WULFTeraWulf

Given the significant decline in the price of bitcoin and disruptions in the cryptocurrency market in the periods presented, tell us how you considered the factors in ASC 360-10-35-21 through 22 in evaluating your long-lived assets for recoverability and potential impairment.

We acknowledge the Staff’s comment and respectfully advise the

Staff that we considered guidance at ASC 360 when evaluating long-lived assets for recoverability and potential impairment as of December

31, 2022. Per ASC 360-10-35-21, a long-lived asset (asset group) shall be tested for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable.

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Although this guidance does not dictate a formal requirement to test for impairment annually, we evaluated the example indicators provided in ASC 360-10-35-21 to determine whether potential triggering events or changes in circumstances had occurred as of December 31, 2022.

In identifying our asset group(s), we considered guidance at ASC 360-10-35-23 which states that a long-lived asset (or assets) shall be grouped with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and

Securities and Exchange Commission liabilities. As of December 31, 2022, substantially all of the

Company’s property, plant and equipment were deployed at the mining facility in New York (“Lake Mariner facility”) to support bitcoin mining operations, which commenced in March 2022 and continued throughout the fiscal year ended December 31, 2022, or was construction in process relating to Building 2. As such, we identified the asset group as the Lake Mariner facility for purposes of this assessment.

In accordance with ASC 360-10-35-21 (a) and (b), we considered whether there was a significant decrease in the market price of the long-lived asset group or whether there was a significant adverse change in the extent or manner in which the long-lived asset group was being used or in its physical conditions. As of December 31, 2022, we reported property, plant and equipment, net of $191.5 million, primarily consisting of miners in service, deposits on miners not yet received, leasehold improvements and construction in process on Building 2. As disclosed in Note 12, Commitments and Contingencies, of our Form

10-K for the Fiscal Year Ended December 31, 2022, the Company entered into and paid deposits for various sale and purchase agreements with Bitmain Technologies Limited (“Bitmain”) for the purchase of bitcoin miners, the first of which were entered into during

December 2021 (the “2021 Agreements”). In September 2022 through December 2022, the Company subsequently cancelled certain batches of miners originally scheduled for delivery under the 2021 Agreements (representing 12,000 of the 18,000 originally contracted miners) and entered into renegotiated Future Sale and Purchase Agreements (the “2022 Agreements’). The Company’s original deposits on miners under the 2021 Agreements were applied as credits to fully satisfy the purchase price of the 2022 Agreements, reflecting the current market price of miners at the time of renegotiation, where the price of miners is positively correlated to the price of bitcoin

(see considerations of ASC 360-10-35-21 (c) in the following paragraph for further discussion regarding the decline in bitcoin prices during the fiscal year ended December 31, 2022). During the fiscal year ended December 31, 2022, the majority of miners placed into service were installed during Q3 and Q4 2022 subsequent to the completion of construction on Building 1, and comprised the then most recently released air-cooled series of miners produced by Bitmain (i.e., the S19 series). Furthermore, as disclosed in Note 11, Joint Venture, of our Form 10-K for the Fiscal Year Ended December 31, 2022, approximately 5,000 of the miners placed in service at the Lake Mariner facility were received as distributions from Nautilus Cryptomine LLC (“Nautilus” or the “Joint Venture), such that the miners were written down to fair value upon distribution and the Company recognized its portion of the loss as a component of equity in net loss of investee, net of tax within the consolidated statement of operations for the year ended December 31, 2022. Based on these considerations, and as the Lake Mariner facility was fully operational with Building 1 and construction substantially complete on Building

2 (with no further plans to significantly change operations outside of continued expansion with additional buildings at the facility), we did not identify any significant changes in market price or the extent or manner in which the long-lived asset group was being used that would indicate impairment as of December 31, 2022.

In accordance with ASC 360-10-35-21 (c), we considered whether a significant adverse change in legal factors or in the business climate that could affect the value of the long-lived asset group, including an adverse action or assessment by a regulator, indicated that its carrying value may not be recoverable. Throughout the fiscal year ended December

31, 2022, the Company monitored the price of bitcoin which declined from over $46 thousand per bitcoin as of January

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1, 2022, to approximately

$20 thousand per bitcoin in Q2 2022 and further down to $16.5 thousand per bitcoin as of December 31, 2022. Based on management’s assessment, the declines in the price of bitcoin were not primarily driven by adverse changes in legal factors, but more correlated with multiple cryptocurrency market participants filing for bankruptcy during 2022 resulting in a loss of confidence in participants of the digital asset ecosystem and negative publicity surrounding digital assets more broadly. Although the declines in the price of bitcoin are significant year over year, management does not believe this to be indicative of impairment in the value of our long-lived asset group

(the Lake Mariner facility). The price of bitcoin has historically been volatile; over the last 10 years, the price of bitcoin has fluctuated frequently and significantly from values less than $1 thousand per bitcoin to over $68 thousand in November 2021. Management determined the decrease in price noted during the fiscal year ended December 31, 2022, was not dissimilar to price drops historically experienced and, as such, management did not believe there to be indications of a permanent, non-temporary decrease in the price of bitcoin. Additionally, we continued operating our miners profitably (despite the lower Q4 2022 bitcoin prices) except for certain days with significant electricity spikes due to excessive winter-condition grid demand. Separately, construction on Building 1 of the facility was recently completed with

Building 2 continuing to be constructed to expand mining operations, and such infrastructure and related electrical equipment were unaffected by fluctuations in the price of bitcoin. Additionally, the Company had taken steps to mitigate the risk that our miners may become unprofitable by deploying miners at the Lake Mariner facility that are Bitmain’s current generation and power-efficient models, and had no plans of discontinuing or scaling back operations in response to the declines in the price of bitcoin as of December 31, 2022. Furthermore, deposits on miners expected to be placed in service in the near-term were renegotiated at prices reflecting current prices of miners as of Q4 2022.

In accordance with ASC 360-10-35-21 (e), we considered whether a current-period operating or cash flow loss combined with a history of operating or cash flow losses or a projection or forecast demonstrated continuing losses associated with the use of the long-lived asset group. Although the Company reported operating losses of $43.7 million and net cash used in operating activities from continuing operations of $32.3 million during the fiscal year ended December 31, 2022, this was within management’s expectations as mining operations continue to grow towards profitability. As noted above, mining operations began in March 2022 with the majority of miners being placed in service starting in Q3 2022 or later, resulting in reported revenues of only $15.0 million for the year (versus costs of revenue and operations of $58.8 million). Additionally, operations at the Lake Mariner facility had not yet grown to the scale required to support its principal operations. For the majority of the fiscal year ended December

31, 2022, the Lake Mariner facility supported only 10 MW of total mining capacity which increased to 60 MW of total mining capacity by

December 31, 2022. As disclosed within Exhibit 99.1 to our Current Report on Form 8-K filed on August 14, 2023, as of Q2 2023 the Company completed construction on Building 2 in accordance with its planned growth, expanding total mining capacity to 110MW (representing approximately

34,000 miners) and has begun to expand the Lake Mariner facility with the addition of a third building, which will house an incremental

43 MW of bitcoin mining capacity. Based on the considerations above, we determined the operating and cash flow losses reflected the early stage of the Company’s mining operations and were not indicative of impairment of the long-lived asset group.

We also evaluated the examples in ASC 360-10-35-21 (d) and (f), and did not identify an accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the long-lived asset group nor a current expectation that, more likely than not, the long-lived asset group will be sold or otherwise disposed of significantly before the end of its previously estimated useful life.

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Please provide us your analysis supporting your revenue recognition policy for your mining pool participation activities. In your response, where appropriate, reference for us the authoritative literature you relied upon to support your accounting: • Provide us a representative sample contract and cross reference your analysis to the specific provisions of that contract.

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Be sure to include terms related to the promises and related performance obligations, calculation of transaction consideration, and payment; • Tell us how you determined the term of your contracts and the period of service for which the mining pool operators determine your compensation. • Tell us about your process to identify your performance obligations. Refer to ASC 606-10-25-14 to 25-22; • You disclose that you are entitled to compensation regardless of whether the pool operator successfully records a block to the bitcoin blockchain, and that you recognize revenue when it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur. Tell us how your accounting policy considered ASC 606-10-25-23 to 25-25, and when during the contract term you recognize revenue; • You disclose that all of the consideration to be received under the contract is variable. Tell us your consideration of ASC 606-10-32-11 to 32-12, whether any of the consideration is constrained and discuss at what point the uncertainty associated with the variable consideration is resolved and why; and • You determine the fair value of the cryptocurrency award using the quoted price of the related cryptocurrency in your principal market at the time of contract inception. Tell us what your principal market is, and how you determined that it was the principal market.

The Company respectfully advises the Staff that it performed an analysis of its revenue recognition related to mining pool activities in accordance with ASC 606, Revenue from Contracts with Customers. The Company has included the Foundry USA Pool Service Agreement, dated August 27, 2020 (effective during the fiscal year ended December 31, 2022), as Exhibit 10.1 within our Form 8-K filed with the SEC on February 1, 2023. Please see Appendix A.1 for a representative sample contract with the customer (the “Pool Operator”).

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Though there is not a countersigned agreement with the Pool Operator, the Pool activities are subject to the Service Agreement and Terms and Conditions (each found on the Pool Operator’s website) that govern any entity’s interaction with the Pool Operator in that capacity. Specifically, the Service Agreement states,

"By accessing and using the Pool, User accepts and agrees to the Terms, conditions, and Privacy Policy (collectively, the “Service Agreement”). As the operator of the Pool, Foundry shall provide a mining Pool Service (as defined below) to Users under the Service Agreement.”

These agreements include the normal rights and obligations found in most contracts, including each party’s responsibilities, term, compensation, termination rights, limitation of liability, warranty

(disclaimer thereof), and choice of law. The contract documents are enforceable and the arrangement is deemed a contract.

We determined the term of the contract and the period of service for which the Pool Operator determines our compensation in accordance with Section 7 of the Service Agreement, Term and Termination. Specifically, subsections (a) and (b) state,

“a. the Service Agreement will be in full force and effect until User’s access and usage rights to the Pool and Service are terminated by either User or Foundry in accordance with the Service Agreement, or as otherwise agreed upon between Foundry and User (“Term”).

b. User may terminate the Service Agreement at any time upon settlement of any pending transactions.”

The Pool Operator provides additional information within the Pool FAQs available on its website, including expanded explanation about information such as the payout scheme. Specifically, “Foundry USA

Pool pays out to all pool members according to the Full-Pay-Per-Share (FPPS) payout scheme. Daily Earnings are calculated from midnight-to-midnight

UTC time, and the sub-account balance is credited one hour later at 1 AM UTC time.” As the Pool Operator settles payments with Users under the arrangement daily, the Company initially determined per (b) above that the contract provides us the right to terminate the contract each 24-hour period, auto-renewing so long as participation in the Pool continues. Upon re-evaluating these terms in response to the Staff’s question, we identified certain factors that indicate the contract term is less than each successive 24-hour period. Specifically, the contract does not dictate any limitation to the customer’s (Pool Operator’s) ability to terminate the contract; additionally, the preamble to the Service Agreement states that the “User agrees that Foundry will have the right to modify the Service Agreement at any time,” which indicates the Pool Operator has the ability to modify (or terminate) the contract at any time without substantial penalty. Effective August 28, 2023, the Pool Operator updated Section 11, Contract Term and Termination, of the Terms of Service (see

Appendix A.2), which clarifies the definition of a “Contract Day” to be “the period between 00:00:00 UTC and 23:59:59

UTC” and stipulates that, “(b) User’s access and usage rights to the Pool and Service may be terminated for any reason, without penalty, by either Foundry or User by providing one Contract Day’s prior written notice to the other party.” However, the preamble to the updated Terms of Service continues to state, “User agrees that Foundry will have the right to modify the Service

Agreement at any time without prior notice” such that the Pool Operator still effectively has the ability to terminate the contract at any time. Based on these updated terms, we acknowledge the contract term could be, based on the Pool Operator modification, less than each 24-hour period (for example, the contract term could be, based on Pool Operator modification, less than each hour, minute, or second that the Company provides computing power to the Pool Operator). We understand that the Staff would not be opposed to the Company adopting an accounting policy to aggregate individual contracts with individual terms less than 24-hours within each intraday period and apply a consistent point to value noncash consideration. As such, the Company will aggregate the individual contracts in a 24-hour period and will continue to use the price of bitcoin at the start of day (00:00:00 UTC) when determining the fair value of noncash consideration received, ensuring that this point in time in each 24-hour period is consistently applied.

We respectfully advise the Staff that in future filings the Company will amend the disclosures within Note 2 - Significant Accounting Policies of our Form 10-K and Form 10-Q related to “Revenue Recognition

- Mining Pool” to more clearly define the contract term used as follows:

“Mining Pool

The Company has entered into an arrangement with a cryptocurrency mining pool (the Foundry USA Pool) to provide computing power to the mining pool in exchange for consideration. The arrangement is terminable at any time without substantial penalty by Foundry USA Pool and may be terminated without substantial penalty by the Company upon providing one Contract Day’s, as defined, prior written notice. The Company’s enforceable right to compensation only begins when and continues while the Company provides computing power to its customer, the mining pool operator. Accordingly, the contract term with Foundry

USA Pool is deemed to be less than 24 hours. The mining pool applies the Full Pay Per Share (“FPPS”) model. Under the FPPS model, in exchange for providing computing power to the pool, the Company is entitled to pay-per-share base amount and transaction fee reward compensation, calculated on a daily basis, at an amount that approximates the total bitcoin that could have been mined and transaction fees that could have been awarded using the Company’s computing power, based upon the then current blockchain difficulty. Under this model, the Company is entitled to compensation regardless of whether the pool operator successfully records a block to the bitcoin blockchain.

Providing computing power to a mining pool for cryptocurrency transaction verification services is an output of the Company’s ordinary activities. The provision of such computing power is the sole performance obligation. The transaction consideration the Company receives is noncash consideration and is all variable. Because cryptocurrency is considered noncash consideration, fair value of the cryptocurrency award received would generally be determined using the quoted price of the related cryptocurrency in the Company’s principal market at the time of contract inception. The Company has adopted an accounting policy to aggregate individual contracts with individual terms less than 24-hours within each intraday period and apply a consistent valuation point, the start of day Coordinated Universal Time (00:00:00 UTC), to value the related noncash consideration.

Revenue is recognized when it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur. After every 24-hour contract term, the mining pool transfers the cryptocurrency consideration to our designated cryptocurrency wallet.

There is no significant financing component in these transactions.

Consideration payable to the customer in the form of a pool operator fee is deducted from the bitcoin the Company receives and is recorded as contra-revenue, as it does not represent a payment for a distinct good or service.”

In identifying our performance obligation(s) under the contract we referred to Section 3, Services, which states “b. User shall be responsible for preparing the necessary equipment and bear the expenses related to using such necessary equipment to participate in the Pool and Service.” Additionally, we used judgment to consider whether the Company or the Pool Operator is the principal for the mining activities performed on the blockchain, using the principal versus agent guidance in ASC 606. Specifically, the Pool Operator directs to the mining pool participants (including the Company) the mining activities they undertake as part of the Pool. Additionally, the Pool Operator is primarily responsible for selecting the transactions to be mined, the activities to be performed, placing the mined block on the blockchain, and collecting the block reward. Furthermore, as the Company is compensated on a fixed basis per unit of computing power delivered (i.e., the FPPS payout scheme), the Pool Operator bears the risks and rewards associated with the mining activities. Based on these considerations, we concluded the Pool Operator is the principal for the mining activities directly on the blockchain and thus the Company’s performance obligation is to provide computing services to the Pool.

In evaluating the satisfaction of performance obligations in accordance with ASC 606-10-25-23 to 25-25, we considered the Pool FAQs available on Foundry’s website regarding the Pool’s payout methodology.

Specifically, the Pool Operator pays out to all pool members according to the FPPS payout scheme, under which the block reward is based on a formulaic view of expected earnings and not on actual blocks mined by the Pool (e.g., using relative hashrate contributed by the

User and the current network difficulty). In the FAQs, the Pool Operator explicitly states that “in the FPPS model, the Pool Operator pays out the expected value to miners for the block subsidy and the transaction fees based on their hash contribution to the Pool, therefore absorbing all the risk on when the blocks are mined.” Based on these considerations and in accordance with ASC 606-10-25-27, we determined that the Company satisfies its performance obligation (i.e., contribution of hashrate to the Pool Operator) over time as the

Pool Operator simultaneously receives and consumes the benefits provided by the Company’s performance as we perform. The Company has access to monitor various metrics via the Pool Operator’s online portal, including hashrate and bitcoin rewards under the FPPS model, which are updated and settled by the Pool Operator on a daily basis (one day in arrears). As such, the Company recognizes revenue under the contract for each intraday period (less than 24 hours) in which hashrate is contributed to the Pool and when determined that it is not probable that a significant reversal of revenue recognized will occur. As the total consideration in the contract is determined daily under the FPPS payout scheme, which varies based upon hashrate contributed by the Company and the current network difficulty, we concluded that the consideration promised in the contract is variable in accordance with paragraphs 606-10-32-5 to 606-10-32-7. However, as such amounts are determined and settled by the Pool Operator within one day of completing the contract, the Company has the ability to estimate the variable consideration with reasonable certainty, such that it determined it unnecessary to estimate constraint on the variable consideration in accordance with ASC 606-10-32-11 to 606-10-32-13. For the avoidance of doubt, we advise the staff that we recognize revenue received in the form of bitcoin on the day such noncash consideration is earned (i.e., computing power provided), not upon receipt of bitcoin. For example, if the Company were to provide computing power to the Pool Operator on September 30, 2023, the Company would have the ability to estimate bitcoin earned based on hashrate provided and confirm the amount of bitcoin received on the following day

(October 1, 2023), such that the amount of revenue reported on September 30, 2023 for that respective day’s activity would be determined with reasonably certainty.

As the consideration paid by the Pool Operator to the Company is denominated in bitcoin, we determined this represents noncash consideration and recognize revenue in accordance with ASC 606-10-32-21 to ASC 606-10-32-24.

To measure the estimated fair value of the noncash consideration at contract inception, we originally determined the contract term to be each 24-hour period, such that we utilize the quoted opening price of bitcoin on the day of each daily contract term. As noted above, we have determined the contract term to be less than each 24-hour period and now adopted an accounting policy to aggregate individual contracts with individual terms less than 24-hours within each intraday period and apply a consistent point to value noncash consideration.

As such, when aggregating the individual contracts in a 24-hour period, the Company will continue to use the price of bitcoin at the start of day (00:00:00 UTC) when determining the fair value of noncash consideration received, ensuring that this point of time in each 24-hour period is consistently applied. In accordance with ASC 606-10-32-23, any changes in the fair value of the digital asset after contract inception due to the form of the consideration would not affect the transaction price for the revenue contract. Please refer to our response to question #4 below for details regarding our determination that Coinbase represents the principal market for our bitcoin.

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Please provide us your analysis supporting your revenue recognition policy for your data center hosting activities. In your response, where appropriate, reference for us the authoritative literature you relied upon to support your accounting: • Tell us your consideration of whether the agreement represents a lease under ASC 842; • Tell us what consideration is payable in cryptocurrency, which cryptocurrencies you

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accept as payment, and how those amounts are determined; and

of its revenue recognition related to data center hosting arrangements in accordance with ASC 606. Please see Appendix B for a representative sample contract of a Hosting Services Agreement.

When determining whether the Hosting Services Agreement represented a lease, we considered the definition of a lease under ASC 842-10-15-3: “a contract is or contains a lease if the contract conveys the right to control the use of identified property, plant, or equipment (an identified asset) for a period of time in exchange for consideration.”

Per Section 2 of the Hosting Services Agreement, the

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Company “will provide rack space, electrical power, ambient air cooling, internet connectivity and physical security (“Services”) for Customer’s Mining Equipment at its

Facility.” Further, Section

7 provides that the Company has the explicit right to relocate the equipment within the Facility or to a different facility. The agreement does not provide for the customer to have rights to control the use of any part of the Lake Mariner facility. Due to the lack of identifiable asset and the lack of control, the Company determined the arrangement is not or does not contain a lease.

Per Section 4.1 of the Hosting Services Agreement, total consideration shall include [X]% of all bitcoin mined by the customer’s Mining Equipment at the Facility (the “Bitcoin Fee”), and the “Monthly Service Fee” as a cash payment equal to [Y]% of each of (i) $[Z] / MWh / month of the Customer’s Billing

Demand and (ii) the actual cost of the Customer’s Billing Demand. Note that a prior version of the Hosting Services Agreement was in effect for a portion of the fiscal year ended December 31, 2022, which contained a simpler pricing structure based on a fixed rate per kWh of electricity provided to the customer, payable to the Company in cash. Other contract terms were substantially similar to the representative sample Hosting Services Agreement provided. Similar to our considerations in response to question #2 above, we determined that the total consideration is dependent upon actual mining activity and electricity consumption over the term of the contract, and thus represents variable consideration in accordance with paragraphs 606-10-32-5 to 606-10-32-7. However, as the customer participates in the

Foundry USA Pool and such amounts are determined and settled by the Pool Operator within one day, the Company has the ability to estimate the variable consideration with reasonable certainty, such that it determined it unnecessary to estimate constraint on the variable consideration in accordance with ASC 606-10-32-11 to 606-10-32-13 at each reporting period.

As a portion of the total consideration paid by the customer to the

Company is denominated in bitcoin, we determined this portion represents noncash consideration and recognize revenue in accordance with

ASC 606-10-32-21 to ASC 606-10-32-24. To measure the estimated fair value of the noncash consideration at contract inception, we utilize the quoted opening price of bitcoin at contract inception. In accordance with ASC 606-10-32-23, any changes in the fair value of the digital asset after contract inception due to the form of the consideration would not affect the transaction price for the revenue contract. Please refer to our response to question #4 below for details regarding our determination that Coinbase represents the principal market for our bitcoin.

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Please tell us, and revise future filings, to disclose how you determine the quoted price of your digital assets and the principal market(s) used. Tell us how you identify these market(s). Refer to ASC Topic 820 and ASC 820-1035-5A.

of the quoted price of digital assets and the principal market(s) used in accordance with guidance per ASC 820, Fair Value Measurements.

In accordance with ASC 820-10-35-3 and 820-10-35-5, a fair value measurement contemplates an orderly transaction to sell the asset or transfer the liability in its principal market (or in the absence of a principal market, the most advantageous market). Under ASC 820, a principal market is the market with the greatest volume and activity level for the asset or liability.

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In accordance with ASC 820-10-35-5A, we determined our principal market considering all information that is reasonably available. In the absence of evidence to the contrary, the market in which an entity normally transacts for the crypto asset is presumed to be the principal market. As disclosed within Part

1, Item 1 of our Form 10-K for the Fiscal Year Ended December 31, 2022, we store and safeguard self-mined bitcoin in a cold storage wallet held by our custodian NYDIG Trust Company LLC. To the extent we sell any of our mined bitcoin, we do so using NYDIG Execution LLC (“NYDIG”), a Delaware LLC registered as a Money Services Business with the Financial Crimes Enforcement Network and licensed with a BitLicense by the New York State Department of Financial Services. NYDIG has advised us that it uses Coinbase as its pricing source. As such, and as

Coinbase is an established and active cryptocurrency market, we determined Coinbase to be the principal market.We further determine the fair value measurement of bitcoin based on the quoted price in that market and the fair value of the asset is measured within Level 1 as the product of the quoted price for the asset and the quantity held by the Company per ASC 820-10-35-6.

will amend the disclosures within Note 2 - Significant Accounting Policies of our Form 10-K and Form 10-Q related to “Cryptocurrencies” to disclose how we determine the quoted price of our digital currency and principal market used as follows:

“Digital currency, net

Digital currency, net is comprised of bitcoin earned as noncash consideration in exchange for providing computing power to a mining pool as well as in exchange for data center hosting services which are accounted for in connection with the Company’s revenue recognition policy disclosed above. From time to time, the Company also receives bitcoin as distributions-in-kind from its joint venture. Digital currency, net is included in current assets in the consolidated balance sheets due to the Company’s ability to sell bitcoin in a highly liquid marketplace and its intent to liquidate its bitcoin holdings to support operations when needed. The Company sells bitcoin on a first-in-first-out basis.

Digital currency, net is accounted for as intangible assets with indefinite useful lives. An intangible asset with an indefinite useful life is not subject to amortization but assessed for impairment annually, or more frequently if events or changes in circumstances indicate it is more likely than not that the asset is impaired. Impairment exists when the carrying amount exceeds its fair value. In testing for impairment, the Company has the option to first perform a qualitative assessment to determine whether it is more likely than not that an impairment exists. If it is determined that it is not more likely than not that an impairment exists, a quantitative impairment test is not necessary. If the Company concludes otherwise, it is required to perform a quantitative impairment test.

The Company has elected to bypass the optional qualitative impairment assessment and to track its bitcoin activity daily for impairment assessment purposes. The Company determines the fair value of its bitcoin on a nonrecurring basis in accordance with ASC 820 based on quoted prices on the active trading platform that the Company normally transacts and has determined is its principal market for bitcoin (Level 1 inputs) based on all information that is reasonably available. The Company performs an analysis each day to identify whether events or changes in circumstances, principally decreases in the quoted price of bitcoin on the active trading platform, indicate that it is more likely than not that its bitcoin are impaired. For impairment testing purposes, the lowest intraday trading price of bitcoin is identified at the single bitcoin level (one bitcoin). The excess, if any, of the carrying amount of bitcoin and the lowest daily trading price of bitcoin represents a recognized impairment loss.

To the extent an impairment loss is recognized, the loss establishes the new cost basis of the asset. Subsequent reversal of previously recorded impairment losses is prohibited. The Company recognized impairment of digital currency of $[X] million and $[Y] during the [current period] and the [prior period], respectively.

Bitcoin awarded to the Company through its mining activities are included as an adjustment to reconcile net loss to cash used in operating activities on the consolidated statements of cash flows.

Proceeds from sales of bitcoin are included within cash flows from operating activities on the consolidated statements of cash flows and any realized gains or losses from such sales are included in costs and operating expenses on the consolidated statements of operations.

The receipt of bitcoin as distributions-in-kind from equity investees are included within investing activities on the consolidated statements of cash flows as supplemental disclosures of noncash activities.”

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We note your disclosure on page 77 and from the Statement of Cash Flows, that you have classified activities related to digital currency as part of operating cash flows in the Consolidated Statement of Cash Flows. Please provide your accounting analysis supporting your conclusion that this activity is properly classified within cash flow from operating activities, instead of cash flows from investing activities.

of the cash flows related to digital currency in accordance with guidance per ASC 230, Statement of Cash Flows. Specifically, ASC 230-10-45-10 to ASC 230-10-45-17 outline the classification of cash flows as investing, financing, or operating activities.

We considered whether the cash flows from digital currency (i.e., cash proceeds from the sale of bitcoin) represent cash inflows from investing activities per ASC 230-10-45-11 to 230-10-45-12.

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These transactions do not represent cash flows from sale of available-for-sale debt securities; receipts from collections or sales of loans made by the entity and of other entities' debt instruments; receipts from sales of equity instruments of other entities; receipts from sales of property, plant, and equipment and other productive assets; or receipts from sales of loans that were not specifically acquired for resale. As such, we determined that classification as cash inflows from investing activities would not be appropriate.

We considered whether the cash flows from digital currency represent cash inflows from financing activities per ASC 230-10-45-14. These transactions do not represent proceeds from issuing equity instruments;

proceeds from issuing bonds, mortgages, notes, and from other shortor long-term borrowing; receipts from contributions and investment income that by donor stipulation are restricted for the purposes of acquiring, constructing, or improving property, plant, equipment, or other long-lived assets or establishing or increasing a donor-restricted endowment fund; or proceeds received from derivative instruments.

As such, we determined that classification as cash inflows from financing activities would not be appropriate.

Based on the above we determined that classifying cash flows from digital currencies as investing or financing activities would not be appropriate. While we considered that our digital currency is accounted for as an intangible asset and that cash inflows and outflows related to the purchase or sale of intangible assets are typically presented as investing activities, we determined that, based on the Company’s facts and circumstances and the nature of our bitcoin sales, the cash flows associated with digital currency should be classified as operating activities during the fiscal year ended December 31,

2022. Specifically, the Company received all digital currency during 2022 as a form of noncash consideration for routine operating activities, and converted the consideration to cash on a recurring basis to support operations. As disclosed within Item 1 of our Form 10-K for the

Fiscal Year Ended December 31, 2022, we state, in part,

“Our primary source of revenue is from sustainably mining bitcoin at our bitcoin mining facility sites. We also earn revenue from miner hosting services to third parties. We do not hold, sell or transact in bitcoin or any other digital assets for anyone other than ourselves. We do not hedge our bitcoin...We sell bitcoin on a daily, weekly and monthly basis to pay for all operating expenses of the Company.”

As discussed in response to question #1 above, although mining operations began in March 2022 at the Lake Mariner facility, production increased significantly in Q3 2022 subsequent to the completion of construction on Building 1. Accordingly, the Company did not retain significant bitcoin balances nor sell bitcoin until August 2022. From this point on, bitcoin sales occurred regularly with weekly to bi-weekly sales in September through December 2022 as needed to support operations.

We determined that classifying these cash receipts as investing activities would not reflect the economics of the activity and could diminish an investor’s ability to assess the uncertainty of the Company’s prospective cash flows, This also is in line with guidance per ASC 230-10-45-16(c) which states, “all other cash receipts that do not stem from transactions defined as investing or financing activities” are cash inflows from operating activities. Accordingly we concluded that the cash flows from our 2022 sales of digital currencies should be classified as cash flows from operating activities within the statement of cash flows.

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We note that revenue is a defined term under ASC 606. Please tell us your consideration of whether the use of the term in your Revenue - Self-Mining Equivalent, Revenue- Hosting and Revenue Equivalent per Bitcoin would be misleading under Regulation G 101(b). Refer also to question 100.04 of the Compliance and Disclosure Interpretations for Non-GAAP Financial Measures, updated December 13, 2022.

We acknowledge the Staff’s comment and advise the Staff that management does not believe the terms “Revenue - Self-Mining Equivalent,” “Revenue - Hosting,” and “Revenue

Equivalent per Bitcoin” would be misleading under Regulation G 100(b). On page 1 of Exhibit 99.1 to the Company’s Current

Report on Form 8-K filed on August 14, 2023, the earnings release begins with the section entitled “Second Quarter 2023 GAAP Operational and Financial Highlights” to ensure that the most directly comparable GAAP measure (revenue) is presented before the aforementioned non-GAAP measures and with equal or

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greater prominence. Additionally, the information in the context of the non-GAAP measures presented does not contain untrue statements of a material fact or omit to state a material fact. As denoted on page 5 of Exhibit 99.1 to the Company’s

Current Report on Form 8-K filed on August 14, 2023, the Company discloses the adjustments used to derive the non-GAAP measures ‘Revenue

- Self-Mining Equivalent’ and ‘Revenue - Hosting’ in footnotes 3 and 4, respectively.

We considered question 100.04 of the Compliance and Disclosure Interpretations for Non-GAAP Financial Measures, updated December 13, 2022, and do not believe these non-GAAP measures violate Rule 100(b) of Regulation

G as the recognition and measurement principles used to calculate these measures are consistent with GAAP. Within ‘Revenue - Self-Mining

Equivalent,’ management calculates the profit sharing associated with short-term hosting arrangements as the quantity of bitcoin received from customers as consideration in the data center hosting revenue arrangement multiplied by the fair value of bitcoin at contract inception, consistent with the measurement principles applied under GAAP as described in our response to question #3 above. Management calculates the amount included within ‘Revenue - Self-Mining Equivalent’ representing TeraWulf’s net share of bitcoin produced at Nautilus (the Joint Venture) as the quantity of bitcoin received by Nautilus as consideration for participating in mining pool activities (related to the Company’s share of the Joint Venture’s hashrate) multiplied by the fair value of bitcoin at contract inception (i.e., daily opening price for each respective day the hashrate is provided to the pool as the contract term is deemed each 24-hour period). As such, the measurement principles used to compute TeraWulf’s share of revenue earned by the Joint Venture’s mining pool activities are consistent with the measurement principles used to compute revenue for the Company’s mining pool activities as described in response to question #2 above.

While we do not believe these non-GAAP measures to be misleading, for greater clarity and improved descriptive disclosures, we advise the Staff that we will revise future filings to define these non-GAAP metrics as follows:

Key Non-GAAP Metrics1

Bitcoin Self-Mined2

Value per Bitcoin Self-Mined3

Power Cost per Bitcoin Self-Mined

Avg. Operating Hash Rate (EH/s)4

Unaudited monthly results are based on estimates, which remain subject to standard month end adjustments. The Company’s share of the earnings or losses of the Nautilus facility is reflected in the caption “Equity in net loss of investee, net of tax” in the consolidated statements of operations. Accordingly, operating results of the Nautilus facility are not reflected in the revenue, cost of revenue or cost of operations lines in TeraWulf’s consolidated statements of operations.

Includes BTC earned from profit sharing associated with a short-term hosting agreement at the Lake Mariner facility and TeraWulf’s net share of BTC produced at the Nautilus facility.

Computed as the weighted-average opening price of BTC on each respective day the Self-Mined Bitcoin is earned.

While nameplate inventory for WULF’s two facilities is 5.5 EH/s, inclusive of gross total hosted miners, actual monthly hash rate performance depends on a variety of factors, including (but not limited to) performance tuning to increase efficiency and maximize margin, scheduled outages (scopes to improve reliability or performance), unscheduled outages, curtailment due to participation in various cash generating demand response programs, derate of ASICS due to adverse weather and ASIC maintenance and repair.

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Please tell us how you determined 'Revenue - Hosting' of $1.1 million in the 3 months ended 6/30/23, and how that compares to the $1.7 million of data center hosting revenue for the three months ended June 30, 2023 you report on page 16 of your Form 10-Q for the Quarterly Period Ended June 30, 2023.

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Similarly, please explain how you determined 'Revenue - Hosting' of $1.2 million in the 3 months ended 3/31/23, and how that compared to the $2.3 million of data center hosting revenue for the three months ended March 31, 2023 you report on page 16 of your Form 10-Q for the Quarterly Period Ended March 31, 2023.

as denoted within the footnote 4 on page 5 of Exhibit 99.1 to our Current Report on Form 8-K filed on August 14, 2023, we compute the non-GAAP measure ‘Revenue - Hosting’ by subtracting from data center hosting revenue (GAAP) the revenue recognized for the profit share portion of total consideration received under the contract - that is, the noncash consideration represented by the quantity of bitcoin received from the customer ([X]% of all bitcoin mined at the facility by the customer as denoted within response to question

#3 above) multiplied by the fair value of bitcoin at contract

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inception. As denoted within our response to question #6 above, this amount is included within ‘Revenue - Self-Mining Equivalent’ such that we determined it appropriate to exclude this from ‘Revenue

- Hosting’ so as to not present the same revenue amount within multiple measures concurrently in the report. As denoted within our response to question #6 above, as a matter of clarity, we advise the Staff that we will revise future filings to not include ‘Revenue

- Hosting’ as a non-GAAP measure.

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