NOTE 5 – DIGITAL ASSETS

The Company’s digital assets, as presented on the condensed consolidated balance sheets for the periods indicated, consist primarily of ATH. ATH qualifies for recurring fair-value measurement under ASC 350-60, Intangibles — Goodwill and Other — Accounting for and Disclosure of Crypto Assets, with changes in fair value recognized in earnings in accordance with ASC 820, Fair Value Measurement, based on quoted (unadjusted) prices on the principal market of the Company for ATH (Level 1 inputs). The following table summarizes the number of units held, cost basis, and fair value of ATH as of June 30, 2026 and December 31, 2025:

Cost basis represents the purchase price of digital assets, including transaction fees, if any, at the time of acquisition or upon receipt. Fair value represents quoted prices for the digital assets in the Company’s principal market at 11:59 p.m. Eastern Time on each reporting date in accordance with the Company’s crypto-asset valuation policy.

The following table represents a reconciliation of digital assets held, for ATH specific activity:

As of June 30, 2026, the Company held $0.1 million of non-ATH digital assets.

ATH tokens were utilized primarily for the rental of GPU compute capacity on the Aethir decentralized infrastructure network, supporting the Company's compute-related operations.

During the six months ended June 30, 2026, the Company generated ATH-denominated digital asset lending income through a digital asset lending arrangement. The Company transferred 2.4 billion ATH tokens via the Aethir portal for a defined period of time of 31 calendar days. The lending arrangement accrued interest at a fixed annual rate of 6%, calculated on a simple interest basis. Upon expiration of the term of the digital asset lending arrangement, the principal amount and accrued interest were repaid in full. For the six months ended June 30, 2026, the Company recognized digital asset lending income of $0.1 million. As of June 30, 2026, no digital assets held by the Company were subject to the lending arrangement.

Side Letter

In connection with private placement transactions completed in October 2025 to support the Company’s treasury strategy, the Company entered into a side letter agreement (the “Side Letter”) with DCI, effective October 7, 2025. Pursuant to the Side Letter, for each ATH token purchased by the Company in the open market, whether through centralized or decentralized exchanges operating on the Ethereum Network, DCI will grant the Company additional ATH tokens equal to 20% of the number of tokens purchased (the “Bonus ATH”), to be delivered within 30 days of the related purchase. The Bonus ATH is not subject to restrictions upon receipt.

The Company accounts for the Side Letter as a derivative instrument. As of June 30, 2026 and December 31, 2025, respectively, no derivative asset was recognized, as all Bonus ATH associated with open market purchases made during the period had been received from DCI.

For the six months ended June 30, 2026, the Company did not receive any Bonus ATH as there were no open market purchases of ATH made during the period. The cost basis of the ATH received in prior periods pursuant to the Side Letter and subsequent fair value adjustments thereto are recorded within “Gains (losses) on digital assets” on the condensed consolidated statements of net loss.

Digital asset receivable

A portion of the Company’s ATH holdings consists of contractual rights to receive ATH tokens that are subject to time-based vesting and transfer restrictions (“Locked ATH”). Locked ATH was obtained pursuant to Simple Agreements for Future Tokens (“SAFTs”) and is administered through an on-chain smart contract deployed on the Ethereum mainnet. Prior to vesting and claim, the Company does not have control of the underlying ATH tokens and is not able to transfer, sell, stake, pledge, or otherwise deploy such tokens.

The smart contract enforces the applicable vesting schedules and restricts access to the ATH tokens until the vesting conditions are satisfied. Upon satisfaction of the vesting conditions, the Company must affirmatively claim the unlocked ATH tokens through the smart contract interface, at which point the tokens are released from restriction and transferred to a Company-controlled wallet. Until such claim occurs, the Locked ATH represents a contractual right to receive ATH in the future rather than a digital asset held by the Company.

As of June 30, 2026, the Company held rights to receive ATH tokens that remain subject to vesting and claim requirements. The vesting period for these ATH tokens ranges from less than one month to approximately 3 years. These restrictions are specific to the underlying ATH tokens. Upon vesting and claim, the restrictions lapse and the Company obtains control of the ATH tokens, which may then be held, transferred to custodial accounts, staked, or otherwise deployed in accordance with the Company’s treasury strategy.

As of June 30, 2026, the Company recorded a digital asset receivable of $10.3 million related to the Locked ATH, consisting of a host receivable of $93.4 million, net of an embedded derivative liability measured at fair value of $83.1 million. The change in fair value of the embedded derivative of $5.2 million for the six months ended June 30, 2026, was recognized within “Gains (losses) on digital assets” in the condensed consolidated statements of net loss.

As of December 31, 2025, the Company recorded a digital asset receivable of $15.5 million related to the Locked ATH, consisting of a host receivable of $93.4 million, net of an embedded derivative liability measured at fair value of $77.9 million. The change in fair value of the embedded derivative of $77.9 million for the year ended December 31, 2025, was recognized within “Gains (losses) on digital assets” in the condensed consolidated statements of net loss.