Fair Value Hierarchy

6 Months Ended

12 Months Ended

Jun. 30, 2024

Dec. 31, 2023

11. Fair Value Hierarchy

Recurring fair value measurements

As of June 30, 2024, the fair value of the warrant liability measured on a recurring basis was as follows:


	Level 1		Level 2		Level 3		Total
Warrant Liability	$	—	$	—	$	454	$	454

The fair value of the warrant liability as of October 9, 2022 (see Note 10) and at the dates of issuance and as of June 30, 2024 were determined via the fair value assessment method and included multiplying the related fixed percent of total equity value by the estimated number of shares upon immediate close of the transaction and multiplied the quoted market price of the Company. The observable input of quoted prices for the Company on the issuance dates and June 30, 2024 were as follows:


Date	Adit/GRIID Share Price
October 9, 2022	$	9.91
December 31, 2022	$	10.11
December 31, 2023	$	5.38
March 31, 2024	$	1.32
June 30, 2024	$	1.06

As of December 31, 2023, the fair value of the warrant liability measured on a recurring basis was as follows:


	Level 1		Level 2		Level 3		Total
Warrant Liability	$	—	$	—	$	3,838	$	3,838

A summary of the changes in the Company’s warrant liability measured at fair value using significant unobservable inputs (Level 3) as of June 30, 2024 and December 31, 2023, respectively:


Warrant liability as of December 31, 2023	$	3,838
Change in fair value		(3,384	)

Warrant liability as of June 30, 2024	$	454

For the three months ended June 30, 2024 and 2023, the Company recognized a gain

of $

and a loss of $

(1,834

)

respectively, on the change in fair value of the warrant liability. For the six months ended June 30, 2024 and 2023, the Company recognized a gain of $

3,384

and a loss of $

(3,624

), respectively, on the change in fair value of the warrant

liability.

Non-recurring

fair value measurements

Cryptocurrencies

The Company records its cryptocurrency assets based upon Level 1 inputs, specifically, the exchange-quoted price of the cryptocurrency. The company does not record impairment due to the adoption of ASC

350-60

as of January 1, 2024. The Company’s cryptocurrency holdings had an outstanding carrying balance of approximately $96

as of June 30, 2024. The Company recorded

a $3 cumulative effect change to adjust the Company’s bitcoin held.

The last impairment date for the Company’s cryptocurrency holdings was December 31, 2023. As of December 31, 2023, the Company’s cryptocurrency holdings had an outstanding carrying balance of approximately $142, net of impairment losses incurred of $285 for the year ended December 31, 2023.

11. Fair Value Hierarchy

Recurring fair value measurements

As of December 31,

2023

, the fair value of the warrant liability measured on a recurring basis was as follows:


	Level 1		Level 2		Level 3		Total
Warrant Liability	$	—	$	—	$	3,838	$	3,838

The fair value of the warrant liability as of October 9, 2022 (see Note 10) and at the dates of issuance and as of December 31, 2023 were determined via the fair value assessment method and included multiplying the

related fixed percent of total equity value by the estimated number of shares upon immediate close of the transaction and multiplied the quoted market price of The Company. The observable input of quoted prices for The Company on the issuance dates and December 31, 2023 were as follows:


Date	Adit/GRIID Share Price
October 9, 2022	$	9.91
December 31, 2022	$	10.11
December 31, 2023	$	5.38

As of December 31, 2022, the fair value of the warrant liability measured on a recurring basis was as follows:


	Level 1		Level 2		Level 3		Total
Warrant Liability	$	—	$	—	$	76,423	$	76,423

A summary of the changes in the Company’s warrant liability measured at fair value using significant unobservable inputs (Level 3) as of December 31, 2023 and 2022, respectively:


Warrant liability as of December 31, 2021	$	29,820
Issuance of warrants		57,133
Gain on termination of warrant		(139	)
Modification of warrants		5,379
Change in fair value		(15,770	)

Warrant liability as of December 31, 2022		76,423
Change in fair value		(59,662	)
Issuance of warrants		15,315
Extinguishment of debt		25,081
Conversion to common stock		(65,664	)
Interest recorded on warrants issued		12,345

Warrant liability as of December 31, 2023	$	3,838

For the years ended December 31, 2023 and 2022, the Company recognized a gain of $59,662 and $22,948, respectively, on the change in fair value of the warrant liability and warrant derivative. The change in fair value that was associated with debt and warrant modifications was $7,178 for the years ended December 31, 2022.

Non-recurring

fair value measurements

Cryptocurrencies

The Company tests cryptocurrency assets for impairment daily based upon Level 1 inputs, specifically, the exchange-quoted price of the cryptocurrency. The last impairment date for the Company’s cryptocurrency holdings during year ended December 31, 2023 and 2022 was December 31, 2023 and 2022, respectively. The Company’s cryptocurrency holdings had an outstanding carrying balance of approximately $142 as of December 31, 2023, net of impairment losses incurred of $285 for the twelve months ended. As of December 31, 2022, the Company’s cryptocurrency holdings had an outstanding carrying balance of approximately $51, net of impairment losses incurred of $6,026 for the year ended December 31, 2022. Per the development and operation agreement, the Company held cryptocurrency of $35 as of December 31, 2023 and 2022, respectively, to be subsequently paid.

Mining and Other Related Equipment

Whenever events or changes in circumstances dictate, or, minimally, on a quarterly basis, the Company tests its miners and other related equipment for impairment. Miners and the equipment associated with the miners are considered fully impaired if they are no longer usable or no longer contributing to the Company’s hash rate. For the year-ended December 31, 2023 and 2022, the Company recorded impairment associated with its mining and other related equipment of $0 and $95. For the year ended December 31, 2022, the Company performed impairment testing of its mining and related revenue generating equipment. Due to the decline in the price of bitcoin and related miner prices by a decline of 65% year over year. The undiscounted cash flows used in the recoverability test were less than the carrying amount of the long-lived asset group, and the Company was required to determine the fair value of the long-lived asset group. The final impairment test using fair value resulted in no impairment of the asset group as the carrying amount of the long-lived asset group was less than its fair value.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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