Financial Analysis

COMMITMENTS AND CONTINGENCIES Commitments Purchase agreements In April 2026, the Company entered into a binding agreement to purchase transformers to expand its substation at the Ward County site for approximately $15.0 million. As of June 30, 2026, there was approximately $9.6 million remaining under the commitment. The Company expects to fund the commitment using available cash. Subsequent to June 30, 2026, the Company entered into an additional $14.7 million commitment for construction and materials to modify and expand the same substation, which will also be funded using available cash. Contingencies The Company is subject to legal proceedings arising in the ordinary course of business, including matters involving governmental agencies or regulators, entities with whom we do business, actions by our stockholders and other proceedings, whether arising in the ordinary course of business or otherwise. These actions may seek, among other things, breach of contract, property damage, punitive damages, civil penalties or other losses, or injunctive or declaratory relief. The Company accrues losses for a legal proceeding when it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. However, the uncertainties inherent in legal proceedings make it difficult to reasonably estimate the costs and effects of resolving these matters. Accordingly, actual costs incurred may differ materially from amounts accrued and could materially adversely af …

CommitmentsAndContingenciesDisclosureTextBlock · excerpt; the full note is in the filing

FAIR VALUE The following table presents the Companys financial instruments that are measured and recorded at fair value on a recurring basis, and their level within the fair value hierarchy ( in thousands ): Fair value as of June 30, 2026 Total carrying value Level 1 Level 2 Level 3 Cash and cash equivalents money market funds $ 12,791 $ 12,791 $ $ Cryptocurrency assets $ 168,680 $ 168,680 $ $ Warrants $ 34,061 $ $ $ 34,061 Fair value as of December 31, 2025 Total carrying value Level 1 Level 2 Level 3 Cash and cash equivalents - money market funds $ 42,135 $ 42,135 $ $ Cryptocurrency assets $ 237,947 $ 237,947 $ $ The carrying amounts of financial assets and liabilities, such as cash and cash equivalents, accounts receivable, and accounts payable, approximate fair value due to the short-term nature of these instruments. There were no transfers in or out of levels during the six months ended June 30, 2026 and 2025. Gains and losses for such assets and liabilities categorized within the Level 3 table set forth may include changes in fair value that are attributable to both observable inputs (Levels 1 and 2) and unobservable inputs (Level 3). Changes in the estimated fair value of Level 3 financial assets and liabilities that are measured on a recurring basis are as follows (in thousands) : Warrants Balance as of January 1, 2026 $ Additions 34,061 Balance as of June 30, 2026 34,061 The Company valued the Warrants (as defined below) at issuance using a Black-Scholes model based …

FairValueDisclosuresTextBlock · excerpt; the full note is in the filing

INCOME TAXES Income Tax in Interim Periods The Company records its income tax expense or benefit for interim periods using the actual effective tax rate applicable to the year-to-date results, adjusted for discrete items recognized in the impacted interim period, rather than an estimated annual effective tax rate. This approach differs from prior periods, in which the Company applied an estimated annual effective tax rate in accordance with ASC 740-270. The change was made because the Company determined it can no longer reliably estimate its annual effective tax rate, primarily due to the volatility of bitcoin fair values and the resulting variability in the Companys deferred tax position, as well as a high degree of uncertainty in estimating annual pre-tax income. ASC 740-270 provides that the actual year-to-date effective tax rate may be used when application of the estimated annual effective tax rate is impractical because a reliable estimate of the annual effective tax rate cannot be made. The Company believes, at this time, the use of the year-to-date actual effective tax rate approach is more appropriate than the estimated annual effective tax rate method. For the three and six months ended June 30, 2026, the Company recorded income tax expense (including discrete items) of $27.2 million and $10.9 million, respectively. For the three and six months ended June 30, 2025, the Company recorded income tax expense (including discrete items) of $8.8 million and $1.4 million, r …

IncomeTaxDisclosureTextBlock · excerpt; the full note is in the filing

LEASES Lessor Arrangements: Digital Infrastructure Leasing Revenue On October 14, 2025, the Company entered into a leasing arrangement to provide digital infrastructure solutions to a single tenant at its Ward County facility which is accounted for under ASC 842. The lease commencement date for accounting purposes is December 19, 2025, and the lease term extends through January 2037. The lessee has one ten-year option to renew, as well as a right of first refusal on any additional power capacity that becomes available at our Ward County site. In February 2026, the Company reached an agreement to amend the lease of its Ward County facility. The amended agreement obligates the tenant to lease an additional 89 MW of capacity when such capacity becomes available, and requires the Company to add the tenant as a qualified occupant for Texas data center tax incentive purposes. The Company is the lessor in this arrangement and identifies the right of the customer to use the land, land improvements, buildings, and equipment as a lease component of the contract. The amendment represents a separate contract under ASC 842, as the assets leased will be in addition to those covered in the original agreement. Control of the assets leased per the amendment has not yet transferred to the tenant; as such, no revenue has been recognized. In both agreements, the Company has a stand-ready obligation to provide maintenance services to ensure the energy step-down transformation assets are operating …

LesseeOperatingLeasesTextBlock · excerpt; the full note is in the filing

BUSINESS SEGMENT DATA Selected financial and descriptive information is provided about reportable operating segments, considering a management approach concept as the basis for identifying reportable segments. The management approach is based on the way that management organizes the segments within the Company for making operating decisions, allocating resources, and assessing performance. Consequently, the segments are evident from the structure of the Companys internal organization, focusing on financial information that the Companys Chief Executive Officer (CEO), who is the Chief Operating Decision Maker (CODM), uses to make decisions about the Companys operating matters. With the execution of the agreement to lease the Ward County facility, the CODM began considering resource allocations and investments in Company operations separately between the historical cryptocurrency mining business and the prospects of leasing the Companys powered land and assets for use in the high-powered computing and artificial intelligence sectors. As such, the Company has determined it has two reportable segments: Cryptocurrency Mining and Digital Infrastructure Solutions. Each are individually managed and provide separate services. Revenues by segment represent revenues earned from the services offered within each segment. The Company does not report results by geographic region, as all of its operations are domestic. All revenues are generated through external customers, and the accounting …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing

STOCK-BASED COMPENSATION On January 31, 2024, the Company adopted the Ionic Digital Inc. Omnibus Incentive Plan (the Omnibus Plan), pursuant to which it may grant equity and equity-based incentive awards (including non-statutory and incentive stock options, stock appreciation rights, restricted stocks, restricted stock units, performance awards, other stock-based awards and cash awards) to eligible employees, consultants, individual contractors and other service providers. The number of shares of Common Stock available under the plan is initially limited to 4,317,960 shares. The share limit automatically increases by 4% on all shares outstanding on January 1 of each calendar year beginning in 2025, unless a smaller number of shares is determined by the Board of Directors. As of June 30, 2026, the Company has reserved approximately 5,551,944 shares (subject to an evergreen) for future awards under the Omnibus Plan . Restricted Stock Units During the three and six months ended June 30, 2026, the Company granted stock-based awards in the form of RSUs under the Omnibus Plan, which vest over a five-year period in equal installments, with one-fifth vesting on each of the first five anniversaries of the grant. These awards are classified as equity awards and are measured at fair value on the grant date. Compensation cost related to the RSUs is recognized on a straight-line basis over the applicable service periods and is recorded within general and administrative expenses, with a co …

StockholdersEquityNoteDisclosureTextBlock · excerpt; the full note is in the filing