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Income Taxes
 9 Months Ended
Sep. 30, 2025
Income Taxes  
Income Taxes

21.Income Taxes

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The Company’s income tax expense for the three months ended September 30, 2025 and 2024 was $6,901 and $766, respectively. The Company’s income tax expense for the nine months ended September 30, 2025 and 2024 was $10,364 and $3,615, respectively. The income tax expense reflects the Company’s estimate of the effective tax 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 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 condensed consolidated 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 consolidated statement of operations.

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The effective tax rate for the three and nine months ended September 30, 2025 was 29.00% and 35.14%, compared to 12.02% and 23.62% in the same period of the prior year, respectively. The increase in the effective tax rate for the three months ended September 30, 2025 was primarily due to the partial reversal of the valuation allowance in the prior period due to unrealized capital gain generated during the quarter that offset the overall capital loss recognized as of September 30, 2024, and lower tax benefits from employee stock-based compensation. The increase in the effective tax rate for the nine-month ended September 30, 2025 is primarily due to penalties related to a settlement with the DOJ that are not deductible for tax purposes.

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The effective tax rate for the three and nine months ended September 30, 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 shared-based compensation plans, federal research and development (“R&D”) credit benefit, change in valuation allowance, and penalties from a settlement with

the DOJ. The effective tax rate for the three and nine months ended September 30, 2024, 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 R&D credit benefit and valuation allowance associated with the Company’s digital assets investments.

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As of September 30, 2025, and December 31, 2024, the Company had $487 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 $207 and $155 as of September 30, 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 condensed consolidated financial statements as of September 30, 2025.

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On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law, introducing significant changes to the U.S. corporate tax code. Key provisions that are expected to impact the Company include:

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•The permanent extension of 100% bonus depreciation for qualified property acquired on or after January 20, 2025.
•The immediate expensing of domestic R&D expenditures effective for tax years beginning after December 31, 2024; and
•The restoration of EBITDA-based limitations on the deductibility of business interest expense, effective for tax years beginning after December 31, 2024.

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The financial effects of the provisions that are effective for tax years beginning after December 31, 2024, have been reflected in the Company’s income tax provision for the quarter ended September 30, 2025.

Under the Master Loan Agreement, the Lender will provide digital assets or cash in exchange for collateral. Per IRS Notice 2014-21, virtual currencies like Bitcoin are treated as property for federal tax purposes. Borrowing funds using property as collateral does not trigger a taxable event unless the asset is sold, exchanged, or otherwise disposed of. Accordingly, using Bitcoin as collateral does not result in a taxable transaction, and no gain or loss is recognized. As of September 30, 2025, the Company did not recognize any gain related to the loan for tax purposes and will continue to monitor the transaction.

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