Ionic Digital Inc.
For the period ended Sep 30, 2026. Filed Nov 12, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2026 · Filed Nov 12, 2026
IOND$59.84-7.4%Stored close · as of Nov 13, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-06-30; filed 2026-09-01.
0002007691-26-000012
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-09-30; filed 2026-11-12.
0002007691-26-000024
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 104 previous paragraphs and 106 current paragraphs.
58 unchanged; 38 reworded; 10 added; 5 removed; 3 previous and 0 current paragraphs rearranged.
Tables are not compared: 5 previous and 5 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (10)
Current report
On July 28, 2026, we completed the direct listing of our Class A common stock. Upon completion of the direct listing, all 7,547,166 outstanding shares of Series A Preferred Stock issued in our June 2026 private placement (the “Private Placement”) automatically converted into an equal number of shares of Class A common stock. See Note 13 to our condensed consolidated financial statements.
Current report
Depreciation and amortization
Current report
For the three months ended September 30, 2026, the Company recorded income tax expense (including discrete items) of $6.7 million, compared to an income tax benefit of $1.0 million for the three months ended September 30, 2025. Income tax expense for the two periods is not directly comparable because the prior-year quarter was determined using the estimated annual effective tax rate method, while the current-year quarter reflects the actual year-to-date effective tax rate method, under which the tax effects of items arising in the quarter are recognized in that quarter. The change in income tax expense was attributable to pre-tax income in the current-year quarter compared to a pre-tax loss in the prior-year quarter, and to permanent differences recognized in the current-year quarter, including the change in the fair value of warrants, non-deductible costs of the Company’s direct listing and Private Placement, and non-deductible officer compensation, partially offset by a decrease in the valuation allowance on the deferred tax asset for unrealized losses on cryptocurrency holdings as the fair value of bitcoin increased during the quarter.
Current report
Comparison of the nine months ended September 30, 2026 and 2025
Current report
Cost of mining revenues, exclusive of depreciation and amortization
Current report
Cost of digital infrastructure leasing revenues, exclusive of depreciation
Current report
Depreciation and amortization
Current report
Other expense, net
Current report
Warrants
Current report
The fair value of the warrant liability requires the use of significant estimates and assumptions. We engage a third-party valuation specialist to assist in determining the fair value of these instruments. The fair value of the warrants are estimated using the Black-Scholes model which has various significant unobservable inputs including expected volatility and contractual remaining term. When estimating expected volatility, management incorporates volatility of comparable public companies and the Company’s own volatility. Changes in the estimated fair values of the warrant liability may have a material impact on our results of operations in any given period, as any increases in these liabilities have a corresponding negative impact in our results of operations in the period in which the changes occur.
Removed paragraphs (5)
Previous report
On July 28, 2026, the Company completed our direct listing of the Company’s Class A Common Stock.
Previous report
Depreciation
Previous report
Comparison of the six months ended June 30, 2026 and 2025
Previous report
Depreciation
Previous report
Other income (expense), net
Reworded paragraphs (38)
Previous wording
Cryptocurrency mining revenue for the six months ended June 30, 2026 was $12.2 million compared to $78.3 million for the six months ended June 30, 2025. The $66.1 million, or 84.4%, decrease in cryptocurrency mining revenue was primarily due to a decline in the average price of bitcoin and a reduction in active miners resulting in a reduced average hash rate as compared to the prior period.
Current wording
Cryptocurrency mining revenue for the three months ended September 30, 2026 was $5.1 million compared to $37.1 million for the three months ended September 30, 2025. The $32.0 million, or 86.3%, decrease in cryptocurrency mining revenue was primarily due to a reduction in active miners resulting in a reduced average hash rate as compared to the prior period.
Previous wording
Digital infrastructure leasing revenue consists of revenue earned from leasing arrangements at our owned digital infrastructure site. For the three months ended June 30, 2026, we recognized $43.8 million digital infrastructure leasing revenue, representing the recognition of revenue associated with the Nscale Agreement.
Current wording
Digital infrastructure leasing revenue consists of revenue earned from leasing arrangements at our owned digital infrastructure site. For the three months ended September 30, 2026, we recognized $43.9 million digital infrastructure leasing revenue, representing the recognition of revenue associated with the Nscale Agreement.
Previous wording
Cost of mining revenues, exclusive of depreciation
Current wording
Cost of mining revenues, exclusive of depreciation and amortization
Previous wording
Cost of mining revenues, exclusive of depreciation, consists primarily of energy and labor costs to operate our owned and leased facilities and hosting fees to operate our hosted facilities. Electricity costs, which are a component of both owned, leased, and hosting costs of mining revenues, were and remain the most significant direct bitcoin mining expenditure. The price of electricity has historically been and may continue to be volatile.
Current wording
Cost of mining revenues, exclusive of depreciation and amortization, consists primarily of energy and labor costs to operate our owned and leased facilities and hosting fees to operate our hosted facilities. Electricity costs, which are a component of both owned, leased, and hosting costs of mining revenues, were and remain the most significant direct bitcoin mining expenditure. The price of electricity has historically been and may continue to be volatile.
Previous wording
For the three months ended June 30, 2026 the cost of mining revenues, exclusive of depreciation totaled $3.1 million compared with $22.3 million for the three months ended June 30, 2025. The cost of mining revenues, exclusive of deprecation decreased primarily due to the reduction in mining activities as compared to the prior period.
Current wording
For the three months ended September 30, 2026 the cost of mining revenues, exclusive of depreciation and amortization totaled $5.0 million compared with $26.6 million for the three months ended September 30, 2025. The cost of mining revenues, exclusive of depreciation and amortization decreased primarily due to the reduction in mining activities as compared to the prior period.
Previous wording
Cost of digital infrastructure leasing revenues
Current wording
Cost of digital infrastructure leasing revenues, exclusive of depreciation
Previous wording
Cost of digital infrastructure leasing revenue represents the costs incurred to decommission cryptocurrency mining operations at Ward County in preparation for occupation by the tenant in accordance with the Nscale Agreement, as well as amortization of the initial direct costs of the lease contract and costs to maintain the facilities that are largely passed through to the customer. For the three months ended June 30, 2026, Cost of digital infrastructure leasing revenue was $0.2 million. There were no Cost of digital infrastructure leasing revenue during the three months ended June 30, 2025.
Current wording
Cost of digital infrastructure leasing revenue, exclusive of depreciation represents the costs incurred to decommission cryptocurrency mining operations at Ward County in preparation for occupation by the tenant in accordance with the Nscale Agreement, as well as amortization of the initial direct costs of the lease contract and costs to maintain the facilities that are largely passed through to the customer. For the three months ended September 30, 2026, Cost of digital infrastructure leasing revenue was $0.2 million. There were no Cost of digital infrastructure leasing revenue during the three months ended September 30, 2025.
Previous wording
Depreciation expense for the three months ended June 30, 2026 totaled $4.9 million, compared with $16.9 million for the three months ended June 30, 2025. The decrease in depreciation expense of 71.0% for the three months ended June 30, 2026 was primarily attributable to the reduction of fixed assets as a result of decommissioning the cryptocurrency mining operations at Ward County during the fourth quarter of 2025 and the subsequent disposal of related assets, including a reduction in our mining fleet. In addition, as of December 31, 2025, the Company recorded an impairment of its fixed assets related to its remaining cryptocurrency mining operations.
Current wording
Depreciation and amortization expense for the three months ended September 30, 2026 totaled $4.5 million, compared with $17.2 million for the three months ended September 30, 2025. The decrease in depreciation expense of 74.0% for the three months ended September 30, 2026 was primarily attributable to the reduction of fixed assets as a result of decommissioning the cryptocurrency mining operations at Ward County during the fourth quarter of 2025 and the subsequent disposal of related assets, including a reduction in our mining fleet. In addition, as of December 31, 2025, the Company recorded an impairment of its fixed assets related to its remaining cryptocurrency mining operations.
Previous wording
G&A expenses consist of service fees, professional fees, insurance, compensation costs, storage expenses, and sales taxes. G&A expenses of $19.5 million for the three months ended June 30, 2026 represent an increase of 80.3% compared to $10.8 million for the three months ended June 30, 2025. The increase in G&A expenses is primarily due to higher stock-based compensation expense and higher headcount-related costs as we expanded our team to support the Company’s strategic transition to digital infrastructure solutions.
Current wording
G&A expenses consist of service fees, professional fees, insurance, compensation costs, storage expenses, and sales taxes. G&A expenses of $25.8 million for the three months ended September 30, 2026 represent an increase of $15.6 million compared to $10.1 million for the three months ended September 30, 2025. The increase in G&A expenses is primarily due to higher stock-based compensation expense, costs incurred related to the direct listing, and higher headcount-related costs as we expanded our team to support the Company’s strategic transition to digital infrastructure solutions.
Previous wording
We recorded a loss on the fair value of cryptocurrency for the three months ended June 30, 2026 totaling $28.2 million compared with a gain of $46.8 million for the three months ended June 30, 2025. This activity represents the change in fair value of bitcoin held by us between the time the bitcoin was mined and the fair value of bitcoin as of the respective period-end, and reflects the volatility in the price of a bitcoin.
Current wording
We recorded a gain on the fair value of cryptocurrency for the three months ended September 30, 2026 totaling $73.2 million compared with a gain of $6.4 million for the three months ended September 30, 2025. This activity represents the change in fair value of bitcoin held by us between the time the bitcoin was mined and the fair value of bitcoin as of the respective period-end, and reflects the volatility in the price of a bitcoin.
Previous wording
There was no realized gain on sale of cryptocurrency assets for the three months ended June 30, 2026 compared to a gain of $14.8 million for the three months ended June 30, 2025. This is a result of the Company not selling any cryptocurrency assets during the current period.
Current wording
There was no realized gain on sale of cryptocurrency assets for the three months ended September 30, 2026 compared to a gain of $11.2 million for the three months ended September 30, 2025. This is a result of the Company not selling any cryptocurrency assets during the current period.
Previous wording
Other income (expense) consists primarily of interest income, gains and losses related to litigation settlements, gains on investments, and realized and unrealized losses related to derivative contracts. Other income was $0.5 million for the six months ended June 30, 2026 compared to expense of $7.5 million for the six months ended June 30, 2025, with the difference of $8.0 million primarily driven by non-recurring gains in the prior period on a litigation settlement.
Current wording
Other income (expense) consists primarily of interest income and gains and losses related to the change in the fair value of warrant liabilities. Other expense was $62.6 million for the three months ended September 30, 2026 compared to income of $0.2 million for the three months ended September 30, 2025, with the difference of $62.8 million primarily driven by the loss on the change in the fair value of the warrant liability, partially offset by interest income.
Previous wording
During the second quarter of 2026, the Company changed its methodology for determining interim income tax expense from the estimated annual effective tax rate method to the year-to-date actual effective tax rate method, adjusted for discrete items recognized in the applicable interim period. The change was made because the Company determined it could no longer reliably estimate its annual effective tax rate due primarily to the volatility of bitcoin fair values and the resulting variability in its deferred tax position, together with significant uncertainty in forecasting annual pre-tax income. Additional information regarding this change is included in Note 14 to the condensed consolidated financial statements.
Current wording
Beginning in the second quarter of 2026, the Company changed its methodology for determining interim income tax expense from the estimated annual effective tax rate method to the year-to-date actual effective tax rate method, adjusted for discrete items recognized in the applicable interim period. The change was made because the Company determined it could no longer reliably estimate its annual effective tax rate due primarily to the volatility of bitcoin fair values and the resulting variability in its deferred tax position, together with significant uncertainty in forecasting annual pre-tax income. The Company continued to apply this methodology during the third quarter of 2026. Additional information regarding this change is included in Note 14 to the condensed consolidated financial statements.
Previous wording
The Company’s effective tax rate (including discrete items) was (29.2)% and 26.4% for the six months ended June 30, 2026 and 2025, respectively. The effective tax rate for the 2026 period differed from the U.S. federal statutory rate of 21% primarily due to the valuation allowance recorded against the deferred tax asset associated with unrealized losses on cryptocurrency holdings, as well as permanent differences related to non-deductible officer compensation and non-deductible stock issuance costs. Under ASU 2023-08, changes in the fair value of the Company's cryptocurrency holdings are recognized in earnings but are not taxable until disposition. Any resulting losses would be capital in character and available only to offset capital gains, which the Company does not currently expect to generate in sufficient amounts within the applicable carryforward period to realize the related deferred tax asset. These items resulted in the recognition of income tax expense despite the Company’s pre-tax losses for the period.
Current wording
The Company’s effective tax rate (including discrete items) was 27.7% and 18.9% for the three months ended September 30, 2026 and 2025, respectively. The effective tax rate for the 2026 period differed significantly from the U.S. federal statutory rate of 21% primarily due to permanent differences related to the change in the fair value of warrants, non-deductible costs of the Company’s direct listing and Private Placement, and non-deductible officer compensation, partially offset by a decrease of approximately $15.7 million in the valuation allowance on the deferred tax asset for unrealized losses on cryptocurrency holdings. See Note 14 to the condensed consolidated financial statements.
Previous wording
The following tables summarize the results of operations for the six months ended June 30, 2026 and 2025:
Current wording
The following tables summarize the results of operations for the nine months ended September 30, 2026 and 2025:
Previous wording
Cryptocurrency mining revenue for the three months ended June 30, 2026 was $4.8 million compared to $37.2 million for the three months ended June 30, 2025. The $32.4 million, or 87.1%, decrease in cryptocurrency mining revenue was primarily due to a decline in the average price of bitcoin and a reduction in active miners resulting in a reduced average hash rate as compared to the prior period.
Current wording
Cryptocurrency mining revenue for the nine months ended September 30, 2026 was $17.3 million compared to $115.4 million for the nine months ended September 30, 2025. The $98.1 million, or 85.0%, decrease in cryptocurrency mining revenue was primarily due to a decline in the average price of bitcoin and a reduction in active miners resulting in a reduced average hash rate as compared to the prior period.
Previous wording
Digital infrastructure leasing revenue consists of revenue earned from leasing arrangements at our owned digital infrastructure site. For the six months ended June 30, 2026 we recognized $87.9 million infrastructure leasing revenue, representing the recognition of revenue associated with the Nscale Agreement. There was no digital infrastructure leasing revenue during the six months ended June 30, 2025.
Current wording
Digital infrastructure leasing revenue consists of revenue earned from leasing arrangements at our owned digital infrastructure site. For the nine months ended September 30, 2026 we recognized $131.7 million infrastructure leasing revenue, representing the recognition of revenue associated with the Nscale Agreement. There was no digital infrastructure leasing revenue during the nine months ended September 30, 2025.
Previous wording
For the six months ended June 30, 2026 the cost of mining revenues, exclusive of depreciation totaled $8.7 million compared with $47.5 million for the six months ended June 30, 2025. The cost of mining revenues, exclusive of depreciation decreased primarily due to the reduction in mining activities as compared to the prior period.
Current wording
For the nine months ended September 30, 2026 the cost of mining revenues, exclusive of depreciation and amortization totaled $13.7 million compared with $74.0 million for the nine months ended September 30, 2025. The cost of mining revenues, exclusive of depreciation and amortization decreased primarily due to the reduction in mining activities as compared to the prior period.
Previous wording
Cost of digital infrastructure leasing revenue represents the costs incurred to decommission cryptocurrency mining operations at Ward County in preparation for occupation by the tenant in accordance with the Nscale Agreement, as well as amortization of the initial direct costs of the lease contract and costs to maintain the facilities that are largely passed through to the customer. For the six months ended June 30, 2026, Cost of digital infrastructure leasing revenue was $0.7 million. There were no Cost of digital infrastructure leasing revenue during the six months ended June 30, 2025.
Current wording
Cost of digital infrastructure leasing revenue, exclusive of depreciation represents the costs incurred to decommission cryptocurrency mining operations at Ward County in preparation for occupation by the tenant in accordance with the Nscale Agreement, as well as amortization of the initial direct costs of the lease contract and costs to maintain the facilities that are largely passed through to the customer. For the nine months ended September 30, 2026, Cost of digital infrastructure leasing revenue was $0.9 million. There were no Cost of digital infrastructure leasing revenue during the nine months ended September 30, 2025.
Previous wording
Depreciation expense for the six months ended June 30, 2026 totaled $10.5 million, compared with $33.4 million for the six months ended June 30, 2025. The decrease in depreciation expense of 68.6% for the six months ended June 30, 2026 was primarily attributable to the reduction of fixed assets as a result of decommissioning of cryptocurrency mining operations at Ward County during the fourth quarter of 2025 and the subsequent disposal of related assets, including a reduction in our mining fleet. In addition, as of December 31, 2025, the Company recorded an impairment of its fixed assets related to its remaining cryptocurrency mining operations.
Current wording
Depreciation and amortization expense for the nine months ended September 30, 2026 totaled $15.0 million, compared with $50.6 million for the nine months ended September 30, 2025. The decrease in depreciation expense of 70.4% for the nine months ended September 30, 2026 was primarily attributable to the reduction of fixed assets as a result of decommissioning of cryptocurrency mining operations at Ward County during the fourth quarter of 2025 and the subsequent disposal of related assets, including a reduction in our mining fleet. In addition, as of December 31, 2025, the Company recorded an impairment of its fixed assets related to its remaining cryptocurrency mining operations.
Previous wording
G&A expenses consist of service fees, professional fees, insurance, compensation costs, storage expenses, and sales taxes. G&A expenses of $35.7 million for the six months ended June 30, 2026 represent an increase of 99.4% compared to $17.9 million for the six months ended June 30, 2025. The increase in G&A expenses is primarily due to higher compensation costs and professional fees as compared to the prior period.
Current wording
G&A expenses consist of service fees, professional fees, insurance, compensation costs, storage expenses, and sales taxes. G&A expenses of $61.4 million for the nine months ended September 30, 2026 represent an increase of 119.4% compared to $28.0 million for the nine months ended September 30, 2025. The increase in G&A expenses is primarily due to higher compensation costs, additional costs related to the direct listing, private placement issuance costs, and professional fees, partially offset by a reduction in litigation costs as compared to the prior period.
Previous wording
We recorded a loss on the fair value of cryptocurrency for the six months ended June 30, 2026 totaling $81.5 million compared with a gain of $1.3 million for the six months ended June 30, 2025. This activity represents the change in fair value of bitcoin held by us between the time the bitcoin was mined and the fair value of bitcoin as of the respective period-end, and reflects the volatility in the price of a bitcoin.
Current wording
We recorded a loss on the fair value of cryptocurrency for the nine months ended September 30, 2026 totaling $8.4 million compared with a gain of $7.7 million for the nine months ended September 30, 2025. This activity represents the change in fair value of bitcoin held by us between the time the bitcoin was mined and the fair value of bitcoin as of the respective period-end, and reflects the volatility in the price of a bitcoin.
Previous wording
There was no realized gain on sale of cryptocurrency assets for the six months ended June 30, 2026 compared to a gain of $32.4 million for the six months ended June 30, 2025. This is a result of the company not selling any cryptocurrency assets during the current period.
Current wording
There was no realized gain on sale of cryptocurrency assets for the nine months ended September 30, 2026 compared to a gain of $43.6 million for the nine months ended September 30, 2025. This is a result of the Company not selling any cryptocurrency assets during the current period.
Previous wording
Other income (expense) consists primarily of interest income, gains and losses related to litigation settlements, gains on investments, and realized and unrealized losses related to derivative contracts. Other income was $0.2 million for the three months ended June 30, 2026 compared to expense of $7.9 million for the three months ended June 30, 2025, with the difference of $8.0 million primarily driven by non-recurring gains in the prior period on a litigation settlement.
Current wording
Other income (expense) consists primarily of interest income, losses related to litigation settlements, losses on the change in fair value of warrant liabilities, and realized losses related to derivative contracts. Other expense was $62.1 million for the nine months ended September 30, 2026 compared to expense of $7.3 million for the nine months ended September 30, 2025, with the difference of $54.8 million primarily driven by the loss on the change in the fair value of the warrant liability, partially offset by interest income.
Previous wording
During the second quarter of 2026, the Company changed its methodology for determining interim income tax expense from the estimated annual effective tax rate method to the year-to-date actual effective tax rate method, adjusted for discrete items recognized in the applicable interim period. The change was made because the Company determined it could no longer reliably estimate its annual effective tax rate due primarily to the volatility of bitcoin fair values and the resulting variability in its deferred tax position, together with significant uncertainty in forecasting annual pre-tax income. Additional information regarding this change is included in Note 14 to the condensed consolidated financial statements.
Current wording
Beginning in the second quarter of 2026, the Company changed its methodology for determining interim income tax expense from the estimated annual effective tax rate method to the year-to-date actual effective tax rate method, adjusted for discrete items recognized in the applicable interim period. The change was made because the Company determined it could no longer reliably estimate its annual effective tax rate due primarily to the volatility of bitcoin fair values and the resulting variability in its deferred tax position, together with significant uncertainty in forecasting annual pre-tax income. The Company continued to apply this methodology during the third quarter of 2026. Additional information regarding this change is included in Note 14 to the condensed consolidated financial statements.
Previous wording
For the three months ended June 30, 2026, the Company recorded income tax expense (including discrete items) of $27.2 million, compared to $8.8 million for the three months ended June 30, 2025. The increase in income tax expense was primarily attributable to deferred tax expense resulting from increases in the Company's valuation allowance, principally related to deferred tax assets associated with unrealized losses on cryptocurrency holdings.
Current wording
For the nine months ended September 30, 2026 and 2025, the Company recorded income tax expense (including discrete items) of $17.6 million and $0.3 million, respectively. The increase in income tax expense was primarily attributable to permanent differences between book and taxable income, including the change in the fair value of warrants, non-deductible costs of the Company’s direct listing and Private Placement, and non-deductible officer compensation, and, to a lesser extent, a net increase in the Company’s valuation allowances on deferred tax assets associated with unrealized losses on cryptocurrency holdings and state net operating loss carryforwards.
Previous wording
The Company’s effective tax rate (including discrete items) was (338.2)% and 21.6% for the three months ended June 30, 2026 and 2025, respectively. The effective tax rate for the 2026 period differed significantly from the U.S. federal statutory rate of 21% primarily due to the valuation allowance recorded against the deferred tax asset associated with unrealized losses on cryptocurrency holdings, as well as permanent differences related to non-deductible officer compensation and non-deductible stock issuance costs. Under ASU 2023-08, changes in the fair value of the Company's cryptocurrency holdings are recognized in earnings but are not taxable until disposition. Any resulting losses would be capital in character and available only to offset capital gains, which the Company does not currently expect to generate in sufficient amounts within the applicable carryforward period to realize the related deferred tax asset. These items resulted in the recognition of income tax expense despite the Company’s pre-tax losses for the quarter.
Current wording
The Company’s effective tax rate (including discrete items) was (132.4)% and (126.2)% for the nine months ended September 30, 2026 and 2025, respectively. The effective tax rate for the 2026 period differed significantly from the U.S. federal statutory rate of 21% primarily due to permanent differences related to the change in the fair value of warrants, non-deductible costs of the Company’s direct listing and Private Placement, and non-deductible officer compensation, as well as valuation allowances recorded against certain deferred tax assets. The valuation allowances reflect the Company's assessment of the realizability of its deferred tax assets, including limitations on the utilization of capital losses associated with cryptocurrency holdings and the Company’s expectation that it will not generate sufficient taxable income apportioned to the states in which its net operating loss carryforwards arose to realize them. These items contributed to the recognition of income tax expense despite the Company’s pre-tax losses for the period.
Previous wording
We define Adjusted gross profit as gross profit exclusive of depreciation. We rely on Adjusted gross profit to evaluate our business, measure our performance, and make strategic decisions. It is used by our Chief Operating Decision Maker (“CODM”) when making decisions regarding the allocation of resources to operating segments.
Current wording
We define Adjusted gross profit as gross profit exclusive of depreciation and amortization. We rely on Adjusted gross profit to evaluate our business, measure our performance, and make strategic decisions. It is used by our Chief Operating Decision Maker (“CODM”) when making decisions regarding the allocation of resources to operating segments.
Previous wording
We define Adjusted EBITDA as net income (loss) before interest, taxes, depreciation, and amortization, further adjusted for certain items that management believes are not indicative of core operating performance, including unrealized gains or losses on energy derivatives and other investments, one-time gains or losses on litigation settlements, stock-based compensation expense, impairment charges on intangible and long-lived assets, costs related to the decommissioning of cryptocurrency mining sites, and other such costs, as detailed in the table below. Additionally, as explained below, beginning with this Quarterly Report, we also adjust Adjusted EBITDA to exclude realized and unrealized gains and losses on digital assets.
Current wording
We define Adjusted EBITDA as net income (loss) before interest, taxes, depreciation, and amortization, further adjusted for certain items that management believes are not indicative of core operating performance, including unrealized gains or losses on energy and cryptocurrency derivatives and other investments, one-time gains or losses on litigation settlements, stock-based compensation expense, impairment charges on intangible and long-lived assets, costs related to the decommissioning of cryptocurrency mining sites, realized and unrealized gains and losses on digital assets, the change in fair value of warrant liability, and other such costs, as detailed in the table below.
Previous wording
We present Adjusted EBITDA because we believe it provides useful information to investors and analysts in assessing our historical financial performance. In particular, the exclusion of realized and unrealized gains and losses on digital assets beginning with this Quarterly Report allows investors to evaluate operating performance on a basis more consistent with management’s view of our core business, as we execute our strategic transition.
Current wording
We present Adjusted EBITDA because we believe it provides useful information to investors and analysts in assessing our historical financial performance. In particular, the exclusion of realized and unrealized gains and losses on digital assets and the change in warrant liability allows investors to evaluate operating performance on a basis more consistent with management’s view of our core business, as we execute our strategic transition.
Previous wording
As of June 30, 2026, the Company had on hand $415.7 million in cash and cash equivalents and 2,882 bitcoin valued at $168.7 million at that date. Our current obligations as of June 30, 2026 totaled $26.3 million and consisted primarily of accrued expenses including transaction costs related to the Private Placement. The Company had no outstanding borrowings as of June 30, 2026.
Current wording
As of September 30, 2026, the Company had on hand $381.4 million in cash and cash equivalents and 2,954 bitcoin valued at $246.9 million at that date. Our current obligations as of September 30, 2026 totaled $17.5 million and consisted primarily of accrued expenses and accrued capital expenditures. The Company had no outstanding borrowings as of September 30, 2026.
Previous wording
We anticipate having sufficient liquidity on hand for the next twelve months from the Private Placement and revenue generated and the sale of accumulated bitcoin to fund operations, the estimated $64 million in capital expenditures ($45 million in 2026 and the remainder in 2027) to upgrade the substation in Ward County, as well as to pursue strategic opportunities. Our ability to liquidate bitcoin earned at future values will be regularly evaluated to generate cash for operations.
Current wording
We anticipate having sufficient liquidity on hand for the next twelve months from the net proceeds of the Private Placement, cash generated from the Nscale Agreement,and the sale of accumulated bitcoin to fund operations, the estimated $64 million in capital expenditures ($45 million in 2026 and the remainder in 2027) to upgrade the substation in Ward County, as well as to pursue strategic opportunities. Our ability to liquidate bitcoin earned at future values will be regularly evaluated to generate cash for operations.
Previous wording
We incurred no debt during the six months ended June 30, 2026 or for the year ended December 31, 2025, and we seek to optimize our balance sheet, operations, and liquidity position to meet our immediate cash flow requirements, and will evaluate leveraging opportunities to meet expansion opportunities over the next twelve months.
Current wording
We incurred no debt during the nine months ended September 30, 2026 or for the year ended December 31, 2025, and we seek to optimize our balance sheet, operations, and liquidity position to meet our immediate cash flow requirements, and will evaluate leveraging opportunities to meet expansion opportunities over the next twelve months.
Previous wording
For the six months ended June 30, 2026 and 2025 we had a net increase in cash and cash equivalents of $372.2 million and net decrease of $11.1 million, respectively. The following table summarizes our cash flow activity for the periods presented:
Current wording
For the nine months ended September 30, 2026 and 2025 we had a net increase in cash and cash equivalents of $337.9 million and net decrease of $25.3 million, respectively. The following table summarizes our cash flow activity for the periods presented:
Previous wording
Net cash used in operating activities results from payments made to operate the mining business, particularly to hosting and energy providers, as well as tax payments, general and administrative expenses, and repairs and maintenance to mining equipment. Historically, these expenses are not offset by our revenues, as consideration from the mining pool operator is received in bitcoin rather than cash. The $25.9 million net cash used in operating activities during the six months ended June 30, 2026, represents a net loss of $48.3 million adjusted for non-cash items including cryptocurrency mining revenue received in bitcoin, depreciation of our miners and other long-lived assets placed in service, change in the fair value of bitcoin held in treasury, an increase in the deferred tax expense, and stock compensation expense. Other material changes to our use of cash in operating activities during the six months ended June 30, 2026 include a decrease in deferred revenue resulting from the recognition of digital infrastructure solutions revenue at our Ward County facility. See “Results of Operations” for further information about the modifications to our business strategy that are driving these non-cash impacts.
Current wording
Net cash used in operating activities results from payments made to operate the mining business, particularly to hosting and energy providers, as well as tax payments, general and administrative expenses, and repairs and maintenance to mining equipment. Historically, these expenses are not offset by our revenues, as consideration from the mining pool operator is received in bitcoin rather than cash. The $36.8 million net cash used in operating activities during the nine months ended September 30, 2026, represents a net loss of $30.9 million adjusted for non-cash items including cryptocurrency mining revenue received in bitcoin, depreciation of our miners and other long-lived assets placed in service, change in the fair value of bitcoin held in treasury, change in the fair value of warrant liabilities, an increase in the deferred income taxes, and stock compensation expense. Other material changes to our use of cash in operating activities during the nine months ended September 30, 2026 include a decrease in deferred revenue resulting from the recognition of digital infrastructure solutions revenue at our Ward County facility and an increase in deferred rent receivable resulting from the straight-line recognition of lease revenue under the Nscale Agreement. See “Results of Operations” for further information about the modifications to our business strategy that are driving these non-cash impacts.
Previous wording
During the six months ended June 30, 2026, the Company used $1.8 million for investing activities, primarily for purchases of property and equipment, partially offset by proceeds from the disposal of assets held for sale.
Current wording
During the nine months ended September 30, 2026, the Company used $8.6 million for investing activities, primarily for purchases of property and equipment, partially offset by proceeds from the disposal of assets held for sale.
Previous wording
For the six months ended June 30, 2026, the Company’s net cash from financing activities was a result of $400 million proceeds from the Private Placement.
Current wording
For the nine months ended September 30, 2026, the Company’s net cash from financing activities was a result of $383.3 million net proceeds from the Private Placement, which closed on June 30, 2026.
Previous wording
Our critical accounting policies and estimates are described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Prospectus. We believe there have been no new critical accounting policies or material changes to our existing critical accounting policies and estimates compared to those discussed in our registration statement.
Current wording
Our critical accounting policies and estimates are described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Prospectus. We believe there has been a new critical accounting estimate compared to those discussed in our registration statement.
Rearranged previous paragraphs (3)
Previous report — wording carried elsewhere
Cost of mining revenues, exclusive of depreciation
Previous report — wording carried elsewhere
Cost of digital infrastructure leasing revenues
Previous report — wording carried elsewhere
For the six months ended June 30, 2026 and 2025, the Company recorded income tax expense (including discrete items) of $10.9 million and $1.4 million, respectively. The increase in income tax expense was primarily attributable to deferred tax expense resulting from increases in the Company's valuation allowance, principally related to deferred tax assets associated with unrealized losses on cryptocurrency holdings.