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):

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

During the six months ended June 30, 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 six months ended June 30, 2026, the Company recognized cumulative realized losses of $124.6 million and unrealized gains of $111.8 million related to digital asset transactions. During the three months ended Jeun 30, 2026, the Company recognized unrealized losses of $6.4 million.

As of June 30, 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 six months ended June 30, 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 $132.4 million was reclassified to digital assets. The Company recognized staking revenue of $0.3 million during the six months ended June 30, 2026, respectively.

As of June 30, 2026, the Company had no remaining staking receivable or associated embedded derivative, as the liquid staking position was closed during the six months ended June 30, 2026. 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 the fair value of the embedded derivative liability was $81.3 million, 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 six months ended June 30, 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 $82.6 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 six months ended June 30, 2026, the Company recognized realized losses of $10.5 million and unrealized gains of $0.5 million related to these instruments. During the three months ended June 30, 2026, the Company recognized realized gains of $1.9 million and unrealized losses of $1.3 million.

Collateral posted in connection with derivative instruments may be returned upon settlement or early termination of the related contracts. During the six months ended June 30, 2026, certain derivative instruments were settled or early terminated and related collateral was returned. As of June 30, 2026, the Company had one open derivative asset position with a fair value of $0.1 million. In connection with these derivative instruments, the Company was required to post cash collateral of $2.1 million. The net balance of $2.2 million, representing cash collateral posted in excess of the related derivative asset, was included in “Prepaid expenses and other current assets” on the Condensed Consolidated Balance Sheets as of June 30, 2026.

As of June 30, 2026, the Company had one open ETH call option contracts with an aggregate notional quantity of 12,000 ETH, all with an expiration date of December 25, 2026, and a strike price of $3,900. 

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 June 30, 2026, the Company had received gross proceeds of $10.0 thousand 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 six months ended June 30, 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 June 30, 2026.