Company: BTBT
Filing Date: 2025-11-14
Form Type: 10-Q
Source: 0001213900-25-110383
Chunk: 23

Company: Bit Digital, Inc
Filing Date: 2025-11-14
Form: 10-Q
Item: Item 1
Chunk 23
---
 and other current assets, useful lives of property, plant, and equipment, impairment of long-lived assets,
intangible assets and goodwill, valuation of assets and liabilities acquired in business combinations, provision necessary for contingent
liabilities and realization of deferred tax assets. Actual results could differ from those estimates.

We
review the useful lives of equipment on an 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 the third quarter of 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 $1.9 million,
or $0.01 per basic share and $0.01 per diluted share. The effect of this change in estimate for the nine months ended September 30, 2025,
was a reduction in depreciation and amortization expense of $7.5 million and a benefit to net income of $5.9 million, or $0.03 per basic
share and $0.03 per diluted share.

9

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