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Significant Accounting Policies and Recent Accounting Pronouncements | 6 Months Ended
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Jun. 30, 2026
Organization and Summary of Significant Accounting Policies [Abstract] |
Significant Accounting Policies and Recent Accounting Pronouncements | Note 2. Significant accounting policies and recent accounting pronouncements Basis of presentation Until the effectiveness of the Transactions on March 31, 2025, the Company’s operations historically operated as the "Bitcoin mining" sub-segment of Hut 8’s "Compute" segment and not as a standalone company; therefore, separate financial statements had not historically been prepared for the Company prior to April 1, 2025. The Company's Unaudited Condensed Consolidated and Combined Financial Statements represent the historical assets, liabilities, operations, and cash flows directly attributable to the Company starting April 1, 2025; the prior periods have been prepared on a carveout basis through the use of a management approach from Hut 8’s consolidated financial statements and accounting records and are presented on a standalone basis as if the operations had been conducted independently from Hut 8. Following the effectiveness of the Transactions on March 31, 2025, the Company began operating as a standalone entity with its own accounting and financial records; therefore, starting April 1, 2025, the Company’s results of operations are the results directly attributed to its standalone operations rather than the Bitcoin mining operations of Hut 8. The Company’s Unaudited Condensed Consolidated and Combined Balance Sheets as of June 30, 2026, reflects the assets and liabilities that the Company directly owns or is legally obligated to satisfy post-Transactions. Prior to the effectiveness of the Transactions on March 31, 2025, all revenues and costs, as well as assets and liabilities directly associated with Hut 8’s Bitcoin mining sub-segment activities were included in the Company’s Unaudited Condensed Consolidated and Combined Financial Statements, including Hut 8’s strategic Bitcoin reserve (which remained with Hut 8 following the effectiveness of the Transactions). Additional costs allocated to the Company include corporate general and administrative expenses which consisted of various categories, including but not limited to: employee compensation and benefits, professional services, facilities and corporate office expenses, information technology, interest expenses, and stock-based compensation. The corporate and general administrative expenses allocated were primarily based on a percentage of revenue basis that was considered to be a reasonable reflection of the utilization of the services provided or benefit received during the periods presented, depending on the nature of the service received. Management believes the assumptions underlying the Company’s Unaudited Condensed Consolidated and Combined Financial Statements, including the expense methodology and resulting allocation, are reasonable for all periods presented. However, the allocations may not include all of the actual expenses that would have been incurred by the Company had it operated as a standalone entity during such periods and may not reflect its results of operations, financial position, and cash flows had it been a standalone company during the periods presented. Actual costs that might have been incurred had the Company been a standalone company would depend on a number of factors, including the Company’s organizational structure, what corporate functions the Company might have performed directly or outsourced, and strategic decisions the Company might have made in areas such as executive management, legal, and other professional services, and certain corporate overhead functions. These costs also may not be indicative of the expenses that the Company may incur in the future or would have incurred if the Company had obtained these services from a third party. Prior to the effectiveness of the Transactions on March 31, 2025, the Company’s equity balance in its Unaudited Condensed Consolidated and Combined Financial Statements represented the excess of total liabilities over assets. Net Hut 8 investment is primarily impacted by contributions from Hut 8 that are the result of net funding provided by or distributed to Hut 8. Prior to the effectiveness of the Transactions on March 31, 2025, cash was managed through bank accounts controlled and maintained by Hut 8. The Company did not have legal ownership of any bank accounts containing cash balances prior to March 31, 2025. As such, cash held in commingled accounts with Hut 8 is presented within net Hut 8 investment on the Company’s Unaudited Condensed Consolidated and Combined Balance Sheets. Subsequent to March 31, 2025, the Company has set up its own legally separate bank accounts to directly settle its liabilities and to manage its own cash. Prior to the effectiveness of the Transactions on March 31, 2025, the Company was not a co-obligor on Hut 8’s third-party, long-term debt obligations nor was the Company expected to pay any portion of Hut 8’s third-party, long-term debt. However, proceeds from Hut 8’s third-party debts were used to finance the Company’s purchase of ASICs or directly used for the Company’s Bitcoin mining-related activities and were therefore included in the Company’s Unaudited Condensed Consolidated and Combined Financial Statements. While the Company is not a legal obligor, as of June 30, 2026, certain Bitcoin mining assets of the Company were pledged as collateral as disclosed in Note 4. Digital Assets. Following the effectiveness of the Transactions on March 31, 2025, the Company is no longer connected to any of Hut 8’s third-party debt obligations. The Company’s Unaudited Condensed Consolidated and Combined Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial reporting. While these statements reflect all normal recurring adjustments which are, in the opinion of management, necessary for fair presentation of the results of the interim period, they do not include all the information and footnotes required by GAAP for complete financial statements. As such, the information included in these Unaudited Condensed Consolidated and Combined Financial Statements should be read in conjunction with the Company's Combined Financial Statements for the year ended December 31, 2025 and related notes included therewith. Interim results are not necessarily indicative of results for a full year. The U.S. Dollar is the functional and presentation currency of the Company. The Company's significant accounting policies are described in Note 2 of the Company's Combined Financial Statements for the year ended December 31, 2025. There have been no material changes to these policies during the period covered in this Quarterly Report, except as described elsewhere in these notes. Certain of the Company's significant accounting policies are presented below because management believes they are particularly relevant to understanding the accompanying Unaudited Condensed Consolidated and Combined Financial Statements for the current interim period. This is not intended to be a complete list of the Company's significant accounting policies. Reverse Stock Split On July 2, 2026, the Company effected a 1-for-15 reverse stock split of its issued and outstanding common stock (the "Reverse Stock Split"). The Reverse Stock Split affected all stockholders uniformly and did not alter any stockholder’s percentage ownership interest or proportionate voting power in the Company’s equity, except for de minimis changes as a result of the elimination of fractional shares. No fractional shares were issued in connection with the Reverse Stock Split. The authorized number of shares and par value of each class of the Company’s common stock were not reduced. In connection with the Reverse Stock Split, proportionate adjustments were made to (i) the number of shares of common stock available for issuance and the number of shares of common stock issuable upon the vesting and settlement of existing equity grants under the Company’s equity compensation plan and (ii) the number of shares of the Company’s Class A common stock purchasable upon exercise of outstanding warrants and, for certain of the Company’s outstanding warrants, their exercise price per share, in each case in accordance with the terms of the relevant warrant agreement. Unless otherwise indicated, all share amounts, per share amounts, weighted-average shares outstanding, and exercise prices included in these Unaudited Condensed Consolidated and Combined Financial Statements have been restated to reflect the Reverse Stock Split on a retroactive basis for all periods presented. The shares of common stock retained a par value of $0.0001 per share. Accordingly, an amount equal to the par value of the decreased shares resulting from the Reverse Stock Split was reclassified from Common Stock to Additional Paid-in Capital. As of June 30, 2026, the Company reclassified $0.1 million from Common Stock to Additional Paid-in Capital. Recent accounting pronouncements The Company continually assesses any new accounting pronouncements to determine their applicability. When it is determined that a new accounting pronouncement affects the Company’s financial reporting, the Company undertakes a study to determine the consequences of the change to its Unaudited Condensed Consolidated and Combined Financial Statements and ensures that there are proper controls in place to ascertain that the Company’s Unaudited Condensed Consolidated and Combined Financial Statements properly reflect the change. In May 2026, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2026-02, Environmental Credits and Environmental Credit Obligations (Topic 818) (“ASU 2026-02”). ASU 2026-02 provides recognition, measurement, presentation, and disclosure requirements for environmental credits and environmental credit obligations. This update is effective for interim and annual reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is currently assessing the impact of adopting this standard. Adoption of ASU 2026-02 requires retrospective application through a cumulative-effect adjustment to the opening balance of retained earnings as of the beginning of the annual reporting period of adoption. In December 2025, the FASB issued Update 2025-12, Codification Improvements, ("ASU 2025-12"). ASU 2025-12 clarifies dilutive earnings per share treatment for certain contracts that may be settled in stock or cash when a company has a loss from continuing operations. This update is effective for interim and annual reporting periods beginning after December 31, 2026, with early adoption permitted. The Company is currently assessing the impact of adopting this standard. Adoption of ASU 2025-12 requires retrospective application to each prior reporting period presented. In September 2025, FASB issued ASU 2025-07, Derivatives and Hedging (Topic 815) and Revenue from Contracts with Customers (Topic 606) ("ASU 2025-07"). With respect to Topic 815, ASU 2025-07 refines the scope of Topic 815 to clarify which contracts are subject to derivative accounting. This update is effective for interim and annual reporting periods beginning after December 15, 2026, with early adoption permitted. The Company is currently assessing the impact of adopting this standard. ASU 2025-07 may be applied using a prospective or modified retrospective transition approach. In September 2025, FASB issued Update ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software ("ASU 2025-06"). ASU 2025-06 modernizes the accounting for internal-use software to current development practices, clarifies when to begin capitalizing costs and enhances disclosure requirements. This update is effective for interim and annual periods beginning after December 15, 2027, with early adoption permitted. The Company is currently assessing the impact of adopting the standard. In January 2025, the FASB issued Update ASU 2025-01, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date ("ASU 2025-01"). ASU 2025-01 was issued to clarify the effective date for Update ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses ("ASU 2024-03"). ASU 2024-03 requires public business entities to provide additional disclosures in the notes to financial statements, disaggregating specific expense categories within relevant income statement captions. The prescribed categories include purchases of inventory, employee compensation, depreciation, intangible asset amortization, and depreciation, depletion, and amortization related to oil-and-gas producing activities. ASU 2024-03 is effective for the first annual reporting period beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently assessing the impact of adopting the standard. Use of estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions about future events that affect the amounts reported in the financial statements and accompanying notes. Future events and their effects cannot be determined with absolute certainty. Therefore, the determination of estimates requires the exercise of judgment. Actual results inevitably will differ from those estimates, and such differences may be material to the financial statements. The most significant accounting estimates inherent in the preparation of the Company’s Unaudited Condensed Consolidated and Combined Financial Statements include estimates associated with revenue recognition, determining the useful lives and recoverability of long-lived assets, goodwill and digital assets, the allocation of costs to the Company for certain corporate and shared service functions in preparing the Company’s Unaudited Condensed Consolidated and Combined Financial Statements on a carve-out basis, and current and deferred income tax assets (including the associated valuation allowance) and liabilities. Fair value measurement The Company’s financial assets and liabilities are accounted for in accordance with FASB ASC Topic 820, Fair Value Measurements and Disclosures ("ASC 820") which defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The fair value hierarchy requires an entity to maximize the use of observable inputs when measuring fair value and classifies those inputs into three levels: Level 1— Quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2— Observable, market-based inputs, other than quoted prices included in Level 1, for the assets or liabilities either directly or indirectly. Level 3—Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. Observable inputs are based on market data obtained from independent sources, while unobservable inputs are based on the Company’s market assumptions. Unobservable inputs require significant management judgment or estimation. In some cases, the inputs used to measure an asset or a liability may fall into different levels of the fair value hierarchy. In those instances, the fair value measurement is required to be classified using the lowest level of input that is significant to the fair value measurement. Such determination requires significant management judgment. Assets and liabilities measured at fair value on a recurring basis The following table presents information about the Company’s assets and liabilities measured at fair value on a recurring basis and the Company’s estimated level within the fair value hierarchy of those assets and liabilities as of June 30, 2026 and December 31, 2025:
|  | Fair value measured at June 30, 2026 |
(in USD thousands) |  | Total carrying value at June 30, 2026 |  |  | Quoted prices in active markets (Level 1) |  |  | Significant other observable inputs (Level 2) |  |  | Significant unobservable inputs (Level 3) |
Digital assets |  | $ | 478,891 |  |  | $ | 478,891 |  |  | $ | — |  |  | $ | — |
Warrant liability |  |  | (55 | ) |  |  | — |  |  |  | — |  |  |  | (55 | )
Bitcoin redemption and put options |  |  | 180,013 |  |  |  | — |  |  |  | 180,013 |  |  |  | — |
|  | Fair value measured at December 31, 2025 |
(in USD thousands) |  | Total carrying value at December 31, 2025 |  |  | Quoted prices in active markets (Level 1) |  |  | Significant other observable inputs (Level 2) |  |  | Significant unobservable inputs (Level 3) |
Digital assets |  | $ | 472,577 |  |  | $ | 472,577 |  |  | $ | — |  |  | $ | — |
Warrant liability |  |  | (146 | ) |  |  | — |  |  |  | — |  |  |  | (146 | )
Bitcoin redemption and put options |  |  | 101,179 |  |  |  | — |  |  |  | 101,179 |  |  |  | — |
In determining the fair value of its digital assets, the Company is able to cite quoted prices as determined by the Company’s principal market, which is the Coinbase Prime. As such, the Company’s Digital assets were determined to be Level 1 assets. See Digital assets below for a description of the Company’s digital asset accounting policy. The Company estimates the fair value of its Bitcoin redemption and put options using the Black model, which includes several inputs and assumptions, including the forward price of the underlying asset (Bitcoin), the underlying asset’s implied volatility, the risk-free interest rate, and the expected term of the redemption and put options. See the Derivatives section below for a description of the Company’s derivative instrument accounting policy. The Company estimated the fair value of its warrant liability, which it assumed in connection with the Mergers, using the Black-Scholes pricing model, which includes significant unobservable inputs, including the expected term of the warrants, and as a result, the Company determined that the warrant liability is a Level 3 liability. For quantitative disclosure on the inputs used to estimate the fair value of the Company’s warrant liability, see Note 7. Derivatives. See Warrant liability section below for a description of the Company’s warrant liability accounting policy. Assets and liabilities measured at fair value on a non-recurring basis In addition to assets and liabilities that are measured at fair value on a recurring basis, the Company also measures certain assets and liabilities at fair value on a non-recurring basis. The Company’s non-financial assets, including goodwill and property and equipment, are measured at fair value when there is an indication of impairment and the carrying amount exceeds the asset’s projected undiscounted cash flows. These assets are recorded at estimated fair value only when an impairment charge is recognized. The Company had no impairment from its continuing operations related to its non-financial assets and liabilities measured on a non-recurring basis during the six months ended June 30, 2026 and 2025. The carrying amounts of the Company’s financial assets and liabilities, such as cash, accounts payable and accrued expenses, approximate fair value due to the short-term nature of these instruments. The carrying value of long-term liabilities, such as lease liabilities, approximate fair value as the related interest rates approximate rates currently available to the Company. Proper ty and equipment Property and equipment, net are stated at cost and depreciated using the straight-line method over the estimated useful lives of the assets. Cost includes expenditures that are directly attributable to the acquisition of the asset, including those attributable to bringing the asset to its intended working condition. Construction in progress is not depreciated until the assets are placed in service. Based on the currently available information and data, management has determined that the straight-line method of depreciation best reflects the current expected useful life of the Company's miners and mining equipment. Management reviews estimates at each reporting date and will revise such estimates as and when data become available. Management reviews the appropriateness of its assumptions related to residual value at each reporting date. The estimated useful life of the Company's property and equipment is generally as follows:
|  | Useful life (in years)
Miners and mining equipment |  | 4
I mpairment of long-lived assets The Company continually monitors events and changes in circumstances that could indicate that the carrying amounts of its long-lived assets, including property and equipment, may not be recoverable. When such events or changes in circumstances occur, the Company assesses recoverability by determining whether the carrying value of such assets will be recovered through the undiscounted expected future cash flows from it. If the expected future undiscounted cash flows from the assets are less than the carrying amount of these assets, the Company recognizes an impairment loss based on any excess of the carrying amount over the fair value of the assets. When recognized, impairment losses related to long-lived assets to be held and used in operations are recorded as cost and expenses in the Company’s Unaudited Condensed Consolidated and Combined Statements of Operations and Comprehensive (Loss) Income. Stock-based compensation The Company grants stock-based compensation, primarily to employees, consultants, and non-employee directors of the Company and its affiliates. Restricted stock units ("RSUs") granted to employees generally either vest in quarterly or annual installments over three years and RSUs granted to non-employee directors generally vest on the date of the Company’s annual general meeting of stockholders.

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