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What changed in Sphere 3D Corp.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Sphere 3D Corp.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+364 added−340 removedSource: 10-K (2025-03-28) vs 10-K (2024-03-13)

Top changes in Sphere 3D Corp.'s 2024 10-K

364 paragraphs added · 340 removed · 222 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

34 edited+48 added−64 removed16 unchanged
Biggest changeOur Bitcoin mining operations are focused on maximizing our ability to successfully mine Bitcoin by growing our hash rate (the amount of computer power we devote to supporting the Bitcoin blockchain), to increase our chances of successfully creating new blocks on the Bitcoin blockchain (a process known as “solving a block”).
Biggest changeASIC miners are the most effective and energy-efficient machines available today, and we believe deploying them at-scale, will enable us to continue growing our hashrate and optimize the output and longevity of our miners as they are deployed. 2 Our Bitcoin mining operation is focused on maximizing our ability to successfully mine Bitcoin by growing our hashrate (the amount of computer power we devote to supporting the Bitcoin blockchain), to increase our chances of successfully creating new blocks on the Bitcoin blockchain (a process known as “proof of work”).
On January 16, 2024, we reached a settlement agreement (the “Settlement Agreement”) with Core Scientific, which was approved by a United States Bankruptcy Judge on January 16, 2024 as part of Core Scientific’s emergence from bankruptcy, for $10.0 million of Core Scientific’s equity.
On January 16, 2024, we reached a settlement agreement (the “Settlement Agreement”) with Core Scientific for $10.0 million of Core Scientific’s equity, which was approved by a United States Bankruptcy Judge as part of Core Scientific’s emergence from bankruptcy.
A key component of the Digital Mining business segment is to acquire highly specialized computer servers (known in the industry as “miners”), which operate application-specific integrated circuit (“ASIC”) chips designed specifically to mine Bitcoin, and deploy such miners at-scale utilizing our hosting agreements.
A key component of the Bitcoin mining business segment is to acquire highly specialized computer servers (known in the industry as “miners”), which operate application-specific integrated circuit (“ASIC”) chips designed specifically to mine Bitcoin, and deploy such miners at-scale utilizing our hosting agreements.
Service and Product On December 28, 2023, we entered into a share purchase agreement with Joseph O’Daniel (“Purchaser”), a related party, under which we sold our service and product segment, including HVE ConneXions and Unified ConneXions, for $1.00 and the transfer of outstanding assets and liabilities.
Disposal of Service and Product On December 28, 2023, we entered into a share purchase agreement with Joseph O’Daniel (“Purchaser”), a related party, under which we sold our Service and Product segment, including HVE ConneXions and Unified ConneXions, for $1.00 and the transfer of outstanding assets and liabilities.
Hosting Sub-License On October 5, 2021, we entered into a Sub-License and Delegation Agreement (“Hosting Sub-Lease”) with Gryphon, which assigned to us certain Master Services Agreement, dated as of September 12, 2021 (the “Core Scientific MSA”), by and between Core Scientific, Inc. (“Core Scientific”), and Gryphon and Master Services Agreement Order #2 (“Order 2”).
Hosting Sub-License On October 5, 2021, we entered into a Sub-License and Delegation Agreement (“Hosting Sub-Lease”) by and between Gryphon and the Company, which assigned to us a certain Master Services Agreement, dated as of September 12, 2021 (the “Core Scientific MSA”), by and between Core Scientific, Inc. (“Core Scientific”), and Gryphon and Master Services Agreement Order #2 (“Order 2”).
(“Overland”) to grow our business in the containerization and virtualization technologies along with data management products that enabled workload-optimized solutions. In November 2018, we sold our Overland business. In January 2022, we commenced operations of our Bitcoin mining business and are dedicated to becoming a leader in the Blockchain and Crypto Industry.
(“Overland”) to grow our business in the containerization and virtualization technologies along with data management products that enabled workload-optimized solutions. In November 2018, we sold our Overland business. In January 2022, we commenced operations of our Bitcoin mining business and are dedicated to becoming a leader in the blockchain and cryptocurrency industry.
As these new miner operators enter the market and as increasingly powerful miners are deployed in an attempt to solve a block, the Bitcoin blockchain’s network hash rate grows, meaning an existing miner must increase its hash rate at pace commensurate with the growth of network hash rate to maintain its relative chance of solving a block and earning a block reward.
As these new miner operators enter the market and as increasingly powerful miners are deployed in an attempt to solve a block, the Bitcoin blockchain’s network hashrate grows, meaning an existing miner must increase its hashrate at pace commensurate with the growth of network hashrate to maintain its relative chance of solving a block and earning a block reward.
Mining pools emerged in response to the growing difficulty and network hash rate competing for Bitcoin rewards on the Bitcoin blockchain as a way of lowering costs and reducing the risk of an individual miner’s mining activities. The mining pool operator provides a service that coordinates the computing power of the independent mining enterprises participating in the mining pool.
Mining pools emerged in response to the growing difficulty and network hash rate competing for Bitcoin rewards on the Bitcoin blockchain as a way of lowering costs and reducing the risk of an individual miner’s mining activities. The mining pool operator coordinates the computing power of the independent mining enterprises participating in the mining pool.
On December 29, 2021, we entered into Amendment No. 1 to the Sub-Lease Agreement (the “Sub-Lease Amendment”) with Gryphon to provide Gryphon the right to recapture the usage of up to 50% of the hosting capacity to be managed by Core Scientific.
On December 29, 2021, the Company and Gryphon entered into Amendment No. 1 to the Sub-Lease Agreement (the “Sub-Lease Amendment”) to provide Gryphon the right to recapture the usage of up to 50% of the hosting capacity to be managed by Core Scientific.
In exchange for providing computing power, we are entitled to Full Pay Per Share (“FPPS”), which is a fractional share of the fixed Bitcoin award the mining pool operator receives for successfully adding a block to the blockchain, plus a fractional share of the transaction fees attached to that blockchain less net Bitcoin mining fees due to the mining pool operator over the measurement period, as applicable.
In exchange for providing the service, we are entitled to Full Pay Per Share (“FPPS”), which is a fractional share of the fixed Bitcoin award the mining pool operator receives, plus a fractional share of the transaction fees attached to that blockchain less net Bitcoin fees due to the mining pool operator over the measurement period, as applicable.
We anticipate that over the long-term there will be a significant increase in the number of Bitcoin miners attempting to enter into, and expand, their Bitcoin mining activities as market demand recovers. Our main competitors generally include other Bitcoin mining companies, both publicly listed and private, as well as other Bitcoin miners who participate in mining pools.
We anticipate that over the long-term there will be a significant increase in the number of Bitcoin miners attempting to enter into, and expand, their Bitcoin mining activities. Our main competitors generally include other Bitcoin mining companies, both publicly listed and private.
Mining pools are subject to various risks such as disruption and down time. In the event that a pool we utilize experiences down time or is not yielding returns, our results may be impacted. We are engaged with digital asset mining pool operators to provide computing power to the mining pools.
Mining pools are subject to various risks such as disruption and down time. In the event that a pool we utilize experiences down time or is not yielding returns, our results may be impacted.
As required by the Rebel Hosting Agreement, we paid a deposit of $2.6 million representing the last two months of estimated service fees.
As required by the Joshi Hosting Agreement, we paid a deposit of $0.3 million representing the last two months of estimated service fees.
The service and product segment also delivered data management and desktop and application virtualization solutions through hybrid cloud, cloud and on premise implementations by a reseller network. We recognized a noncash gain of $0.7 million related to the transfer of net liabilities to the Purchaser.
The Service and Product segment also delivered data management and desktop and application virtualization solutions through hybrid cloud, cloud and on premise implementations by a reseller network. We recognized a noncash gain of $0.7 million related to the transfer of net liabilities to the Purchaser. Intellectual Property We actively use specific hardware and software for our Bitcoin mining operations.
As consideration for the Gryphon MSA, Gryphon shall receive the equivalent of 22.5% of the net operating profit, as defined in the Gryphon MSA, of all of our blockchain and digital currency related operations as a management fee. In addition, any costs Gryphon incurs on our behalf are to be reimbursed to Gryphon as defined in the Gryphon MSA.
As consideration for the Gryphon MSA, Gryphon received the equivalent of 22.5% of the net operating profit, as defined in the Gryphon MSA, of all of our blockchain and cryptocurrency related operations as a management fee. In addition, any costs Gryphon incurred on our behalf were reimbursed to Gryphon as defined in the Gryphon MSA.
We have requested that certain advanced deposits paid be refunded back to us as a result of the modification to our machine purchase agreement with FuFu Technology Limited (now Ethereal Tech Pte. Ltd.). In December 2022, Core Scientific filed Chapter 11 bankruptcy.
We requested that certain advanced deposits paid be refunded back to it as a result of the modification to the Company’s machine purchase agreement with FuFu Technology Limited (now Ethereal Tech Pte. Ltd.).
On January 23, 2024, we received 2,050,982 shares of Core Scientific Inc. common stock trading under the NASDAQ symbol CORZ. Hosting Agreements On October 18, 2023, we entered into a Hosting Agreement with Joshi Petroleum, LLC (the “Joshi Hosting Agreement”) for rack space, network services, electrical connections, routine facility maintenance, and technical support of certain of our mining equipment.
On October 18, 2023, we entered into a Hosting Agreement with Joshi Petroleum, LLC (the “Joshi Hosting Agreement”) for rack space, network services, electrical connections, routine facility maintenance, and technical support of certain of our mining equipment.
We do not have any power purchase agreements for the supply of power. 2 Mining Pools A “mining pool” is a service operated by a mining pool operator that pools the resources of individual miners to share their processing power over a network.
Mining Pools A mining pool is a service operated by a mining pool operator that pools the resources of individual miners to share their processing power over a network.
Employees As of December 31, 2023, we had five employees, three of which were full time. 8
Employees As of December 31, 2024, we had four employees, two of which were full time.
In December 2022, the Compute North MA was assigned to GC Data Center Granbury, LLC (the “GC Data Center MA”) and has a term of five years from such assignment date.
In December 2022, the Compute North MA was assigned to GC Data Center Granbury, LLC (the “GC Data Center MA”). In the first quarter of 2024, Marathon Digital Holdings acquired GC Data Center Granbury Equity Holdings, LLC and assumed the GC Data Center MA. The GC Data Center MA had a term of five years beginning December 2022.
Generally, the greater share of the Bitcoin blockchain’s total network hash rate (the aggregate hash rate deployed to solving a block on the Bitcoin blockchain) a miner’s hash rate represents, the greater that miner’s chances of solving a block and, therefore, earning the block reward, which is currently 6.25 Bitcoin plus transaction fees per block (subject to periodic halving, as discussed below).
Generally, the greater share of the Bitcoin blockchain’s total network hashrate (the aggregate hashrate deployed to solving a block on the Bitcoin blockchain) a miner’s hashrate represents, the greater that miner’s chances of solving a block and, therefore, earning the block reward.
We have established and plan to continue to grow an enterprise-scale mining operation through the procurement of mining equipment and partnering with experienced service providers. On December 28, 2023, we sold our service and product segment which included HVE ConneXions and Unified ConneXions. See additional information below.
We have established and plan to continue to grow an enterprise-scale mining operation through the procurement of mining equipment and partnering with experienced service providers.
As required by the Lancium Hosting Agreement, we paid a deposit of $0.2 million representing a partial payment towards the last two months of estimated service fees.
As required by the Lancium Hosting Agreement, we paid a deposit of $0.2 million representing a partial payment towards the last two months of estimated service fees. On November 15, 2024, both parties terminated the Lancium Hosting Agreement, which resulted in the return of our deposit, and waiving of outstanding service fees in exchange for the mining equipment in immersion.
The primary drivers of competition are demand for Bitcoin and the ability to execute miner deployments to generate the highest returns while incurring the lowest costs to mine, thereby achieving maximum efficiency. 7 Our competition in the Bitcoin mining space fluctuates due to a number of factors, including, but not limited to, the value of Bitcoin rewards for mining, the amount of network hashrate (ability to achieve awards relative to others), and the price of Bitcoin.
The primary drivers of competition are demand for Bitcoin and the ability to execute miner deployments to generate the highest returns while incurring the lowest costs to mine, thereby achieving maximum efficiency.
On June 3, 2022, we entered into a Master Agreement with Compute North LLC (the “Compute North MA”) for, the colocation, management, and other services of certain of our mining equipment for an initial term of five years.
We recorded a $2.3 million loss on equipment retained by Lancium, as agreed upon in the Termination Agreement, and is included in loss on disposal of property and equipment on the consolidated statement of operations. 4 On June 3, 2022, we entered into a Master Agreement with Compute North LLC (the “Compute North MA”) for, the colocation, management, and other services of certain of our mining equipment.
Under the GC Data Center MA, the monthly service fee is payable based on the actual hashrate performance of the equipment per miner type per location as a percentage of the anticipated monthly hashrate per miner type.
The monthly service fee was payable based on the actual hashrate performance of the equipment per miner type per location as a percentage of the anticipated monthly hashrate per miner type. As required by the service agreement, we paid a deposit of $0.5 million representing the last two months of monthly service fees.
Our fractional share is based on the proportion of computing power we contributed to the mining pool operator to the total computing power contributed by all mining pool participants in solving the current algorithm. Master Services Agreement On August 19, 2021, we entered into a Master Services Agreement (the “Gryphon MSA”) with Gryphon Digital Mining, Inc.
Master Services Agreement On August 19, 2021, we entered into a Master Services Agreement (the “Gryphon MSA”) with Gryphon Digital Mining, Inc.
Based on our existing operations and expected deployment of miners we have purchased, we anticipate having approximately 1.4 EH/s of total hash rate in operation during 2024.
Based on our existing operations and expected deployment of miners we have purchased, we anticipate having approximately 1.5 EH/s of total hashrate in operation during 2025. We plan to continue to acquire new generation miners as we expand our exahash. We do not have scheduled downtime for our miners. We periodically perform both scheduled and unscheduled maintenance on our miners.
During the years ended December 31, 2023 and 2022, we paid costs under the Gryphon MSA of $8.4 million and $1.3 million, respectively. On April 7, 2023, we filed litigation against Gryphon outlining several breaches to the Gryphon MSA, including but not limited to, several fiduciary and operational breaches.
On April 7, 2023, the Company filed litigation against Gryphon outlining several breaches to the Gryphon MSA, including but not limited to, several fiduciary and operational breaches. On October 6, 2023, in accordance with the cure period, the Company terminated the Gryphon MSA.
As required by the Joshi Hosting Agreement, we paid a deposit of $0.1 million, and will pay an additional $0.2 million, representing the last two months of estimated service fees.
As required by the Rebel Hosting Agreement, we paid a deposit of $2.6 million representing the last two months of estimated service fees. During the year ended December 31, 2024, we recorded a $0.9 million impairment to prepaid service fees held by Rebel Mining Company and is included in impairment of other assets on the consolidated statement of operations.
Significant competition for suitable mining data centers is expected to continue, and other government regulators, including local permitting officials, may potentially restrict the ability of potential mining data centers to begin or continue operations in certain locations. For a more detailed description of competitive and other risks related to our business, see Item 1A. Risk Factors .
Significant competition for suitable mining data centers is expected to persist, and government regulations—such as local permitting requirements—could further restrict the ability of both hosted and owned mining operations to begin or continue operating in certain locations. These factors could impact our ability to secure adequate infrastructure to support some of our hashrate and maintain profitable mining operations.
As we expect this trend to continue, we will need to continue growing our hash rate to compete in our dynamic and highly competitive industry.
As we expect this trend to continue, we will need to continue growing our hashrate to compete in our dynamic and highly competitive industry. As of December 31, 2024, we owned approximately 14,000 miners, of which approximately 6,300 were in service, and a total hashrate capacity of 0.76 exahash per second (“EH/s”).
The agreement allows for approximately 230 MW of carbon neutral digital mining hosting capacity to be managed by Core Scientific as hosting partner. As part of the agreement, Core Scientific will provide digital mining fleet management and monitoring solution, Minder™, data analytics, alerting, monitoring, and miner management services.
The agreement allowed for approximately 230 MW of carbon neutral Bitcoin mining hosting capacity to be managed by Core Scientific as hosting partner. On October 31, 2022, we filed an arbitration request against Core Scientific regarding the Hosting Sub-Lease.
We rely on hosting arrangements to conduct our business, and the availability of such hosting arrangements is uncertain and competitive and may be affected by changes in regulation in one or more countries.
We rely on both owned mining facilities (our new 8 MW hosting site in Iowa was energized in March 2025) and hosting arrangements to conduct our business, and the availability and stability of these arrangements remain uncertain and highly competitive.
Removed
Digital assets and blockchain Bitcoin is a digital asset issued by and transmitted through an open source protocol maintained by a peer-to-peer network of decentralized user nodes. This network hosts a public transaction ledger blockchain where the digital assets and their corresponding transactions are recorded.
Added
On December 28, 2023, we sold our Service and Product segment, which included HVE ConneXions and Unified ConneXions, and plan to focus on growing our Bitcoin mining operation. 1 Bitcoin and Blockchain Bitcoin is a decentralized digital currency that operates on a peer-to-peer network, allowing users to send and receive payments without relying on banks or central authorities.
Removed
The digital assets are stored in individual wallets with public addresses and a private key that controls access. The blockchain is updated without a single owner or operator of the network.
Added
It runs on a public blockchain, a distributed ledger where all transactions are recorded and secured through cryptographic verification. Within the Bitcoin ecosystem, there are three key participants: users, miners, and nodes. Users are individuals or businesses that send, receive, or store Bitcoin, typically using wallets.
Removed
New digital assets are generated and mined rewarding users after transactions are verified in the blockchain. 1 Digital assets and their corresponding markets emulate fiat currency exchange markets, such as the U.S. dollar, where they can be exchanged to various fiat currencies on trading exchanges. In addition, several markets such as derivative markets, exist for enhanced trading.
Added
Miners are participants who use computational power to solve complex mathematical puzzles, validating transactions and adding them to the blockchain in exchange for newly minted Bitcoin and transaction fees as a reward for their work. Nodes are computers that maintain a full copy of the blockchain and help verify transactions, ensuring the network remains secure and decentralized.
Removed
Since the nature of digital assets is such that it exists solely in electronic form, they are exposed to risks similar to that of any data held solely in electronic form such as power failure, data corruption, cyber security attacks, and protocol breaches, among others.
Added
Together, these participants enable Bitcoin to function as a trustless, borderless, and censorship-resistant financial system. In the Bitcoin network, transactions must be validated before they are added to the blockchain. When a user initiates a transaction, it is broadcast to the network and enters the mempool, where it awaits confirmation.
Removed
Since blockchain relies on open source developers to maintain the digital asset protocols, it may be subject to other risks associated with open source software. Digital currencies serve multiple purposes - a medium of exchange, store of value or unit of account. Examples of digital currencies include: Bitcoin, Bitcoin cash, Ethereum, and Litecoin.
Added
Full nodes verify the transaction by checking the sender’s balance and digital signature against the blockchain’s history. Once verified, miners compete to include the transaction in a new block through a process called Proof of Work, where they solve a complex cryptographic puzzle to find a valid hash that meets the network’s difficulty requirements.
Removed
Digital currencies are decentralized currencies that facilitate instant transfers. Transactions occur on an open source platform using peer-to-peer direct technology with no single owner. Blockchain is a public transaction ledger where transactions are recorded and tracked, however are not owned nor managed by one single entity. Blockchain, accessible and open to all, contains records of all existing and historical transactions.
Added
The first miner to solve the puzzle broadcasts the new block to the network, and if other nodes verify its validity, it is permanently added to the blockchain. As a reward for securing the network, the winning miner receives a block reward, which consists of newly minted Bitcoin—currently 3.125 BTC as of 2024—along with transaction fees paid by users.
Removed
All accounts on the blockchain have a unique public key and is secured with a private key that is only known to the individual. The combination of private and public keys results in a secure digital “fingerprint” which results in a strong control of ownership.
Added
Over time, as the block reward continues to halve approximately every four years, transaction fees will become an increasingly important incentive for miners to continue securing the network. This system ensures Bitcoin remains decentralized, secure, and resistant to inflation. As of December 31, 2024, we held approximately 14.9 Bitcoin.
Removed
We believe cryptocurrencies have many advantages over traditional, physical fiat currencies, including immediate settlement, fraud deterrent as they are unable to be duplicated or counterfeited, lower fees, mass accessibility, decentralized nature, transparency of transactions, identity theft prevention, physical loss prevention, no devaluation due to dilution, no counterparty risk, no intermediary facilitation, no arduous exchange rate implications and a strong confirmation transaction process.
Added
The fair value of our Bitcoin as of December 31, 2024 was approximately $1.4 million on our consolidated balance sheet.
Removed
Digital Mining As of December 31, 2023, our Digital Mining business segment operated approximately 12,800 miners with a total hash rate capacity of 1.3 exahash per second (“EH/s”). We have an additional 730 machines that are awaiting deployment. In 2023, we mined 667.4 Bitcoin, which represented an increase of 409% over the 131.01 Bitcoin we mined in 2022.
Added
Construction in Progress In September 2024, we entered into a letter of intent with Simple Mining LLC (“Simple Mining”) to build-out a 12.5 megawatt (“MW”) site in Iowa with Simple Mining managing the build-out of the infrastructure for the new mining site.
Removed
We believe ASIC miners are the most effective and energy-efficient miners available today, and we believe deploying them at-scale, including in quiet immersion-cooled environments, with their more efficient heat dissipation and reduced wear-and-tear compared to traditional air-cooled hardware, will enable us to continue growing our hash rate and optimize the output and longevity of our miners once they are deployed.
Added
Due to delays in permitting and timeline, we shifted to a different site, under the same construct and power cost assumptions, reducing the overall capacity from 12.5 MW to 8 MW. For the year ended December 31, 2024, we made payments of $1.4 million towards the infrastructure.
Removed
At this time, we intend only to mine Bitcoin and hold no other digital assets other than Bitcoin.
Added
Subsequent to December 31, 2024, we incurred additional costs of $1.4 million towards the infrastructure of the new 8 MW mining site in Iowa. The 8 MW site was energized on March 10, 2025. In March 2025, we entered into a Managed Services Agreement with Simple Mining to operate the site on our behalf.
Removed
On December 29, 2021, we entered into Amendment No. 1 to the Gryphon MSA (the “Gryphon MSA Amendment”) with Gryphon which extended the initial term of the Gryphon MSA to five years as we did not receive delivery of a specified minimum number of digital mining machines during 2022.
Added
Bitcoin Mining We obtain Bitcoin as a result of our mining operations, and when necessary we sell Bitcoin to support our operations and strategic growth. We mine Bitcoin in Missouri, Texas and Iowa, which do not have any material state-specific regulatory restrictions on the mining of Bitcoin.
Removed
Subject to written notice from us and an opportunity by Gryphon to cure for a period of up to 180 days, the Gryphon MSA provided us with the right to terminate the Gryphon MSA in the event of: (i) Gryphon’s failure to perform the Services under the Gryphon MSA in a professional and workmanlike manner in accordance with generally recognized digital mining industry standards for similar services, or (ii) Gryphon’s gross negligence, fraud or willful misconduct in connection with performing the Services.
Added
However, it is possible that these states or other states in which we may seek to operate may create laws that would impede Bitcoin mining. We do not currently plan to engage in regular trading of Bitcoin other than sales to convert our Bitcoin into U.S. dollars.
Removed
Gryphon shall be entitled to specific performance or termination for cause in the event of a breach by us, subject to written notice and an opportunity to cure for a period of up to 180 days.
Added
Decisions to hold or sell our Bitcoin are currently made by management by analyzing forecasts and monitoring the market in real time. We have a hybrid treasury strategy to hold Bitcoin when possible, and sell to fund working capital requirements.
Removed
On October 6, 2023, in accordance with the cure period, we terminated the Gryphon MSA.
Added
We are strategizing for our future growth by refreshing a significant portion of our fleet with newer-generation machines to bolster efficiency and developing a 8 MW site in Iowa. Vertically integrating with self owned facilities, like the Iowa site, allows us to reduce our reliance on third-parties and decrease our overall cost to mine a Bitcoin.
Removed
In November 2023, Gryphon indicated that upon receipt of certain information it would remit outstanding Bitcoin proceeds, less fees and expenses that we assert is currently held by Gryphon on behalf of us, which we believe amounts to approximately 21.6 Bitcoin and approximately $0.6 million of revenue at December 31, 2023, before factoring in fees and expenses.
Added
As a result of our strategic changes, during the third and fourth quarter of 2024 mining production decreased as we focused on our long-term strategic goals of transitioning to lower-cost hosting sites, vertically integrating to own our own sites, and refreshing our fleet with newer-generation machines.
Removed
Due to the uncertainty regarding when we would receive the Bitcoin, the Bitcoin proceeds, less fees and expenses, will be recognized when received.
Added
In 2024, we mined 286.3 Bitcoin, which represented a decrease of 57.1% over the 667.4 Bitcoin we mined in 2023. The decrease was primarily due to the halving event in April 2024 and our strategic plan to transition to lower-cost hosting sites and refresh our fleet with newer-generation machines.
Removed
The Hosting Sub-Lease shall automatically terminate upon the termination of the Core 3 Scientific MSA and/or Order 2 in accordance with their respective terms. On October 31, 2022, we filed an arbitration request against Core Scientific regarding the Hosting Sub-Lease.
Added
Depending on the type of repair, the miner may run at a reduced speed or be taken offline. We use multiple software programs to monitor the performance of our machines. The miners owned as of December 31, 2024 have an average efficiency (joules per terahash – “J/th”) of 27.1 J/th.
Removed
As of December 31, 2023, we have a pre-paid deposit balance of $33.9 million towards the Hosting Sub-Lease, which we have recorded a $23.9 million provision for losses on the deposit due to Core Scientific’s Chapter 11 bankruptcy filing in December 2022.
Added
The miner efficiency is an indication of how efficiently we can earn Bitcoin and minimize cost to run the miner. Currently, we intend only to mine Bitcoin and we hold no other cryptocurrency other than Bitcoin. We do not have any power purchase agreements for the supply of power.
Removed
During the years ended December 31, 2023 and 2022, we had $8.2 million and $15.7 million, respectively, of expense included in provision for losses on deposits due to vendor bankruptcy filings on the consolidated statements of operations.
Added
We are engaged with Bitcoin mining pool operators as our customers, to provide a service to perform hash calculations for the mining pool operator, which is our only performance obligation. Providing hash calculation services is an output of our ordinary activities.
Removed
As of December 31, 2023, we have deposits, in the aggregate, of $0.7 million to Compute North for which during the years ended December 31, 2023 and 2022, we recorded a $0.3 million and $0.4 million, respectively, provision for losses on the deposit due to Compute North’s 2022 bankruptcy filing.
Added
We have service agreements with Foundry Digital LLC and Luxor Technology Corporation, each a mining pool operator, to provide a service to perform hash calculations.
Removed
A deposit of $0.5 million previously paid to Compute North for the last two months of monthly service fees was remitted to GC Data Center on our behalf and is included in prepaid digital hosting services at December 31, 2023. 4 Series H Preferred Shares On November 7, 2022, we entered into an agreement with Hertford Advisors Ltd. modifying the number of outstanding Series H Preferred Shares held by Hertford (the “Modified Hertford Agreement”).
Added
The pay-outs received are based on the expected value from the block reward plus the transaction fee reward, regardless of whether the mining pool operator successfully records a block to the blockchain. 3 Our fractional share is based on a contractual formula, which primarily calculates the hashrate provided to the mining pool as a percentage of total network hashrate and other inputs.
Removed
Pursuant to the Modified Hertford Agreement, we cancelled 36,000 Series H Preferred Shares, with a value of $15.9 million, without payment of any cash consideration, and reduced the value of the supplier agreement intangible asset by such amount.
Added
The contracts, which are less than 24 hours and continuously renew throughout the day, are terminable at any time by either party without compensation and our enforceable right to compensation only begins when we start providing the service to the mining pool operator, which begins daily at midnight Universal Time Coordinated (“UTC”).

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

141 edited+56 added−20 removed110 unchanged
Biggest changeThe price and trading volume of any digital asset is subject to significant uncertainty and volatility, depending on a number of factors, including: • market conditions of, and overall sentiment towards, digital assets; • changes in liquidity, market-making volume, and trading activities; • trading activities on other digital platforms worldwide, many of which may be unregulated, and may include manipulative activities; • investment and trading activities of highly active retail and institutional users, speculators, miners, and investors; • the speed and rate at which digital assets are able to gain adoption as a medium of exchange, utility, store of value, consumptive asset, security instrument, or other financial assets worldwide, if at all; • decreased investor confidence in digital assets and digital platforms; • negative media publicity and events relating to the digital economy; • unpredictable social media coverage or “trending” of, or other rumors and market speculation regarding digital assets; • the ability for digital assets to meet user and investor demands; • the functionality and utility of digital assets and their associated ecosystems and networks, including digital assets designed for use in various applications; • increased competition from other payment services or other digital assets that exhibit better speed, security, scalability, or other characteristics; • regulatory or legislative changes and updates affecting the digital economy; • the maintenance, troubleshooting, and development of the blockchain networks underlying digital assets, including by miners, validators, and developers worldwide; • the ability for digital networks to attract and retain miners or validators to secure and confirm transactions accurately and efficiently; • ongoing technological viability and security of digital assets and their associated smart contracts, applications and networks, including vulnerabilities against hacks and scalability; • fees and speed associated with processing digital asset transactions, including on the underlying blockchain networks and on digital platforms; • financial strength of market participants; • the availability and cost of funding and capital; 9 • the liquidity of digital platforms; • interruptions in service from or failures of major digital platforms; • availability of an active derivatives market for various digital assets; • availability of banking and payment services to support digital-related projects; • level of interest rates and inflation; and • environmental, social, and governance (ESG) concerns about power and water consumption.
Biggest changeThe price and trading volume of Bitcoin is subject to significant uncertainty and volatility, depending on a number of factors, including: • market conditions of, and overall sentiment towards, Bitcoin; • changes in liquidity, market-making volume, and trading activities; • trading activities on other cryptocurrency trading platforms worldwide, many of which may be unregulated, and may include manipulative activities; • investment and trading activities of highly active retail and institutional users, speculators, miners, and investors; • the speed and rate at which Bitcoin is able to gain adoption as a medium of exchange, utility, store of value, consumptive asset, security instrument, or other financial assets worldwide, if at all; • decreased investor confidence in Bitcoin and cryptocurrency trading platforms; • negative media publicity and events relating to the cryptocurrency economy; • unpredictable social media coverage or “trending” of, or other rumors and market speculation regarding Bitcoin; • the ability for cryptocurrency to meet user and investor demands; • the functionality and utility of Bitcoin and its associated ecosystems and networks; • increased competition from other payment services or other cryptocurrency that exhibit better speed, security, scalability, or other characteristics; • regulatory or legislative changes and updates affecting the cryptocurrency economy; • the maintenance, troubleshooting, and development of the blockchain networks underlying assets, including by miners, validators, and developers worldwide; • the ability for cryptocurrency networks to attract and retain miners or validators to secure and confirm transactions accurately and efficiently; • ongoing technological viability and security of cryptocurrency and their associated smart contracts, applications and networks, including vulnerabilities against hacks and scalability; • fees and speed associated with processing Bitcoin transactions, including on the underlying blockchain networks and on cryptocurrency trading platforms; • financial strength of market participants; • the availability and cost of funding and capital; • the liquidity of cryptocurrency trading platforms; • interruptions in service from or failures of major cryptocurrency trading platforms; • availability of an active derivatives market for Bitcoin; • availability of banking and payment services to support cryptocurrency-related projects; • level of interest rates and inflation; and • environmental, social, and governance (ESG) concerns about power and water consumption. 8 There is no assurance that Bitcoin will maintain its value or that there will be meaningful levels of trading activities.
The effects of human activity on global climate change have attracted considerable public and scientific attention, as well as the attention of the United States and other governments. Efforts are being made to reduce greenhouse gas emissions, particularly those from coal combustion power plants, some of which plants our hosting facility suppliers may rely upon for power.
The effects of human activity on global climate change have attracted considerable public and scientific attention, as well as the attention of the United States and other governments. Efforts are being made to reduce greenhouse gas emissions, particularly those from coal combustion power plants, upon which some of our hosting facility suppliers may rely for power.
If we require additional capital and are unsuccessful in raising that capital at a reasonable cost and at the required times, or at all, we may not be able to continue our business operations in the cryptocurrency mining industry or we may be unable to advance our growth initiatives, either of which could adversely impact our business, financial condition and results of operations.
We require additional capital and if we are unsuccessful in raising that capital at a reasonable cost and at the required times, or at all, we may not be able to continue our business operations in the cryptocurrency mining industry or we may be unable to advance our growth initiatives, either of which could adversely impact our business, financial condition and results of operations.
We may not achieve or maintain profitability. We have limited non-recurring revenues derived from operations. We have a history of net losses, and we expect to continue to incur net losses and we may not achieve or maintain profitability.
We have a history of net losses. We may not achieve or maintain profitability. We have limited non-recurring revenues derived from operations. We have a history of net losses, and we expect to continue to incur net losses and we may not achieve or maintain profitability.
Factors affecting the trading price of our common shares may include: • actual or anticipated fluctuations in our financial results or the financial results of companies perceived to be similar to it; • changes in the market’s expectations about our operating results; • success of competitors; • our operating results failing to meet market expectations in a particular period; • changes in financial estimates and recommendations by securities analysts concerning us; • operating and share price performance of other companies that investors deem comparable to us; • changes in laws and regulations affecting our business; • commencement of, or involvement in, litigation involving us; • changes in our capital structure, such as future issuances of securities or the incurrence of debt; • the volume of our shares available for public sale; • any significant change in our board or management; 26 • sales of substantial amounts of shares by our directors, executive officers or significant shareholders or the perception that such sales could occur; and • general economic and political conditions such as recessions, interest rates, fuel prices, international currency fluctuations and acts of war or terrorism.
Factors affecting the trading price of our common shares may include: • actual or anticipated fluctuations in our financial results or the financial results of companies perceived to be similar to it; • changes in the market’s expectations about our operating results; • success of competitors; • our operating results failing to meet market expectations in a particular period; • changes in financial estimates and recommendations by securities analysts concerning us; • operating and share price performance of other companies that investors deem comparable to us; • changes in laws and regulations affecting our business; • commencement of, or involvement in, litigation involving us; • changes in our capital structure, such as future issuances of securities or the incurrence of debt; • the volume of our shares available for public sale; 26 • any significant change in our board or management; • sales of substantial amounts of shares by our directors, executive officers or significant shareholders or the perception that such sales could occur; and • general economic and political conditions such as recessions, interest rates, fuel prices, international currency fluctuations and acts of war or terrorism.
Long- and short-term power prices may fluctuate substantially due to a variety of factors outside of our control, including, but not limited to: • increases and decreases in generation capacity; 12 • changes in power transmission or fuel transportation capacity constraints or inefficiencies; • demand response/mandatory curtailments; • volatile weather conditions, particularly unusually hot or mild summers or unusually cold or warm winters; • technological shifts resulting in changes in the demand for power or in patterns of power usage, including the potential development of demand-side management tools, expansion and technological advancements in power storage capability and the development of new fuels or new technologies for the production or storage of power; • federal and state power, market and environmental regulation and legislation; and • changes in capacity prices and capacity markets.
Long- and short-term power prices may fluctuate substantially due to a variety of factors outside of our control, including, but not limited to: • increases and decreases in generation capacity; • changes in power transmission or fuel transportation capacity constraints or inefficiencies; • demand response/mandatory curtailments; • volatile weather conditions, particularly unusually hot or mild summers or unusually cold or warm winters; • technological shifts resulting in changes in the demand for power or in patterns of power usage, including the potential development of demand-side management tools, expansion and technological advancements in power storage capability and the development of new fuels or new technologies for the production or storage of power; • federal and state power, market and environmental regulation and legislation; and • changes in capacity prices and capacity markets.
Our cash and other sources of liquidity may not be sufficient to fund our operations and there is substantial doubt about the Company’s ability to continue as a going concern within 12 months from the date of issuance of the financial statements and we may not be successful in raising additional capital necessary to meet expected increases in working capital needs and if we raise additional funding through sales of equity or equity-based securities, your shares will be diluted.
Our cash and other sources of liquidity may not be sufficient to fund our operations and there is substantial doubt about our ability to continue as a going concern within 12 months from the date of issuance of our financial statements and we may not be successful in raising additional capital necessary to meet expected increases in working capital needs, and if we raise additional funding through sales of equity or equity-based securities your shares will be diluted.
To the extent that any acquisition results in additional goodwill, it will reduce our tangible net worth, which might adversely affect our business, financial condition, results of operations and prospects, as well as our credit capacity and if we proceed with an acquisition, our available cash may be used to complete the transaction, diminishing our liquidity and capital resources, or shares may be issued which could cause significant dilution to existing shareholders.
To the extent that any acquisition results in additional goodwill, it will reduce our tangible net worth, which might adversely affect our business, financial condition, results of operations and prospects, as well as our credit capacity and if we proceed with an acquisition, our 24 available cash may be used to complete the transaction, diminishing our liquidity and capital resources, or shares may be issued which could cause significant dilution to existing shareholders.
The cost of such compliance would result in us incurring substantial additional expenses, and the failure to register if required would have a materially adverse impact to conduct our operations. 13 If regulatory changes or interpretations of our activities require its registration as a money services business under the regulations promulgated by The Financial Crimes Enforcement Network under the authority of the U.S.
The cost of such compliance would result in us incurring substantial additional expenses, and the failure to register if required would have a materially adverse impact to conduct our operations. 13 If regulatory changes or interpretations of our activities require registration as a money services business under the regulations promulgated by The Financial Crimes Enforcement Network under the authority of the U.S.
The impact of geopolitical and economic events on the supply and demand for cryptocurrency is uncertain. Geopolitical crises may motivate large-scale purchases of cryptocurrencies, which could increase the price of cryptocurrencies rapidly. This may increase the likelihood of a subsequent price decrease as crisis-driven purchasing behavior dissipates, adversely affecting the value of our inventory following such downward adjustment.
The impact of geopolitical and economic events on the supply and demand for cryptocurrency is uncertain. Geopolitical crises may motivate large-scale purchases of cryptocurrency, which could increase the price of cryptocurrency rapidly. This may increase the likelihood of a subsequent price decrease as crisis-driven purchasing behavior dissipates, adversely affecting the value of our inventory following such downward adjustment.
Additionally, as the technology evolves, we may be required to acquire newer models of miners to remain competitive in the market. Also, because we expect to depreciate all new miners, our reported operating results will be negatively affected. Further, the global supply chain for cryptocurrency miners is presently heavily dependent on China.
Additionally, as the technology evolves, we may be required to acquire newer models of miners to remain competitive in the market. 20 Also, because we expect to depreciate all new miners, our reported operating results will be negatively affected. Further, the global supply chain for cryptocurrency miners is presently heavily dependent on China.
In addition, as a result of negative publicity regarding environmental concerns associated with Bitcoin mining, some companies have ceased accepting Bitcoin for certain types of purchases, and additional companies may do so in the future, which may have a material adverse effect on our business, financial condition or results of operations.
In addition, as a result of negative publicity regarding environmental concerns associated with 11 Bitcoin mining, some companies have ceased accepting Bitcoin for certain types of purchases, and additional companies may do so in the future, which may have a material adverse effect on our business, financial condition or results of operations.
Due to the inherent limitations in a cost-effective control system, misstatements due to error, or fraud may occur and not be detected. 27 We may be treated as a Passive Foreign Investment Company. There is also an ongoing risk that we may be treated as a Passive Foreign Investment Company (“PFIC”), for U.S. federal income tax purposes.
Due to the inherent limitations in a cost-effective control system, misstatements due to error, or fraud may occur and not be detected. We may be treated as a Passive Foreign Investment Company. There is also an ongoing risk that we may be treated as a Passive Foreign Investment Company (“PFIC”), for U.S. federal income tax purposes.
Cryptocurrencies, including those maintained by or for us, may be exposed to cybersecurity threats and hacks. As with any computer code generally, flaws in cryptocurrency codes may be exposed by malicious actors. Several errors and defects have been found previously, including those that disabled some functionality for users and exposed users’ information.
Cryptocurrency, including those maintained by or for us, may be exposed to cybersecurity threats and hacks. As with any computer code generally, flaws in cryptocurrency codes may be exposed by malicious actors. Several errors and defects have been found previously, including those that disabled some functionality for users and exposed users’ information.
However, the future sale of a substantial number of common shares by our officers, directors and other shareholders and their respective affiliates, or the perception that such sales could occur, could adversely affect prevailing market prices for the common shares. We may issue an unlimited number of common shares. Future sales of common shares will dilute your shares.
However, the future sale of a substantial number of common shares by our officers, directors and other shareholders and their respective affiliates, or the perception that such sales could occur, could adversely affect prevailing market prices for the common shares. 28 We may issue an unlimited number of common shares. Future sales of common shares will dilute your shares.
The market price for our common shares is volatile and subject to wide fluctuations in response to numerous factors, many of which are beyond our control, including the following: • price and volume fluctuations in the overall stock market, the crypto asset market, and of Bitcoin mining stocks from time to time; • future capital raising activities; • sales of common shares by holders thereof or by us; • changes in financial estimates by securities analysts who follow us, or our failure to meet these estimates or the expectations of investors; • the financial projections we may provide to the public, any changes in those projections or our failure to meet those projections; • rumors and market speculation involving us or other companies in our industry; • actual or anticipated changes in our operating results or fluctuations in our operating results; • actual or anticipated developments in our business, our competitors’ businesses or the competitive landscape generally; 25 • litigation involving us, our industry or both, or investigations by regulators into our operations or those of our competitors; • developments or disputes concerning our intellectual property or other proprietary rights; • announced or completed acquisitions of businesses or technologies by us or our competitors; • new laws or regulations or new interpretations of existing laws or regulations applicable to us and our business; • any significant change in our executive officers and other key personnel or Board of Directors; • release of transfer restrictions on certain outstanding common shares; and • fluctuating or anticipated changes in power markets.
The market price for our common shares is volatile and subject to wide fluctuations in response to numerous factors, many of which are beyond our control, including the following: • price and volume fluctuations in the overall stock market, the cryptocurrency market, and of Bitcoin mining stocks from time to time; • future capital raising activities; • sales of common shares by holders thereof or by us; • changes in financial estimates by securities analysts who follow us, or our failure to meet these estimates or the expectations of investors; • the financial projections we may provide to the public, any changes in those projections or our failure to meet those projections; • rumors and market speculation involving us or other companies in our industry; • actual or anticipated changes in our operating results or fluctuations in our operating results; • actual or anticipated developments in our business, our competitors’ businesses or the competitive landscape generally; 25 • litigation involving us, our industry or both, or investigations by regulators into our operations or those of our competitors; • developments or disputes concerning our intellectual property or other proprietary rights; • announced or completed acquisitions of businesses or technologies by us or our competitors; • new laws or regulations or new interpretations of existing laws or regulations applicable to us and our business; • any significant change in our executive officers and other key personnel or Board of Directors; • release of transfer restrictions on certain outstanding common shares; and • fluctuating or anticipated changes in power markets.
We expect these rules and regulations will increase our legal and financial costs and lead to a diversion of management time and attention from revenue-generating activities. We must comply with the financial reporting requirements of a public company, as well as other requirements associated with being listed on Nasdaq.
We expect these rules and regulations will increase our legal and financial costs and lead to a diversion of management time and attention from revenue-generating activities. 27 We must comply with the financial reporting requirements of a public company, as well as other requirements associated with being listed on Nasdaq.
The loss of any of these key persons could have a material adverse effect on our business, financial condition or results of operations. Our success is also dependent on our continuing ability to identify, hire, train, motivate and retain highly qualified management and finance personnel.
The loss of any of these key persons could have a material adverse effect on our business, financial condition or results of operations. 23 Our success is also dependent on our continuing ability to identify, hire, train, motivate and retain highly qualified management and finance personnel.
If a corresponding and proportionate increase in the trading price of a cryptocurrency or a proportionate decrease in mining difficulty does not follow the decrease in rewards, the revenue we earn from our cryptocurrency mining operations could see a corresponding decrease, which would have a material adverse effect on our business and operations.
If a corresponding and proportionate increase in the trading price of a cryptocurrency or a proportionate decrease in mining difficulty does not follow the decrease in rewards, the revenue we earn from our Bitcoin mining operations could see a corresponding decrease, which would have a material adverse effect on our business and operations.
If management’s assumptions prove to be incorrect, it could have a material adverse effect on our business, financial condition, or results of operations. 23 We have made a number of acquisitions in the past and we may make acquisitions in the future.
If management’s assumptions prove to be incorrect, it could have a material adverse effect on our business, financial condition, or results of operations. We have made a number of acquisitions in the past and we may make acquisitions in the future.
The reward for mining cryptocurrency in the future may decrease, and the value of cryptocurrency may not adjust to compensate us for the reduction in the rewards we receive from our mining efforts. There is no guarantee that price fluctuations of cryptocurrencies will compensate for the reduction in mining reward.
The reward for mining cryptocurrency in the future may decrease, and the value of cryptocurrency may not adjust to compensate us for the reduction in the rewards we receive from our mining efforts. There is no guarantee that price fluctuations of cryptocurrency will compensate for the reduction in mining reward.
Mining machines rely on components and raw materials that may be subject to price fluctuations or shortages, including ASIC chips that have been subject to a significant shortage.
Bitcoin mining machines rely on components and raw materials that may be subject to price fluctuations or shortages, including ASIC chips that have been subject to a significant shortage.
Further, at this time, there is no specifically enumerated U.S. or foreign governmental, regulatory, investigative or prosecutorial authority or mechanism through which to bring an action or complaint regarding missing or stolen cryptocurrency. In the event of a loss, we would be reliant on existing private investigative entities to investigate any such loss of our cryptocurrency assets.
Further, at this time, there is no specifically enumerated U.S. or foreign governmental, regulatory, investigative or prosecutorial authority or mechanism through which to bring an action or complaint regarding missing or stolen cryptocurrency. In the event of a loss, we would be reliant on existing private investigative entities to investigate any such loss of our Bitcoin.
Such events could have a material adverse effect our business, prospects, or operations and potentially the value of any Bitcoin that we mine or otherwise acquire or hold for our own account. 21 Malicious cyber-attacks, attempted cybersecurity breaches, and other adverse events affecting our operational systems or infrastructure, or those of third parties, could disrupt our businesses and cause losses.
Such events could have a material adverse effect our business, prospects, or operations and potentially the value of Bitcoin that we mine or otherwise acquire or hold for our own account. Malicious cyber-attacks, attempted cybersecurity breaches, and other adverse events affecting our operational systems or infrastructure, or those of third parties, could disrupt our businesses and cause losses.
The cryptocurrency that we own, acquire or mine may be deemed an investment security by the SEC, and although we do not believe any of the cryptocurrency we own, acquire or mine are securities, any determination we make regarding whether crypto assets are securities is a risk-based assessment, not a legal standard binding on a regulatory body or court, and does not preclude legal or regulatory action.
The cryptocurrency that we own, acquire or mine may be deemed an investment security by the SEC, and although we do not believe any of the cryptocurrency we own, acquire or mine are securities, any determination we make regarding whether cryptocurrency is a security is a risk-based assessment, not a legal standard binding on a regulatory body or court, and does not preclude legal or regulatory action.
In view of the rapidly evolving nature of our business and the crypto economy, period-to-period comparisons of our operating results may not be meaningful, and you should not rely upon them as an indication of future performance. Quarterly and annual expenses reflected in our financial statements may be significantly different from historical or projected rates.
In view of the rapidly evolving nature of our business and the cryptocurrency economy, period-to-period comparisons of our operating results may not be meaningful, and you should not rely upon them as an indication of future performance. Quarterly and annual expenses reflected in our financial statements may be significantly different from historical or projected rates.
In many nations, particularly in China and Russia, it is illegal to accept payment in cryptocurrencies for consumer transactions and banking institutions are barred from accepting deposits of cryptocurrency. Such restrictions may adversely affect us as the large-scale use of cryptocurrency as a means of exchange is presently confined to certain regions globally.
In many nations, particularly in China, it is illegal to accept payment in cryptocurrency for consumer transactions and banking institutions are barred from accepting deposits of cryptocurrency. Such restrictions may adversely affect us as the large-scale use of cryptocurrency as a means of exchange is presently confined to certain regions globally.
In the event of any such requirement, to the extent we decide to continue, the required registrations, licensure and regulatory compliance steps may result in extraordinary, non-recurring expenses to us. We may also decide to cease its operations. Any termination of certain operations in response to the changed regulatory circumstances may be at a time that is disadvantageous to investors.
In the event of any such requirement, to the extent we decide to continue operating, the required registrations, licensure and regulatory compliance steps may result in extraordinary, non-recurring expenses to us. We may also decide to cease operations. Any termination of certain operations in response to the changed regulatory circumstances may be at a time that is disadvantageous to investors.
A significant disruption in a hosting site's ability to function due to adverse weather could disrupt mining operations until the disruption is resolved and have an adverse effect on our ability to mine cryptocurrencies, impacting our revenues. We may be affected by price fluctuations in the wholesale and retail power markets.
A significant disruption in a hosting site's ability to function due to adverse weather could disrupt mining operations until the disruption is resolved and have an adverse effect on our ability to mine Bitcoin, impacting our revenues. We may be affected by price fluctuations in the wholesale and retail power markets.
Similarly, a number of companies and individuals or businesses associated with cryptocurrencies may have had and may continue to have their existing bank accounts closed or services discontinued with financial institutions in response to government action. We also may be unable to obtain or maintain these services for our business.
Similarly, a number of companies and individuals or businesses associated with cryptocurrency may have had and may continue to have their existing bank accounts closed or services discontinued with financial institutions in response to government action. We also may be unable to obtain or maintain these services for our business.
Our ability to raise additional funds for working capital through equity or debt financings or other sources may depend on the financial success of our then current business and successful implementation of our key strategic initiatives, financial, economic and market conditions and other factors, some of which are beyond our control.
Our ability to raise additional funds for working capital through equity or debt financings or other sources may depend on the financial success of our business and successful implementation of our key strategic initiatives, financial, economic and market conditions and other factors, some of which are beyond our control.
We face risks of downtime at hosting sites due to excessive weather or heat, which could have an adverse effect on the mining of cryptocurrency and impact our revenues. A disruption at hosting sites may affect the mining of cryptocurrency. Generally, cryptocurrency and our business of mining cryptocurrency is dependent upon consistent operations at hosting sites.
We face risks of downtime at hosting sites due to excessive weather or heat, which could have an adverse effect on the mining of Bitcoin and impact our revenues. A disruption at hosting sites may affect the mining of Bitcoin. Generally, Bitcoin and our business of mining Bitcoin is dependent upon consistent operations at hosting sites.
We cannot be certain as to how future regulatory developments will impact the treatment of cryptocurrencies under the law. If we fail to comply with such additional regulatory and registration requirements, we may seek to cease certain of our operations or be subjected to fines, penalties and other governmental action.
We cannot be certain as to how future regulatory developments will impact the treatment of cryptocurrency under the law. If we fail to comply with such additional regulatory and registration requirements, we may seek to cease certain of our operations or be subjected to fines, penalties, and other governmental action.
Bitcoin, for instance, was designed to serve as a peer-to-peer electronic cash system, while Ethereum was designed to be a smart contract and decentralized application platform. Many other crypto networks, ranging from cloud computing to tokenized securities networks, have only recently been established.
Bitcoin, for instance, was designed to serve as a peer-to-peer electronic cash system, while Ethereum was designed to be a smart contract and decentralized application platform. Many other cryptocurrency networks, ranging from cloud computing to tokenized securities networks, have only recently been established.
A perceived lack of stability in the digital asset exchange market and the closure or temporary shutdown of digital asset exchanges due to business failure, hackers or malware, government-mandated regulation, or fraud, may reduce confidence in digital asset networks and result in greater volatility in cryptocurrency values.
A perceived lack of stability in the cryptocurrency exchange market and the closure or temporary shutdown of cryptocurrency exchanges due to business failure, hackers or malware, government-mandated regulation, or fraud, may reduce confidence in cryptocurrency networks and result in greater volatility in cryptocurrency values.
The market price and availability of new mining machines fluctuates with the price of cryptocurrencies and can be volatile. In addition, as more companies seek to enter the mining industry, the demand for machines may outpace supply and create mining machine equipment shortages.
The market price and availability of new mining machines fluctuates with the price of cryptocurrency and can be volatile. In addition, as more companies seek to enter the mining industry, the demand for machines may outpace supply and create mining machine equipment shortages.
If a malicious actor or botnet (a volunteer or hacked collection of computers controlled by networked software coordinating the actions of the computers) obtains a majority of the processing power dedicated to mining on any digital asset network it may be able to alter the blockchain by constructing alternate blocks if it is able to solve for such blocks faster than the remainder of the miners on the blockchain can add valid blocks.
If a malicious actor or botnet (a volunteer or hacked collection of computers controlled by networked software coordinating the actions of the computers) obtains a majority of the processing power dedicated to mining on any cryptocurrency network, it may be able to alter the blockchain by constructing alternate blocks if it is able to solve for such blocks faster than the remainder of the miners on the blockchain can add valid blocks.
Based on current business plans and financial expectations, we do not believe we were a PFIC for our tax year ended December 31, 2023, and based on current business plans and financial expectations, we expect that we will not be a PFIC for our current tax year ending December 31, 2024 or for the foreseeable future.
Based on current business plans and financial expectations, we do not believe we were a PFIC for our tax year ended December 31, 2024, and based on current business plans and financial expectations, we expect that we will not be a PFIC for our current tax year ending December 31, 2025 or for the foreseeable future.
As cryptocurrencies may be determined to be investment securities, we may inadvertently violate the Investment Company Act of 1940 and incur large losses as a result and potentially be required to register as an investment company or terminate operations and we may incur third-party liabilities.
As cryptocurrency may be determined to be investment securities, we may inadvertently violate the Investment Company Act of 1940 and incur large losses and third party liabilities as a result and potentially be required to register as an investment company or terminate operations.
Cryptocurrencies are controllable only by the possessor of both the unique public and private keys relating to the local or online digital wallet in which they are held, which wallet’s public key or address is reflected in the network’s public blockchain.
Cryptocurrency is controllable only by the possessor of both the unique public and private keys relating to the local or online digital wallet in which they are held, which wallet’s public key or address is reflected in the network’s public blockchain.
The loss or destruction of a private key required to access our digital wallets may be irreversible and we may be denied access for all time to our cryptocurrency holdings or the holdings of others held in those compromised wallets.
The loss or destruction of a private key required to access our digital wallets may be irreversible and we may be denied access for all time to our Bitcoin holdings or the holdings of others held in those compromised wallets.
To the extent such private keys are lost, destroyed, or otherwise compromised, we will be unable to access our cryptocurrency rewards and such private keys may not be capable of being restored by any network.
To the extent such private keys are lost, destroyed, or otherwise compromised, we will be unable to access our Bitcoin rewards and such private keys may not be capable of being restored by any network.
However, there is no guarantee that such disruption or any reputational harm resulting therefrom will not have a material adverse effect on our business, financial condition and results of operations in the future. 10 The future development and growth of crypto is subject to a variety of factors that are difficult to predict and evaluate.
However, there is no guarantee that such disruption or any reputational harm resulting therefrom will not have a material adverse effect on our business, financial condition and results of operations in the future. The future development and growth of cryptocurrency is subject to a variety of factors that are difficult to predict and evaluate.
Such circumstances could have a material adverse effect on our ability to continue as a going concern or to pursue our strategy at all, which could have a material adverse effect on our business, prospects, or operations and potentially the value of any cryptocurrency that we mine or otherwise acquire or hold for our own account, and harm investors.
Such circumstances could have a material adverse effect on our ability to continue as a going concern or to pursue our strategy at all, which could have a material adverse effect on our business, prospects, or operations, and potentially the value of Bitcoin that we mine or otherwise acquire or hold for our own account, and harm investors.
Such events could have a material adverse effect on our ability to continue as a going concern or to pursue our new strategy at all, which could have a material adverse effect on our business, prospects or operations and potentially the value of any cryptocurrency that we mine or otherwise acquire or hold for our own account.
Such events could have a material adverse effect on our ability to continue as a going concern or to pursue our new strategy at all, which could have a material adverse effect on our business, prospects or operations and potentially the value of Bitcoin that we mine or otherwise acquire or hold for our own account.
As cryptocurrency has grown in both popularity and market size, governments around the world have reacted differently to cryptocurrency; certain governments have deemed them illegal, and others have allowed their use and trade without restriction, while in some jurisdictions, such as in the United.States, subject to extensive, and in some cases overlapping, unclear and evolving regulatory requirements.
As cryptocurrency has grown in both popularity and market size, governments around the world have reacted differently to cryptocurrency; certain governments have deemed them illegal, and others have allowed their use and trade without restriction, while in some jurisdictions, such as in the United States, subject to extensive and evolving regulatory requirements.
Such potential decreased liquidity or volume, or increase in volatility may adversely affect us, and could have a material adverse effect on our business, prospects, or operations and potentially the value of any cryptocurrency that we mine or otherwise acquire or hold for our own account and harm investors.
Such potential decreased liquidity or volume, or increase in volatility may adversely affect us, and could have a material adverse effect on our business, prospects, or operations and potentially the value of Bitcoin that we mine or otherwise acquire or hold for our own account and harm investors.
Such events could have a material adverse effect on our ability to continue as a going concern or to pursue our new strategy at all, which could have a material adverse effect on our business, prospects, or operations and potentially the value of any cryptocurrency that we mine or otherwise acquire or hold for our own account.
Such events could have a material adverse effect on our ability to continue as a going concern or to pursue our new strategy at all, which could have a material adverse effect on our business, prospects, or operations and potentially the value of Bitcoin that we mine or otherwise acquire or hold for our own account.
Such circumstances could have a material adverse effect on our ability to continue as a going concern or to pursue its business model at all, which could have a material adverse effect on its business, prospects or operations and potentially the value of any cryptocurrencies we plan to hold or expect to acquire for our own account.
Such circumstances could have a material adverse effect on our ability to continue as a going concern or to pursue its business model at all, which could have a material adverse effect on its business, prospects or operations and potentially the value of Bitcoin we plan to hold or expect to acquire for our own account.
It is possible that, through computer or human error, or through theft or criminal action, our cryptocurrency rewards could be transferred in incorrect amounts or to unauthorized third parties, or to uncontrolled accounts.
It is possible that, through computer or human error, or through theft or criminal action, our Bitcoin rewards could be transferred in incorrect amounts or to unauthorized third parties, or to uncontrolled accounts.
To the extent that such malicious actor or botnet does not yield its majority control of the processing power or the digital asset community does not reject the fraudulent blocks as malicious, reversing any changes made to the blockchain may not be possible. Such changes could adversely affect an investment in us.
To the extent that such malicious actor or botnet does not yield its majority control of the processing power or the cryptocurrency community does not reject the fraudulent blocks as malicious, reversing any changes made to the blockchain may not be possible. Such changes could adversely affect an investment in us.
Currently, the New York Department of Financial Services has finalized its “BitLicense” framework for businesses that conduct “virtual currency business activity.” We will continue to monitor for developments in New York legislation, guidance, and regulations. Such additional federal or state regulatory obligations may cause us to incur extraordinary expenses, possibly affecting our business in a material and adverse manner.
Currently, the New York Department of Financial Services has finalized its “BitLicense” framework for businesses that conduct Bitcoin business activity. We will continue to monitor for developments in New York legislation, guidance, and regulations. Such additional federal or state regulatory obligations may cause us to incur extraordinary expenses, possibly affecting our business in a material and adverse manner.
We may take actions to cause the investment securities held by us to be less than 40% of our total assets, which may include acquiring assets with our cash and cryptocurrency on hand or liquidating our investment securities or cryptocurrency or seeking a no-action letter from the SEC if we are unable to acquire sufficient assets or liquidate sufficient investment securities in a timely manner.
We may take actions to cause the investment securities held by us to be less than 40% of our total assets, which may include acquiring assets with our cash and Bitcoin on hand or liquidating our equity investment securities or B or seeking a no-action letter from the SEC if we are unable to acquire sufficient assets or liquidate sufficient investment securities in a timely manner.
If we are unable to successfully enter into definitive hosting agreements with mining data centers on favorable terms or those counterparties fail to perform their obligations under such agreements, we may be forced to look for alternative mining data centers to host its mining equipment.
If we are unable to successfully enter into definitive hosting agreements with mining data centers on favorable terms or those counterparties fail to perform their obligations under such agreements, we may be forced to seek alternative mining data centers to host its mining equipment.
Pricing may be the result of, and may continue to result in, speculation regarding future appreciation in the value of cryptocurrencies, inflating and making its market prices more volatile or creating “bubble” type risks for cryptocurrencies. 20 We may not be able to realize the benefits of forks.
Pricing may be the result of, and may continue to result in, speculation regarding future appreciation in the value of cryptocurrency, inflating and making its market prices more volatile or creating “bubble” type risks for cryptocurrency. We may not be able to realize the benefits of forks.
Using alternate blocks, the malicious actor could “double-spend” its own digital assets (i.e., spend the same digital assets in more than one transaction) and prevent the confirmation of other users’ transactions for so long as it maintains control.
Using alternate blocks, the malicious actor could “double-spend” its own cryptocurrency (i.e., spend the same cryptocurrency in more than one transaction) and prevent the confirmation of other users’ transactions for so long as it maintains control.
To the extent that the digital assets ecosystems do not act to ensure greater decentralization of digital asset mining processing power, the feasibility of a malicious actor obtaining more than 50% of the processing power on any digital asset network (e.g., through control of a large mining pool or through hacking such a mining pool) will increase, which may adversely impact an investment in us.
To the extent that the cryptocurrency ecosystems do not act to ensure greater decentralization of cryptocurrency mining processing power, the feasibility of a malicious actor obtaining more than 50% of the processing power on any cryptocurrency network (e.g., through control of a large mining pool or through hacking such a mining pool) will increase, which may adversely impact an investment in us.
The sale of our common shares upon exercise of our outstanding warrants, the conversion of the Preferred Shares into common shares, or the sale of a significant amount of the common shares issued or issuable upon exercise of the warrants in the open market, or the perception that these sales may occur, could cause the market price of our common shares to decline or become highly volatile.
The sale of our common shares upon exercise of our outstanding warrants, or the sale of a significant amount of the common shares issued or issuable upon exercise of the warrants in the open market, or the perception that these sales may occur, could cause the market price of our common shares to decline or become highly volatile.
Cold storage is generally more secure than hot storage, but is not ideal for quick or regular transactions and we may experience lag time in our ability to respond to market fluctuations in the price of our cryptocurrency assets.
Cold storage is generally more secure than hot storage, but is not ideal for quick or regular transactions and we may experience lag time in our ability to respond to market fluctuations in the price of our Bitcoin.
The consumption of electricity could lead to governmental measures restricting or prohibiting the use of electricity for cryptocurrency mining activities. Any such development in the jurisdictions where we plan to operate could increase our compliance burdens and have a material adverse effect on our business, prospects, financial condition, and operating results.
This, in turn, could lead to governmental measures restricting or prohibiting cryptocurrency mining or the use of electricity for Bitcoin mining activities. Any such development in the jurisdictions where we plan to operate could increase our compliance burdens and have a material adverse effect on our business, prospects, financial condition, and operating results.
Our business is dependent on a small number of digital asset mining equipment suppliers. Our business is dependent upon digital asset mining equipment suppliers providing an adequate supply of new generation digital asset mining machines at economical prices to customers intending to purchase our hosting and other solutions.
Our business is dependent on a small number of Bitcoin mining equipment suppliers. Our business is dependent upon Bitcoin mining equipment suppliers providing an adequate supply of new generation Bitcoin mining machines at economical prices to customers intending to purchase our hosting and other solutions.
These events are continuing to develop and it is not possible to predict, at this time, every risk that they may pose to us, our service providers, or the digital asset industry as a whole.
These events are continuing to develop and it is not possible to predict, at this time, every risk that they may pose to us, our service providers, or the cryptocurrency industry as a whole.
If we and our customers are not able to obtain a sufficient number of digital asset mining machines at favorable prices, our growth expectations, liquidity, financial condition and results of operations will be negatively impacted.
If we and our customers are not able to obtain a sufficient number of Bitcoin mining machines at favorable prices, our growth expectations, liquidity, financial condition and results of operations will be negatively impacted.
The further growth and development of any crypto assets and their underlying networks and other cryptographic and algorithmic protocols governing the creation, transfer, and usage of crypto assets represent a new and evolving paradigm that is subject to a variety of factors that are difficult to evaluate, including: • many crypto networks have limited operating histories, have not been validated in production, and are still in the process of developing and making significant decisions that will affect the design, supply, issuance, functionality, and governance of their respective crypto assets and underlying blockchain networks, any of which could adversely affect their respective crypto assets; • many crypto networks are in the process of implementing software upgrades and other changes to their protocols, which could introduce bugs, security risks, or adversely affect the respective crypto networks; • security issues, bugs, and software errors have been identified with many digital assets and their underlying blockchain networks, some of which have been exploited by malicious actors.
The further growth and development of any cryptocurrency and their underlying networks and other cryptographic and algorithmic protocols governing the creation, transfer, and usage of cryptocurrency represents a new and evolving paradigm that is subject to a variety of factors that are difficult to evaluate, including: • many cryptocurrency networks have limited operating histories, have not been validated in production, and are still in the process of developing and making significant decisions that will affect the design, supply, issuance, functionality, and governance of their respective cryptocurrency and underlying blockchain networks, any of which could adversely affect their respective cryptocurrency; 9 • many cryptocurrency networks are in the process of implementing software upgrades and other changes to their protocols, which could introduce bugs, security risks, or adversely affect the respective cryptocurrency networks; • security issues, bugs, and software errors have been identified with many cryptocurrencies and their underlying blockchain networks, some of which have been exploited by malicious actors.
One or more countries, including but not limited to China and Russia, which have taken harsh regulatory action in the past, may take regulatory actions in the future that could severely restrict the right to acquire, own, hold, sell, or use these cryptocurrency assets or to exchange for fiat currency.
One or more countries, including but not limited to China, which have taken harsh regulatory action in the past, may take regulatory actions in the future that could severely restrict the right to acquire, own, hold, sell, or use cryptocurrency or to exchange for fiat currency.
The price of cryptocurrency may be affected by the sale of cryptocurrency by other vehicles investing in cryptocurrency or tracking cryptocurrency markets. The mathematical protocols under which many cryptocurrencies are mined permit the creation of a limited, predetermined amount of currency, while others have no limit established on total supply.
The price of cryptocurrency may be affected by the sale of cryptocurrency by other vehicles investing in cryptocurrency or tracking cryptocurrency markets. The mathematical protocols under which cryptocurrency is mined permit the creation of a limited, predetermined amount of currency, while others have no limit established on total supply.
The growth in our business is directly related to increased demand for hosting services and cryptocurrency which is dependent in large part on the availability of new generation mining machines offered for sale at a price conducive to profitable digital asset mining, as well as the trading price of cryptocurrency.
The growth in our business is directly related to increased demand for hosting services and Bitcoin which is dependent in large part on the availability of new generation mining machines offered for sale at a price conducive to profitable Bitcoin mining, as well as the trading price of Bitcoin.
These events have also negatively impacted the demand for the digital assets markets. As a result of these events, many digital asset markets, including the market for Bitcoin, have experienced increased price volatility. The Bitcoin ecosystem may continue to be negatively impacted and experience long term volatility if public confidence decreases.
These events have also negatively impacted the demand for the cryptocurrency markets. As a result of these events, many cryptocurrency markets, including the market for Bitcoin, have experienced increased price volatility. The Bitcoin ecosystem may continue to be negatively impacted and experience long term volatility if public confidence decreases.
Forks in a digital asset network may occur in the future which may affect the value of cryptocurrency held by us.
Forks in a cryptocurrency network may occur in the future which may affect the value of cryptocurrency held by us.
These potential consequences of a digital asset exchange’s failure could adversely affect an investment in us. It may be illegal now, or in the future, to acquire, own, hold, sell, or use cryptocurrencies, participate in blockchains or utilize similar cryptocurrency assets in one or more countries, the ruling of which would adversely affect us.
These potential consequences of a cryptocurrency exchange's failure could adversely affect an investment in us. 17 It may be illegal now, or in the future, to acquire, own, hold, sell, or use cryptocurrency, participate in blockchains or utilize similar cryptocurrency in one or more countries, the ruling of which would adversely affect us.
We may not be able to realize the economic benefit of a fork, either immediately or ever, which could adversely affect our business.
A fork in a cryptocurrency could adversely affect our business because we may not be able to realize the economic benefit of a fork, either immediately or ever, which could adversely affect our business.
The approach towards and possible crossing of the 50% threshold indicate a greater risk that a single mining pool could exert authority over the validation of digital asset transactions.
The approach towards and possible crossing of the 50% threshold indicate a greater risk that a single mining pool could exert authority over the validation of cryptocurrency transactions.
We may see continued losses during 2024 and as a result of these and other factors, we may not be able to achieve, sustain or increase profitability in the near future. We are subject to many risks common to early-stage enterprises, including under-capitalization, cash shortages, limitations with respect to personnel, financial, and other resources, technology, and market acceptance issues.
We may see continued losses during 2025 and as a result of these and other factors, we may not be able to achieve, sustain or increase profitability in the near future. We are subject to many risks common to early-stage enterprises, including under-capitalization, cash shortages, limitations with respect to personnel, financial, and other resources.
In such alternate blocks, the malicious actor or botnet could control, exclude, or modify the ordering of transactions, though it could not generate new digital assets or transactions using such control.
In such alternate blocks, the malicious actor or botnet could control, exclude, or modify the ordering of transactions, though it could not generate new cryptocurrency or transactions using such control.
Further, we have been directly and indirectly impacted by certain of the recent bankruptcies in the crypto asset space, and may in the future be directly or indirectly impacted by any future bankruptcies in the crypto asset space.
Further, we have been directly and indirectly impacted by certain of the recent bankruptcies in the cryptocurrency space, and may in the future be directly or indirectly impacted by any future bankruptcies in the cryptocurrency space.
Due to the highly volatile nature of the crypto economy and the prices of Bitcoin, our operating results have, and will continue to, fluctuate significantly from quarter to quarter in accordance with market sentiments and movements in the broader crypto economy.
Due to the highly volatile nature of the cryptocurrency economy and the prices of Bitcoin, our operating results have fluctuated, and will continue to fluctuate from quarter to quarter in accordance with market sentiments and movements in the broader cryptocurrency economy.
Significant changes from our current forecasts, including but not limited to: (i) shortfalls from projected mining earning levels; (ii) increases in operating costs; (iii) fluctuations in the value of cryptocurrency; and (iv) inability to maintain compliance with the requirements of the NASDAQ Capital Market and/or inability to maintain listing with the NASDAQ Capital Market could have a material adverse impact on our ability to access the level of funding necessary to continue our operations at current levels.
Significant changes from our current forecasts, including but not limited to: (i) shortfalls from projected mining earning levels; (ii) increases in operating costs; (iii) decreases in the value of cryptocurrency; and (iv) if we do not maintain compliance with the requirements of The Nasdaq Capital Market (“Nasdaq”) and/or we do not maintain our listing with Nasdaq could have a material adverse impact on our ability to access the level of funding necessary to continue its operations at current levels.
As of the date of this annual report, we do not believe that our operations or financial conditions associated have been materially impacted by any reputational harm that we may face in light of the recent disruption in the crypto asset markets.
As of the date of this annual report, we do not believe that our operations or financial conditions associated have been materially impacted by any reputational harm that we may face in light of the recent disruption in the cryptocurrency market.
Any such action may adversely affect an investment in us. Regulatory changes or actions in one or more countries or jurisdictions may alter the nature of an investment in us or restrict the use of digital assets, such as cryptocurrencies, in a manner that adversely affects our business, prospects or operations.
Any such action may adversely affect an investment in us. Regulatory changes or actions in one or more countries or jurisdictions may alter the nature of an investment in us or restrict the use of cryptocurrency in a manner that adversely affects our business, prospects or operations.
We expect to hold all our cryptocurrency in a combination of insured institutional custody services and multi signature cold storage wallets, and maintain secure backups to reduce the risk of malfeasance, but the risk of loss of our cryptocurrency assets cannot be wholly eliminated.
We expect to hold our Bitcoin in a combination of insured 18 institutional custody services and multi signature cold storage wallets, and maintain secure backups to reduce the risk of malfeasance, but the risk of loss of our Bitcoin cannot be wholly eliminated.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeWe do not believe that risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, have materially affected us, including our business strategy, results of operations or financial condition. 28 Our Board of Directors oversees management’s processes for identifying and mitigating risks, including cybersecurity risks, to help align our risk exposure with our strategic objectives.
Biggest changeWe do not believe that risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, have materially affected us, including our business strategy, results of operations or financial condition. Our Board of Directors oversees management’s processes for identifying and mitigating risks, including cybersecurity risks, to help align our risk exposure with our strategic objectives.
Risk Factors” for a discussion of certain of the cybersecurity risks that our business is subject to. As a smaller reporting company, with respect to compliance with Form 8-K incident disclosure requirements, we are required to comply with the reporting requirements beginning June 15, 2024.
Risk Factors” for a discussion of certain of the cybersecurity risks that our business is subject to. As a smaller reporting company, with respect to compliance with Form 8-K incident disclosure requirements, we were required to comply with the reporting requirements beginning June 15, 2024.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties We are a remote-first company, meaning that for the vast majority of roles, our employees have the option to work remotely. As a result of this strategy, we do not maintain a corporate headquarters.
Biggest changeItem 2. Properties We are a remote-first company, meaning our employees have the option to work remotely. As a result of this strategy, we do not maintain a corporate headquarters.
We believe that our remote working strategy is adequate to meet our needs for the immediate future, and that, should we need physical office space, suitable space will be available in the future. Item 3. Legal Proceedings For a discussion of our legal proceedings, see Note 15. Commitments and Contingencies to our Consolidated Financial Statements. Item 4.
We believe that our remote working strategy is adequate to meet our needs for the immediate future, and that, should we need physical office space, suitable space will be available in the future. Item 3. Legal Proceedings For a discussion of our legal proceedings, see Note 16. Commitments and Contingencies to our Consolidated Financial Statements. Item 4.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeItem 5. Market For Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common shares are listed on the NASDAQ Capital Market under the symbol “ANY”. As of March 4, 2024, we had approximately 37 shareholders of record and beneficial owners of our common shares.
Biggest changeItem 5. Market For Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common shares are listed on The Nasdaq Capital Market under the symbol “ANY”. As of March 24, 2025, we had approximately 35 shareholders of record and beneficial owners of our common shares.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeOperating Expenses Cost of Revenue For the years ended December 31, 2023 and 2022, direct cost of revenues were $15.9 million and $3.4 million, respectively, representing an increase of $12.5 million primarily due to the increase in miners deployed related to our digital mining operation.
Biggest changeThere was also a decrease in revenues of $2.2 million related to our former Service and Product segment which was sold in December 2023. 31 Operating Expenses Cost of Revenue (exclusive of depreciation and amortization expense) For the years ended December 31, 2024 and 2023, direct cost of revenues were $13.4 million and $15.9 million, respectively, representing a decrease of $2.5 million primarily due to lower hosting fees due to machines being taken offline to be relocated and the transition of removing older mining machines and replacing them with newer generation machines, as well the prior year disposal of our Service and Product segment.
For the year ended December 31, 2023, an impairment charge of $1.7 million was recorded for the carbon credits held for future use due to a certain vendor who was not able to perform under terms of the agreement.
For the year ended December 31, 2023, an impairment charge of $1.7 million was recorded for carbon credits held for future use due to a certain vendor who was not able to perform under terms of the agreement.
If we require additional capital and are unsuccessful in raising that capital at a reasonable cost and at the required times, or at all, we may not be able to continue our business operations in the cryptocurrency mining industry or we may be unable to advance our growth initiatives, either of which could adversely impact our business, financial condition and results of operations.
We require additional capital and if we are unsuccessful in raising that capital at a reasonable cost and at the required times, or at all, we may not be able to continue our business operations in the cryptocurrency mining industry or we may be unable to advance our growth initiatives, either of which could adversely impact our business, financial condition and results of operations.
In 2023, interest income and other expense, net, primarily related to a $1.0 million fair value adjustment for warrant liabilities, and $0.2 million in interest income from previously restricted funds that were held in a trust, offset by $0.1 million in other miscellaneous expenses.
In 2023, other income, net, primarily related to a $1.0 million fair value adjustment for warrant liabilities, and $0.2 million in interest income from previously restricted funds that were held in a trust, offset by $0.1 million in other miscellaneous expenses.
During 2023, we sold 3,336 miners originally included in mining equipment, for cash proceeds of $4.5 million, our SPAC received $10.3 million from the redemption of the trust account and paid $10.4 million for the redemption of the redeemable non-controlling interest related to MEOA, and we paid $1.6 million towards digital asset mining machines and shipping costs.
During 2023, we sold 3,336 miners originally included in mining equipment, for cash proceeds of $4.5 million, our SPAC received $10.3 million from the redemption of the trust account and paid $10.4 million for the redemption of the redeemable non-controlling interest related to MEOA, and we paid $1.6 million towards Bitcoin mining machines and shipping costs.
Our ability to raise additional funds for working capital through equity or debt financings or other sources may depend on the financial success of our then current business and successful implementation of our key strategic initiatives, financial, economic and market conditions and other factors, some of which are beyond our control.
Our ability to raise additional funds for working capital through equity or debt financings or other sources may depend on the financial 34 success of our business and successful implementation of our key strategic initiatives, financial, economic and market conditions and other factors, some of which are beyond our control.
Gain on Disposal of Service and Product Segment - Related Party Gain on disposal of service and product segment was $0.7 million and nil for the years ended December 31, 2023 and 2022, respectively.
Gain on Disposal of Service and Product Segment- Related Party Gain on disposal of Service and Product segment was nil and $0.7 million for the years ended December 31, 2024 and 2023, respectively.
Net cash provided by financing activities . During 2023, we received $3.0 million from the issuance of preferred shares and warrants, $0.8 million, net, from the issuance of a convertible note, and $0.6 million from the exercise of stock options.
Net cash provided by financing activities . During 2024, we received $5.4 million, net, from the issuance of common shares and warrants. During 2023, we received $3.0 million from the issuance of preferred shares and warrants, $0.8 million, net, from the issuance of a convertible note, and $0.6 million from the exercise of stock options.
Significant changes from our current forecasts, including but not limited to: (i) shortfalls from projected mining earning levels; (ii) increases in operating costs; (iii) fluctuations in the value of cryptocurrency; and (iv) inability to maintain compliance with the requirements of the NASDAQ Capital Market and/or inability to maintain listing with the NASDAQ Capital Market could have a material adverse impact on our ability to access the level of funding necessary to continue our operations at current levels.
Significant changes from our current forecasts, including but not limited to: (i) shortfalls from projected mining earning levels; (ii) increases in operating costs; (iii) decreases in the value of cryptocurrency; and (iv) if we do not maintain compliance with the requirements of Nasdaq and/or we do not maintain our listing with Nasdaq could have a material adverse impact on our ability to access the level of funding necessary to continue its operations at current levels.
Realized Gain on Sale of Bitcoin Realized gain on sale of Bitcoin was $1.1 million and $19,000 for the years ended December 31, 2023 and 2022, respectively, and was due to the sale of Bitcoin and the difference between the sales proceeds from the Bitcoin and the carrying amount.
Realized Gain on Sale of Bitcoin Realized gain on sale of Bitcoin was nil and $1.1 million for the years ended December 31, 2024 and 2023, respectively, and was due to the sale of Bitcoin and the difference between the sales proceeds from the Bitcoin and the carrying amount.
Management has projected that based on our hashing rate at December 31, 2023, cash on hand may not be sufficient to allow the Company to continue operations and there is substantial doubt about the Company’s ability to continue as a going concern within 12 months from the date of issuance of the financial statements if we are unable to raise additional funding for operations.
Management has projected that based on our recurring losses, negative cash flows from operating activities, and our hashing rate at December 31, 2024, cash on hand may not be sufficient to allow us to continue operations and there is substantial doubt about our ability to continue as a going concern within 12 months from the date of issuance of our financial statements if we are unable to raise additional funding for operations.
Impairment of Acquired Intangible Assets Impairment of acquired intangible assets were $3.0 million and $13.2 million for the years ended December 31, 2023 and 2022, respectively.
Impairment of Acquired Intangible Assets Impairment of acquired intangible assets were nil and $3.0 million for the years ended December 31, 2024 and 2023, respectively.
As of December 31, 2023, we have no standby letters of credit outstanding. Critical Accounting Estimates The discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles, or U.S. GAAP.
Critical Accounting Estimates The discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles, or U.S. GAAP.
General and Administrative Expense General and administrative expenses were $15.8 million and $24.1 million for the years ended December 31, 2023 and 2022, respectively.
General and Administrative Expense General and administrative expenses were $12.4 million and $15.8 million for the years ended December 31, 2024 and 2023, respectively.
On December 19, 2023, our 3,162,500 shares of MEOA’s Class B common stock were cancelled, eliminating our ownership of MEOA, and we recognized a $6.1 million gain related to the deconsolidation of MEOA.
On December 19, 2023, our 3,162,500 shares of MEOA’s Class B common stock were cancelled, eliminating our ownership of MEOA, and we recognized a $6.1 million gain related to the deconsolidation of MEOA. 33 Interest Expense Interest expense was nil and $1.2 million for the years ended December 31, 2024 and 2023, respectively.
Recent Accounting Pronouncements Refer to Note 2, Summary of Significant Accounting Policies , to our consolidated financial statements for a discussion of recent accounting pronouncements and their effect, if any, on us.
Our significant accounting policies are outlined in Note 2 to the Consolidated Financial Statements included in this Annual Report on Form 10-K. Recent Accounting Pronouncements Refer to Note 2, Summary of Significant Accounting Policies , to our consolidated financial statements for a discussion of recent accounting pronouncements and their effect, if any, on us. Item 7A.
The decrease of $22.1 million was primarily due to fully amortized supplier agreements related to our digital mining machines. 32 Provision for Losses on Deposits Due to Vendor Bankruptcy Filings Provision for losses on deposits due to vendor bankruptcy filings was $8.5 million and $16.1 million for the years ended December 31, 2023 and 2022, respectively, primarily as a result of two vendors filing for Chapter 11 bankruptcy.
Provision for Losses on Deposits Due to Vendor Bankruptcy Filings Provision for losses on deposits due to vendor bankruptcy filings was nil and $8.5 million for the years ended December 31, 2024 and 2023, respectively, and in the prior year is primarily as a result of two vendors filing for Chapter 11 bankruptcy.
These factors, among others, indicate there is substantial doubt about our ability to continue as a going concern within 12 months from the date of issuance of the financial statements.
These factors, among others, should they occur may result in our inability to continue as a going concern within 12 months from the date of issuance of our financial statements.
During the year ended December 31, 2023, we sold 3,336 miners that were included in mining equipment, for cash proceeds of $4.5 million. Impairment of Bitcoin Impairment of Bitcoin was $0.7 million and $1.1 million for the years ended December 31, 2023 and 2022, respectively.
We sold 3,263 and 3,336 miners during the years ended December 31, 2024 and 2023, respectively, for proceeds of $1.0 million and $4.5 million, respectively.
We expect our working capital needs to increase in the future as we continue to expand and enhance our operations.
We expect our working capital needs to increase in the future as we continue to expand and enhance our operations. Included in our working capital is an investment in equity securities that we can liquidate as needed to assist in funding our operations.
As a result of the share purchase agreement, the Purchaser, who served as our President, resigned effective December 28, 2023. We recognized a noncash gain of $0.7 million related to the transfer of net liabilities to the Purchaser. Interest Expense Interest expense was $1.2 million and nil for the years ended December 31, 2023 and 2022, respectively.
As a result of the share purchase agreement, the Purchaser, who served as our President, resigned effective December 28, 2023. We recognized a noncash gain of $0.7 million related to the transfer of net liabilities to the Purchaser. Liquidity and Capital Resources Our principal sources of liquidity are our existing cash, cash equivalents and available-for-sale equity securities.
As a result of the analysis, an impairment charge on mining equipment of $75.9 million was recorded for the year ended December 31, 2022. 33 Non-Operating Income and Expenses Gain on Deconsolidation of Special Purpose Acquisition Company Gain on deconsolidation of MEOA, our SPAC, was $6.1 million and nil for the years ended December 31, 2023 and 2022, respectively.
Gain on Deconsolidation of Special Purpose Acquisition Company Gain on deconsolidation of MEOA, our SPAC, was nil and $6.1 million for the years ended December 31, 2024 and 2023, respectively.
The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business and do not include any adjustments that might result from the outcome of this uncertainty. 35 The following table shows a summary of our cash flows (used in) provided by operating activities, investing activities and financing activities (in thousands): Year Ended December 31, 2023 2022 Net cash used in operating activities $ (6,582) $ (30,771) Net cash provided by (used in) investing activities $ 2,561 $ (22,041) Net cash provided by financing activities $ 3,064 $ — Net cash used in operating activities.
The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business and do not include any adjustments that might result from the outcome of this uncertainty.
The $15.8 million increase in revenue is due to the increase of $16.3 million in revenues from our digital mining operation, offset by a decrease of $0.5 million in service and product. The majority of our revenue was derived from digital currency mining and data management services.
The $5.3 million decrease in revenue is due to the decrease of $3.1 million in revenues from our Bitcoin mining operation and a decrease of $2.2 million in service and product.
The increase of $1.2 million was related to $1.0 million for warrants issued with our LDA convertible debt and $0.2 million of debt costs and interest expense. Interest Income and Other Expense, Net Interest income and other expense, net, was $1.1 million and $2.6 million for the years ended December 31, 2023 and 2022, respectively.
In the current year we had no interest expense and the prior year was related to $1.0 million for warrants issued with our LDA convertible debt and $0.2 million of debt costs and interest expense.
Sales and Marketing Expense Sales and marketing expenses were $0.9 million and $1.0 million for the years ended December 31, 2023 and 2022, respectively. The decrease of $0.1 million was primarily due to a $0.2 million decrease in employee related costs associated with a lower average headcount, offset by an increase in share-based compensation.
These decreases were offset by an increase of $0.5 million in share-based compensation primarily related to awards to certain executives, and a $0.3 million increase in costs related to strategic business growth. Depreciation and Amortization Expense Depreciation and amortization expense was $7.1 million and $6.2 million for the years ended December 31, 2024 and 2023, respectively.
The use of cash during 2023 was primarily a result of our net loss of $23.3 million, offset by $15.7 million in noncash items, which primarily included provision for losses on deposits made due to vendor bankruptcy filings, depreciation and amortization, gain on the deconsolidation of our SPAC, impairments of acquired intangible assets, share-based compensation expense, Bitcoin issued for services, change in fair value of warrant liabilities, realized gain on the sale of Bitcoin, warrants issued with convertible debt, loss on the disposal of mining equipment, impairment of Bitcoin, gain on the disposal of our service and product segment, and the noncash exercise of warrants.
The use of cash during 2024 was primarily a result of our net loss of $9.5 million, offset by $6.4 million in noncash items, which primarily included an unrealized gain on investment in equity securities, realized gain on investment in equity securities, depreciation and amortization, share-based compensation expense, impairment of property and equipment, loss on disposal of property and equipment, impairment of other assets, change in fair value of Bitcoin, Bitcoin issued for services, and change in fair value of warrant liabilities.
Typically gains are higher when Bitcoin prices are increasing over a holding period. Loss on Disposal of Property and Equipment Loss on disposal of property and equipment was $1.0 million and nil for the years ended December 31, 2023 and 2022, respectively, and related to the sale of mining equipment.
The increase of $0.9 million was primarily due to depreciation related to our Bitcoin mining machines. Loss on Disposal of Property and Equipment Loss on disposal of property and equipment was $3.5 million and $1.0 million for the years ended December 31, 2024 and 2023, respectively, and related to the sale of mining equipment.
As of December 31, 2023, we had working capital of $8.2 million, reflecting an increase in current assets of $3.2 million and a decrease in current liabilities of $0.9 million compared to December 31, 2022.
As of December 31, 2024, we had working capital of $13.9 million, reflecting an increase in current assets of $4.3 million and a decrease in current liabilities of $1.5 million primarily related to an increase in cash and the unrealized gain on our investment in equity securities.
We do not currently plan to engage in regular trading of Bitcoin (other than as necessary to convert our Bitcoin into U.S. dollars) or to engage in hedging activities related to our holding of Bitcoin; however, our decisions to hold or sell Bitcoin at any given time may be impacted by the Bitcoin market, which has been historically characterized by significant volatility.
We do not currently plan to engage in regular trading of Bitcoin other than sales to convert our Bitcoin into U.S. dollars. Decisions to hold or sell our Bitcoin is currently determined by management by analyzing forecasts and monitoring the market in real time.
These inflows were offset by $1.3 million of payments made on our convertible debt which was paid in full in August 2023. Off-Balance Sheet Information During the ordinary course of business, we may provide standby letters of credit to third parties as required for certain transactions initiated by us.
These inflows were offset by $1.3 million of payments made on our convertible debt which was paid in full in August 2023.
We have established and continue to grow an enterprise-scale mining operation through the procurement of mining equipment and partnering with experienced service providers. In addition to digital mining, through December 28, 2023, we delivered data management and desktop and application virtualization solutions through hybrid cloud, cloud and on premise implementations by its reseller network.
In addition to Bitcoin mining, through December 28, 2023, we delivered data management and desktop and application virtualization solutions through hybrid cloud, cloud and on premise implementations by its reseller network. We achieved this through a combination of containerized applications, virtual desktops, virtual storage and physical hyper-converged platforms.
Research and Development Expense Research and development expenses were $1.0 million and $0.6 million for the years ended December 31, 2023 and 2022, respectively. The increase of $0.4 million was primarily due to a $0.2 million increase in employee and related expenses associated with internal projects, and $0.2 million due to severance costs.
Research and Development Expense Research and development expenses were nil and $1.0 million for the years ended December 31, 2024 and 2023, respectively. The decrease of $1.0 million was due to the sale of our Service and Product segment in December 2023 and we no longer have research and development expense.
Due to the uncertainty regarding when we would receive the Bitcoin, the Bitcoin proceeds, less fees and expenses, will be recognized when received. 31 Results of Operations - Comparison of Years Ended December 31, 2023 and 2022 Revenue We had revenue of $21.9 million during 2023 compared to $6.1 million during 2022.
Subsequent to December 31, 2024, we sold 210,448 common shares for approximately $0.1 million of net proceeds under the AGP Agreement. Results of Operations - Comparison of Years Ended December 31, 2024 and 2023 Revenue We had revenue of $16.6 million during 2024 compared to $21.9 million during 2023.
Provision for Losses on Deposit for Mining Equipment Provision for deposit on mining equipment was nil and $10.0 million for the years ended December 31, 2023 and 2022, respectively.
Impairment of Property and Equipment Impairment of property and equipment was $1.1 million and nil for the years ended December 31, 2024 and 2023, respectively, and related to idle mining equipment not expected to return to use.
All share and per share amounts have been restated for all periods presented to reflect the share consolidation. Overview In January 2022, we commenced operations of our digital mining business and are dedicated to becoming a leader in the Blockchain and Crypto Industry.
Overview In January 2022, we commenced operations of our Bitcoin mining business and are dedicated to becoming a leader in the blockchain and cryptocurrency industry. We have established and continue to grow an enterprise-scale mining operation through the procurement of mining equipment and partnering with experienced service providers.
These decreases were offset by increases of $2.8 million for legal expenses associated with litigation with Core Scientific Inc. and Gryphon Digital Mining Inc., a prior year nonrecurring adjustment of $1.4 million for a change in fair value of a crypto asset payable, $0.9 million related to formation and operating costs for MEOA, our special purpose acquisition company (“SPAC”), $0.5 million of additional insurance cost, and $0.2 million in director fees.
The decrease of $3.4 million was primarily due to a decrease of $1.2 million in legal fees associated with the 2023 litigation with Core Scientific Inc. and Gryphon Digital Mining Inc., a decrease of $0.9 million related to operating costs for our former special purpose acquisition company which no longer exists for 2024, a $0.7 million decrease associated with outside services related to our expansion into the cryptocurrency industry, a decrease of $0.6 million for employee and related expenses, a decrease of $0.4 million in investor relations, and a decrease of $0.3 million in insurance cost.
In 2022, we recognized a gain on forgiveness of liabilities of $2.1 million and interest income of $0.6 million from our notes receivable. Impairment of Investments Impairment of investments was nil and $14.5 million for the years ended December 31, 2023 and 2022, respectively.
Non-Operating Income and Expenses Investment Income Investment income was $9.0 million and nil for the years ended December 31, 2024 and 2023, respectively. In 2024, investment income related to a $4.1 million realized gain on the partial sale of our equity investment in Core Scientific Inc., and a $4.9 million unrealized gain on our equity investment in Core Scientific Inc.
Income from our mining segment is a result of Bitcoin mining activities in the United States. Income from our product and services segment is primarily generated in the United States. On December 28, 2023, we sold our service and product segment.
On December 28, 2023, we sold our Service and Product segment which included HVE ConneXions and Unified ConneXions. We obtain Bitcoin as a result of our mining operations, and when necessary we sell Bitcoin to support our operations and strategic growth.
We have a hybrid treasury strategy to hold Bitcoin when possible, and sell at peaks or sell to fund working capital requirements. As of December 31, 2023, we held approximately 23.8 Bitcoin. The carrying value of our Bitcoin as of December 31, 2023 was $1.0 million on our consolidated balance sheet.
We have a hybrid treasury strategy to hold Bitcoin when possible, and sell to fund working capital requirements. As of December 31, 2024, we owned approximately 14,000 miners, of which approximately 6,300 were in service, and a total hashrate capacity of 0.76 exahash per second (“EH/s”).
The fair value of the Filecoiner investments was impacted by the decrease in the price of Filecoin since the time of the investments resulting in an impairment. Forgiveness of Note Receivable Forgiveness of note receivable was nil and $13.1 million for the years ended December 31, 2023 and 2022, respectively.
Impairment of Other Assets Impairment of other assets was $1.1 million and nil for the years ended December 31, 2024 and 2023, respectively, and primarily related to a $0.9 million impairment to our prepaid service fees held by Rebel Mining Company, and a $0.2 million impairment for an uncollectible other receivable. 32 Change in Fair Value of Bitcoin Change in fair value of Bitcoin was $0.7 million and nil for the years ended December 31, 2024 and 2023, respectively.
In addition, we have financed our operations through proceeds from the issuance of private and public sales of securities. At December 31, 2023, we had cash and cash equivalents of $0.6 million compared to $1.3 million at December 31, 2022.
We expect to fund our operations going forward with existing cash resources, anticipated revenue from our Bitcoin mining operation, and cash that we may raise through future financing transactions. At December 31, 2024, we had cash and cash equivalents of $5.4 million compared to $0.6 million at December 31, 2023.
Removed
Share Consolidation On June 28, 2023, we filed Articles of Amendment to effect a share consolidation (also known as a reverse stock split) of our issued and outstanding common shares on a 1-for-7 basis. The share consolidation became effective on June 28, 2023.
Added
We mine Bitcoin in Missouri, Texas and Iowa, which these states do not have any material state-specific regulatory restrictions on the mining of Bitcoin. However, it is possible that these states or other states in which we may seek to operate may create laws that would impede Bitcoin mining.
Removed
We achieved this through a combination of containerized applications, virtual desktops, virtual storage and physical hyper-converged platforms. On December 28, 2023, we sold our service and product segment which included HVE ConneXions and Unified ConneXions. We owned approximately 13,530 miners as of December 31, 2023, of which approximately 12,800 were in service.
Added
We are strategizing for our future growth by refreshing a significant portion of our fleet with newer-generation machines to bolster efficiency and developing a 8 megawatt (“MW”) site in Iowa. Vertically integrating with self owned facilities, like the Iowa site, allows us to reduce our reliance on third-parties and decrease our overall cost to mine a Bitcoin.
Removed
We do not have scheduled downtime for our miners. We periodically perform both scheduled and unscheduled maintenance on our miners, but such downtime has not historically been significant. Depending on the type of repair, the miner may run at a reduced speed or be taken offline. We use multiple software programs to monitor the performance of our machines.
Added
As a result of our strategic changes, during the third and fourth quarter of 2024 mining production decreased as we focused on our long-term strategic goals of transitioning to lower-cost hosting sites, vertically integrating to own our own sites, and refreshing our fleet with newer-generation machines. 30 As of December 31, 2024, we held approximately 14.9 Bitcoin.
Removed
The miners owned as of December 31, 2023 have a range of energy efficiency (joules per terahash – “J/th”) of 21.5 to 38 J/th with an average energy efficiency of 28.4 J/th.
Added
The fair value of our Bitcoin as of December 31, 2024 was approximately $1.4 million on our consolidated balance sheet. We account for Bitcoin as indefinite-lived intangible assets.
Removed
The miner efficiency is an indication of how efficient we can earn Bitcoin and minimize cost to run the miner. 30 We obtain Bitcoin as a result of our mining operations, and we sell Bitcoin from time to time, to support our operations and strategic growth.
Added
Effective January 1, 2024, we early adopted ASU 2023-08, Intangibles - Goodwill - and Other - Crypto Assets (Subtopic 350-60) : Accounting For and Disclosure of Crypto Assets (“ASU 2023-08”) and recorded a $20,000 decrease to the opening balance of accumulated deficit and an increase to cryptocurrency.
Removed
Currently, we do not use a formula or specific methodology to determine whether or when we will sell Bitcoin that we hold, or the number of Bitcoins we will sell. Rather, decisions to hold or sell Bitcoins are currently determined by management by analyzing forecasts and monitoring the market in real time.
Added
The new guidance requires Bitcoin to be valued at fair value each reporting period with changes in fair value recorded in operating expenses in the consolidated statement of operations. The fair value of Bitcoin is measured using the period-end closing price from the Company’s principal market.
Removed
We account for our Bitcoin as indefinite-lived intangible assets, which are subject to impairment losses if the fair value of our Bitcoin decreases below their carrying value at any time since their acquisition. Impairment losses cannot be recovered for any subsequent increase in fair value.
Added
When Bitcoin is sold, the gains and losses from such transactions are measured as the difference between the cash proceeds and the carrying basis of the Bitcoin as determined on a first in-first out (“FIFO”) basis and are recorded within the same line item, Change in fair value of Bitcoin, in the consolidated statements of operations.
Removed
The carrying value of each Bitcoin we held at the end of each reporting period reflects the lowest price of one Bitcoin quoted on the active exchange at any time since its acquisition. Therefore, negative swings in the market price of Bitcoin could have a material impact on our earnings and on the carrying value of our Bitcoin.
Added
Recent Key Events • On March 7, 2025, we reached a settlement with Gryphon Digital Mining, Inc. to resolve all claims against each other on mutually satisfactory terms that will result in the complete dismissal of the outstanding litigation.
Removed
Recent Key Events • On January 16, 2024 we reached a settlement agreement (the “Settlement Agreement”) with Core Scientific Inc., which was approved by a United States Bankruptcy Judge on January 16, 2024 as part of Core Scientific’s emergence from bankruptcy, for $10.0 million of Core Scientific’s equity.
Added
We were required to make no payments under the settlement agreement. • On March 10, 2025, our new 8 MW hosting site in Iowa was energized. • On March 6, 2025, we received a notice from the Nasdaq Listing Qualifications Department of the Nasdaq Stock Market LLC stating that the bid price of our common shares for the last 30 consecutive trading days had closed below the minimum $1.00 per share required for continued listing under Listing Rule 5550(a)(2) (the “Listing Rule”).
Removed
The Settlement Agreement includes access to potential additional funds for interest as well as an additional equity pool if the value of Core Scientific’s equity decreases in the 18 months after the date of the Settlement Agreement commensurate with the other unsecured creditors.
Added
We have a period of 180 calendar days, or until September 2, 2025, to regain compliance with the Listing Rule. • On January 29, 2025, we granted 1,684,783 restricted stock units with a fair value of $1.5 million and vesting periods of two years.
Removed
On January 23, 2024, we received 2,050,982 common shares of Core Scientific Inc. trading under the Nasdaq symbol CORZ. • In January 2024, we granted 1,114,942 RSUs with a fair value of $2.2 million and vesting periods of up to two years and 246,150 options with a fair value of $0.5 million and a vesting period of 11 months. • Subsequent to December 31, 2023, pursuant to the Modified Hertford Agreement, we issued 2,422,710 common shares for the conversion of 16,959 Series H Preferred Shares. • On December 28, 2023, we entered into a share purchase agreement with Joseph O’Daniel (“Purchaser”), a related party, under which we sold our service and product segment, including HVE ConneXions and Unified ConneXions, for $1.00 and the transfer of outstanding assets and liabilities.
Added
On March 4, 2025, we canceled 927,310 RSUs that were granted on January 29, 2025. • On January 21, 2025, we issued 507,000 common shares for the exercise of pre-funded warrants issued in November 2024. • On January 16, 2025, we ended our hosting agreement with Rebel Mining Company, LLC (the “Rebel Hosting Agreement”) and agreed to a termination and settlement amount of $2.4 million payable to us in satisfaction of all obligations of the Rebel Hosting Agreement, and it constitutes a final settlement of all amounts owed by either party. • On January 3, 2025, we entered into a sales agreement (the “AGP Agreement”) with A.G.P./Alliance Global Partners (the “Sales Agent”).
Removed
As a result of the share purchase agreement, the Purchaser, who served as our President, resigned effective December 28, 2023. We recognized a noncash gain of $0.7 million related to the transfer of net liabilities to the Purchaser. • On December 19, 2023, our 3,162,500 shares of Minority Equality Opportunities Acquisition Inc.
Added
In accordance with the terms of the AGP Agreement, we may offer and sell from time to time through or to the Sales Agent, as agent or principal, the Company's common shares having an aggregate offering price of up to $8.0 million.
Removed
(“MEOA”) Class B common stock were cancelled, eliminating our ownership of MEOA, and we recognized a $6.1 million gain related to the deconsolidation of MEOA. • On October 6, 2023, in accordance with the cure period, we terminated the Gryphon MSA.
Added
The Bitcoin mining revenue decreased primarily due to one of our previous hosting providers taking approximately 3,300, or 22%, of our mining machines offline in the third quarter of 2024 to relocate them and the majority of such machines are still pending redeployment.
Removed
In November 2023, Gryphon indicated that upon receipt of certain information it would remit outstanding Bitcoin proceeds, less fees and expenses that we assert is currently held by Gryphon on behalf of us, which we believe amounts to approximately 21.6 Bitcoin and approximately $0.6 million of revenue at December 31, 2023, before factoring in fees and expenses.
Added
In addition, beginning the third quarter of 2024, we are in the process of removing our older mining equipment and replacing it with newer generation machines. This is expected to be an ongoing process through 2025, which may result in further fluctuations in exahash.
Removed
The decrease of $8.3 million was primarily due to decreases of approximately $6.1 million in share-based compensation related to awards, $5.8 million associated with outside services primarily related to our 2022 expansion into the digital mining industry, $1.9 million for costs related to former proposed merger transaction that was terminated in 2022, and $0.3 million in other costs.
Added
Sales and Marketing Expense Sales and marketing expenses were nil and $0.9 million for the years ended December 31, 2024 and 2023, respectively. The decrease of $0.9 million was due to the sale of our Service and Product segment in December 2023 and we no longer have sales and marketing expenses.
Removed
Depreciation and Amortization Expense Depreciation and amortization expense was $6.2 million and $28.3 million for the years ended December 31, 2023 and 2022, respectively.
Added
Effective January 1, 2024, we early adopted ASU 2023-08 and recorded a $20,000 decrease to the opening balance of accumulated deficit and an increase to digital assets. The gain in the year ended December 31, 2024 is the change in fair value of the Bitcoin held, as well as the gains and losses from when the Bitcoin was sold.
Removed
For the year ended December 31, 2022, an impairment charge of $13.2 million was recorded for supplier agreements due to adverse changes in the business climate, including the decline in the price of Bitcoin and two of our vendors, Core Scientific and Compute North filing for bankruptcy.
Added
Sale transactions are measured as the difference between the cash proceeds and the carrying basis of the Bitcoin as determined on a FIFO basis.
Removed
The decrease of $0.4 million was due to a reduction in impairment losses recognized on our Bitcoin. An impairment analysis is performed daily to determine if the lowest intraday price of Bitcoin is lower than the Company’s carrying value for Bitcoin until the Company’s Bitcoin is sold or until the end of the reporting period, whichever comes first.
Added
Typically gains are higher when Bitcoin prices are increasing over a holding period. Effective January 1, 2024, we early adopted ASU 2023-08, and in accordance with the new guidance we no longer report impairment of Bitcoin and realized gain on sale of Bitcoin separately.
Removed
If the carrying value of the digital assets exceeds the fair value based on the lowest intraday quoted price as reported in our principal market during the period, an impairment loss has occurred with respect to those digital assets in the amount equal to the difference between their carrying values and the price determined.
Added
Instead, current period comparable information is reported in the line item Change in fair value of Bitcoin in the consolidated statement of operations. Impairment of Bitcoin Impairment of Bitcoin was nil and $0.7 million for the years ended December 31, 2024 and 2023, respectively.

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