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| Leases | Note 8. Leases
As further discussed in Note 11. Related party transactions, on March 31, 2025, in connection with the Transactions, the Company entered into a Master Colocation Services Agreement and Master Management Services Agreement with Hut 8. Under both agreements, Hut 8 provides the Company with colocation, hosting, management, oversight, strategy, compliance, operational, and other services for its Bitcoin mining operations located at Hut 8’s facilities. Pursuant to an Exclusivity Agreement between the Company and Hut 8, all of the Company’s Bitcoin miners are located at Hut 8’s facilities. The Company has determined that it has embedded operating leases at three of the facilities governed by this arrangement and has elected to combine lease and non-lease components as permitted under ASC 842. One of the facilities governed by this arrangement includes payments that are variable pass-through fees and facility costs and are therefore expensed as incurred. The Company recorded right-of-use ("ROU") assets of $11.4 million in exchange for operating lease obligations during the six months ended June 30, 2026 related to Drumheller.
The following table shows the ROU assets and lease liabilities as of June 30, 2026 and December 31, 2025:
The Company’s lease costs are comprised of the following:
The following table presents supplemental lease information:
(1) The Company’s operating leases implicit interest rate cannot be determined, 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, 2026:
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