| DIGITAL ASSETS |
3.
DIGITAL ASSETS
The Company measures digital assets
at fair value as of each reporting period. For the six months ended June 30, 2025, the Company recognized an unrealized fair value gain
of $15.07 million on its holdings of digital assets. For the same period in 2024, the Company recorded an unrealized fair value loss of
$4.60 million. Realized gain on sales of digital assets recorded for the six months ended June 30, 2025 and 2024 was $2.43 million and
$22.98 million, respectively. The balance of the Company’s
digital assets consisted of the following:
| | |
As of June 30, 2025 | |
| | |
Quantity | | |
Cost Basis | | |
Fair Value | |
| | |
| | |
| | |
| |
| Bitcoin | |
| 1,532 | | |
| 148,692 | | |
| 163,718 | |
| USDT | |
| 7,502,932 | | |
| 7,503 | | |
| 7,549 | |
| Others | |
| 42,333 | | |
| 91 | | |
| 93 | |
| Total | |
| | | |
| 156,286 | | |
| 171,360 | |
| | |
As of December 31, 2024 | |
| | |
Quantity | | |
Cost Basis | | |
Fair Value | |
| | |
| | |
| | |
| |
| Bitcoin | |
| 1,313 | | |
| 87,457 | | |
| 125,048 | |
| USDT | |
| 4,800,082 | | |
| 4,802 | | |
| 4,817 | |
| Others | |
| 46,233 | | |
| 77 | | |
| 75 | |
| Total | |
| | | |
| 92,336 | | |
| 129,940 | |
The cost basis of digital assets represents
the fair value of digital assets at the time of service contract inception, the fair value of digital assets purchased upon receipt in
an exchange for another digital assets, and the cost of digital assets purchased upon receipt in an exchange for fiat currency.
The following table presents the movement
for digital assets of the Company for the six months ended June 30, 2025 and 2024:
| | |
BTC | | |
USDT | | |
Others | | |
Total | |
| | |
| | |
| | |
| | |
| |
| Balance as of January 1, 2025 | |
| 125,048 | | |
| 4,817 | | |
| 75 | | |
| 129,940 | |
| Digital assets received from customers for products and services | |
| 116,958 | | |
| 57,505 | | |
| 23 | | |
| 174,486 | |
| Revenue generated from Bitcoin self-mining operation | |
| 32,357 | | |
| - | | |
| - | | |
| 32,357 | |
| Converted (to)/from other digital assets or fiat cash, net | |
| (69,768 | ) | |
| 3,433 | | |
| 2 | | |
| (66,333 | ) |
| Costs and expenses (paid)/prepaid in digital assets | |
| (70,019 | ) | |
| (60,815 | ) | |
| - | | |
| (130,834 | ) |
| Unrealized fair value changes | |
| 15,015 | | |
| 66 | | |
| (7 | ) | |
| 15,074 | |
| Realized gain on sale/exchange of Bitcoins | |
| 2,426 | | |
| - | | |
| - | | |
| 2,426 | |
| Digital assets from borrowings | |
| - | | |
| 5,000 | | |
| - | | |
| 5,000 | |
| Digital assets pledged to lender or supplier | |
| (31,331 | ) | |
| - | | |
| - | | |
| (31,331 | ) |
| Digital assets pledged from customers | |
| 43,032 | | |
| - | | |
| - | | |
| 43,032 | |
| Purchase of mining equipment | |
| - | | |
| (2,457 | ) | |
| - | | |
| (2,457 | ) |
| Balance as of June 30, 2025 | |
| 163,718 | | |
| 7,549 | | |
| 93 | | |
| 171,360 | |
| | |
BTC | | |
USDT | | |
Others | | |
Total | |
| | |
| | |
| | |
| | |
| |
| Balance as of December 31, 2023 | |
| 43,896 | | |
| 61 | | |
| 21 | | |
| 43,978 | |
| Cumulative effect of the adoption of ASU2023-08 | |
| 6,436 | | |
| - | | |
| - | | |
| 6,436 | |
| Balance as of January 1, 2024 | |
| 50,332 | | |
| 61 | | |
| 21 | | |
| 50,414 | |
| Digital assets received from customers for products and services | |
| 98,832 | | |
| 66,582 | | |
| 10 | | |
| 165,424 | |
| Revenue generated from Bitcoin self-mining operation | |
| 111,130 | | |
| - | | |
| - | | |
| 111,130 | |
| Converted (to)/from other digital assets or fiat cash, net | |
| (55,796 | ) | |
| (60,842 | ) | |
| 6 | | |
| (116,632 | ) |
| Costs and expenses (paid)/prepaid in digital assets | |
| (116,622 | ) | |
| (5,534 | ) | |
| 77 | | |
| (122,079 | ) |
| Unrealized fair value changes | |
| (4,608 | ) | |
| 2 | | |
| 3 | | |
| (4,603 | ) |
| Realized gain on sale/exchange of Bitcoins | |
| 22,762 | | |
| 220 | | |
| - | | |
| 22,982 | |
| Balance as of June 30, 2024 | |
| 106,030 | | |
| 489 | | |
| 117 | | |
| 106,636 | |
The net income received or to be received
by digital assets, as presented in unaudited interim condensed consolidated statement of cash flow, consists of following item (a), (b)
and (c). The
following table provides the reconciliation between net income and the movement of digital assets of the Company for the six months ended
June 30, 2025 and 2024:
| | |
For
the Six Months Ended
June 30, | |
| | |
2025 | | |
2024 | |
| | |
| | |
| |
| DIGITAL ASSETS FROM OPERATING
ACTIVITIES | |
| | |
| |
| | |
| | |
| |
| Revenue recognized
from selling products and services which was settled or will be settled in digital assets (a) | |
| 158,838 | | |
| 162,702 | |
| Adjusted
by the changes of operating assets and liabilities: | |
| | | |
| | |
| Accounts
receivable to be settled in digital assets | |
| (7,663 | ) | |
| 1,224 | |
| Contract
liabilities received in digital assets | |
| 23,311 | | |
| 1,498 | |
| Digital
assets received from customers for products and services | |
| 174,486 | | |
| 165,424 | |
| | |
| | | |
| | |
| Revenue
recognized from Bitcoin self-mining operation (b) | |
| 32,357 | | |
| 111,130 | |
| | |
| | | |
| | |
| Cost and expenses settled
or to be settled by digital assets (c) | |
| (98,881 | ) | |
| (112,043 | ) |
| Adjusted
by the changes of operating assets and liabilities: | |
| | | |
| | |
| Prepayments
made in digital assets to suppliers | |
| (5,720 | ) | |
| (10,731 | ) |
| Accounts
payable to be settled in digital assets | |
| (13,986 | ) | |
| (5 | ) |
| Payments
made in digital assets by a related party on behalf of Company | |
| (11,141 | ) | |
| - | |
| Other
receivables to be settled in digital assets | |
| (4,881 | ) | |
| 92 | |
| Other
payables to be settled in digital assets | |
| 3,682 | | |
| 813 | |
| Inventories | |
| 43 | | |
| (205 | ) |
| Costs
and expenses paid in digital assets | |
| (130,834 | ) | |
| (122,079 | ) |
| | |
| | | |
| | |
| Unrealized fair value loss
of digital assets | |
| 15,074 | | |
| (4,603 | ) |
| Realized
gain on sale of digital assets | |
| 2,426 | | |
| 22,982 | |
| Net
digital assets provided by operating activities | |
| 93,509 | | |
| 172,854 | |
| | |
| | | |
| | |
| DIGITAL
ASSETS FROM INVESTING ACTIVITIES | |
| | | |
| | |
| Sales of digital assets
in exchange for fiat cash | |
| (76,833 | ) | |
| (130,643 | ) |
| Digital assets purchased
by fiat cash | |
| 10,500 | | |
| 14,011 | |
| Digital asset collateral,
net | |
| 11,701 | | |
| - | |
| Purchase
of mining equipment | |
| (2,457 | ) | |
| - | |
| Net
digital assets used in investing activities | |
| (57,089 | ) | |
| (116,632 | ) |
| | |
| | | |
| | |
| DIGITAL
ASSETS FROM FINANCING ACTIVITIES | |
| | | |
| | |
| Proceeds
from long-term loans | |
| 5,000 | | |
| - | |
| Net
digital assets provided by financing activities | |
| 5,000 | | |
| - | |
| | |
| | | |
| | |
| Adjustments
on the opening balance for adoption of ASU 2023-08 | |
| - | | |
| 6,436 | |
| | |
| | | |
| | |
| Net increase in digital assets | |
| 41,420 | | |
| 62,658 | |
| Digital
assets at the beginning of the periods | |
| 129,940 | | |
| 43,978 | |
| Digital
assets at the end of the periods | |
| 171,360 | | |
| 106,636 | |
|