QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
−Removed: following discussion about our market risk exposures involves forward-looking statements.
−Removed: Actual results could differ materially from
−Removed: those projected in the forward-looking statements.
−Removed: Price Risk of Bitcoin.
−Removed: The Company holds a significant amount of bitcoin and as such, we are exposed to the impact of market
−Removed: price changes in bitcoin on our bitcoin holdings.
+Added: The following discu ssion about our mar ket risk exposures involves forward-looking statements.
+Added: Actual results could differ materially from those projected in the forward-looking statements.
+Added: Market Price Risk of Bitcoin.
+Added: We hold a significant amount of bitcoin, as such, we are exposed to the impact of market price changes in bitcoin on its bitcoin holdings.
This exposure would generally manifest itself in the following areas:
−Removed: account for our bitcoin holdings as indefinite lived intangible assets and we record impairment charges whenever the carrying value
−Removed: of our bitcoin holdings on the balance sheet exceeds their fair market value.
−Removed: Subsequent recovery of bitcoin prices would not impact
−Removed: the carrying value of bitcoin on the balance sheet, as recovery of previously recorded impairment charges are not allowed under US
−Removed: in the fair market value of bitcoin also impact the value of collateral for our loan facilities.
−Removed: If the fair market value of bitcoin
−Removed: held as collateral declines such that the loan-to-value ratio is above 75%, the Company is required to add collateral to bring the
−Removed: ratio back to 65%.
−Removed: If the value of the collateral increases such that the loan-to-value ratios falls below 65%, the Company can require
−Removed: a return of collateral to bring the ratio back to 65%.
−Removed: in the fair market value of bitcoin also impact the Adjusted Net Worth covenant in our loan agreements, as this covenant allows for
−Removed: Net Worth to be calculated based in the fair market value (and not the carrying value) of our digital assets.
−Removed: in the fair market value of bitcoin also impact the cash value that would be realized if we were to sell our bitcoin for cash, therefore
−Removed: having a negative impact on our liquidity.
−Removed: December 31, 2022, the Company held approximately 12,232 bitcoin and the fair value of a single bitcoin was approximately $16,545, meaning
−Removed: that the fair value of our bitcoin holdings on that date was approximately $202,409 thousand .
−Removed: Approximately 4,417 of these bitcoin, or $73,100 thousand, were being utilized as collateral
−Removed: for borrowings.
−Removed: The remaining 7,815 bitcoin, or $129,300 thousand, were unrestricted bitcoin
−Removed: Prior to the termination of its credit facilities on March 8, 2023, the Company was exposed to interest rate risk
−Removed: as both our Term Loan and RLOC facilities called for interest at a variable rate tied to the Wall Street Journal Prime Rate (“WSJ
−Removed: Prime”), which was 7.75% as of March 8, 2023.
−Removed: Our Term Loan facility called for interest rates at the WSJ Prime rate plus a margin
−Removed: of 1.75% or 9.50% as of March 8, 2023.
−Removed: Our RLOC facility called for interest rates at the WSJ Prime rate plus a margin that varies based
−Removed: on the collateral posted as follows:
−Removed: margin (9.00% currently) if the RLOC LTV Ratio is less than 40%
−Removed: margin (9.75% currently) if the RLOC LTV Ratio is greater than 40% but less than 55%
−Removed: margin (10.50% currently) if the RLOC LTV Ratio is greater than 55%
+Added: • Declines in the fair market value of bitcoin will impact the cash value that would be realized if we were to sell our bitcoin for cash, therefore having a negative impact on our liquidity.
+Added: • We occasionally enter into derivative financial instruments to manage our exposure resulting from fluctuations in the price of bitcoin.
+Added: At December 31, 2023, we held approximately 15,126 bitcoin and the fair value of a single bitcoin was approximately $42,288, meaning that the fair value of our bitcoin holdings on that date was approximately $639.7 million.
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.