v3.26.1
Income Taxes
 12 Months Ended
Dec. 31, 2025
Income Taxes [Abstract]  
INCOME TAXES
14.INCOME TAXES

 

Effective January 1, 2025, the Company adopted ASU 2023-09 on a prospective basis, which enhances the transparency and decision usefulness of income tax disclosures in our financial statements. This update requires entities to disclose a detailed reconciliation of the federal statutory income tax rate to the effective tax rate and the disaggregation of income (loss) before income taxes, income tax benefit (expense) and income taxes paid, net of refunds by domestic federal, domestic state, and foreign jurisdictions. Furthermore, changes in unrecognized tax benefits must be categorized based on their relation to current or prior annual reporting periods.

 

For financial reporting purposes, (loss) income before income taxes includes the following components:

 

   Year Ended December 31, 
   2025   2024   2023 
United States   (36,172)   (11,285)  (4,720)
Foreign   6,908   72,916    17,398 
Total (loss)/income before income taxes   (29,264)   61,631    12,678 

 

The components of the provision for income taxes are as follows:

 

   Year Ended December 31, 
   2025   2024   2023 
             
Current income tax expense/(benefit):            
US-Federal   
-
    
-
    
-
 
US-State   6    
-
    
-
 
Foreign   938    877    (1,968)
Total current income tax expense/(benefit)   944    877    (1,968)
Deferred tax expense/(benefit):               
US-Federal   (7,481)   (2,370)   (991)
US-State   (1,781)   (564)   (236)
Foreign   933   9,725    5,378 
Total deferred tax expense/(benefit)   (8,329)   6,791    4,151 
Change in valuation allowance   9,263    
-
    
-
 
Net deferred tax expense after valuation allowance   934   6,791    4,151 
                
Total income tax expense   1,878   7,668    2,183 
                
Effective tax rate   (6.4)%   12.4%   17.2%

The reconciliation of the U.S. federal statutory income tax rate to the Company’s effective tax rate for the year ended December 31, 2025 was as follows:

 

   For the Year Ended
December 31, 2025		 
         
Federal income tax benefit at the statutory rate   (6,145)   21.0%
Domestic Federal:          
Change in valuation allowances   7,481    (25.6)%
Other adjustments   107    (0.4)%
Foreign Tax Effects:          
Statuary income tax rate difference          
Singapore   214    (0.7)%
UAE   (3,935)   13.4%
Hong Kong   427    (1.4)%
Cayman Island   2,179    (7.4)%
Others, net   1,550    (5.3)%
Income tax expense/(benefit)   
1,878
   (6.4)%

 

The Company adopted the updated guidance for the year ended December 31, 2025, and applied the new disclosure requirements prospectively to the current annual period. Prior period disclosures have not been adjusted to reflect the new disclosure requirements.

 

   Year Ended December 31, 
   2024   2023 
         
Federal income tax benefit at the statutory rate   (2,370)   (991)
Effect of:          
State income taxes   (564)   (236)
Foreign taxes   10,602    3,494 
Other, net   
-
    (84)
Income tax expense/(benefit)   7,668    2,183 

 

The Company’s net deferred tax assets/(liabilities) were as follows:

 

   As of December 31, 
   2025   2024 
         
Deferred tax assets:        
Impairment loss on mining equipment   10,747    5,181 
Net operating loss carryforwards   6,610    7,742 
Credit loss provision for receivables   10    81 
Limits on interest expense deduction   5,194    3,683 
Total gross deferred tax assets   22,561    16,687 
           
Deferred tax liabilities:          
Digital assets   (14,302)   (15,072)
Depreciation of equipment   (6,400)   (8,086)
Total gross deferred liabilities   (20,702)   (23,158)
           
Valuation allowance   (9,263)   
-
 
Net deferred tax asset liabilities   (7,404)   (6,471)
   As of December 31, 
   2025   2024 
         
Deferred tax assets/(liabilities):        
United States   7,158    7,158 
Hong Kong   1,579    
-
 
United Arab Emirates   (1,213)   1,443 
Singapore   (14,928)   (15,072)
Net deferred tax assets/(liabilities)   (7,404)   (6,471)

 

The Company has not identified any uncertain tax positions requiring a reserve as of December 31, 2025, and 2024. The Company’s policy is to recognize interest and penalties that would be assessed in relation to the settlement value of unrecognized tax benefits as a component of income tax expense. The Company did not accrue either interest or penalties for the years ended December 31, 2025, and 2024.

 

As of December 31, 2025, the Company has following tax Net Operating Losses (“NOLs”) that may be available to offset future taxable income:

 

   Gross amount   Expiring  Deduction limitation
           
US-Federal   31,965   Indefinite*  80% of taxable income*
US-State   37,753   Various  80% to 100% of taxable income
Hong Kong   867   Indefinite  No limitations

 

*Under the Tax Cuts and Jobs Act, NOLs incurred after December 31, 2017 can be carried forward indefinitely, but may be limited in utilization to 80% of taxable income.

 

Based on management’s evaluation of all available positive and negative evidence, management concluded that it is more-likely-than-not that the Company will not realize all its deferred tax assets in the United States. Accordingly, the Company recorded a valuation allowance to reduce deferred tax assets to the amount expected to be realized

 

Changes in the valuation allowance for deferred tax assets for the years ended December 31, 2025 are as follows:

 

   Year ended
December 31,
2025		 
     
Beginning balance   
-
 

Current increase

   9,263 
Current decrease   
-
 
Ending balance   9,263 

 

Upon adoption of ASU 2023-09, cash paid for income taxes, net of refunds, during the year ended December 31, 2025 was as follows:

 

   Year ended
December 31,
2025		 
     
US-Federal   
-
 
US-State   6 
Foreign   924 
Cash paid for income taxes (net of refunds)   930