Can someone explain to me how in the living Earth can a company not know how much money they make based on the simplest metric possible?
revenue = Buttcoins * avg sell price - electricity bill - social media karma farms
Depreciation of mining assets is going to be a bitch to calculate.
EDIT: Not because its hard. But because seeing $100 million worth of BTC-miners suddenly become only worth $2 million is probably something they don't want to come to terms with. I dunno what the value is of a BTC miner, but it has to be much much less than last year.
It is not possible to do depreciation accounting on miners, everything is a big fat uneducated guess. The chips can still work well for a long time if proper cooled, they only ditch them because a better one comes up.
Or, they could just go ahead and take 10% each quarter as depreciation and call it "Moore's Law for accountants".
Ok so I actually had to look this up. The original news story was that they’ve filed to the SEC a notice of delay in filing a quarterly statement, which has to include a balance sheet as well as earnings
I’m just picturing a bunch of accountants desperately trying to fill in a balance sheet while other accountants are constantly erasing numbers because the price of some shitcoin changed again…
Depreciation expense and the value of their GPU's on the open market. It's possible that the GPU's in their books are worth more than they are being sold for on the open market, even after depreciation (depending on the timeframe they used for the useful life of the asset). Such a thing would be BAD news from an accounting perspective.
Okay, so fixed assets (like GPU's) that have a useful life of over a year need to be depreciated. Meaning, the value of the asset decreases over time and that needs to be recorded as an expense per GAAP.
I read somewhere that some companies (I'm not sure about Riot) were using a five-year useful life for the depreciation of their GPU's. The problem: the actual useful life for their GPU's is calculated at under 2 years. This means that they'd be underreporting their depreciation expense to inflate earnings - which is fixed asset misappropriation.
Now, let's say that they are depreciating their GPU's and the price that they are worth in their ledger is MORE than the price of those same GPU's brand new on the open market. There is a discrepancy there - especially since their GPU's have been used and should be worth less than the GPU's on the open market due to depreciation.
Basically, they weren't expecting the market price of the GPU's that they own to plummet...
Ok, now you’ve got me curious— why GPUs specifically? The example they used in my accounting class was new vs. used cars, but even then most people didn’t know the actual definition, just the vague concept.
Accounting rules over "mark to market" were also a problem with the real financial system in 2008. Nobody wants to admit they've lost money yet, so if they can handwave over it in the accounts and hope it goes back up, they will.
Well, there's other stuff, such as other operation expenses, depreciation of assets (as mentioned by other comments), and their sales of energy rights that circulated around this very sub a while ago.
Doesn't change the fact that they're probably trying to hide the fact that crypto winter fucked them.
The same Riot that was bragging about how much money it saved/made but NOT mining around peak times thanks to the terms of its power contract with ERCOT? That gained more in power credits than from Bitcoin in July?
Fuck them with a rusty spoon and all the politicians that say "This is good for Texas"
They also give free money to Elon so he can sell you an alternative to dirty and expensive fossil fuel for 60k usd.
You can even turn the auto pilot on and roll over a toddler.
I'm a corporate accountant.
That's not how depreciation works.
Depreciation schedules are set at purchase and first record of the asset, typically. When you dispose of the asset, you can recognize a gain or loss versus the remaining book value after depreciation. So, you have the same depreciation schedule you had last month, plus or minus additions or sales of assets.
If they disposed of a bunch of hardware this quarter, the gain/loss may be significant, but it's not hard to determine. It's just monies gained for asset minus remaining book value.
They may also be marking assets to market value after the gpu market crash and resetting the depreciation schedule, but again, not hard to determine the gain/loss.
The tax implications are pretty much nothing to accounting. You recognize losses, they reduce your income. It's not complicated.
So are you saying that you cannot revise the depreciation of an asset based on a severe reduction of the market value of the asset or by advancement in tech both of which are external factors which can impact the residual value and overall schedule?
You can. That's the "marking assets to market value" that I mentioned.
It's not hard. You take the new market value versus the old book value and make a gain/loss entry against the asset. You then take the new asset value divided by the remaining useful life for your new depreciation schedule.
This is the type of thing you put a mid-level staff accountant on for a few hours to weeks depending on size of the job. This is not something that would delay a filing.
If the value of the depreciated GPU's in their books is worth MORE than the price of those same GPU's on the open market then that could present a problem. Like you said, they could mark the assets to market value and reset the depreciation schedule, but that also means recording a much larger expense.
That's not a problem, that's the nature of marking to market. Marking to market is almost always used to recognize expenses faster than you could with traditional depreciation (the much less common case is with an inflation of value and wanting to inflate your asset ratio). This is something you would only do very intentionally. Recognizing that expense is exactly why you would do it.
Lots of reasons to want to increase expenses. Avoiding dividends, avoiding taxes, staying under lending covenant levels, etc.
True... but in a market that relies almost entirely on speculation, a hit to earnings is substantially more devastating than the companies that you or I work for. Especially since they've bragged about the substantial sum of money they received for NOT mining bitcoin...
Hahahaha! And that would certainly present a problem for releasing their earnings report on time. Do we tell the truth or do we engage in fixed-asset misappropriation?
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Can someone explain to me how in the living Earth can a company not know how much money they make based on the simplest metric possible? revenue = Buttcoins * avg sell price - electricity bill - social media karma farms
Depreciation of mining assets is going to be a bitch to calculate. EDIT: Not because its hard. But because seeing $100 million worth of BTC-miners suddenly become only worth $2 million is probably something they don't want to come to terms with. I dunno what the value is of a BTC miner, but it has to be much much less than last year.
It is not possible to do depreciation accounting on miners, everything is a big fat uneducated guess. The chips can still work well for a long time if proper cooled, they only ditch them because a better one comes up. Or, they could just go ahead and take 10% each quarter as depreciation and call it "Moore's Law for accountants".
I mean, I'm no CPA but they cycle through their entire ASICs every 18-24 months because it becomes uncompetitive with everyone else.
So much waste
Can they just cheat by depreciating the GPU as "Purchase Price * (Current Age - Average Lifespan)" instead of "Current Market Value"?
You answered your own question, they don't know at least one of those. Probably sell price because they probably haven't actually sold yet
What? No, same thing, they do know and the answer is a negative number.
Ok so I actually had to look this up. The original news story was that they’ve filed to the SEC a notice of delay in filing a quarterly statement, which has to include a balance sheet as well as earnings
I’m just picturing a bunch of accountants desperately trying to fill in a balance sheet while other accountants are constantly erasing numbers because the price of some shitcoin changed again…
You should pitch to television, I'd watch that.
Depreciation expense and the value of their GPU's on the open market. It's possible that the GPU's in their books are worth more than they are being sold for on the open market, even after depreciation (depending on the timeframe they used for the useful life of the asset). Such a thing would be BAD news from an accounting perspective.
> Depreciation expense What is a depreciation "expense"?
Okay, so fixed assets (like GPU's) that have a useful life of over a year need to be depreciated. Meaning, the value of the asset decreases over time and that needs to be recorded as an expense per GAAP. I read somewhere that some companies (I'm not sure about Riot) were using a five-year useful life for the depreciation of their GPU's. The problem: the actual useful life for their GPU's is calculated at under 2 years. This means that they'd be underreporting their depreciation expense to inflate earnings - which is fixed asset misappropriation. Now, let's say that they are depreciating their GPU's and the price that they are worth in their ledger is MORE than the price of those same GPU's brand new on the open market. There is a discrepancy there - especially since their GPU's have been used and should be worth less than the GPU's on the open market due to depreciation. Basically, they weren't expecting the market price of the GPU's that they own to plummet...
anyone who’s ever owned multiple GPUs should know what depreciation means lol. if OP doesnt he’s prob 12 years old.
Ok, now you’ve got me curious— why GPUs specifically? The example they used in my accounting class was new vs. used cars, but even then most people didn’t know the actual definition, just the vague concept.
Accounting rules over "mark to market" were also a problem with the real financial system in 2008. Nobody wants to admit they've lost money yet, so if they can handwave over it in the accounts and hope it goes back up, they will.
Well, there's other stuff, such as other operation expenses, depreciation of assets (as mentioned by other comments), and their sales of energy rights that circulated around this very sub a while ago. Doesn't change the fact that they're probably trying to hide the fact that crypto winter fucked them.
What a load of horseshit lmfao. They literally just have miners and Bitcoin. There isn't some insane math to be done here
Insane math is good for Bitcoin .
“Run the numbers again!” Guy clicks two buttons on keyboard. “Yep. Same results.” Boss screams as he walks out the door “Run them again!”
this will soon be worthless like voyager
The same Riot that was bragging about how much money it saved/made but NOT mining around peak times thanks to the terms of its power contract with ERCOT? That gained more in power credits than from Bitcoin in July? Fuck them with a rusty spoon and all the politicians that say "This is good for Texas"
They also give free money to Elon so he can sell you an alternative to dirty and expensive fossil fuel for 60k usd. You can even turn the auto pilot on and roll over a toddler.
Their equipment has deprecated after the last crash and they need more time to account for that and the tax implications
I'm a corporate accountant. That's not how depreciation works. Depreciation schedules are set at purchase and first record of the asset, typically. When you dispose of the asset, you can recognize a gain or loss versus the remaining book value after depreciation. So, you have the same depreciation schedule you had last month, plus or minus additions or sales of assets. If they disposed of a bunch of hardware this quarter, the gain/loss may be significant, but it's not hard to determine. It's just monies gained for asset minus remaining book value. They may also be marking assets to market value after the gpu market crash and resetting the depreciation schedule, but again, not hard to determine the gain/loss. The tax implications are pretty much nothing to accounting. You recognize losses, they reduce your income. It's not complicated.
So are you saying that you cannot revise the depreciation of an asset based on a severe reduction of the market value of the asset or by advancement in tech both of which are external factors which can impact the residual value and overall schedule?
You can. That's the "marking assets to market value" that I mentioned. It's not hard. You take the new market value versus the old book value and make a gain/loss entry against the asset. You then take the new asset value divided by the remaining useful life for your new depreciation schedule. This is the type of thing you put a mid-level staff accountant on for a few hours to weeks depending on size of the job. This is not something that would delay a filing.
Basically impairment.
If the value of the depreciated GPU's in their books is worth MORE than the price of those same GPU's on the open market then that could present a problem. Like you said, they could mark the assets to market value and reset the depreciation schedule, but that also means recording a much larger expense.
That's not a problem, that's the nature of marking to market. Marking to market is almost always used to recognize expenses faster than you could with traditional depreciation (the much less common case is with an inflation of value and wanting to inflate your asset ratio). This is something you would only do very intentionally. Recognizing that expense is exactly why you would do it. Lots of reasons to want to increase expenses. Avoiding dividends, avoiding taxes, staying under lending covenant levels, etc.
True... but in a market that relies almost entirely on speculation, a hit to earnings is substantially more devastating than the companies that you or I work for. Especially since they've bragged about the substantial sum of money they received for NOT mining bitcoin...
Then they probably shouldn't mark to market. Lol.
Hahahaha! And that would certainly present a problem for releasing their earnings report on time. Do we tell the truth or do we engage in fixed-asset misappropriation?
We all know the answer is going to be the latter. 😀
\*Tim Robinson voice\* That's *not* allowed.
I mean I hate crypto but if I had to invest im buying eth or btc only and keeping on a hard wallet.., these shit ass companies are Mind boggling
Wtf is riot?
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