Note 3. Digital Assets and Fair Value Disclosures

ETH Digital Assets

The following table sets forth the units held, cost basis, and fair value of ETH digital assets held, as shown on the condensed consolidated balance sheet as of March 31, 2026 ($ in thousands):

Schedule of ETH Digital Assets

Cost basis is equal to the cost of the ETH digital assets net of any transaction fees, if any, at the time of purchase or upon receipt. Fair value represents the quoted ETH prices within the Company’s principal market at the time of measurement (5:00pm Eastern Time).

The following table represents a reconciliation of ETH digital assets held (in thousands):

Schedule of Reconciliation of ETH Digital Assets

During the three months ended March 31, 2026, the Company sold 10,050 ETH, which generated proceeds of approximately $22.0 million. Also during the three months ended March 31, 2026, the Company converted 9,395 ETH to staked ETH (“stETH”), which was subsequently converted to wstETH.

Digital Assets at Cost

The following table sets forth the tokens, cost basis, and carrying amount of digital assets held at cost, for wstETH specific activity, as shown on the condensed consolidated balance sheet as of March 31, 2026 ($ in thousands):

Schedule of WSETH Digital Assets

The following table represents a reconciliation of digital assets held at cost, for wstETH specific activity (in thousands):

Schedule of Reconciliation of ETH Digital Assets At Cost 

Fair Value Measurements

The Company determines fair value based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. The FASB has issued guidance that defines fair value as the exchange price that would be received for an asset (or paid to transfer a liability) in the principal, or most advantageous market in an orderly transaction between market participants. This guidance also establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The guidance categorizes assets and liabilities at fair value into one of three different levels depending on the observation of the inputs employed in the measurements, as follows:

The Company applies ASC 820 in the valuation of ETH held by the Company for financial statement purposes. The fair value of ETH uses Level 1 inputs to reflect the price that would be received for ETH in a current sale, which assumes an orderly transaction between market participants on the measurement date in the Company’s principal market, or in the absence of a principal market, the most advantageous market. Market participants are defined as buyers and sellers in the principal or most advantageous market that are independent, knowledgeable, and willing and able to transact. The Company determines its principal market (or in the absence of a principal market, the most advantageous market) on a periodic basis to determine which market is its principal market for the purpose of calculating fair value for the creation of quarterly and annual financial statements. Issuer-specific events, market trends, bid/ask quotes of brokers and information providers and other data may be reviewed in the course of making a good faith determination of the digital asset’s fair value.

Financial instruments measured, on a recurring basis, at fair value in accordance with the guidance promulgated by the FASB as of March 31, 2026 and December 31, 2025 are as follows (in thousands): 

Schedule of Financial Instruments Measured on Recurring Basis at Fair Value 

Digital intangible assets, at cost are measured at fair value on a nonrecurring basis. The carrying values for the wstETH digital assets carried at the lower of cost or impaired value was $17.2 million and $0 as of March 31, 2026 and December 31, 2025, respectively. For purposes of fair value disclosures and impairment testing, wrapped digital assets, such as wstETH, are classified within Level 2 of the fair value hierarchy, as the valuation is based on observable inputs other than quoted prices for identical assets in active markets.