Company: BTBT
Filing Date: 2025-05-15
Form Type: 10-Q
Source: 0001213900-25-044155
Chunk: 44

Company: Bit Digital, Inc
Filing Date: 2025-05-15
Form: 10-Q
Item: Item 1
Chunk 44
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 $1 million as an investment in the SAFE on the Consolidated Balance Sheets. Additionally, per the terms of the SAFE arrangement, the
Company may be obligated to invest up to an additional $2 million into the SAFE arrangement if Canopy satisfies certain milestones prior
to the expiration of the SAFE, or if an equity financing event occurs.

The Company accounted for this investment under
ASC 320, Investments - Debt Securities and elected the fair value option for the SAFE investment pursuant to ASC 825, Financial
Instruments, which requires financial instruments to be remeasured to fair value each reporting period, with changes in fair value
recorded in the consolidated statements of operations. The fair value estimate includes significant inputs not observable in the market,
which represents a Level 3 measurement within the fair value hierarchy. The decision to elect the fair value option is determined on an
instrument-by-instrument basis on the date the instrument is initially recognized, is applied to the entire instrument, and is irrevocable
once elected. For instruments measured at fair value, embedded conversion or other features are not required to be separated from the
host instrument. Issuance costs related to convertible securities carried at fair value are not deferred and are recognized as incurred
on the Consolidated Statements of Operations. For the three months ended March 31, 2025, the Company did not record upward adjustments
or downward adjustments on the investment.

(g) Investment in AI Innovation Fund I (“AI fund”)

On July 15, 2024, the Company entered into a subscription
agreement with Pleasanton Ventures Innovation Master Fund SPC Limited for investment of $15.9 million in its AI Innovation Fund I. The
investment includes a direct investment into private equity and fund of fund opportunities within the AI industry.

As a practical expedient, the Company uses Net
Asset Value (“NAV”) or its equivalent to measure the fair value of the investment in the fund. For the three months ended
March 31, 2025, the Company recorded cumulative downward adjustments of $75,000 on the investment. 

(h) Investment in Innovation Fund I (“Innovation fund”)

After the Company disposed its BVI entities for
its previous fund operation (See Note 21, Disposition of Bit Digital Investment Management Limited and Bit Digital Innovation Master Fund
Spc Limited, for more information), the Company no longer consolidates the investment in the fund. As a practical expedient, the Company
uses Net Asset Value (“NAV”) or its equivalent