Leases

6 Months Ended

Jun. 30, 2025

Note 12. Leases

The Company’s operating leases are for its offices, mining facilities, and data centers. The Company’s subsidiaries also have finance leases, which are primarily related to equipment used at its data centers and the power plant located in Iroquois Falls, Ontario. The Company indirectly owns four natural gas power plants in Ontario, Canada, through an 80.1% interest in a joint venture entity, Far North Power Corp. (the “Far North JV”).

The following table shows the right-of-use assets and lease liabilities as of June 30, 2025 and December 31, 2024:


(in USD thousands)	June 30, 2025		December 31, 2024
Right-of-use assets:
Operating leases	$	20,057	$	20,593
Finance leases		19,456		19,770
Total right-of-use assets	$	39,513	$	40,363

Lease liabilities:
Operating leases	$	20,816	$	21,364
Finance leases		25,070		23,700
Total lease liabilities	$	45,886	$	45,064

A subsidiary of the Company entered into a sale-leaseback transaction with Macquarie as part of the Far North JV transaction. The finance lease related to the power plant in Iroquois Falls, Ontario is secured by the assets that exist at the power plant. As per the stated terms of the finance lease, there is a mandatory prepayment of base rent when there are net cash proceeds in the event of a (1) cash sweep – when there is excess cash in the Far North JV in respect of each fiscal quarter, (2) equity issuance – all net cash proceeds from any equity issuances shall be applied to prepay base rent, (3) disposition of property – all net cash proceeds from the disposition of property shall be applied to prepay base rent, (4) insurance and expropriation – in the event net cash proceeds are received from the expropriation of its property or assets, or insurance policies in respect of its property or assets, and are greater than a certain insurance threshold, it shall be applied to prepay base rent, and (5) harmonized sales tax (consumption tax in Canada) refunds – all net cash proceeds of any harmonized sales tax refunds shall be applied according to priority payments set forth in the lease agreement and then applied to prepay base rent.

The lease agreement underlying the sale-leaseback transaction, as amended, included lease deferrals at a subsidiary of the Far North JV’s election whereby if a deferral was elected, the Far North JV would issue subsidiary Penny Warrants to the lessor as an additional lease payment. During the six months ended June 30, 2025, the subsidiary of the Far North JV elected to defer lease payments and issued 2,000,000 subsidiary Penny Warrants. See Note 13. Stockholders’ equity for further information on the subsidiary Penny Warrants. Upon elections to defer lease payments, the subsidiary of the Far North JV determined that the contingency upon the non-cash variable lease payments, being the subsidiary Penny Warrants, was resolved. As such, the non-cash variable lease payments were then included as lease payments under the lease and the subsidiary of the Far North JV remeasured the associated lease liability to reflect these lease payments with a corresponding adjustment to the associated right-of-use asset.

The Company’s lease costs are comprised of the following:


	Three Months Ended				Six Months Ended
(in USD thousands)	June 30, 2025		June 30, 2024		June 30, 2025		June 30, 2024
Operating leases
Operating lease cost	$	1,275	$	586	$	2,478	$	1,253
Variable lease cost		242		255		479		517
Operating lease expense		1,517		841		2,957		1,770
Short-term lease expense		200		69		283		95
Total operating lease expense		1,717		910		3,240		1,865
Finance leases
Amortization of financed assets		1,471		187		2,897		374
Interest on lease obligations		641		20		1,292		42
Total finance lease expense		2,112		207		4,189		416
Total lease expense	$	3,829	$	1,117	$	7,429	$	2,281

The following table presents supplemental lease information:


	Six Months Ended
(in USD thousands)	June 30, 2025			June 30, 2024
Operating cash outflows – operating leases	$	2,512		$	1,400
Operating cash outflows – finance leases	$	425		$	42
Financing cash outflows – finance leases	$	970		$	359

Right-of-use assets obtained in exchange for operating lease liabilities	$	197		$	—
Right-of-use assets obtained in exchange for finance lease liabilities	$	—		$	24,672

	Six Months Ended
(in USD thousands)	June 30, 2025			June 30, 2024
Weighted-average remaining lease term – operating leases		8.3			10.8
Weighted-average remaining lease term – finance leases		3.8			4.3
Weighted-average discount rate⁽¹⁾ – operating leases		11.6	%		11.2	%
Weighted average discount rate – finance leases		10.0	%		9.9	%

⁽¹⁾ The Company’s operating leases do not provide an implicit rate, therefore the Company uses the incremental borrowing rate at the lease commencement date in determining the present value of lease payments. The incremental borrowing rate represents an estimate of the interest rate the Company would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis for similar assets over the term of the lease.

The following table presents the Company’s future minimum operating lease payments as of June 30, 2025:


	Operating
(in USD thousands)	Leases
Remainder of 2025	$	2,623
2026		5,071
2027		4,799
2028		4,444
2029		3,380
Thereafter		13,231
Total undiscounted lease payments		33,548
Less present value discount		(12,732)
Present value of operating lease liabilities	$	20,816

The following table presents the Company’s future minimum finance lease payments as of June 30, 2025:


	Finance
(in USD thousands)	Leases
Remainder of 2025	$	4,217
2026		9,188
2027		6,891
2028		6,891
2029		2,767
Thereafter		—
Total undiscounted lease payments		29,954
Less present value discount		(4,884)
Present value of finance lease liabilities	$	25,070