in investments in marketable equity securities within current assets on our unaudited condensed interim consolidated balance sheets. The fair value was calculated as 3.2 million shares of Mogo common stock multiplied by the fair value of the Mogo shares received. During the three and nine months endedSeptember 30, 2021 , we recorded unrealized losses on the shares of approximately$11.2 million and$10.8 million , respectively, based on the closing price per share of Mogo common stock on NASDAQ onSeptember 30, 2021 of$4.32 . The daily share price is extremely volatile and may be more or less than the amount recorded as ofSeptember 30, 2021 .
COVID-19:
The COVID-19 global pandemic has been unpredictable and unprecedented and is likely to continue to result in significant national and global economic disruption, which may adversely affect our business. Based on the Company's current assessment, however, the Company does not expect any material impact on its long-term development, its operations, or its liquidity due to the worldwide spread of COVID-19. However, the Company is actively monitoring this situation and the possible effects on its financial condition, liquidity, operations, suppliers, and industry.
Summary of Cryptocurrency Mining Results:
The following table presents additional information about our cryptocurrency mining activities of Bitcoin ("BTC"), Bitcoin Cash ("BCH") and Litecoin ("LTC") in coins and amounts ($ in thousands) during the nine months endedSeptember 30, 2021 and 2020: Quantities (in coins) Cryptocurrencies BTC BCH Amounts
Balance at January 1, 2021 1,078 1 $ 11,626 Revenue recognized from cryptocurrencies mined 2,458 - 108,213 Proceeds from sale of cryptocurrencies (3 ) - (113 ) Realized gain on sale/exchange of cryptocurrencies - - 94 Impairment of cryptocurrencies - - (17,507 ) Balance at September 30, 2021 3,533 1 $ 102,313 Quantities (in coins) Cryptocurrencies BTC LTC BCH Amounts Balance at January 1, 2020 514 3,449 1 $ 3,839 Revenue recognized from cryptocurrencies mined 730 21 - 6,717 Mining pool operating fees - - - (94 ) Proceeds from sale of cryptocurrencies (100 ) - - (1,029 ) Realized gain on sale/exchange of cryptocurrencies 26 (3,470 ) - 491 Impairment of cryptocurrencies - - - (989 ) Cryptocurrencies received from sale of equipment 5 - - 52 Balance at September 30, 2020 1,175 -
1 $ 8,987 42
Results of Operations Comparative Results for the Three Months Ended
Revenue:
Total revenue for the three months ended
For the three months endedSeptember 30, 2021 and 2020, cryptocurrency mining revenue was$53.6 million , and$2.4 million , respectively. The increase of$51.2 million in mining revenue was due to higher Bitcoin values in the 2021 period, averaging$41,837 per coin as compared to$10,823 per coin in the 2020 period, combined with a higher number of Bitcoin mined in 2021, which totaled 1,292 as compared to 222 in the 2020 period. For the three months endedSeptember 30, 2021 , data center hosting revenue was$11.2 million , and there was no data center hosting revenue for the three months endedSeptember 30, 2020 . Data center hosting revenue includes upfront payments which we record as deferred revenue and generally recognize as services are provided. We provide energized space and operating and maintenance services to third-party mining companies who locate their mining hardware at our Whinstone Facility under long-term contracts. We account for these agreements as a single performance obligation for services being delivered in a series with delivery being measured by daily successful operation of the mining hardware. As such, we recognize revenue over the life of the contract as its series of performance obligations are met. The contracts are recognized in the amount for which we have the right to invoice because we elected the "right to invoice" practical expedient.
Other revenue consisting of license fees was not significant in either period.
Costs and expenses: Cost of revenues for cryptocurrency mining for the three months endedSeptember 30, 2021 and 2020 was$13.0 million and$1.3 million , respectively, representing an increase of approximately$11.7 million . As a percentage of cryptocurrency mining revenue, cost of revenues totaled 24.3% and 53.4% for each of the three month periods endedSeptember 30, 2021 and 2020, respectively. Cost of revenues consists primarily of direct production costs of mining operations, including electricity, labor, insurance and the variableCoinmint hosting fee, but excluding depreciation and amortization, which are separately stated. The increase of$11.7 million in cost of revenues is primarily due to the increases in variable mining costs, including the variable hosting fees, associated with increases in mining revenues. Cost of revenues for data center hosting for the three months endedSeptember 30, 2021 , was$12.6 million and there were no data center hosting costs for the three months endedSeptember 30, 2020 . The 2021 costs consisted primarily of$9.4 million for direct power costs, with the balance primarily incurred for rent and compensation costs. Acquisition-related costs for the three months endedSeptember 30, 2021 totaled$0.6 million , and consisted of expenses incurred in connection with our acquisition of Whinstone. There were no acquisition-related costs for the three months endedSeptember 30, 2020 . Selling, general and administrative expenses during the three months endedSeptember 30, 2021 and 2020 totaled$40.3 million and$2.0 million , respectively. Selling, general and administrative expenses consist of stock-based compensation, legal and professional fees and other personnel and related costs. The increase of$38.3 million is primarily due to an increase in stock-compensation expense of$35.6 million resulting from additional awards (including the performance-based plan announce inAugust 2021 ), compensation expense, which increased by$1.8 million due to additional employees to support the Company's growth, and an increase in consulting fees of$0.7 million resulting primarily from assistance on internal control systems and procedures. Depreciation and amortization expenses during the three months endedSeptember 30, 2021 totaled$12.2 million , which is an increase of approximately$10.9 million , as compared to$1.3 million for the three months endedSeptember 30, 2020 . The increase is primarily due to the amortization of the customer contract intangible asset and higher depreciation expense recognized for the Whinstone Facility and our recently acquired miners. 43 Change in fair value of our derivative asset for the three months endedSeptember 30, 2021 , was$9.9 million , including$7.2 million recorded to adjust the fair value of our Power Supply Agreement, which was classified as a derivative asset and measured at fair value on the date of our acquisition of Whinstone, and$2.7 million from power sales toERCOT through its demand response program. Other income and expenses: Other expense for the three months endedSeptember 30, 2021 was$11.1 million and other income for the three months endedSeptember 30, 2020 was$0.4 million . The increase of$11.5 million is primarily related to an$11.2 million unrealized loss on the decline in fair value of our marketable equity securities.
Results of Operations Comparative Results for the Nine Months Ended
Revenue:
Total revenue for the nine months ended
For the nine months endedSeptember 30, 2021 and 2020, cryptocurrency mining revenue was$108.2 million , and$6.7 million , respectively. The increase of$101.5 million in mining revenue was due to higher Bitcoin values in the 2021 period, averaging$44,591 per coin as compared to$9,064 per coin in the 2020 period, combined with a higher number of Bitcoin mined in 2021, which totaled 2,458 as compared to 730 in the 2020 period. For the period from acquisition toSeptember 30, 2021 , data center hosting revenue was$14.1 million , and there was no data center hosting revenue for the nine months endedSeptember 30, 2020 . Data center hosting revenue includes upfront payments, which we record as deferred revenue and generally recognize as services are provided. We provide energized space and operating and maintenance services to third-party mining companies who locate their mining hardware at ourRockdale, Texas facility under long-term contracts. We account for these agreements as a single performance obligation for services being delivered in a series with delivery being measured by daily successful operation of the mining hardware. As such, we recognize revenue over the life of the contract as its series of performance obligations are met. The contracts are recognized in the amount for which we have the right to invoice because we elected the "right
to invoice" practical expedient.
Other revenue consisting of license fees was not significant in either period.
Costs and expenses: Cost of revenues for cryptocurrency mining for the nine months endedSeptember 30, 2021 and 2020 was$29.9 million and$4.1 million , respectively, representing an increase of approximately$25.8 million . As a percentage of cryptocurrency mining revenue, cost of revenues totaled 27.6% and 61.8% for each of the nine-month periods endedSeptember 30, 2021 and 2020, respectively. Cost of revenues consist primarily of direct production costs of mining operations, including electricity, labor, insurance and, in 2020, rent for theOklahoma City facility and, in 2021, the variableCoinmint hosting fee, but excluding depreciation and amortization which are separately stated. The increase of$25.8 million in cost of revenues is primarily due to the increases in variable mining costs, including the variable hosting fees associated with increases in mining revenues.
Cost of revenues for data center hosting for the period from acquisition toSeptember 30, 2021 , was$16.3 million and there were no data center hosting costs for the nine months endedSeptember 30, 2020 . The 2021 costs consisted primarily of$12.5 million for direct power costs, with the balance primarily incurred for rent and compensation costs. Acquisition-related costs for the nine months endedSeptember 30, 2021 , totaled$18.9 million , and consisted of expenses incurred in connection with our acquisition of Whinstone. There were no acquisition-related costs for the nine months endedSeptember 30, 2020 . 44 Selling, general and administrative expenses during the nine months endedSeptember 30, 2021 and 2020 totaled$48.0 million and$8.0 million , respectively. Selling, general and administrative expenses consist of stock-based compensation, legal and professional fees and other personnel and related costs. The increase of$40.0 million is primarily due to an increase in stock-compensation expense of$35.1 million resulting from additional awards (including the performance-based plan announce inAugust 2021 ), compensation expense, which increased by$3.2 million due to additional employees to support the Company's growth, and an increase in consulting fees of$1.3 million resulting primarily from assistance on internal control systems and procedures. Depreciation and amortization expense during the nine months endedSeptember 30, 2021 totaled$20.8 million , which is an increase of approximately$18.0 million , as compared to$2.8 million for the nine months endedSeptember 30, 2020 . The increase is primarily due to the amortization of the customer contract intangible asset and higher depreciation expense recognized for the Whinstone Facility and our recently acquired miners. Change in fair value of our derivative asset for the nine months endedSeptember 30, 2021 , was$27.5 million , including$23.8 million recorded to adjust the fair value of our Power Supply Agreement, which was classified as a derivative asset and measured at fair value on the date of our acquisition of Whinstone, and$3.7 million from power sales toERCOT through its demand response programs. Impairment of long-term investments of$9.4 million recognized during the nine months endedSeptember 30, 2020 was recorded in connection with the impairment of our investment in Coinsquare. Impairment of cryptocurrencies for the nine months endedSeptember 30, 2021 and 2020, was$17.5 million and$1.0 million respectively, arising from the decline in Bitcoin prices during the periods. Other income: Other income for the nine months endedSeptember 30, 2021 and 2020 was$17.3 million and$1.9 million , respectively. The increase of$15.4 million is primarily related to a$26.3 million realized gain on the exchange of marketable equity securities recognized in connection with the exchange of our shares of Coinsquare, partially offset by a$10.8 million unrealized loss on our marketable equity securities.
Liquidity and Capital Resources:
AtSeptember 30, 2021 , we had working capital of approximately$153.5 million , which included cash and cash equivalents of$57.9 million . We reported net income of$11.5 million during the nine months endedSeptember 30, 2021 . Net income included$42.1 million in non-cash items consisting primarily of a realized gain on the sale of marketable equity securities of$26.3 million and the change in fair value of our derivative asset of$23.8 million , offset by stock-based compensation expense of$37.9 million , the impairment of cryptocurrencies of$17.5 million , depreciation and amortization of$20.8 million , an unrealized loss on marketable securities of$10.8 million , deferred income tax expense of$3.7 million and the issuance of common stock warrants of$1.2 million .
Coinmint Co-location Mining Services Agreement:
OnApril 8, 2020 , the Company entered into a co-location agreement (the "Coinmint Agreement") withCoinmint, LLC ("Coinmint ), pursuant to whichCoinmint agreed to provide up to approximately 9.5 MW of electrical power and to perform all maintenance necessary to operate Riot's miners deployed atCoinmint's data center facility inMassena NY (the "Coinmint Facility"). In exchange,Coinmint is reimbursed for direct production expenses and receives a performance fee based on the net cryptocurrencies generated by Riot's miners deployed at the Coinmint Facility. The amount of electrical power supplied to Riot's miners at the Coinmint Facility has subsequently been increased to accommodate Riot's expanding miner fleet. However, the Company has not entered into a formal written amendment to the Coinmint Agreement and there is no assurance that the Company will have continued use of the Coinmint Facility. The initial term of the Coinmint Agreement was six (6) months, with automatic renewals for subsequent three (3) month terms until terminated as provided in theCoinmint Agreement. 45 Miners: As ofSeptember 30, 2021 , the Company had outstanding executed purchase agreements for the purchase of miners from Bitmain for a total of 13,500 new S19j-Pro model miners, scheduled to be delivered throughOctober 2021 , and had paid a deposit of 20% of the total purchase price for the acquisition of an additional 42,000 model S19j miners pursuant to a purchase agreement entered into by the Company and Bitmain, dated effective as ofApril 5, 2021 . OnApril 5, 2021 , the Company entered into a purchase agreement with Bitmain to acquire approximately 42,000 Antminer model S19j miners, which are scheduled to be delivered, on a monthly basis, betweenNovember 2021 andOctober 2022 . As ofSeptember 30, 2021 a deposit of$56.0 million had been paid against the approximate$138.5 million purchase price, payable as follows: (i) 20% of the purchase price paid as a refundable down payment in connection with the execution of the agreement; (ii) 30% of the purchase price per batch due 6 months in advance of the shipment date for such batch; and (iii) the remaining 50% per batch due 30 days in advance of the shipment date for such batch.
Revenue from Operations:
Funding our operations on a go-forward basis will rely significantly on our ability to continue to mine cryptocurrency and the spot or market price of the cryptocurrency we mine and our data center hosted customers. We expect to generate ongoing revenues from the production of cryptocurrencies, primarily Bitcoin currency rewards, for example, in our mining facilities and our ability to liquidate Bitcoin currency rewards at future values will be evaluated from time to time to generate cash for operations. Generating Bitcoin currency rewards, for example, which exceed our production and overhead costs will determine our ability to report profit margins related to such mining operations, although accounting for our reported profitability is significantly complex. Furthermore, regardless of our ability to generate revenue from the sale of our cryptocurrency assets or our data center hosting facility, we may need to raise additional capital in the form of equity or debt to fund our operations and pursue our business strategy. The ability to raise funds as equity, debt or conversion of cryptocurrency to maintain our operations is subject to many risks and uncertainties and, even if we were successful, future equity issuances would result in dilution to our existing stockholders and any future debt or debt securities may contain covenants that limit our operations or ability to enter into certain transactions. Our ability to realize revenue through Bitcoin production and successfully convert Bitcoin into cash or fund overhead with Bitcoin is subject to a number of risks, including regulatory, financial and business risks, many of which are beyond our control. Additionally, we have observed significant historical volatility in the market price of Bitcoin and, as such, future prices cannot be predicted.
If we are unable to generate sufficient revenue from our Bitcoin production or hosting operations when needed or secure additional sources of funding, it may be necessary to significantly reduce our current rate of spending or explore other strategic alternatives.
At-the-Market Equity Offerings:
2021 ATM Offering
InAugust 2021 , the Company entered into a Sales Agreement withCantor Fitzgerald & Co. ,B. Riley FBR, Inc. ,BTIG, LLC, Compass Point Research & Trading, LLC andRoth Capital Partners, LLC (the "Sales Agents") datedAugust 31, 2021 (the "Sales Agreement"), pursuant to which the Company may, from time to time, sell up to$600.0 million in shares of the Company's common stock through the Sales Agents, acting as the Company's sales agent and/or principal, in a continuous at-the-market offering (the "2021 ATM Offering"). All sales of the shares in connection with the ATM Offering have been made pursuant to an effective shelf registration statement on Form S-3 (Registration No. 333-259212) filed with theSEC . The Company pays the Sales Agents a commission of up to 3.0% of the aggregate gross proceeds the Company receives from all sales of the Company's common stock under the Sales Agreement. During the periodAugust 31, 2021 toSeptember 30, 2021 , the Company received gross proceeds of approximately$35.7 million ($34.8 million , net of$0.9 million in commissions and expenses) from the sale of 1,227,991 shares of common stock, with an average fair value of$29.07 per share, in the 2021 ATM Offering. Subsequent toSeptember 30, 2021 , in connection with the Company's 2021 ATM Offering, the Company received gross proceeds of approximately$564.3 million from the sale of 18.7 million shares of common stock, which completed the 2021 ATM Offering. 46 2020 ATM Offering DuringJanuary 2021 , in connection with the Second Amendment to the At-the-Market Sales Agreement, as amended, between the Company and its sales agent,H.C. Wainwright , the Company received gross proceeds of approximately$84.8 million ($82.7 million net, after$2.1 million in expenses) from the sale of 4,433,468 shares of common stock, with an average fair value of$19.13 per share, in theDecember 2020 ATM Offering. With the sale and issuance of these shares, all$200 million in shares of the Company's common stock registered under theDecember 2020 Registration Statement had been issued and the Company completed theDecember 2020 ATM Offering. Under the terms of theDecember 2020 ATM Offering, the Company only issued shares of its common stock. Operating Activities: Net cash used in operating activities was$61.0 million during the nine months endedSeptember 30, 2021 . Cash was generated from operations by income of$11.5 million , less non-cash items of$42.1 million , consisting primarily of a realized gain on the sale of marketable equity securities of$26.3 million and the change in fair value of our derivative asset of$23.8 million , offset by stock-based compensation expense of$37.9 million , the impairment of cryptocurrencies of$17.5 million , depreciation and amortization of$20.8 million , an unrealized loss on marketable securities of$10.8 million , deferred income tax expense of$3.7 million and the issuance of common stock warrants of$1.2 million , net of other immaterial items. The change in assets and liabilities of$114.6 million consisted primarily of increased cryptocurrencies of$108.2 million , increased security deposits of$3.1 million , increased accounts receivable of$2.6 million , decreased prepaid expenses and other current assets of$1.9 million , increased accounts payable and accrued expenses of$4.5 million , change in fair value of future power credits of$0.4 million , increased customer deposits of$6.1 million , and decreased deferred revenue
of$12.8 million . Net cash used in operating activities was$8.8 million during the nine months endedSeptember 30, 2020 . Cash was consumed from continuing operations by the loss of$16.6 million , less non-cash items of$14.4 million , consisting of the impairment of our investment in Coinsquare totaling$9.4 million , stock-based compensation totaling$2.8 million , impairment to our cryptocurrencies of$1.0 million , depreciation and amortization totaling$2.8 million , and amortization of our right of use assets of$0.4 million , offset by,$1.4 million for the reversal of our accrual for the registration rights penalty and$0.5 million related to the gain from the exchange of cryptocurrencies, net of other immaterial items. Cryptocurrencies increased by$6.6 million and prepaid expenses and other current assets decreased$0.5 million , offset by, a decrease in our lease liability of$0.4 million and a decrease in accounts payable and accrued expenses of$0.2 million .
Investing Activities:
Net cash used in investing activities during the nine months endedSeptember 30, 2021 was$221.0 million , primarily consisting of deposits on equipment of$103.2 million , our acquisition of Whinstone of$40.9 million , net and purchases of property and equipment of$78.9 million , offset by proceeds of$1.8 million received for our Mogo investment. Net cash used in investing activities during the nine months endedSeptember 30, 2020 was$16.5 million , consisting of deposits on equipment of$11.4 million , purchases of property and equipment of$6.3 million , offset by proceeds received from the sale of cryptocurrencies of$1.0 million and proceeds received from the sale of property and equipment of$0.1 million . 47 Financing Activities: Net cash provided by financing activities was$116.5 million during the nine months endedSeptember 30, 2021 , which consisted of net proceeds from the issuance of our common stock in connection with our ATM Offerings of$117.5 million and proceeds received from the exercise of common stock warrants of$0.8 million , offset by the repurchase of common stock to pay employee withholding taxes of$1.8 million .
Net cash provided by financing activities was
Critical Accounting Policies and Significant Judgments and Estimates:
Our critical accounting policies and significant estimates are detailed in our 2020 Annual Report. Our critical accounting policies and significant estimates have not changed from those previously disclosed in our 2020 Annual Report, except for those accounting subjects mentioned in the section of the notes to the unaudited condensed interim consolidated financial statements titled "Recently Issued and Adopted Accounting Pronouncements."
Recently Issued and Adopted Accounting Pronouncements:
The Company has evaluated all recently issued accounting pronouncements and
believes such pronouncements do not have a material effect on the Company's
financial statements. See Note 3 of the unaudited condensed interim consolidated
financial statements at
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