Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Market price risk of digital assets
A large portion of our revenue generated from API providers is received in Bitcoin. A decline in the market price of digital
assets had (and could in the future, have) an adverse effect on the Company's operations, the value of our digital assets, and
our future operations and cash flows.
The market price of Bitcoin is impacted by a variety of factors and is determined primarily using data from various
exchanges, over-the-counter markets and derivative platforms. The digital asset industry has been negatively impacted by
market price volatility. Pricing may be the result of, and may continue to result in, speculation regarding future
appreciation in the value of Bitcoin. There can be no assurance that we will be able to exchange our digital assets for U.S.
dollars on a timely basis, if at all, or for a fair price. If the value of our digital assets decline, or if we experience difficulties
converting our digital assets to U.S. dollars, we may not have sufficient liquidity to satisfy our liabilities, expenses and
costs as they become due, which may negatively affect our business operations and financial condition. A hypothetical
10% increase or decrease in the digital assets held would have resulted in a change to the fair value of $15.6 million and
$19.6 million as of December 31, 2025 and 2024 , respectively.
I n terest rate risk
The Company is exposed to interest rate risk primarily through its notes receivable, which bears interest at a fixed rate. Due
to the interest rate on the notes receivable being fixed, changes in market interest rates do not affect the amount of interest
income earned over the life of the receivable. However, fluctuations in market interest rates may affect the fair value of the
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receivable. The Company does not currently use derivative financial instruments to manage interest rate risk related to this
receivable.
Additionally, the Company's exposure to changes in interest rates primarily relates to interest earned on our cash and cash
equivalents and U.S. Treasury bills with maturities of six months or less . We had no outstanding debt or U.S. Treasury bills
subject to interest rate risk as of December 31, 2025 , and consequently, we do not currently expect to be exposed to
fluctuations in interest rates for the foreseeable future.
Our investment policy and strategy related to our cash, cash equivalents, and treasury bills is to preserve capital and meet
liquidity requirements without increasing risk. Our cash and cash equivalents consist of money market funds denominated
in U.S. dollars, cash deposits, and treasury bills acquired with less than three months to maturity. Treasury bills outside of
cash and cash equivalents include amounts acquired with three months to twelve months to maturity. Therefore, the fair
value of our cash, cash equivalents, and treasury bills would not be significantly affected by either an increase or a decrease
in interest rates. A hypothetical 100 basis points increase or decrease in average interest rates applied to our daily balances
held as of December 31, 2025 would not have resulted in material impact on our financial results, whereas the same change
applied to our daily balances held as of December 31, 2024, would have resulted in a $0.7 million increase or decrease,
respectively, in interest earned on cash, cash equivalents, and treasury bills.
Foreign currency risk
Foreign currency transaction risk
Revenues, expenses, and financial results of our foreign subsidiaries are recorded in the functional currency of these
subsidiaries. Our foreign currency exposure is primarily related to transactions denominated in Swiss Francs attributable to
cash and cash equivalents, and other intercompany transactions where the transaction currency is different from a
subsidiary’s functional currency. Changes in foreign exchange rates, and in particular a weakening of foreign currencies
relative to the U.S. dollar may negatively affect our results of operations as expressed in U.S. dollars. We have experienced
and will continue to experience fluctuations in our results of operations as a result of gains or losses on the settlement and
the remeasurement of monetary assets and liabilities denominated in foreign currencies that are not the functional currency.
We recognized net foreign currency gains of $1.9 million and losses of $1.1 million for the years ended December 31, 2025
and 2024 , respectively, in general and administrative expense in the consolidated statements of operations and
comprehensive (loss) income. If an adverse 10% foreign currency exchange rate change was applied to total monetary
assets, liabilities, and commitments denominated in currencies other than the functional currencies at the balance sheet
date, it would not have resulted in a material impact on our financial results.
We have not but may in the future enter into derivatives or other financial instruments in an attempt to hedge our exposure
to foreign currency exchange risk. It is difficult to predict the impact hedging activities would have on our results of
operations. Additionally, the volatility of exchange rates depends on many factors that we cannot forecast with reliable
accuracy. Our international operations increase our exposure to exchange rate fluctuations and, as a result, such
fluctuations could have a material impact on our future results of operations and cash flows.
Foreign currency translation risk
Fluctuations in functional currencies from our net investment in international subsidiaries expose us to foreign currency
translation risk, where changes in foreign currency exchange rates may adversely affect our results of operations upon
translation into U.S. dollars. We recognized losses on translation adjustments, net of tax, of $1.4 million for the year ended
December 31, 2025 , compared to gains on translation adjustments, net of tax, of $0.7 million for the year ended
December 31, 2024 , in the consolidated statements of operations and comprehensive (loss) income. As of December 31,
2025 and 2024 , a 10% increase or decrease on foreign currency exchange rates for translation purposes would not have
resulted in a material impact on our financial results.
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PART II—OTHER INFORMATION