8. INVESTMENT SECURITY

As of June 30, 2026 and December 31, 2025, investment security represents the Company’s investment of $1.0 million in a privately held company via a simple agreement for future equity (“SAFE”).

On June 30, 2024 (the “Effective Date”), the Company entered into a SAFE agreement for an initial investment amount of $1 million in exchange for a right to participate in a future equity financing of preferred stock to be issued by Canopy Wave Inc. (“Canopy”). Alternatively, upon a liquidity event such as a change in control, a direct listing or an initial public offering, the Company is entitled to receive the greater of (i) the SAFE investment amount plus 15% annual accrued interest (the “cash-out amount”), or (ii) the SAFE investment amount divided by a discount to the price per share of Canopy’s ordinary shares. In a dissolution event, such as a bankruptcy, the Company is entitled to receive the cash-out amount. If the SAFE is outstanding on the three-year anniversary of the Effective Date, then the SAFE will expire and the Company would be entitled to receive the cash-out amount. In the event of a qualifying equity financing, the number of shares of preferred stock received by the Company would be determined by dividing the SAFE investment amount by a discounted price per share of the preferred stock issued in the respective equity financing. The Company recorded an investment of $1 million as an investment in the SAFE on the condensed consolidated balance sheets. Additionally, per the terms of the SAFE arrangement, the Company may be obligated to invest up to an additional $2 million into the SAFE arrangement if Canopy satisfies certain milestones prior to the expiration of the SAFE, or if an equity financing event occurs.

The Company accounted for this investment under ASC 320, Investments – Debt Securities and elected the fair value option for the SAFE investment pursuant to ASC 825, Financial Instruments, which requires financial instruments to be remeasured to fair value each reporting period, with changes in fair value recorded in the condensed consolidated statements of operations. The fair value estimate includes significant inputs not observable in the market, which represents a Level 3 measurement within the fair value hierarchy. The decision to elect the fair value option is determined on an instrument-by-instrument basis on the date the instrument is initially recognized, is applied to the entire instrument and is irrevocable once elected. For instruments measured at fair value, embedded conversion or other features are not required to be separated from the host instrument. Issuance costs related to convertible securities carried at fair value are not deferred and are recognized as incurred on the condensed consolidated statements of operations.

At June 30, 2026, the Company performed a qualitative assessment to identify if events or circumstances indicate that the investment is impaired or that an observable price change has occurred. We considered available information about Canopy’s operations and industry conditions. No events or circumstances were identified that would indicate the investment is impaired or that an observable price change occurred. The Company did not recognize any upward or downward adjustment to the value of the investment for the three or six months ended June 30, 2026.

The SAFE agreement was replaced and superseded, in its entirety, by that certain Simple Agreement for Future Equity instrument of Canopy dated as of June 30, 2024 (the “New SAFE”) between the Canopy and WhiteFiber HPC, Inc. Pursuant to that certain Surrender and Termination Agreement, dated as of August 10, 2026, by and among Canopy, WhiteFiber HPC, Inc. and WhiteFiber AI, Inc., the New SAFE was surrendered to Canopy and terminated on the same date.

PIPE Investment

On August 10, 2026, the Company entered into the PIPE Share Purchase Agreement with SAIHEAT Limited, an exempted company incorporated under the laws of the Cayman Islands (“SAIHEAT”). Pursuant to the PIPE Share Purchase Agreement, the Company purchased from SAIHEAT, an aggregate of 55,105 SAIHEAT’s Class A Ordinary Shares (the “PIPE Shares”) for aggregate proceeds of approximately $1.0 million at a per-share purchase price of $18.15 per share. The Company has neither control nor significant influence through investment in PIPE Shares. The Company is currently evaluating the appropriate accounting treatment for this investment under U.S. GAAP. The accounting for this investment had not been finalized as of the date these financial statements were issued and will be reflected in the Company's financial statements in the third quarter of 2026. Four members of Bit Digital’s management, including Erke Huang, Bit Digital’s Chief Financial Officer, participated in the PIPE transaction in their personal capacity as investors and invested $0.5 million each in SAIHEAT.