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Fair Value Measurements | 9 Months Ended
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Sep. 30, 2023
Fair Value Disclosures [Abstract] |
Fair Value Measurements | (8) Fair Value Measurements Assets and Liabilities Measured at Fair Value on a Recurring Basis The Company did no t have any assets or liabilities measured at fair value on a recurring basis as of December 31, 2022. For the period-ended September 30, 2023, the fair value of the complex embedded derivative issued as a part of the PIPE Agreement was estimated using a Monte Carlo simulation to simulate potential changes in share price and the resulting impact on the amount of cash to be collected under the PIPE Agreement. The fair value of the embedded derivative was then determined by comparing (i) the best estimate of the cash to be collected at the valuation date using this simulation compared to (ii) the cash that would be collected under a hypothetical host contract that assumes the share price did not change since the date of initial recognition (both on a present value basis). The fair value is considered a level 2 fair value given the observability of the following inputs:
|  | September 30, 2023 |
Bitcoin Depot Inc. stock price at September 30, 2023 |  |  | 2.63 |
Term to the end of the 6th reference period (in years) |  |  | 0.41 |
Risk free rate |  |  | 5.46 | %
Equity volatility |  |  | 50 | %
Dividend yield |  |  | 0 | %
The fair value is determined to be a Level 2 fair value because there are no significant unobservable inputs. Level 2 fair values involve inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. In the case of the PIPE Financing embedded derivative fair value, the inputs are limited to share price, interest rates, and dividend yield, each of which are observable along with volatility, which is based on historical traded prices and implied volatility derived from the same historical data. Contingent Consideration The following table presents the changes in the estimated fair value of the contingent consideration liability measured using significant unobservable inputs (Level 3) (in thousands):
|  | Nine Months Ended September 30, 2023 |  |  | Year ended December 31, 2022 |
Balance, beginning of period |  | $ | 1,841 |  |  | $ | 2,879 |
Change in fair value during the period |  |  | 159 |  |  |  | 962 |
Payment made during the period |  |  | (2,000 | ) |  |  | (2,000 | )
Balance, end of period |  | $ | - |  |  | $ | 1,841 |
Contingent consideration related to the BitAccess acquisition in July 2021 was measured at the probability-weighted fair value at the date of acquisition, which was estimated by applying an income valuation approach based on Level 3 inputs consisting primarily of a discount rate and probability of achieving the performance metrics. During the year-ended December 31, 2022, the Company made the first year payment of $2.0 million to the former owners of BitAccess as the performance conditions were determined to have been met. In addition, the Company amended the contingent consideration arrangement to remove the performance conditions for the second year payment such that the full $2.0 million related to the second year payment would be paid out in accordance with the agreement on July 31, 2023. As such, there was no contingent consideration liability as of September 30, 2023. The change in fair value of the contingent consideration is recognized in interest expense in the consolidated Statements of Income (Loss) and Comprehensive Income (Loss) for the nine months ended September 30, 2023 and 2022. The difference between the recorded fair value of the payments and the ultimate payment amounts was not material to any period. In July 2023, in accordance with the BitAccess acquisition agreement, the Company paid $2.0 million to settle the remaining contingent consideration. Assets and Liabilities Measured at Fair Value on a Non-recurring Basis The Company’s non-financial assets, such as goodwill, intangible assets, property and equipment, operating lease right-of-use assets and cryptocurrencies are adjusted down to fair value when an impairment charge is recognized. Certain fair value measurements are based predominantly on Level 3 inputs. No impairment charges related to goodwill, intangible assets, operating lease right-of-use assets and property and equipment have been recognized for the nine months ended September 30, 2023 and 2022. Fair value of cryptocurrencies are based on Level 1 inputs. The carrying value of the Company’s cryptocurrency reflects any impairment charges recorded since its purchase or receipt. Assets and Liabilities Not Measured and Recorded at Fair Value The Company considers the carrying value of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses (excluding contingent consideration) in the consolidated financial statements to approximate fair value due to their short maturities. The Company estimates the fair value of its fixed-rated note payable based on quoted prices in markets that are not active, which is considered a Level 2 valuation input. As of September 30, 2023, the estimated fair value of the fixed-rated note was approximately $19.6 million and the carrying value was $18.7 million.

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- 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. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482106/820-10-50-2 + Details
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