v3.26.1
Derivative Assets and Liabilities
 3 Months Ended
Mar. 31, 2026
Derivative Assets and Liabilities [Abstract]  
DERIVATIVE ASSETS AND LIABILITIES

NOTE 6: DERIVATIVE ASSETS AND LIABILITIES

 

Bitcoin option and selling contracts

 

The Company purchased Bitcoin option contracts that provide it with the right, but not the obligation, to sell digital assets at a fixed price. The Company also entered into contracts and earned premiums by agreeing to sell Bitcoin if the Bitcoin price reached specific targets.

 

On March 16, 2026, Reliz Ltd., the operating entity of BlockFills, a Chicago-based cryptocurrency brokerage, trading platform, and liquidity provider, filed voluntary petitions for relief under Chapter 11 restructuring proceedings of the United States Bankruptcy Code. Prior to March 16, 2026, in connection with its Bitcoin option and selling contracts, the Company closed all outstanding contracts with BlockFills. During the three months ended March 31, 2026, the Company recorded a credit loss expense for the $4,218 receivable from BlockFills related to the closed contracts and was recorded in Other Expenses in the unaudited condensed consolidated statements of operations.

 

Bitcoin redemption options

 

Starting in November 2024, the Company entered into purchase orders of Miners with a supplier which allows the Company to pay for the Miners in cash, Bitcoin or a combination of both. The right to redeem the Bitcoin (“Bitcoin Redemption Option”) meets the definition of an embedded derivative. As of December 31, 2025, the Company no longer held any Bitcoin Redemption Options.

 

Capped call transactions

 

In October 2025, in connection with the Convertible Notes, the Company entered into capped call transactions, with a cap price of $11.88 per share (representing a 125% premium over the reference price). The capped call transactions do not meet the scope exception from derivative accounting, as they fail the equity classification requirements as the Company cannot settle these transactions by means other than cash and are therefore treated as a derivative asset, which are measured at fair value.

 

The following table summarizes the derivatives and reconciles the fair value measurement, which are classified within Level 2 of the fair value hierarchy:

 

   As of March 31,   As of December 31, 
   2026   2025 
   Capped call
transactions		   Bitcoin option and selling contracts   Capped call transactions   Bitcoin redemption
options		   Bitcoin option and selling contracts 
                     
   Derivative Assets   Derivative Assets   Derivative Liabilities   Derivative Assets   Derivative Assets   Derivative Assets   Derivative Liabilities 
Balance as of January 1,   5,200    2,287    (2,922)   
—
    3,418    
—
    (128)
Initial recognition   
—
    
—
    
—
    69,090    1,072    
—
    
—
 
Purchases   
—
    
—
    4,122    
—
    
—
    89,478    64,965 
Settlement   
—
    (5,363)   
—
    
—
    
—
    (73,659)   (99,256)
Remeasurement recognized in statement of operations   (3,440)   3,076    (1,200)   (63,890)   (4,490)   (13,532)   31,497 
Balance as of period end   1,760    
—
    
—
    5,200    
—
    2,287    (2,922)
                                    
Total derivative assets   
—
              2,287                
Total long-term derivative assets   1,760              5,200                
Total derivative liabilities   
—
              (2,922)               

The following gain (loss) on derivatives is recognized in the unaudited condensed consolidated statements of operations:

 

   Three months ended March 31, 
   2026   2025 
Gain (loss) on Bitcoin options and selling contracts        
Unrealized change in fair value of outstanding contracts   (1,553)   (6,338)
Realized gain on settled contracts   3,429    4,789 
    1,876    (1,549)
Gain (loss) on Bitcoin redemption options          
Unrealized change in fair value   
—
    (3,180)
Realized gain on settled options   
—
    1,015 
    
—
    (2,165)
Loss on Capped call transactions          
Unrealized change in fair value   (3,440)   
—
 
           
Loss on derivative assets and liabilities   (1,564)   (3,714)

 

Refer to Note 15 for more details of derivative instruments.