Company: BTBT
Filing Date: 2025-05-15
Form Type: 10-Q
Source: 0001213900-25-044155
Chunk: 13

Company: Bit Digital, Inc
Filing Date: 2025-05-15
Form: 10-Q
Item: Item 1
Chunk 13
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ongoing basis, and effective January 1, 2025 we changed our estimate of the useful lives for our cloud service equipment from three to
five years. The change was made to better reflect the expected usage patterns and economic benefits of the assets. The effect of this
change in estimate for Q1 2025, based on cloud service equipment that were included in “Property, plant and equipment, net”
as of December 31, 2024 and those acquired during the three months ended March 31, 2025, was a reduction in depreciation and amortization
expense of $2.5 million and a benefit to net income of $2.0 million, or $0.01 per basic share and $0.01 per diluted share.

6

Fair value of financial instruments

ASC 825-10 requires certain disclosures regarding
the fair value of financial instruments. Fair value is defined as the price that would be received to sell an asset or paid to transfer
a liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy prioritizes
the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of
unobservable inputs. The three levels of inputs used to measure fair value are as follows:

    ●
    Level 1 - inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

    ●
    Level 2 - inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted market prices for identical or similar assets in markets that are not active, inputs other than quoted prices that are observable and inputs derived from or corroborated by observable market data.

    ●
    Level 3 - inputs to the valuation methodology are unobservable.

Fair value of digital assets is based on Level
1 inputs as these were based on observable quoted prices in the Company’s principal market for identical assets. The fair value
of the Company’s other financial instruments, including cash and cash equivalents, restricted cash, loans receivable, deposits,
accounts receivable, other receivables, accounts payable, and other payables, approximate their fair values because of the short-term
nature of these assets and liabilities. Non-financial assets, such as goodwill, intangible assets, operating lease right-of-use assets,
and property, plant and equipment, are adjusted to fair value when there is an indication of impairment and the carrying amount exceeds
the asset’s