Company: BTBT
Filing Date: 2025-03-14
Form Type: 10-K
Source: 0001013762-25-000307
Chunk: 1353

Company: Bit Digital, Inc
Filing Date: 2025-03-14
Form: 10-K
Item: Item 3
Chunk 1353
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 relate to accounts or disclosures that are material to the financial statements and (2) involved
our especially challenging, subjective, or complex judgments. The communication of the critical audit matters does not alter in any way
our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing
a separate opinion on the critical audit matters or on the accounts or disclosures to which they relate.

F-2

Revenue Recognition of Digital Asset Mining

As disclosed in Note 3 to the financial statements,
the Company’s ongoing major operation is entered into digital asset mining pools by executing contracts with the mining pool operators
to provide computing power to the mining pool.

We identified the procedures performed related
to revenue recognition as a critical audit matter due to the nature and extent of audit effort required to perform audit procedures over
the completeness and occurrence of revenue recognized.

The procedures we performed to address this critical
audit matter included the following:

●We performed site visits at the Company’s facilities
where the mining hardware is located, which included observations of the physical controls and mining equipment inventory.

●We independently traced certain financial and performance
data directly to the blockchain network to test the completeness, occurrence and accuracy of mining revenue as the operator.

●We independently confirmed with third-party mining pool operators
the significant contractual terms utilized in the determination of mining revenue, total mining rewards earned and the digital asset
wallet addresses in which the rewards are deposited to test the occurrence and accuracy of mining revenue as the participant.

●We confirmed the year-end digital asset balances directly
with the custodians of the Company’s wallets.

Goodwill valuation

As disclosed in Note 4 to the financial statements,
the Company completed an acquisition of an operational data center. The Company accounted for this transaction under the acquisition method
for business combinations. Accordingly, the purchase price was allocated to the assets acquired and liabilities assumed based on their
respective fair values, including identified property, plant and equipment, operating lease right-of-use assets and customer relationship
related intangible assets.

We identified goodwill valuation as a critical
audit matter because of the significant estimates and assumptions made by management in the process.

The procedures we performed to address this critical
audit matter included the following:

●We tested the effectiveness of controls over the fair value
estimate of the identifiable goodwill valuation, including management’s review of the valuation models, as well as the significant
assumptions used in the valuation models, such as future cash flows.

●With the assistance of fair value