Company: BTBT
Filing Date: 2025-08-14
Form Type: 10-Q
Source: 0001213900-25-076608
Chunk: 27

Company: Bit Digital, Inc
Filing Date: 2025-08-14
Form: 10-Q
Item: Item 1
Chunk 27
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 amortize the deferred contract costs on a straight-line basis over the expected
period of benefit. These amounts are included in the accompanying consolidated balance sheets, with the capitalized costs to be amortized
to commission expense over the expected period of benefit and commission expense payable included in Other current assets and Other long-term
liabilities.

The Company
capitalized lease expense incurred in December 2023 that are directly related to fulfilling its cloud services which commenced operations
in January 2024. The lease expense is directly related to fulfill customer contracts and is expected to be recovered. The capitalized
lease expense was reclassified as lease expense in January 2024.

Deferred Revenue

Deferred
revenue primarily pertains to prepayments received from customers for services that have not yet commenced as of June 30, 2025. Deferred
revenues are recognized as revenue recognition criteria have been met.

13

Remaining
performance obligation

Remaining
performance obligations represent the transaction price of contracts for work that have not yet been performed. The amount represents
estimated revenue expected to be recognized in the future related to the unsatisfied portion of the performance obligation.

Cost of revenue

The Company’s cost of revenue
consists primarily of (i) direct production costs related to mining operations, including electricity costs, profit-sharing fees/variable
performance fees and/or other relevant costs paid to our hosting facilities, (ii) direct production costs related to our cloud services,
including electricity costs, data center lease costs, and other relevant costs, (iii) direct production costs related to our colocation
services, including electricity costs, lease costs, data center employees’ wage expenses and other relevant costs, and (iv) direct
cost related to ETH staking business, including service fees payable to the service provider. 

Cost revenue excludes depreciation expenses, which
are separately stated in the Company’s consolidated statements of operations.

Foreign currency

Accounts expressed in foreign currencies are translated
into U.S. dollars. Functional currency assets and liabilities are translated into U.S. dollars generally using rates of exchange prevailing
at the balance sheet date of each respective subsidiary and the related translation adjustments are recorded as a separate component of
Accumulated other comprehensive income, net of any related taxes, in total shareholders’ equity. Income statement accounts expressed
in functional currencies are translated using average exchange rates during the period. Functional currencies are generally the currencies
of the local operating environment. Financial statement accounts expressed in currencies other than the functional currency of a consolidated
entity are remeasured into that entity’s