10. PROPERTY AND EQUIPMENT, NET

At December 31, 2025 and 2024, property and equipment consisted of:

Summary of depreciation expense:

Impairment of Property and Equipment

During the year ended December 31, 2025, the Company evaluated its investment in certain oil and gas properties operated by third parties for impairment. The Company identified indicators of impairment, including (i) significantly lower-than-expected production and revenue generated from the underlying wells operated by third parties, (ii) a history of operating results that did not support recovery of the carrying value of the assets, and (iii) the Company’s determination not to commit additional capital to third-party operators to further develop these properties. Based on these factors, the Company performed a recoverability test by comparing the carrying amount of the asset group to its estimated undiscounted future cash flows. The Company concluded that the carrying amount of the oil and gas properties was not recoverable, as the expected undiscounted future cash flows were not sufficient to recover the carrying value. The Company then estimated the fair value of the asset group. Due to limited production, the absence of active market transactions for similar underperforming assets, and the Company’s decision not to provide additional funding to third-party operators to support further development of the underlying properties, the estimated fair value of the investment was determined to be negligible. Accordingly, the Company recorded an impairment charge of approximately $3.0 million during the year ended December 31, 2025 to write down the carrying value of this investment to zero. The impairment loss is included in impairment of property and equipment in the accompanying consolidated statements of operations.

During the year ended December 31, 2024, due to increases in the Bitcoin mining difficulty level, which compounded the continued impact of the Bitcoin halving event, we concluded that indicated that an impairment triggering event had occurred. Testing performed indicated the estimated fair value of the Company’s miners to be less than their net carrying value during the year ended December 31, 2024, and an impairment charge of $10.5 million was recognized, decreasing the net carrying value of the Company’s crypto assets mining equipment to their estimated fair value. The Company valued the miners using an income approach utilizing a discounted cash flow and a discount rate of 20%. The Company estimated the cash flow from the miners over a two-year period assuming a utilization rate of 98%, a mining difficulty level of 101.6 trillion, a Bitcoin price of $76,000 and a power cost of $0.055 per kilowatt-hour. The estimated fair value of the Company’s miners is classified in Level 3 of the fair value hierarchy with no observable inputs using a discounted cash flow methodology.

On April 30, 2024, the Company had a change in plan of sale for our four hotels owned and operated by AGREE. As a result, as of April 30, 2024, the assets no longer met the held for sale criteria and were required to be reclassified as held and used at the lower of adjusted carrying value or the fair value at the date of the determination not to sell. In connection with this change in plan of sale, the Company recorded a loss on impairment of property and equipment related to the real estate assets of AGREE of $9.2 million during the year ended December 31, 2024. The fair values of property and equipment related to the real estate assets of AGREE were based on a discounted cash flow income approach for the hotel properties and a comparable sales market approach for the vacant land assets. Assumptions used in the discounted cash flow analysis included discount rates between 10.5% and 10.75%, terminal capitalization rates between 8.5% and 8.75% and occupancy rates between 59.2% and 78.8%.

Sale of St. Petersburg Property

On December 13, 2024, AGREE completed the sale of its real property located in St. Petersburg, Florida (the “Florida Property”) for $13.0 million and recorded a gain on the sale of $0.2 million included in gain on the sale of fixed assets in the consolidated statement of operations.