Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item
3. Quantitative and Qualitative Disclosures About Market Risk.
The
following discussion about the Company’s market risk exposures involves forward-looking statements. Actual results could differ materially from
those discussed in the forward-looking statements.
Market
Price Risk of Bitcoin. The Company holds a significant amount of bitcoin; therefore, it is exposed to the impact of market price
changes in bitcoin on its bitcoin holdings. This exposure would generally manifest itself in the following areas:
● The
Company accounts for its bitcoin holdings as indefinite lived intangible assets and records
impairment charges whenever the carrying value of bitcoin holdings on the balance sheet exceeds
their fair market value. Subsequent recovery of bitcoin prices would not impact the carrying
value of bitcoin on the balance sheet, as recovery of previously recorded impairment charges
are not allowed under current U.S. GAAP.
● Declines
in the fair market value of bitcoin will impact the cash value that would be realized if
the Company were to sell its bitcoin for cash, therefore having a negative impact on its
liquidity.
At
September 30, 2023, the Company held approximately 13,716 bitcoin and the fair value of a single bitcoin was approximately $26,961, meaning
that the fair value of its bitcoin holdings on that date was approximately $369,797.
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