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Income Taxes
 3 Months Ended
Mar. 31, 2025
Income Taxes  
Income Taxes

20.Income Taxes

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The Company’s income tax benefit for the three months ended March 31, 2025 was $10,167 and income tax expense for the three months ended March 31, 2024 was $1,724. The income tax benefit reflects the Company’s estimate of the effective tax benefit rates expected to be applicable for the full year, adjusted for any discrete events that are recorded in the period in which they occurred. The estimates are re-evaluated each quarter based on the estimated tax benefit for the full year.

For uncertain tax positions that meet a “more likely than not” threshold, the Company recognizes the benefit of uncertain tax positions in the financial statements. The Company’s practice is to recognize interest and penalties, if any, related to uncertain tax positions in income tax expense in the condensed statement of operations.

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The effective tax benefit rate for the three months ended March 31, 2025 was 13.58%, compared to an effective tax provision rate of 22.11% in the same period of the prior year. The decrease in effective tax rate for the three months ended March 31, 2025 was primarily due to operating losses, and higher tax benefits associated with employee stock-based compensation, partially offset by increase in the valuation allowance due to unrealized capital losses incurred during the three months ended March 31, 2025.

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The effective tax benefit rate for the three months ended March 31, 2025 differed from the U.S. federal statutory rate of 21% primarily due to state income taxes (net of federal benefit), tax benefits associated with employee share-based compensation plans and federal research and development (“R&D”) credit benefit, and valuation allowance associated with the Company’s digital assets investments.

As of March 31, 2025, and December 31, 2024, the Company had $502 and $487, respectively, of unrecognized tax benefits, excluding interest and penalties. The Company’s practice is to recognize interest and penalty expenses related to uncertain tax positions, which was $172 and $155 as of March 31, 2025 and December 31, 2024, respectively.

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On August 16, 2022, the Creating Helpful Incentives to Produce Semiconductors for America Act of 2022 (“CHIPS and Science Act”), and Inflation Reduction Act (“IRA”) were signed into law in the United States. Among other things, the CHIPS and Science Act provides incentives and tax credits for the global chip manufacturers who choose to set-up or expand existing operations in the United States. The IRA imposes a 15% corporate alternative minimum tax for tax years beginning after December 31, 2022, levies a 1% excise tax on net stock repurchases after December 31, 2022, and provides tax incentives to promote clean energy. The IRA is primarily applicable to large corporations with an annual revenue of $1 billion or over. Implementation of this act had no impact on the Company’s financial statements as of March 31, 2025.