Income Taxes (Tables)

12 Months Ended

Dec. 31, 2025

The (loss) income before income tax (benefit) expense for the years ended December 31, 2025 and 2024, are as follows:


(in thousands)	2025	2024
(Loss) income before income taxes
Domestic	$(20,239)	$130,872
Foreign	(413)	(14)
Total (loss) income before income taxes	(20,652)	130,858

The current and deferred tax components of the income tax provision for the years ended December 31, 2025 and 2024, are

as follows:


(in thousands)	2025	2024
Current tax expense (benefit)
U.S. Federal	455	(37)
State	47	13
Total	502	(24)

Deferred tax (benefit) expense
U.S. Federal	(9,446)	17,447
State	(355)	477
Total	(9,801)	17,924

Total tax (benefit) expense
U.S. Federal	(8,991)	17,410
State	(308)	490
Income tax (benefit) expense	$(9,299)	$17,900

The reconciliation of the U.S. federal statutory income tax rate to the Company's effective income tax rate as of

December 31, 2025 and 2024, was as follows:


(dollars in thousands)	December 31, 2025		December 31, 2024
	Amount	%	Amount	%
Domestic federal statutory rate	$(4,337)	21.0%	$27,480	21.0%
Effect of cross border tax laws:
Foreign derived intangible income deduction	(673)	3.3	(185)	(0.1)
Other	4	(0.1)	—	*
Tax credits:
Research and development tax credits	(905)	4.4	(133)	(0.1)
Nontaxable or nondeductible items:
Share-based compensation	(10,390)	50.3	(11,570)	(8.8)
Non-deductible executive compensation	5,235	(25.3)	1,738	1.3
Lobbying	378	(1.8)	—	*
Penalties	519	(2.5)	—	*
Transaction costs	1,368	(6.6)	—	*
Other	36	(0.2)	17	*
Domestic state and local income tax (benefit) expense - net of federal (benefit) expense	(309)	1.5	491	0.3
Foreign tax effects	100	(0.5)	3	*
Uncertain tax positions	(343)	1.7	—	*
Other	18	(0.2)	59	*
Effective tax rate	$(9,299)	45.0%	$17,900	13.6%

*Percentage variances not considered meaningful.

Significant components of deferred tax assets and liabilities as of December 31, 2025 and 2024, were as follows:


(in thousands)	December 31, 2025	December 31, 2024
Deferred tax assets
Intangible assets	$5,282	$1,551
Share-based compensation	2,430	1,501
Net operating loss carryforward	1,409	459
Federal tax credit carry forwards	457	—
Other	109	—
Less: valuation allowance	(321)	(448)
Total deferred tax assets	$9,366	$3,063
Deferred tax liabilities
Unrealized gain on digital assets	(20,656)	(24,297)
Prepaid expenses	(640)	(511)
Fixed assets	(61)	(34)
Total deferred tax liabilities	(21,357)	(24,842)
Net deferred tax liabilities	$(11,991)	$(21,779)

A reconciliation of unrecognized tax benefits was as follows:


(in thousands)	December 31, 2025	December 31, 2024
Balance - beginning of period	$344	$412
Additions for tax positions of prior years	—	40
Lapse of statute of limitations	(344)	(108)
Balance - end of period	$—	$344

Cash paid for income taxes consisted of the following: