SecProbe.io

CORRESP
1
filename1.htm

Eric
M. Hellige

Partner

Direct Tel: 212-326-0846

Fax: 212-326-0806

ehellige@pryorcashman.com

August 13, 2024

VIA EDGAR

CONFIDENTIAL TREATMENT REQUEST UNDER
RULE 83

The entity requesting confidential treatment
is:

Sphere 3D Corp.

4 Greenwich Office Park, 1st
Floor

Greenwich, CT 06831

Attn: Patricia Trompeter, Chief Executive
Officer

Telephone: (203) 524-6524

CERTAIN PORTIONS OF THIS LETTER HAVE BEEN OMITTED
FROM THE VERSION FILED VIA EDGAR. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS. INFORMATION THAT WAS
OMITTED IN THE EDGAR VERSION HAS BEEN NOTED IN THIS LETTER WITH A PLACEHOLDER IDENTIFIED BY THE MARK “[***].” THE OMITTED
PORTIONS ARE BRACKETED IN THIS LETTER FOR EASE OF IDENTIFICATION.

Kate Tillan

Rolf Sundwall

Securities and Exchange Commission

Division of Corporation Finance

Office of Crypto Assets

100 F Street, N.E.

Washington, D.C. 20549

    Re:
    Sphere 3D Corp.

    Form 10-K for the Fiscal Year Ended December 31, 2023

    Form 10-Q for the Quarterly Period Ended March 31, 2024

    File No. 001-36532

Ladies and Gentlemen:

This letter is being furnished in response to the
comment of the staff (the “Staff”) of the Division of Corporation Finance of the Securities and Exchange Commission
(the “Commission”) that was contained in the Staff’s letter dated July 10, 2024 (the “Comment Letter”),
to Sphere 3D Corp. (the “Company”) with respect to the Company’s Annual Report on Form 10-K for the year ended
December 31, 2023 (the “Form 10-K”) filed with the Commission on March 13, 2024 and the Company’s Quarterly Report
on Form 10-Q for the period ended March 31, 2024 (the “Form 10-Q”) filed with the Commission on May 13, 2024 (File
No. 001-36532).

Set forth below is the Company’s response
to the Staff’s comment communicated in the Comment Letter. For ease of reference, the Staff’s comments are reproduced below
in italics and are followed by the Company’s response. In addition, unless otherwise indicated, all references to page numbers
in such responses are to page numbers in the Form 10-K. Capitalized terms used in this letter but not otherwise defined herein shall
have the meaning ascribed to such term in the Form 10-K.

The Company has asked us to convey the following
responses to the Staff:

Form 10-K for the Fiscal Year Ended December 31, 2023

Financial Statement

Consolidated Statements of Operations, page F-4

 1. We note that depreciation is not included within costs of revenue. Consistent with SAB Topic 11.B, in future filings, please change
your description of the line items for cost of revenues to indicate that the amounts are exclusive of depreciation shown separately below.

 Response: The Company acknowledges the Staff’s comment and will revise its disclosures in future filings to indicate that the amounts
for cost of revenues are exclusive of depreciation.

Securities and Exchange Commission

August 13, 2024

Page 2

Note 2. Summary of Significant
Accounting Policies

Digital Assets, page F-11

 2. We acknowledge your response to prior comment 1. Please respond to the following regarding your valuation of bitcoin for purposes
of impairment testing under ASC 350:

 ● You
                                            told us that you consider Coinbase to be bitcoin’s principal market, but you did not
                                            tell us whether Coinbase is your principal market for bitcoin. Per ASC 820-10-35-6A, you
                                            should consider the principal (or most advantageous) market from the perspective of the reporting
                                            entity.

 ● For
                                            your impairment analysis for the year ended December 31, 2022, you told us you used the lowest
                                            intraday quoted bitcoin price from the bitcoin USD historical data on Yahoo Finance and that
                                            this is in accordance with ASC 820-10-35-5A because bitcoin prices derived from Yahoo Finance
                                            are widely accessible. We note that Yahoo Finance is not itself a market where bitcoin and
                                            other cryptocurrencies are traded. Accordingly, we do not believe that your response provides
                                            sufficient analysis to demonstrate how your use of Yahoo Finance to determine the fair value
                                            of your bitcoin complies with ASC 820. Please expand your analysis to include, but not necessarily
                                            limit it to, identifying your principal market and demonstrating how you comply with ASC
                                            820.

 ● If
                                            you agree that your principal market is not Yahoo Finance, please provide us with your analysis
                                            of the quantitative impact of using Yahoo Finance rather than your principal market to value
                                            your cryptocurrencies for impairment purposes for all periods presented in your financial
                                            statements.

 Response: The Company would like to confirm that it does consider Coinbase to
be its principal market for Bitcoin.

The Company sells its Bitcoin through its BitGo wallet using BitGo
PrimeTrading, which is itself not an exchange. Therefore, the Company has no transactional market for Bitcoin and determined that Coinbase
is its principal market as the Company believes it provides the most reliable quotes and the greatest volume and level of activity for
Bitcoin for which the Company can access at each of the impacted measurement dates. Management has determined that Coinbase was its principal
market for the years ended December 31, 2023 and 2022, and for all interim periods within those years. The Company further notes that
volume and activity data for Bitcoin is reasonably available from Coinbase, and that ASC 820-10-35-36B states in part “in all cases,
if there is a quoted price in an active market (that is a Level 1 input) for the asset or a liability, a reporting entity should use that
quoted price without adjustment when measuring fair value, except as specified in paragraph 820-10-35-41-C.”

For the years ended December 31, 2023 and 2022, the Company performed
an analysis of impairment loss using the lowest intraday quoted Bitcoin price per Coinbase and compared the amount to the impairment loss
reported in its financial statements.

Rule 83 Confidential
Treatment Request by Sphere 3D Corp. Request #1

For the year ended December 31, 2022, the Company determined the quantitative
impact to be an understatement in impairment loss of approximately $[***], or ([***]%) of net loss for the year, and an
overstatement of total current assets and total assets of [***]% and [***]%, respectively.

For the year ended December 31, 2023, the Company determined the quantitative
impact to be an understatement in impairment loss of approximately $[***], or ([***]%) of net loss for the year and an overstatement
of total current assets and total assets of [***]% and [***]%, respectively.

Sphere
3D Corp. respectfully requests that the information contained in Request #1 be treated as confidential information and that the Staff
provide timely notice to Patricia Trompeter, Chief Executive Officer, Sphere
3D Corp., 4 Greenwich Office Park, 1st Floor, Greenwich, CT 06831, telephone (203)
524-6524, before it permits any disclosure of the bracketed information contained in Request #1.

The Company considered the impact of the understatement to not be material
to its previously-filed financial statements. Please see the Company’s analysis attached as Annex A.

Securities and Exchange Commission

August 13, 2024

Page 3

Revenue Recognition, page F-13

 3. We acknowledge your response to prior comment 2. Please respond to the following:

 ● Please
                                            represent to us that you will revise your revenue recognition policy in future filings to
                                            address the following:

 o Disclose,
                                            similar to your response, that you have a single performance obligation.

 o Disclose,
                                            if true, that the mining pool operators are your customers.

 o Disclose,
                                            similar to your response to comment 6 in your July 27, 2023 letter that the services you
                                            provide are an output of your ordinary activities

 Response: The
                                            Company acknowledges the Staff’s comment and will revise its disclosures in future
                                            filings to indicate that it has a single performance obligation, that the mining pool operators
                                            are its customers and that the services provided are an output of its ordinary activities.

 ● Your
                                            response indicates your only performance obligation is to supply computing power because
                                            the mining pool operators perform computations based on their own systems. We understand
                                            that you run software from the pool operators that constructs block header candidates and
                                            performs hash computations on behalf of the pool operators. If you do perform hash calculations
                                            for the pool operators, tell us whether a more accurate description of your promise and single
                                            performance obligation is a service to perform hash calculations for the pool operator, and
                                            if so, represent to us that you will make corresponding revisions to your accounting policy
                                            and related disclosures throughout your filing.

 Response: The
                                            Company acknowledges the Staff’s comment and will also revise its disclosures in future
                                            filings to describe that it has a single performance obligation, which is the service to
                                            perform hash calculations for the pool operator.

 ● You
                                            told us that you believe, under ASC 606-10-25-1, contract inception occurs when you provide
                                            computing power to Foundry or Luxor, which is the beginning of the 24 hour period (12:00am
                                            UTC time) and the contract duration is 24 hours. However, you have also told us that your
                                            contracts can be terminated at any time by either party and the duration of the contract
                                            does not extend beyond the goods or services already delivered. Given your statements about
                                            termination rights and contract duration not extending beyond the goods or services already
                                            delivered (i.e., the last hash calculation) coupled with the discussion in FASB Revenue Recognition
                                            Implementation Q&As Question 8 that indicates that customer cancellation rights can be
                                            similar to a renewal option, tell us your consideration of whether the contract continuously
                                            renews throughout the day and therefore that the duration of the contract is less than 24
                                            hours. To the extent that you agree, represent to us that you will revise your accounting
                                            policy disclosure accordingly in future filings.

 Response: The
                                            Company considers each mining pool arrangement to be a contract that is continuously renewed
                                            throughout the day. As a result, the Company believes the duration of the Company’s
                                            contracts is 24 hours or less. The Company will revise its accounting policy disclosure accordingly
                                            in future filings.

Securities and Exchange Commission

August 13, 2024

Page 4

 ● Because
                                            termination rights are akin to renewal options, tell us whether the customer’s renewal
                                            option is a material right and whether the terms, conditions, and compensation amounts of
                                            the renewal option are at the then-current market rates. If so, tell us whether you concluded
                                            that the customer’s renewal option is not a material right that represents a separate
                                            performance obligation. Refer to ASC 606-10-25-18(j) and 606-10-55-42. Also if so, represent
                                            to us that you will make corresponding revisions to your accounting policy and related disclosures
                                            in future filings that links this conclusion to your determination that you have only one
                                            performance obligation.

 Response: As discussed above, the Company believes the duration of the Company’s
contracts is 24 hours or less. Upon each renewal, the Company provides the same rate of payment, which is the market rate paid by any
miner that enters into a mining contract with the pool operator. As a result, in consideration of ASC 606-10-55-42, the Company believes
the contract does not provide the customer with a material right that would give rise to a performance obligation as there are no discounts
in relation to the option to renew. The pricing upon renewal of the contract remains the same and therefore a material right does
not exist. The Company will revise its accounting policy disclosure accordingly in future filings and will disclose in future filings
that the terms, conditions, and compensation of the contracts are at the current market rates, and accordingly the renewal option is not
a material right.

 ● The
                                            disclosure in your September 30, 2023 Form 10-Q stated that you measured your noncash consideration
                                            on the date earned rather than the date that control of your service transfers to the pool
                                            operator. We note that you have revised your disclosure to state that you measure the fair
                                            value of the noncash consideration at contract inception. Please address the following:

 o Provide
                                            us with an analysis supporting your prior statement that historically measuring noncash consideration
                                            on the date earned is not materially different from the date of contract inception.

 Response: Please see the Company’s analysis attached as Annex B showing that measuring the Company’s noncash consideration
on the date earned is not materially different from the date of contract inception for each of the quarters ended in fiscal year 2023
and 2022.

Rule 83 Confidential Treatment
Request by Sphere 3D Corp. Request #2

The overall difference was calculated to be $[***], ($[***])
and ($[***]) for the quarters ended March 31, 2023