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Digital Assets
 3 Months Ended
Mar. 31, 2026
Digital Assets [Abstract]  
DIGITAL ASSETS

NOTE 5 – DIGITAL ASSETS

  

Crypto assets within the scope of ASC 350-60

 

The following table presents the Company’s significant digital asset holdings (in thousands):

 

   March 31, 2026 
   Quantity   Cost Basis1   Fair Value1 
ETH   12,441   $41,165   $26,223 
USDC (USDC is a stablecoin meant to track the value of the U.S. dollar, backed by U.S. dollars and dollar-denominated assets)   2,083,424    2,082    2,084 
Liquid staking incentive tokens 2     
-
    
-
    
-
 
Total digital asset holdings   2,095,865   $43,247   $28,307 

 

(1)Cost basis is equal to the cost of the digital assets net of any transaction fees, if any, at the time of purchase or upon receipt. Fair value represents the quoted digital asset prices within the Company’s principal market at the time of measurement.

 

(2) Liquid staking incentive tokens include PUFFER and ETHFI incentive tokens. Incentive tokens are governance tokens earned for deposited certain amounts of ETH into protocols for a specified period of time.

The following table presents a roll forward of the Company’s digital asset holdings, consisting of ETH and staking incentive tokens (in thousands):

 

   Three Months Ended
March 31,
2026		 
Digital Assets as of December 31, 2025  $61,587 
Additions1   757 
Dispositions   (128,096)
Receipt and accrual of ETH from native staking activities   (460)
Receipt of ETH from derecognition of liquid staking activities   132,374 
Cryptocurrency denominated loan proceeds2   67,039 
Cryptocurrency denominated loan repayments2   (98,552)
Change in fair value of digital assets   (6,342)
Digital assets fair value  $28,307 

 

(1)Additions are the results of purchases and receipts of ETH.

 

(2)Represents ETH-denominated proceeds received during the year from a collateralized loan that was fully repaid prior to March 31, 2026.

 

During the three months ended March 31, 2026, the Company sold approximately 57,726 ETH for an aggregate of $128.1 million, at an average price of $2.2 thousand per ETH. During the three months ended March 31, 2026, the Company recognized cumulative realized losses of $124.6 million and unrealized gains of $118.2 million related to digital asset transactions.

 

As of March 31, 2026, the Company held approximately 12,441 ETH, which are pledged as collateral under a crypto-collateralized borrowing arrangement. See Note 9 – Debt for additional information.

 

Non-monetary receivable with an embedded derivative within the scope of ASC 310-10 and ASC 815-15

 

During the three months ended March 31, 2026, the Company closed its liquid staking position. The Company recognized a change in fair value of the embedded derivative of $48.6 million and the net value of liquid staking activities of $132.3 million was reclassified to digital assets. The Company recognized staking revenue of $0.3 million during the three months ended March 31, 2026.

 

As of March 31, 2026, the carrying amount of the host contract was $0, and the fair value of the embedded derivative liability was $129.9 million, and as of December 31, 2025 the carrying amount of the host contract (representing the 50,000 deposited ETH into Ether.Fi and 10,575 into PufETH) was $262.3 million and $81.3 million, respectively, both of which are included within “Staking Receivables” on the Condensed Consolidated Balance Sheets.

 

Derivative Instruments and Collateral Arrangements

 

The Company may transfer or pledge digital assets or cash as collateral in connection with certain derivative instruments. During the three months ended March 31, 2026, the Company entered into a series of derivative trades with a single counterparty in connection with the Company’s disposal of digital asset holdings, including call and put options and non-deliverable forward contracts, with a total notional amount of approximately $83.0 million.

 

Certain derivative contracts may require the posting of collateral, which can include cash or digital assets, depending on the terms of the arrangement. Results of the Company’s ETH-denominated derivative instruments, including realized and unrealized gains and losses, are recognized in earnings and presented within “Digital asset gains and losses” in the Condensed Consolidated Statements of Operations and Comprehensive Loss, as the instruments are used to economically manage exposure to changes in the fair value of ETH. During the three months ended March 31, 2026, the Company recognized realized losses of $10.5 million and unrealized gains of $0.5 million related to these instruments.

Collateral posted in connection with derivative instruments may be returned upon settlement or early termination of the related contracts. During the three months ended March 31, 2026, certain derivative instruments were settled or early terminated and related collateral was returned. As of March 31, 2026, the Company had one open derivative position with a fair value liability of $0.5 million. In connection with these derivative instruments, the Company was required to post cash collateral of $2.1 million. The net balance of $1.6 million, representing cash collateral posted in excess of the related derivative liability, was included in “Prepaid expenses and other current assets” on the Condensed Consolidated Balance Sheets as of March 31, 2026.

 

As of March 31, 2026, the Company had open ETH put and call option contracts with an aggregate notional quantity of 30,000 ETH, all with an expiration date of June 26, 2026, and strike prices ranging from $1,615 to $3,000.

 

Sales of ETH

 

Between January 1, 2026 and March 31, 2026, the Company sold approximately 57,726 ETH for an aggregate of $128.1 million, at an average price of $2.2 thousand per ETH. As of March 31, 2026, the Company held approximately 12,441 ETH on its balance sheet which is collateral on ETH-denominated collateralized borrowing.

 

Eurus Aero Tokens

 

On February 12, 2026, the Company, through its wholly owned subsidiary, ETHZilla Aerospace LLC, launched a private offering of up to approximately $11.7 million in profit participation interests issued as Eurus Aero Tokens on the Arbitrum Ethereum Layer 2 network in connection with two CFM56-7B24 aircraft engines owned by the Company. The aircraft engines are subject to existing lease arrangements with third-party lessees.

 

As of March 31, 2026, the Company had received gross proceeds of $10,000 from the issuance of Eurus Aero Tokens.

 

The Eurus Aero Tokens provide holders with contractual rights to pro rata distributions from the net cash flows generated by the aircraft engines, which are derived from monthly lease collections and, upon a liquidity event, proceeds from the sale of the aircraft engines. The Company’s obligations under the Eurus Aero Tokens are secured by collateral that includes the aircraft engines, related lease receivables, reserves, and insurance proceeds.

 

The Eurus Aero Tokens are digital securities issued on a blockchain network. The tokens themselves do not represent ownership interests in ETH, stablecoins, or other digital assets, nor do they constitute ownership interests in the aircraft engines.

 

The issuance of Eurus Aero Tokens did not result in the transfer or derecognition of the underlying aircraft engines or related lease receivables. Cash proceeds received from the token issuance are recorded separately from digital assets.

 

During the three months ended March 31, 2026, the Company did not make any cash distributions to Eurus Aero Token holders, and there was no accrued payable related to declared but unpaid distributions as of March 31, 2026.