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What changed in BTCS Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of BTCS Inc.'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.

+337 added−391 removedSource: 10-K (2025-03-20) vs 10-K (2024-03-21)

Top changes in BTCS Inc.'s 2024 10-K

337 paragraphs added · 391 removed · 191 edited across 5 sections

Item 1. Business

Business — how the company describes what it does

37 edited+53 added−59 removed25 unchanged
Biggest changeTo achieve this, we plan to work towards the completion of the development of ChainQ, potentially establish partnerships and collaborations with other blockchain projects for integration, and implement a subscription-based pricing model to monetize the platform. 10 HUMAN CAPITAL / EMPLOYEES As of December 31, 2023, we had five full-time employees, all of whom work full-time, none of which are covered by a collective bargaining agreement.
Biggest changeHUMAN CAPITAL / EMPLOYEES As of December 31, 2024, we had seven employees, all of whom work full-time, none of which are covered by a collective bargaining agreement. We engage third-party contractors and consultants on an as-needed basis. We are a remote-first Company.
We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.
We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law. 13
More recently, the SEC Enforcement Division has taken action against crypto asset focused enterprises, and if the interpretations of federal securities laws are further expanded to apply to the Company, it would adversely affect the Company’s future acquisition of crypto assets by limiting the amount of crypto asset securities (“Digital Securities”) it may acquire, potentially limiting or precluding the use of its blockchain infrastructure and other operations, and creating increased compliance and legal costs.
The SEC Enforcement Division has taken action against crypto asset focused enterprises, and if the interpretations of federal securities laws are further expanded to apply to the Company, it would adversely affect the Company’s future acquisition of crypto assets by limiting the amount of crypto asset securities (“Digital Securities”) it may acquire, potentially limiting or precluding the use of its blockchain infrastructure and other operations, and creating increased compliance and legal costs.
Delegation is a non-custodial process that allows token holders (“Delegators”, or “customers”) to maintain control of their private keys and revoke their delegation at any time (subject to the rules of a particular blockchain). There is no transfer of ownership, often referred to as “private keys”, of any Delegator’s crypto assets as part of the Delegation process.
Delegation is a non-custodial process that allows token holders (“Delegators”) to maintain control of their private keys and revoke their delegation at any time (subject to the rules of a particular blockchain). There is no transfer of ownership, often referred to as “private keys”, of any Delegator’s crypto assets as part of the Delegation process.
Provided, however, if over 40% of our assets are considered securities, excluding cash, we may be considered a 1940 Act company (see the risk factor on page 12 herein) . Further, the aforementioned assessments are risk-based judgments and not a legal standard or determination binding on any regulatory body or court.
Provided, however, if over 40% of our assets are considered securities, excluding cash, we may be considered a 1940 Act company (see Risk Factors on page 14 herein). Further, the aforementioned assessments are risk-based judgments and not a legal standard or determination binding on any regulatory body or court.
The Company may acquire additional crypto assets and continues to develop and expand upon its StakeSeeker, Builder+, and ChainQ platforms to enable it to offer a wider range of functions and availability for use with a greater variety of crypto assets.
The Company may acquire additional crypto assets and continues to develop and expand upon its Builder+ operations and ChainQ platform to enable it to offer a wider range of functions and availability for use with a greater variety of crypto assets.
Occasionally, we may use hot wallets or move crypto assets to exchanges for operational or transactional requirements. Additionally, we regularly transfer crypto assets to more secure cold wallets when appropriate. As of December 31, 2023, 97% of BTCS’s crypto assets were held in cold storage wallets and 3% of crypto assets were held in other storage wallets, including hot wallets.
Occasionally, we may use hot wallets or move crypto assets to exchanges for operational or transactional requirements. Additionally, we regularly transfer crypto assets to more secure cold wallets when appropriate. As of December 31, 2024, 98% of BTCS’s crypto assets were held in cold storage wallets and the remaining crypto assets were held in other storage wallets, including hot wallets.
Because of the foregoing or other regulatory developments, in the future, before we acquire or transact in crypto assets, we may be required to examine how they were originally offered to determine if they were offered as an investment contract or other type of security.
We continue to monitor legislative matters related to our industry. Because of the foregoing or other regulatory developments, in the future, before we acquire or transact in crypto assets, we may be required to examine how they were originally offered to determine if they were offered as an investment contract or other type of security.
Management’s Discussion and Analysis of Financial Condition and Results of Operations.” 3 Staking-as-a-Service Through BTCS’s blockchain infrastructure operations, we validate transactions on behalf of those who delegate their crypto holdings (or “Stake”) to BTCS-operated validator nodes (referred to as “Staking as a Service” or “StaaS”) on dPoS blockchains.
Staking-as-a-Service - NodeOps Through BTCS’s blockchain infrastructure operations, we validate transactions on behalf of those who delegate their crypto holdings (or “stake”) to BTCS-operated validator nodes (referred to as “Staking as a Service” or “StaaS”) on dPoS blockchains.
Recent actions taken by the SEC, including enforcement actions brought against crypto asset companies with a focus on custodial staking, are more particularly described under certain “Risk Factors”, demonstrate the SEC’s position that many, if not most, crypto assets may be securities and therefore reflect the reality that we will likely face increased government regulation and oversight as our industry and government treatment of the crypto assets on which our operations are based continue to evolve.
Prior to President Trump taking office, actions taken by the SEC, including enforcement actions brought against crypto asset companies with a focus on custodial staking, demonstrate the SEC’s position that many, if not most, crypto assets may be securities and therefore reflect the reality that we could face increased government regulation and oversight as our industry and government treatment of the crypto assets on which our operations are based continue to evolve.
Both the crypto reward paid to the Delegator and the crypto fee paid to the Validator are distributed by the blockchain network. These “validator fees” in the dPoS network encourage validators to participate in the network and thereby help to secure and decentralize the network.
This fee is broadcast by the Validator to the network and publicly available. Both the crypto reward paid to the Delegator and the crypto fee paid to the Validator are distributed by the blockchain network. These Validator Fees in the dPoS network encourage validators to participate in the network and thereby help to secure and decentralize the network.
To the extent a regulatory body or court finds that our conclusions are incorrect, we may seek to cease certain of our operations.
To the extent a regulatory body or court finds that our conclusions are incorrect, we may seek to cease certain of our operations. Any such action may adversely affect an investment in us.
Therefore, to the extent the SEC identified all other crypto assets held by the Company excluding Ethereum as securities, the Company would still not meet the definition of an “investment company” under Section 3(a)(1)(C) of the 1940 Act. By doing so, we can avoid being subject to the regulatory requirements and oversight that apply to investment companies.
Therefore, to the extent the SEC identified all other crypto assets held by the Company excluding Ethereum as securities, the Company would still not meet the definition of an “investment company” under Section 3(a)(1)(C) of the 1940 Act.
ITEM 1. BUSINESS BTCS Inc. (“BTCS” or the “Company”) is a Nasdaq listed company operating in the blockchain technology sector since 2014 and is one of the only U.S. publicly traded companies with a primary focus on proof-of-stake blockchain infrastructure.
ITEM 1. BUSINESS BTCS Inc. (“BTCS” or the “Company”) is a Nasdaq-listed blockchain technology company focused on advancing blockchain infrastructure. Since 2014, BTCS has established itself as one of the only publicly traded U.S. companies with a primary emphasis on proof-of-stake (“PoS”) and delegated proof-of-stake (“dPoS”) blockchain networks.
We primarily earn crypto assets through the operation of our non-custodial validator nodes, with the intention of enhancing our production of crypto assets in various blockchain networks.
The flexibility of BTCS’s validator operations positions the Company to adapt to emerging opportunities within the blockchain sector. We primarily earn crypto assets through the operation of our non-custodial validator nodes, with the intention of enhancing our production of crypto assets in various blockchain networks.
As a non-custodial Validator operator, BTCS may charge a validator node fee, typically determined as a percent of the crypto asset rewards earned on crypto assets delegated to its node, creating the opportunity for potential scalable revenue and business growth with limited additional costs. This fee is broadcast by the Validator to the network and publicly available.
As a non-custodial Validator operator and StaaS provider, BTCS charges a validator node fee (“Validator Fee”), which is calculated as a percentage of the crypto asset rewards earned on crypto assets delegated to its node, creating the opportunity for potential scalable revenue and business growth with limited additional costs.
We are committed to the principles of equal employment and complying with all federal, state, and local laws providing equal employment opportunities, and all other employment laws and regulations.
We value our diverse employees, and provide career and professional development opportunities that foster the success of our Company. We are committed to the principles of equal employment and complying with all federal, state, and local laws providing equal employment opportunities, and all other employment laws and regulations.
For example, lawmakers and regulators have in recent years expressed views that government oversight is needed, including with a view to curtailing the use of crypto asset use for malign and illegal activities. Many PoW crypto assets have also been subject to skepticism due to concerns about the high energy consumption used in mining on blockchain networks.
For example, lawmakers and regulators have in recent years expressed views that government oversight is needed, including with a view to curtailing the use of crypto asset use for malign and illegal activities.
Human capital management is critical to our ongoing business success, which requires investing in our people. Our aim is to create a highly engaged and motivated workforce where employees are inspired by leadership, engaged in purpose-driven, meaningful work, and have opportunities for growth and development.
Our aim is to create a highly engaged and motivated workforce where employees are inspired by leadership, engaged in purpose-driven, meaningful work, and have opportunities for growth and development. We are committed to creating and maintaining a work environment in which employees are treated with respect and dignity.
The Series V preferred Stock is perpetual and does not convert into shares of the Company’s Common Stock. 11 Cautionary Note Regarding Forward Looking Statements This report contains forward-looking statements, including our liquidity, our belief that our blockchain infrastructure efforts will form the core growth for our business, including but not limited to Builder+, StakeSeeker, and Chain, plans to expand our PoS operations, growth opportunities for the Company, our belief regarding blockchain, expected increase in our revenues and gross margins and future business plans.
If these conditions are not satisfied, the applicable restricted shares will be forfeited and returned to the Company. 12 Cautionary Note Regarding Forward Looking Statements This report contains forward-looking statements, including our liquidity, potential for Builder+ to drive revenue growth, our belief that our blockchain infrastructure efforts will form the core growth for our business, including but not limited to Builder+, and ChainQ, plans to expand our PoS operations, growth opportunities for the Company, our belief regarding blockchain, expected increase in our revenues and gross margins and future business plans.
The Company has conducted a detailed legal analysis which has led us to determine that certain crypto assets that are identified as securities by the SEC should not impact our business, financial condition, and results of operations.
By doing so, we can avoid being subject to the regulatory requirements and oversight that apply to investment companies. 7 The Company has conducted a detailed legal analysis which has led us to determine that certain crypto assets that are identified as securities by the SEC should not materially impact our business, financial condition, and results of operations, though this determination is subject to change based on evolving regulatory guidance and enforcement actions.
Our cold wallet private keys are protected through a variety of methods, including key sharding, key encryption, and offline encrypted key storage in safety deposit boxes situated across multiple geographic locations. We believe this multi-layered approach ensures the utmost security for our crypto assets.
Our cold wallet private keys are protected through multiple redundant security measures, industry-standard key sharding protocols, encryption, and geographically distributed offline encrypted key storage in secured facilities and restricted access protocols. We believe this multi-layered approach ensures the utmost security for our crypto assets.
Because of legal uncertainties, careful examination of the results of our compliance review will be required by experienced securities counsel.
Because of legal uncertainties, careful examination of the results of our compliance review will be required by experienced securities counsel, and we cannot guarantee that such review will conclusively determine the proper classification of any particular crypto asset.
Therefore, BTCS does not obtain custody or facilitate transfers of any third-party crypto assets in its role as a Validator or StaaS provider.
Therefore, BTCS does not obtain custody or facilitate transfers of any third-party crypto assets in its role as a Validator or StaaS provider. 4 ChainQ BTCS has developed ChainQ, an AI-powered blockchain data and analytics platform designed to increase transparency and accessibility in the blockchain ecosystem.
We engage third-party contractors and consultants on an as-needed basis. We are a remote-first Company. We believe that allowing our employees to work in the location that best suits them provides us access to a larger talent pool and a sustained advantage in hiring and retaining employees and consultants in the United States and worldwide.
We believe that allowing our employees to work in the location that best suits them provides us access to a larger talent pool and a sustained advantage in hiring and retaining employees and consultants in the United States and worldwide. Human capital management is critical to our ongoing business success, which requires investing in our people.
As a StaaS provider, BTCS does not take custody of or pool Delegator crypto assets or Delegator crypto rewards (i.e. BTCS does not take possession of users’ private “keys” or “crypto”). The rewards earned on delegated crypto assets are sent directly to Delegators by the respective blockchain network and are never in BTCS’s possession.
The rewards earned on delegated crypto assets are sent directly to Delegators by the respective blockchain network and are never in BTCS’s possession.
The prices of crypto assets have experienced substantial volatility, which may reflect “bubble” type volatility, meaning that high or low prices may have little or no merit, are subject to rapidly changing investor sentiment, and may be influenced by factors such as technology, regulatory void or changes, fraudulent actors, manipulation, and media reporting. 6 Government Oversight Blockchain networks are a relatively new technological innovation and the regulatory schemes to which crypto assets and their blockchain networks are or may be subject, including both the interpretation and applicability of existing laws and regulations and the potential establishment of new laws and regulations, have not been fully explored or developed.
Despite these challenges, the Company believes that its focus on blockchain infrastructure, including Ethereum block-building and validator node operations, positions it to capitalize on the transformative potential of blockchain technology while navigating the associated risks. 6 Government Oversight Blockchain networks are a relatively new technological innovation and the regulatory schemes to which crypto assets and their blockchain networks are or may be subject, including both the interpretation and applicability of existing laws and regulations and the potential establishment of new laws and regulations, have not been fully explored or developed.
Any such action may adversely affect an investment in us. 7 In addition to the securities laws and investment company considerations, as our business model and operations continue to evolve, including StakeSeeker, Builder+, and ChainQ we may become subject to additional laws and regulations.
In addition to the securities laws and investment company considerations, as our business model and operations continue to evolve, including, Builder+, and ChainQ, we are subject to and must comply with an expanding framework of laws and regulations, including comprehensive data privacy laws (such as the American Data Privacy Protection Act, as amended), enhanced cybersecurity requirements, consumer protection standards, and evolving financial services regulations.
In separate SEC complaints, the SEC identified Cardano, Tezos, Solana, Cosmos, Polygon, Axie Infinity, and NEAR Protocol crypto assets as securities. As a matter of practice the Company typically targets keeping in excess of 60% of the Company’s total assets (excluding cash and government securities) in Ethereum.
As a matter of practice, the Company typically targets maintaining in excess of 60% of the Company’s total assets (excluding cash and government securities) in Ethereum, though this target may be adjusted based on market conditions and regulatory developments.
Custody and Key Storage BTCS prioritizes self-custody of its crypto assets through secure storage of most of its crypto assets in cold digital wallets, with the goal of typically maintaining less than 0.1% of its crypto assets on crypto exchanges at any given time, except during necessary transfers between wallets and exchanges for sales or purchases.
The Company primarily stores its assets in cold wallets, which are offline and encrypted, ensuring maximum protection against potential breaches. BTCS aims to maintain less than 0.1% of its crypto assets on crypto exchanges at any given time, except during necessary transfers between wallets and exchanges to support purchase or sale activities.
While we do not offer health benefits, we do offer 401(k) plans with 100% matching of employees’ contributions subject to IRS limitations. CAPITALIZATION The following table details the Company’s capitalization as of March 19, 2024.
While we do not offer health benefits, we do offer 401(k) plans with 100% matching of employees’ contributions subject to IRS limitations. 10 GROWTH STRATEGY BTCS aims to grow revenue and margins by scaling Ethereum block-building under Builder+ and expanding NodeOps.
Class of Security Shares of Common Stock as Converted Common Stock Issued and Outstanding 15,691,209 Restricted Stock Units Issued (Not Vested) 1,806,373 Options to Purchase Common Stock (weighted average exercise price of $2.04) 1,200,000 Warrants to Purchase Common Stock (weighted average exercise price of $11.50) 712,500 Total Common Shares Diluted 19,410,082 Series V Preferred Stock (non-convertible) 14,567,829 The table above describes the shares of Common Stock and Preferred Stock which are outstanding and/or are issuable under outstanding securities.
Class of Security Shares of Common Stock as Converted Common Stock Issued and Outstanding 20,087,981 Restricted Common Stock (Not Vested) (1) 1,299,801 Options to Purchase Common Stock (weighted average exercise price of $2.22) 2,729,568 Warrants to Purchase Common Stock (weighted average exercise price of $11.50) 712,500 Total Common Shares Diluted 23,530,049 Series V Preferred Stock (non-convertible) 14,934,937 Restricted Series V Preferred Stock (non-convertible) (2) 1,069,801 (1) As of March 17, 2025, a total of 1,170,834 shares of restricted common stock remain subject to forfeiture, contingent upon the achievement of specified market capitalization thresholds within the applicable performance measurement period.
For example, to the extent we collect, analyze, distribute, or otherwise use data concerning individuals or entities and their holdings and transactions, we may become subject to the ever-growing number of data privacy and security laws within and without the U.S. which often have far-reaching implications for businesses.
For example, to the extent we collect, analyze, distribute, or otherwise use data concerning individuals or entities and their holdings and transactions, we are subject to various data privacy and security laws and regulations in the United States and other jurisdictions, including but not limited to the American Data Privacy Protection Act, state privacy laws, and international regulations such as GDPR, which impose specific requirements on the handling of personal data.
Given our small team and relative lack of capital to many peers, we acknowledge that we face a competitive disadvantage in this landscape. ASSETS The Company’s primary assets consist of its crypto assets and cash as well as its human capital and intellectual property noted below.
By leveraging its expertise in proof-of-stake ecosystems, innovative Builder+ operations, and a non-custodial staking model, BTCS aims to navigate the competitive landscape and capture value in the rapidly growing blockchain industry. 9 ASSETS The Company’s primary assets consist of its crypto assets and cash as well as its human capital and intellectual property noted below.
INTELLECTUAL PROPERTY AND TRADE SECRETS Our business depends in large part on our proprietary technology, particularly with regards to StakeSeeker, the operation of validator nodes as part of our blockchain infrastructure, our efforts and development with respect to our initiatives, and our brand.
INTELLECTUAL PROPERTY AND TRADE SECRETS BTCS relies on proprietary technology and intellectual property, which are critical to its blockchain infrastructure operations and strategic initiatives. These include the development efforts and operation of validator nodes, block builders through Builder+, and ChainQ, as well as the Company’s proprietary tools and systems that enable efficient and secure operations.
Many of our current and potential competitors enjoy advantages such as greater financial resources, longer operational histories, larger user bases, bigger teams, and stronger brand recognition. Most are also not burdened with the additional costs and time commitments required of being an exchange-listed public company. These competitors may allocate more substantial resources to technology development, infrastructure enhancement, and marketing efforts.
Many of BTCS’s current and potential competitors benefit from significant advantages, including greater financial resources, longer operational histories, larger teams, established brand recognition, and broader user bases. These competitors are also often privately held, enabling them to operate without the regulatory and reporting burdens associated with being a publicly traded company.
Additionally, they may possess greater resources, allowing them to enhance their custodial or non-custodial staking offerings and other offerings in the future. ● Crypto Asset-Focused Companies and Node Operators: Numerous companies and node operators specializing in crypto assets compete with our non-custodial crypto asset staking services and validator node operation.
Their substantial financial and technical resources further enable them to enhance existing offerings and enter new markets. ● Crypto Asset-Focused Companies and Node Operators: Companies specializing in crypto asset staking and validator node operations directly compete with BTCS’s non-custodial staking services. Key competitors in this space include Blockdaemon, Allnodes, Kiln, Everstake, Figment, P2P, Foundry, Stakin, and Stakefish.
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Our core focus is on driving scalable growth through a diverse range of business streams leveraging and built on top of our core and proven blockchain infrastructure operations.
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The Company’s goal is to drive scalable revenue by leveraging its robust blockchain infrastructure to develop innovative business lines that complement and enhance its core operations. BTCS’s primary activities include Ethereum block-building (“Builder+”) and validator node operations (“NodeOps”) across PoS and dPoS networks.
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BTCS secures and operates validator nodes on cutting-edge blockchain networks that power Web 3, earning native token rewards by staking our proof-of-stake crypto assets (also referred to “cryptocurrencies”, “crypto”, “crypto assets”, “digital assets”, or “tokens”), with an emphasis on Ethereum. Our innovative “StakeSeeker” platform empowers crypto holders with an analytics-focused cryptocurrency dashboard.
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The Company generates native token rewards by staking the Company’s crypto assets (also referred to “cryptocurrencies”, “crypto”, “digital assets”, or “tokens”) to validator nodes (“nodes”) operated by BTCS and other third-parties. By leveraging our blockchain infrastructure, we aim to drive scalable revenue growth and strengthen our leadership in the blockchain ecosystem.
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We also offer a non-custodial Staking-as-a-Service solution, enabling users to earn staking rewards, while we earn a percentage of token holders’ rewards, creating the potential for scalable revenue with limited additional costs. We recently introduced “Builder+”, an Ethereum block builder. Builder+ leverages advanced algorithms to maximize profit through optimized block construction and creates opportunities for new scalable revenue streams.
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OUR BUSINESS Blockchain Infrastructure BTCS’s blockchain infrastructure operations underpin its participation in blockchain network consensus mechanisms and security. The Company operates a network of cloud-based validator nodes that perform essential roles in PoS and dPoS blockchain ecosystems. Validator nodes validate transactions (“attestation”) and propose new blocks for inclusion in the blockchain (“block proposal”).
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OUR BUSINESS Blockchain Infrastructure BTCS’s blockchain infrastructure entails operating validator nodes (or “nodes”) on various proof-of-stake (“PoS”) and delegated proof-of-stake (“dPoS”)-based blockchain networks. In connection with the validation of transactions occurring on those blockchain networks, BTCS stakes (or “delegates”) blockchain-based crypto assets native to those blockchains networks (“native crypto assets”) to earn staking rewards.
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In return, BTCS earns native token rewards through these activities. These rewards are generated by staking (or “delegating”) BTCS’s own crypto assets and from supporting third-party delegations to BTCS nodes. BTCS’s infrastructure currently supports a diverse range of PoS and dPoS blockchains, including Ethereum, Cosmos, Kava, Akash, Avalanche, and others as of December 31, 2024.
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We also specialize in operating validator nodes on various PoS and dPoS-based blockchain networks, including Ethereum, Cosmos, Kava, Tezos, Avalanche, Kusama, Mina, Akash, Evmos, Oasis, and NEAR Protocol. BTCS utilizes cloud infrastructure to operate and run its validator nodes and does not operate a data center or own physical assets such as servers.
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Management’s Discussion and Analysis of Financial Condition and Results of Operations.” 3 Ethereum Block Building – Builder+ BTCS’s Ethereum block-building operations, launched under the Builder+ brand in 2024, represent a core pillar of the Company’s blockchain infrastructure strategy.
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In addition to staking our crypto assets to our nodes, we also stake certain crypto assets to nodes operated by third-parties. PoS blockchain infrastructure is akin to Bitcoin’s proof-of-work (“PoW”) mining consensus mechanism but differs in a few key ways. PoW is a consensus mechanism that requires nodes to dedicate computational resources to validate transactions on a blockchain.
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Block-building is a critical function within Ethereum’s proof-of-stake ecosystem, where Builders create and submit blocks to Validators for proposal, validation, and inclusion in the blockchain. A Builder selects and organizes transactions from Ethereum’s transaction pool, known as the mempool, strategically assembling blocks to maximize the value of included transactions.
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In PoW, miners use energy-consuming computers to do “work,” and they are rewarded with crypto assets for validating transactions on the blockchain. The reward is comprised of transaction fees and crypto assets.
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Builders compete to purchase block space and have their blocks selected by Validators, who propose them to the network for consensus, resulting in the block’s verification and addition to the blockchain. Builder+ optimizes this process by leveraging advanced algorithms to construct high-value blocks.
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Conversely, PoS is a consensus mechanism that requires validator nodes to dedicate financial resources in the form of crypto assets, which are staked to participate in the consensus algorithm. Validators, the equivalent of miners in PoW networks, operate nodes and validate transactions on the blockchain. Validators are rewarded in crypto assets for aligning behavior with the rules of the algorithm.
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By analyzing the mempool, Builder+ identifies transactions with the highest gas fees and assembles them into blocks designed to maximize gross gas fee revenue. Builder+’s logic also aims to minimize the costs to acquire block space (“Validator Payments”) required to secure block inclusion, ensuring an efficient and scalable approach.
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StakeSeeker Platform The Company’s internally developed “StakeSeeker” platform is a personal finance software and education center with a comprehensive crypto dashboard for crypto asset holders to connect, monitor, track, and analyze their crypto portfolios across exchanges and wallets in a single analytics platform.
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This has positioned Builder+ as a significant driver of BTCS’s growth, enabling the Company to capture value from Ethereum’s transaction fee market. While Builder+ currently operates exclusively on Ethereum, it has been designed to expand to other blockchain networks, aligning with BTCS’s long-term strategy of diversification.
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The StakeSeeker dashboard reads user data from digital wallets and utilizes application programming interfaces (APIs) to read data from crypto exchanges and is non-custodial, meaning it does not allow for the trading or custody of crypto assets.
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By combining cutting-edge technology with its blockchain infrastructure expertise, BTCS seeks to capture an increasing share of the Ethereum Builder market. The platform’s 2024 performance demonstrated its potential as a scalable revenue driver, and BTCS believes Builder+ will play a key role in its future growth.
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StakeSeeker’s Stake Hub functions as an educational center, offering users guidance on how to delegate their crypto assets to our non-custodial validator nodes, along with the ability to monitor such delegation activities through data analysis. StakeSeeker does not provide or facilitate direct crypto asset delegation through its StakeHub, nor does it facilitate transaction execution on our platform.
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As a StaaS provider, BTCS does not take custody of or pool Delegator crypto assets or Delegator crypto rewards (i.e. BTCS does not take possession of users’ private keys or cryptocurrency assets) at any time during the delegation process.
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Stake Hub’s primary role is to offer instructional support and monitoring capabilities. Crypto asset holders are able to delegate to our validator nodes without signing up for our StakeSeeker platform; conversely, crypto asset holders can delegate to validator nodes not operated by the Company and utilize our StakeSeeker software and data analytics.
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Currently in beta, ChainQ indexes public blockchain data from BTCS’s operations, providing an intuitive platform for users to explore and analyze on-chain activity. StakeSeeker Discontinuation As of December 27, 2024, BTCS discontinued its StakeSeeker platform to focus its resources on Builder+ and validator node operations. Custody and Key Storage BTCS prioritizes the secure custody of its crypto assets.
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The StakeSeeker platform is currently free-to-use for registered users so is not currently generating revenue. The Company is not a broker-dealer or an investment advisor and does not provide any such related services.
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Our approach of prioritizing the self-custody of our crypto assets minimizes exposure to risks associated with centralized platforms and third-party failures. 5 INDUSTRY AND MARKET OVERVIEW (CRYPTO ASSET AND BLOCKCHAIN TECHNOLOGIES) Blockchain and Cryptocurrencies Blockchain technology is a decentralized, encrypted ledger system designed to securely store and verify data without the need for intermediaries.
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StakeSeeker operates exclusively as an informational and educational resource for the monitoring and analysis of crypto assets, with its non-custodial and non-transactional approach ensuring compliance with federal securities laws, thereby precluding any regulatory concerns as the platform continues to develop. 4 StakeSeeker provides a valuable analytical platform to crypto enthusiasts and strategically seeks to entice users with its features.
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It has been widely adopted across industries due to its ability to enhance transparency, security, and efficiency in processes that traditionally relied on centralized systems.
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One underlying strategic objective of the platform is to drive the expansion of Delegators to our validator nodes. The growth of the size of delegations is central to the scalability of BTCS’s StaaS business strategy.
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Blockchain technology underpins crypto assets, a class of digital assets that includes cryptocurrencies, which can function as a medium of exchange, store of value, or unit of account, as well as enable non-financial applications such as smart contracts, tokenized assets, and decentralized applications (dApps).
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The Company believes that StaaS provides a more accessible and cost-effective way for crypto asset holders to participate in blockchain network consensus, thereby promoting the growth and adoption of blockchain technology.
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The global adoption of blockchain technology has grown significantly in recent years, fueled by advancements in infrastructure, increasing institutional interest, and the development of next-generation use cases. Beyond cryptocurrencies, blockchain technology is being explored in sectors such as finance, healthcare, supply chain, governance, and digital identity management.
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The estimated staking rewards, expressed as the Annual Percentage Reward (APR), as displayed on StakeSeeker’s Stake Hub and our StakeSeeker website (www.stakeseeker.com), are determined using the most recent network data obtained through API data pulls from www.stakingrewards.com, a third-party blockchain data provider.
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These innovations have the potential to transform traditional industries, offering efficiencies and capabilities not achievable with legacy systems. Cryptocurrencies and Proof-of-Stake Ecosystems Cryptocurrencies operate on blockchain networks using cryptographic protocols to secure transactions and manage decentralized ledgers. These networks rely on nodes, which are computers participating in the network, to validate and record transactions.
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To ensure accuracy and consistency, BTCS conducts periodic checks to validate the APR data obtained against the data reported on each respective blockchain network’s blockchain explorer. Disclosure on StakeSeeker’s website clearly states that the APR presented is not guaranteed and does not include StakeSeeker’s validator fee.
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A distinguishing feature of cryptocurrencies is their ability to enable secure peer-to-peer transactions without requiring a trusted intermediary, such as a financial institution or government. Unlike proof-of-work (“PoW”) networks, which require significant energy resources to validate transactions, PoS) and dPoS networks utilize an efficient consensus mechanism that relies on validators staking their crypto assets to secure the network.
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The APR figures are provided for informational purposes and are subject to change based on the dynamics of the underlying blockchain networks. The Company anticipates taking the StaaS Platform out of beta prior to the end of 2024.
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Validators, such as those operated by BTCS, play a critical role in maintaining the integrity of these networks by validating transactions and proposing new blocks for inclusion in the blockchain. PoS ecosystems have gained substantial traction due to their energy efficiency, scalability, and ability to support diverse applications, including decentralized finance (DeFi), non-fungible tokens (NFTs), and other blockchain-based innovations.
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The current functionality allows crypto asset holders to connect, monitor, track, and analyze their crypto portfolios across exchanges and wallets in a single analytics platform. In the future we may add support for additional blockchains and provide other analytic tools. We are also exploring the feasibility of adding Ethereum non-custodial staking to StakeSeeker in 2024.
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Ethereum’s transition to PoS in 2022 further solidified its position as a leading blockchain for smart contracts and decentralized applications. This evolution has also driven the development of new roles within the ecosystem, such as Builders, who optimize and propose blocks for on-chain validation, creating new opportunities for revenue generation.
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We anticipate the costs associated with doing so would be in line with our historical research and development costs. Ethereum Block Building On February 1, 2024, we introduced Builder+, a newly developed Ethereum block builder (“Builder”) to maximize validator earnings by utilizing advanced algorithms to construct optimized blocks for on-chain validation.
Added
Advantages and Risks of Crypto Assets Crypto assets offer numerous advantages over traditional fiat currencies and legacy systems, including: ● Fraud deterrence, as digital assets cannot be counterfeited or arbitrarily reversed by a sender. ● Immediate settlement of transactions without intermediaries. ● Lower transaction fees and reduced counterparty risk. ● Enhanced security through cryptographic protocols, preventing double spending and identity theft. ● Accessibility to anyone with internet access, fostering financial inclusion. ● Decentralized governance, removing reliance on central authorities.
Removed
Builders actively monitor the Ethereum transaction queue, known as the “mempool”, for pending transactions and strategically reorder them to create ‘optimized blocks’ containing transactions with the highest fees. Builders pay a fee to Validators for block space in order to increase the chances of their blocks being selected by a validator and, in return, earn the associated crypto transaction fees.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe Audit Committee of our Board of Directors considers cybersecurity risks and other information technology risks as part of its risk oversight function and evaluates our risk assessment and management policies, including periodic discussions with our senior officers.
Biggest changeOur Audit Committee considers cybersecurity risks and other information technology risks as part of its risk oversight function and evaluates our risk assessment and management policies, including periodic discussions with our senior officers. In addition, management updates the Board of Directors , as necessary, regarding any material cybersecurity incidents, as well as any incidents with lesser impact potential.
The results of our assessments are used to develop initiatives to enhance our security controls, make recommendations to improve processes, and inform a broader Company-wide risk assessment that is then periodically reported to our Board and Audit Committee. 12 Technical Safeguards : We regularly assess and deploy technical safeguards designed to protect our information systems from cybersecurity threats.
The results of our assessments are used to develop initiatives to enhance our security controls, make recommendations to improve processes, and inform a broader Company-wide risk assessment that is then periodically reported to our Board and Audit Committee. 14 Technical Safeguards: We regularly assess and deploy technical safeguards designed to protect our information systems from cybersecurity threats.
Governance Our senior management team, led by our Chief Financial Officer and Chief Technology Officer, is responsible for assessing and managing our material risks from cybersecurity threats.
Governance Our senior management team, led by our Chief Financial Officer and Chief Operating Officer, is responsible for assessing and managing our material risks from cybersecurity threats.
This does not imply that we meet any particular technical standards, specifications, or requirements, only that we use the NIST CSF as a guide to help us identify, assess, and manage cybersecurity risks relevant to our business.
This does not imply that we meet any particular technical standards, specifications, or requirements, only that we use the NIST CSF as a guide to help us identify, assess, and manage cybersecurity risks relevant to our business. Our cybersecurity program is an integral part of our broader Enterprise Risk Management (ERM) framework and business continuity efforts.
In addition, management updates the Board of Directors, as necessary, regarding any material cybersecurity incidents, as well as any incidents with lesser impact potential. Our Audit Committee also meets at least quarterly with our independent registered accounting firm and communicates with them regarding any cybersecurity-related risks.
Our Audit Committee also meets at least quarterly with our independent registered accounting firm and communicates with them regarding any cybersecurity-related risks.
While there can be no guarantee that our policies and procedures will be properly followed in every instance or that those policies and procedures will be effective, we believe that the Company’s sustained investment in people and technologies has contributed to a culture of continuous improvement that has put the Company in a position to protect against potential compromises.
While we cannot guarantee complete effectiveness of our cybersecurity measures despite our best efforts and continuous monitoring, we believe that the Company’s sustained investment in people and technologies has contributed to a culture of continuous improvement that has put the Company in a position to protect against potential compromises.
Added
By incorporating cybersecurity into our overall risk assessment and management processes, we aim to address interconnected risks that could impact critical operations, systems, and assets. This alignment allows us to proactively evaluate and prioritize cybersecurity risks in the context of broader organizational objectives and resilience planning, ensuring a comprehensive approach to safeguarding the Company’s infrastructure and stakeholders.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeITEM 3. LEGAL PROCEEDINGS. From time to time, we are party to certain legal proceedings that arise in the ordinary course and are incidental to our business. We know of no material, active or pending legal proceedings against us. ITEM 4. MINE SAFETY DISCLOSURES. Not applicable. 13 PART II
Biggest changeITEM 3. LEGAL PROCEEDINGS. From time to time, we are party to certain legal proceedings that arise in the ordinary course and are incidental to our business. As of the filing date of this report, to our knowledge, there are no material, active or pending legal proceedings against us. ITEM 4. MINE SAFETY DISCLOSURES. Not applicable. 15 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeName or Class of Investor Date of Sale No. of Securities Reason for Issuance Executive Officers (1) January 1, 2023 354,713 shares of restricted stock Performance awards Executive Officers (1) January 1, 2023 50,000 shares of restricted stock units Compensation for services Non-Employee Directors (1) March 31, 2023 27,576 shares of restricted stock Compensation for services Non-Employee Directors (1) June 30, 2023 31,647 shares of restricted stock Compensation for services Non-Employee Directors (1) September 29, 2023 39,894 shares of restricted stock Compensation for services Non-Employee Director (1) December 29, 2023 23,007 shares of restricted stock Compensation for services (1) Exempt under Section 4(a)(2) of the Securities Act and Regulation 506(b) thereunder.
Biggest changeName or Class of Investor Date of Sale No. of Securities Reason for Issuance Non-Employee Directors (1) March 31, 2024 14,206 shares of restricted stock Compensation for services Non-Employee Directors (1) June 30, 2024 25,781 shares of restricted stock Compensation for services Non-Employee Directors (1) September 30, 2024 32,328 shares of restricted stock Compensation for services Non-Executive Employees December 12, 2024 12,500 shares of restricted stock Performance awards Non-Employee Directors (1) December 31, 2024 15,183 shares of restricted stock Compensation for services (1) Exempt under Section 4(a)(2) of the Securities Act and Regulation 506(b) thereunder.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. MARKET INFORMATION Our Common Stock is listed and traded on the Nasdaq Stock Market under the symbol “BTCS”. The last reported sale price of our Common Stock on March 19, 2024 was $1.22.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. MARKET INFORMATION Our Common Stock is listed and traded on the Nasdaq Stock Market under the symbol “BTCS”. The last reported sale price of our Common Stock on March 17, 2025 was $1.91.
The securities were issued to an accredited investor and there was no general solicitation. ITEM 6. [RESERVED]
The securities were issued to an accredited investor and there was no general solicitation.
HOLDERS As of March 19, 2024, there were 177 stockholders of record of our Common Stock, one of which is Cede & Co., a nominee for Depository Trust Company, or DTC.
HOLDERS As of March 17, 2025, there were 180 stockholders of record of our Common Stock, one of which is Cede & Co., a nominee for Depository Trust Company, or DTC.
The Company will evaluate the appropriateness of potential future dividends as the Company continues to grow its operations. 14 RECENT SALES OF UNREGISTERED SECURITIES In addition to those unregistered securities previously disclosed in reports filed with the SEC, during the year ended December 31, 2023, we have issued securities without registration under the Securities Act of 1933 (the “Securities Act”), as described below.
RECENT SALES OF UNREGISTERED SECURITIES In addition to those unregistered securities previously disclosed in reports filed with the SEC, during the year ended December 31, 2024, we issued securities without registration under the Securities Act of 1933 (the “Securities Act”), as described below.
Removed
DIVIDENDS Effective January 27, 2023, the Company’s Board of Directors (the “Board”) approved the issuance of a newly designated Series V Preferred Stock (“Series V”) on a one-for-one basis to the Company’s shareholders (including restricted stock unit holders and warrant holders who were entitled to such distribution).
Removed
The distribution of Series V shares was approved and completed on June 2, 2023 to shareholders as of the record date of May 12, 2023.
Removed
The Series V: (i) is non-convertible, (ii) has a 20% liquidation preference over the shares of common stock, (iii) is non-voting and (iv) has certain rights to dividends and distributions (at the discretion of the Board). A total of 14,542,803 shares of Series V Preferred Stock were distributed to shareholders on June 2, 2023.
Removed
In June 2023, the Series V shares commenced trading on Upstream, a Merj Exchange market (“Upstream”). In November 2023, Upstream announced that it was no longer providing U.S. individuals with the ability to trade on Upstream. All Series V shares owned by U.S investors were returned to the transfer agent.
Removed
On January 5, 2022, the Board declared a non-recurring special dividend of $0.05 for each outstanding share of Common Stock of the Company, payable to holders of record as of the close of business on March 17, 2022. Shareholders were provided the option to receive proceeds of their dividend payable in either cash or Bitcoin.
Removed
The dividend distributions were considered a return of capital distribution for IRS income tax purposes as the value was in excess of the Company’s current and accumulated earnings and profits. The return of capital distribution reduces the Company’s additional paid in capital balance. The total value of dividends paid in 2022 was approximately $631,000.

Item 7. Management's Discussion & Analysis

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

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Biggest changeSet forth below is a summary of the principal risks we face: ● We have a limited operating history, particularly with respect to our blockchain infrastructure solutions business, StakeSeeker, Builder+, ChainQ and staking-as-a-service operations. ● We have an evolving business model which we may be unable to develop, adapt or execute effectively, and we may be unable to manage our growth or implement our business plan as intended or at all. ● We are highly dependent on our executive officers, particularly Charles Allen, our Chairman and Chief Executive Officer, Michal Handerhan, our Chief Operating Officer, Michael Prevoznik, our Chief Financial Officer, and Manish Paranjape, our Chief Technology Officer, and the loss of the services of any of these individuals could materially harm our business. ● We may be subject to regulatory actions, private causes of actions such as intellectual property infringement claims, and restrictions and limited access to banking and financial services due to our operations in the cryptocurrency industry, and regulatory or other adverse developments in the cryptocurrency industry could otherwise adversely affect us. ● Because of our involvement in staking of crypto assets through delegations as part of our StaaS strategy, we are subject to risks inherent in engaging in activities involving financial instruments owned by third-party users, notwithstanding the non-custodial nature of our platform or other features management believes to constitute meaningful distinctions for regulatory, compliance and other purposes. ● A particular crypto asset’s status as a “security” in any relevant jurisdiction is subject to a high degree of uncertainty, and if we are unable to correctly characterize a crypto asset, we may be subject to regulatory scrutiny, investigations, fines, sanctions, penalties and other adverse consequences, including potentially becoming subject to the Investment Company Act of 1940 which would impose significant regulatory burdens and compliance costs. ● Crypto assets and our related activities are characterized by numerous other risks and uncertainties, including the possibility for adverse developments such as regulatory actions, bans or restrictions, declines in the price of, demand for or public perception of crypto assets, theft, fraud, hacking, manipulation or malicious coding, price volatility, the potential for one cryptocurrency to branch into two, variations among and the potential for adverse changes to blockchain algorithms, and other external forces beyond our control described more fully below. ● The future development and growth of cryptocurrencies is subject to a variety of factors that are difficult to predict and evaluate, and the market for the crypto assets we obtain and hold may not grow as we expect or the prices may decline, including due to political or economic crises or other factors which we neither predict nor control. ● The cryptocurrency space is subject to continuous regulatory uncertainty, and any adverse regulatory changes or other developments with respect to our operations or the crypto assets with which we transact may require us to alter our business model or suspend or cease some or all of our operations. ● Our focus on PoS blockchain networks exposes us to risk of loss due to features unique to those networks, including by virtue of being locked in by smart contracts such that we cannot liquidate a portion of the relevant crypto assets for a period of time during and after the staking process, during which the price or value of the crypto assets may depreciate. ● We are reliant on a single service provider for cloud computing infrastructure deployed in our blockchain infrastructure business, and are therefore exposed to the risks which may arise from potential adverse developments that may be caused or experienced by such service provider. ● We are subject to various other risks and uncertainties relating to our StaaS and other elements of our business, including potential loss of revenue if we experience excessive removal of delegated crypto assets on our validator nodes, potential shifts in the block building landscape, and competitive forces for Ethereum and other crypto assets for which our services are offered, technical failures, bugs, or vulnerabilities in our block builder software, and our efforts with respect to new features and services which were recently launched or are still under development. ● Our critical accounting policies may prove to be incorrect including due to our adoption of new accounting standards applicable to crypto assets in 2023, we may need to implement additional finance and accounting systems, procedures and controls, and we face challenges inherent in operating a crypto assets business which is subject to evolving accounting treatment for which there is limited precedent. ● Our stock price has in the past and may in the future be subject to significant volatility due to a variety of factors, many of which are beyond our control, including its potential connection to the price of one or more of the crypto assets with which we are or may become involved. 27 Risks Related to Our Company in General We have a limited operating history, particularly with respect to our blockchain infrastructure operations, including certain features and service offerings which recently commenced and our platform and staking-as-a-service business model, and we have a history of operating losses, and expect to incur significant additional operating losses.
Biggest changeSet forth below is a summary of the principal risks we face: ● We have a limited operating history, particularly with respect to our blockchain infrastructure solutions business, Builder+ and ChainQ operations. ● We have an evolving business model which we may be unable to develop, adapt or execute effectively, and we may be unable to manage our growth or implement our business plan as intended or at all. ● We are highly dependent on our executive officers, particularly Charles Allen, our Chairman and Chief Executive Officer, Michal Handerhan, our Chief Operating Officer, and Michael Prevoznik, our Chief Financial Officer, and the loss of the services of any of these individuals could materially harm our business. ● We may be subject to regulatory actions, private causes of actions due to our operations in the cryptocurrency industry, and regulatory or other adverse developments in the cryptocurrency industry could otherwise adversely affect us. ● Because of our involvement in staking of crypto assets through delegations as part of our StaaS strategy, we are subject to risks inherent in engaging in activities involving financial instruments owned by third-party users, notwithstanding the non-custodial nature of our operations management believes to constitute meaningful distinctions for regulatory, compliance and other purposes. ● A particular crypto asset’s status as a “security” in any relevant jurisdiction is subject to a high degree of uncertainty, and if we are unable to correctly characterize a crypto asset, we may be subject to regulatory scrutiny, investigations, fines, sanctions, penalties and other adverse consequences, including potentially becoming subject to the Investment Company Act of 1940 which would impose significant regulatory burdens and compliance costs. ● Crypto assets and our related activities are characterized by numerous other risks and uncertainties, including the possibility for adverse developments such as regulatory actions, bans or restrictions, declines in the price of, demand for or public perception of crypto assets, theft, fraud, hacking, manipulation or malicious coding, price volatility, the potential for one cryptocurrency to branch into two, variations among and the potential for adverse changes to blockchain algorithms, and other external forces beyond our control described more fully below. ● The future development and growth of cryptocurrencies is subject to a variety of factors that are difficult to predict and evaluate, and the market for the crypto assets we obtain and hold may not grow as we expect or the prices may decline, including due to political or economic crises or other factors which we neither predict nor control. ● The cryptocurrency space is subject to continuous regulatory uncertainty, and any adverse regulatory changes or other developments with respect to our operations or the crypto assets with which we transact may require us to alter our business model or suspend or cease some or all of our operations. ● Our focus on PoS blockchain networks exposes us to risk of loss due to features unique to those networks, including by virtue of being locked in by smart contracts such that we cannot liquidate a portion of the relevant crypto assets for a period of time during and after the staking process, during which the price or value of the crypto assets may depreciate. ● We are subject to various other risks and uncertainties relating to our StaaS and other elements of our business, including potential loss of revenue if we experience excessive removal of delegated crypto assets on our validator nodes, potential shifts in the block building landscape, and competitive forces for Ethereum and other crypto assets for which our services are offered, technical failures, bugs, or vulnerabilities in our block builder software, and our efforts with respect to new features and services which were recently launched or are still under development. ● Our stock price has in the past and may in the future be subject to significant volatility due to a variety of factors, many of which are beyond our control, including its potential connection to the price of one or more of the crypto assets with which we are or may become involved. 29 Risks Related to Our Company in General We have a history of operating losses and expect to incur additional operating losses as we scale our business.
Crypto assets are measured at their fair respective fair market values at each reporting period end on the balance sheets and classified as either ‘Staked Crypto Assets’ or ‘Crypto Assets’ to distinguish their nature within the respective balances.
Crypto assets are measured at their respective fair market values at each reporting period end on the balance sheets and classified as either ‘Staked Crypto Assets’ or ‘Crypto Assets’ to distinguish their nature within the respective balances.
The term of a smart contract can vary based on the rules of the respective blockchain and typically last from a few days to several weeks after it is cancelled (or “un-staked”) by the delegator and requires that the crypto assets staked remain locked up during the duration of the smart contract.
The term of a smart contract can vary based on the rules of the respective blockchain and typically last from a few days to several weeks after it is cancelled (or “un-staked”) by the delegator and requires that the staked crypto assets remain locked up during the duration of the smart contract.
In addition, our Builder+ block builder software is equipped with a filtering mechanism that screens transactions initiated by wallet addresses listed on OFAC’s Specially Designated Nationals And Blocked Persons (SDN) list, ensuring transactions from identified wallets are not included in the blocks we propose to validators. We actively monitor sanctioned jurisdictions to ensure that appropriate restrictions are maintained.
Our Builder+ block builder software is equipped with a filtering mechanism that screens transactions initiated by wallet addresses listed on OFAC’s Specially Designated Nationals And Blocked Persons (SDN) list, ensuring transactions from identified wallets are not included in the blocks we propose to validators. We actively monitor sanctioned jurisdictions to ensure that appropriate restrictions are maintained.
Accordingly, if changes in the classification of crypto assets causes us to exceed the 40% threshold, we may experience large losses when we liquidate Digital Securities as a result of continued volatility. The 40% requirement may limit our ability to make certain investments or enter into joint ventures that could otherwise have a positive impact on our earnings.
Accordingly, if changes in the classification of crypto assets causes us to exceed the 40% threshold, we may experience large losses when we liquidate Digital Securities as a result of continued volatility. 35 The 40% requirement may limit our ability to make certain investments or enter into joint ventures that could otherwise have a positive impact on our earnings.
Because of the foregoing realities and uncertainties surrounding our business and industry, we may invest substantial resources towards developing additional platform features or new offerings such as Builder+ that ultimately fail to achieve the goals or benefits sought, or need to be suspended, due to competitive, regulatory, technological or other conditions or developments beyond our control.
Because of the foregoing realities and uncertainties surrounding our business and industry, we may invest substantial resources towards developing additional ChainQ platform features, or new offerings such as Builder+, that ultimately fail to achieve the goals or benefits sought, or need to be suspended, due to competitive, regulatory, technological or other conditions or developments beyond our control.
In addition, digital economies themselves are subject to rapid and unpredictable change that regulators could decide warrants updates or additions to existing regulatory regimes. As a result, the risks created by any new law or regulation in one jurisdiction are magnified by the potential that they may be replicated, affecting our business in another place.
In addition, digital economies themselves are subject to rapid and unpredictable change so that regulators could decide warrants updates or additions to existing regulatory regimes. As a result, the risks created by any new law or regulation in one jurisdiction are magnified by the potential that they may be replicated, affecting our business in another place.
As an alternative to fiat currencies that are backed by central governments, crypto assets such as Bitcoin and Ethereum, which are relatively new, are subject to supply and demand forces based upon the desirability of an alternative, decentralized means of buying and selling goods and services, and it is unclear how such supply and demand will be impacted by geopolitical events.
As an alternative to fiat currencies that are backed by central governments, crypto assets such and Ethereum, which is relatively new, is subject to supply and demand forces based upon the desirability of an alternative, decentralized means of buying and selling goods and services, and it is unclear how such supply and demand will be impacted by geopolitical events.
Criteria for assessing blockchain quality encompass factors such as i) market and on-chain statistics, ii) liquidity, iii) potential blockchain utility, iv) history and milestones, v) growth and development roadmap, vi) use cases, vii) community interest, vii) quality of documentation, viii) decentralization, and ix) any other publicly available information.
Criteria for assessing blockchain quality encompass factors such as i) market and on-chain statistics, ii) liquidity, iii) potential blockchain utility, iv) history and milestones, v) growth and development roadmap, vi) use cases, vii) community interest, viii) quality of documentation, ix) decentralization, and x) any other publicly available information.
The SEC has also brought enforcement actions with respect to crypto assets and related activities, including custodial staking-as-a-service models, and the SEC and courts have issued further orders and guidance as the crypto asset industry continues to develop and evolve, as more particularly described later in these Risk Factors.
The SEC has brought enforcement actions with respect to crypto assets and related activities, including custodial staking-as-a-service models, and the SEC and courts have issued further orders and guidance as the crypto asset industry continues to develop and evolve, as more particularly described later in these Risk Factors.
The Company estimates the fair value of market-based RSUs as of the grant date and expected derived term using a Monte Carlo simulation that incorporates pricing inputs covering the period from the grant date through the end of the derived service period. 25 Expected Volatility – The Company uses historical volatility as it provides a reasonable estimate of the expected volatility.
The Company estimates the fair value of market-based RSUs as of the grant date and expected derived term using a Monte Carlo simulation that incorporates pricing inputs covering the period from the grant date through the end of the derived service period. Expected Volatility – The Company uses historical volatility as it provides a reasonable estimate of the expected volatility.
In May 2019, FinCEN issued guidance on the application of FinCEN regulations to certain business models. While the guidance directly addressed Bitcoin mining, it did not address securing PoS blockchains which while similar to Bitcoin mining has technical nuanced differences which could potentially alter the analysis.
In May 2019, FinCEN issued guidance on the application of FinCEN regulations to certain business models. While the guidance directly addressed Bitcoin mining, it did not address securing PoS blockchains, which, while similar to Bitcoin mining, has technical nuanced differences that could potentially alter the analysis.
In such case, the trading price of our Common Stock could decline and investors could lose all or part of their investment. Summary Risk Factors Our business is subject to numerous risks and uncertainties that you should consider before investing in our common stock.
In such case, the trading price of our Common Stock could decline substantially and investors could lose all or part of their investment. Summary Risk Factors Our business is subject to numerous risks and uncertainties that you should consider before investing in our common stock.
Alternatively, as an emerging asset class with limited acceptance as a payment system or commodity, global crises and general economic downturn may discourage investment in crypto assets as investors focus their investment on less volatile asset classes as a means of hedging their investment risk.
As an emerging asset class with limited acceptance as a payment system or commodity, global crises and general economic downturn may discourage investment in crypto assets as investors focus their investment on less volatile asset classes as a means of hedging their investment risk.
The classification of purchases and sales in the statements of cash flows is determined based on the nature of the crypto assets, which can be categorized as ‘productive’ (i.e. acquired for purposes of staking) or ‘non-productive’ (e.g. bitcoin).
The classification of purchases and sales in the consolidated statements of cash flows is determined based on the nature of the crypto assets, which can be categorized as ‘productive’ (i.e. acquired for purposes of staking) or ‘non-productive’ (e.g. bitcoin).
Effective January 1, 2023, the Company has elected to early adopt ASU No. 2023-08, resulting in a material change in accounting principle related to the Company’s accounting treatment of crypto assets. The impacts of the change in accounting principle are discussed further in Note 3.
Effective January 1, 2023, the Company has elected to early adopt ASU No. 2023-08, resulting in a material change in accounting principle related to the Company’s accounting treatment of crypto assets. The impacts of the change in accounting principle are discussed further in Note 3 - Changes in Accounting Principle .
Blockchain Infrastructure The Company engages in network-based smart contracts by running its own crypto asset validator nodes as well as by staking (or “delegating”) crypto assets directly to both its own validator nodes and nodes run by third-party operators.
Blockchain Infrastructure (NodeOps) The Company engages in network-based smart contracts by running its own crypto asset validator nodes as well as by staking (or “delegating”) crypto assets directly to both its own validator nodes and nodes run by third-party operators.
In addition, we may not be able to obtain on favorable terms, or at all, licenses or other rights with respect to intellectual property we do not own in providing ecommerce services to other businesses and individuals under commercial agreements. 41 Risks Related to Our Public Company Reporting Requirements and Accounting Matters We may need to implement additional finance and accounting systems, procedures and controls as we grow our business and organization and to satisfy new reporting requirements .
In addition, we may not be able to obtain on favorable terms, or at all, licenses or other rights with respect to intellectual property we do not own in providing ecommerce services to other businesses and individuals under commercial agreements. 45 Risks Related to Our Public Company Reporting Requirements and Accounting Matters We may need to implement additional finance and accounting systems, procedures and controls as we grow our business and organization and to satisfy new reporting requirements .
Sales by existing shareholders of a large number of shares of our Common Stock in the public market or the perception that additional sales could occur could cause the market price of our Common Stock to drop. 43
Sales by existing shareholders of a large number of shares of our Common Stock in the public market or the perception that additional sales could occur could cause the market price of our Common Stock to drop.
In exchange for staking the crypto assets and validating transactions on blockchain networks, the Company is entitled to all of the fixed crypto asset award earned from the network when delegating to the Company’s own node and is entitled to a fractional share of the fixed crypto asset award a third-party node operator receives (less crypto asset transaction fees payable to the node operator, which are immaterial and are recorded as a deduction from revenue), for successfully validating or adding a block to the blockchain.
In exchange for staking the crypto assets and validating transactions on blockchain networks, the Company is entitled to all of the fixed crypto asset awards earned from the network when delegating to the Company’s own node and is entitled to a fractional share of the fixed crypto asset awards a third-party node operator receives (less crypto asset transaction fees payable to the node operator, which are immaterial and are recorded as a deduction from revenue), for successfully validating or adding a block to the blockchain.
A StaaS provider maintains a ministerial role in validating transactions on a given dPoS network on behalf of its Delegators by (1) arranging transactions using open-source software to stake the relevant crypto assets; (2) monitoring the nodes it is operating to ensure the computers remain online to validate transactions; and (3) verifying transactions on the network when required.
A StaaS provider maintains a ministerial role in validating transactions on a given dPoS network on behalf of its Delegators by (1) using open-source software to stake the relevant crypto assets; (2) monitoring and maintaining the nodes it is operating to ensure the computers remain online to validate transactions; and (3) verifying transactions on the network when required.
To the extent we hold crypto assets allegedly identified as securities by the SEC, it could have a material adverse effect on our business and our stock price. 30 Because crypto assets may be determined to be Digital Securities, we may inadvertently violate the 1940 Act and incur large losses as a result and potentially be required to register as an investment company.
To the extent we hold crypto assets allegedly identified as securities by the SEC, it could have a material adverse effect on our business and our stock price. 34 Because crypto assets may be determined to be Digital Securities, we may inadvertently violate the 1940 Act and incur large losses as a result and potentially be required to register as an investment company.
If we fail to fully develop and commercialize our platform in a timely and effective manner, your investment in us could lose some or all of its value. Even if we develop and commercialize our StakeSeeker platform, we may not be able to generate material revenues. The continued development of StakeSeeker will require significant time and capital.
If we fail to fully develop and commercialize our platform in a timely and effective manner, your investment in us could lose some or all of its value. Even if we develop and commercialize our ChainQ platform, we may not be able to generate material revenues. The continued development of ChainQ will require significant time and capital.
The CCPA requires covered companies to, among other things, provide new disclosures to California users, and affords such users new privacy rights such as the ability to opt-out of certain sales of personal information and expanded rights to access and require deletion of their personal information, opt out of certain personal information sharing, and receive detailed information about how their personal information is collected, used, and shared.
The CPRA requires covered companies to, among other things, provide new disclosures to California users, and affords such users new privacy rights such as the ability to opt-out of certain sales of personal information and expanded rights to access and require deletion of their personal information, opt out of certain personal information sharing, and receive detailed information about how their personal information is collected, used, and shared.
Crypto assets which utilize PoS consensus mechanisms are locked in smart contracts while staked which limits liquidity of the underlying crypto asset.
Crypto assets that utilize PoS consensus mechanisms are locked in smart contracts while staked, which limits the liquidity of the underlying crypto asset.
We are subject to cyber security risks and may incur delays in platform development in an effort to minimize those risks and to respond to cyber incidents. StakeSeeker is and will continue to be dependent on the secure operation of our website and systems as well as the operation of the Internet generally.
We are subject to cyber security risks and may incur delays in platform development in an effort to minimize those risks and to respond to cyber incidents. ChainQ is and will continue to be dependent on the secure operation of our website and systems as well as the operation of the Internet generally.
Potential uncertainty surrounding the CCPA may increase our compliance costs and potential liability, particularly in the event of a data breach, and could have a material adverse effect on our business, including how we use personal information, our financial condition, the results of our operations or prospects.
Potential uncertainty surrounding the CPRA may increase our compliance costs and potential liability, particularly in the event of a data breach, and could have a material adverse effect on our business, including how we use personal information, our financial condition, the results of our operations or prospects.
The costs of compliance with, and other burdens imposed by, the CCPA, and similar laws may limit our prospective customer base or the use and adoption of our products and services and/or require us to incur substantial compliance costs, which could have an adverse impact on our business.
The costs of compliance with, and other burdens imposed by, the CPRA, and similar laws may limit our prospective customer base or the use and adoption of our products and services and/or require us to incur substantial compliance costs, which could have an adverse impact on our business.
Since the CCPA was enacted, a growing number of states have enacted similar legislation designed to protect the personal information of consumers and penalize companies that fail to comply, and other states have also proposed similar legislation.
Since the CPRA was enacted, a growing number of states have enacted similar legislation designed to protect the personal information of consumers and penalize companies that fail to comply, and other states have also proposed similar legislation.
Current and future legislation, CFTC and other regulatory developments, including interpretations released by a regulatory authority, may impact the manner in which Bitcoin, Ethereum, and other crypto assets are treated for classification and clearing purposes. In particular, derivatives on these assets are not excluded from the definition of “commodity future” by the CFTC.
Current and future legislation, CFTC and other regulatory developments, including interpretations released by a regulatory authority, may impact the manner in which Ethereum, and other crypto assets we own are treated for classification and clearing purposes. In particular, derivatives on these assets are not excluded from the definition of “commodity future” by the CFTC.
We do not and will not hold our Ethereum and other crypto assets with a banking institution or a member of the FDIC or the Securities Investor Protection Corporation (“SIPC”) and, therefore, our crypto assets are not subject to the protections enjoyed by depositors with FDIC or SIPC member institutions. 39 Risks Related to Our Development Efforts There is substantial doubt that we will be able to fully develop or commercialize our StakeSeeker platform as intended.
We do not and will not hold our Ethereum and other crypto assets with a banking institution or a member of the FDIC or the Securities Investor Protection Corporation (“SIPC”) and, therefore, our crypto assets are not subject to the protections enjoyed by depositors with FDIC or SIPC member institutions. 43 Risks Related to Our Development Efforts There is substantial doubt that we will be able to fully develop or commercialize our ChainQ platform as intended.
We may infringe the intellectual property rights of others, which may prevent or delay our product development efforts and stop us from commercializing or increase the costs of commercializing the StakeSeeker platform.
We may infringe the intellectual property rights of others, which may prevent or delay our product development efforts and stop us from commercializing or increase the costs of commercializing the ChainQ platform.
If we fail to develop a comprehensive dashboard for StakeSeeker as intended, it could have a material adverse effect on our business, especially to the extent that we allocate significant capital, labor and other resources to this endeavor rather than focusing on other business opportunities which may prove to have been more lucrative in hindsight.
If we fail to develop a comprehensive platform for ChainQ as intended, it could have a material adverse effect on our business, especially to the extent that we allocate significant capital, labor, and other resources to this endeavor rather than focusing on other business opportunities which may prove to have been more lucrative in hindsight.
Any compromise of our security could result in a violation of applicable privacy and other laws, significant legal and financial exposure, damage to our reputation, and a loss of confidence in our security measures, which could harm our business. 40 We may become subject to data privacy and data security laws and regulations by virtue of our StakeSeeker platform, which could force us to incur significant compliance costs and expose us to liabilities.
Any compromise of our security could result in a violation of applicable privacy and other laws, significant legal and financial exposure, damage to our reputation, and a loss of confidence in our security measures, which could harm our business. 44 We may become subject to data privacy and data security laws and regulations by virtue of our ChainQ platform, which could force us to incur significant compliance costs and expose us to liabilities.
Liquidit y The Company’s financial statements have been prepared assuming that it will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business.
Liquidit y The Company’s consolidated financial statements have been prepared assuming that it will continue as a going concern, which contemplates continuity of operations, realization of assets, and settlement of liabilities in the normal course of business.
Such circumstances could adversely affect an investment in us. 34 Political or economic crises may motivate large-scale sales of crypto assets, which could result in a reduction in crypto asset values and adversely affect an investment in us. Geopolitical or economic crises may motivate large-scale sales of crypto assets, which could rapidly decrease the price of crypto assets.
Political or economic crises may motivate large-scale sales of crypto assets, which could result in a reduction in crypto asset values and adversely affect an investment in us. Geopolitical or economic crises may motivate large-scale sales of crypto assets, which could rapidly decrease the price of crypto assets.
Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth under “Risk Factors” and elsewhere in this report.
Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth under Risk Factors and elsewhere in this report.
The CCPA provides for civil penalties for violations, as well as a private right of action for security breaches that may increase security breach litigation.
The CPRA provides for civil penalties for violations, as well as a private right of action for security breaches that may increase security breach litigation.
In particular, we have relied and will continue to rely on Charles Allen, our Chairman and Chief Executive Officer, Michal Handerhan, our Chief Operating Officer, Michael Prevoznik, our Chief Financial Officer, and Manish Paranjape, our Chief Technology Officer, to continue and grow our operations and execute our business plan.
In particular, we have relied and will continue to rely on Charles Allen, our Chairman and Chief Executive Officer, Michal Handerhan, our Chief Operating Officer, and Michael Prevoznik, our Chief Financial Officer, to continue and grow our operations and execute our business plan.
Future legislation, SEC rulemaking and other regulatory developments, including interpretations released by a regulatory authority, may impact the manner in which Bitcoin, Ethereum, and other crypto assets are treated for classification and clearing purposes.
Future legislation, SEC rulemaking and other regulatory developments, including interpretations released by a regulatory authority, may impact the manner in which Ethereum and other crypto assets owned by us are treated for classification and clearing purposes.
While we are pursuing the development of additional features to make our platform more useful and attractive to consumers involved in crypto assets, we may fail to develop these features effectively in an efficient manner, or within a timeframe that enables us to be or remain competitive.
While we are pursuing the development of additional features to make our platform more useful and attractive to consumers involved in blockchain technology, we may fail to develop these features effectively in an efficient manner, or within a timeframe that enables us to be or remain competitive.
The platform involves reading user data, and storage of user data, and security breaches could expose us to a risk of loss or misuse of this information, litigation, and potential liability. A number of large Internet companies have suffered security breaches, some of which have involved intentional attacks.
The platform involves processing and storage of sensitive data, and security breaches could expose us to a risk of loss or misuse of this information, litigation, and potential liability. A number of large Internet companies have suffered security breaches, some of which have involved intentional attacks.
The blockchain network calculates rewards earned, which are then distributed directly to the Delegator’s wallet. At no point does the Validator gain access, control, or custody of the original staked crypto assets or the earned crypto rewards through staking to its node.
The blockchain network calculates rewards earned, which are then distributed directly to the Delegator’s wallet. The blockchain network does not distribute any of the Delegator’s earned crypto rewards to BTCS. At no point does the Validator gain access, control, or custody of the original staked crypto assets or the earned crypto rewards through staking to its node.
Such additional registrations: i) would result in extraordinary, non-recurring expenses, ii) is time consuming and restrictive, iii) would require a restructuring of our operations, and iv) we would be very constrained in the kind of business we could do as a registered investment company, thereby materially and adversely impacting an investment in us.
Such additional registrations: i) would result in extraordinary, non-recurring expenses, ii) would be time consuming and restrictive, iii) would require a restructuring of our operations, and iv) would result in significant constraints in the kind of business we could do as a registered investment company, thereby materially and adversely impacting an investment in us.
Because of the foregoing, we may be subject to legal claims of alleged infringement of the intellectual property rights of third parties. We expect this risk to increase as we continue to develop and roll-out additional functions for the StakeSeeker platform and potential StaaS operations in the future.
Because of the foregoing, we may be subject to legal claims of alleged infringement of the intellectual property rights of third parties. We expect this risk to increase as we continue to develop and roll-out additional functions for the ChainQ platform in the future.
We have no guarantees or obligations other than those which arise out of normal business operations. 22 CRITICAL ACCOUNTING POLICIES AND ESTIMATES We believe that the following accounting policies are the most critical to aid you in fully understanding and evaluating this management discussion and analysis: Accounting Treatment of Crypto Assets Fair Value Measurement The Company’s fair value measurement for its crypto assets is guided by Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 820 - Fair Value Measurement .
We have no guarantees or obligations other than those which arise out of normal business operations. 23 CRITICAL ACCOUNTING POLICIES AND ESTIMATES We believe that the following accounting policies are the most critical to aid you in fully understanding and evaluating this management discussion and analysis: Accounting Treatment of Crypto Assets Fair Value Measurement The Company accounts for the fair value measurement for its crypto assets in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 820, Fair Value Measurement.
In order to limit our acquisition of Digital Securities to stay within the 40% threshold, we will examine the manner in which a crypto asset was initially marketed to determine if it may be deemed a Digital Security and subject to federal and state securities laws.
In order to limit our acquisition of Digital Securities to stay within the 40% threshold, we will examine the manner in which a crypto asset was initially marketed, the economic reality of the instrument, and apply the Howey test factors to determine if it may be deemed a Digital Security subject to federal and state securities laws.
The Company believes that the existing cash and liquid crypto assets held by us, in addition to the funds available to the Company from the issuance of additional stock through the ATM Agreement, provide sufficient liquidity to meet working capital requirements, anticipated capital expenditures and contractual obligations for at least the next twelve months.
The Company believes that its existing cash and liquid crypto assets, in addition to the funds available to the Company from the issuance of additional stock through the ATM Agreement, provide sufficient liquidity to meet working capital requirements, anticipated capital expenditures and contractual obligations for at least the next twelve months from the filing date of this report.
Crypto assets on which our current and planned operations depend face significant scaling obstacles that can lead to high fees or slow transaction settlement times, and attempts to increase the volume of transactions may not be effective.
Our business faces significant scaling obstacles due to its dependence on crypto assets and related infrastructure. Crypto assets on which our current and planned operations depend face significant scaling obstacles that can lead to high fees or slow transaction settlement times, and attempts to increase the volume of transactions may not be effective.
Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis. At December 31, 2023, the Company had approximately $1,458,000 of cash and working capital of approximately $26,055,000.
Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis. At December 31, 2024, the Company had approximately $1,978,000 of cash and working capital of approximately $33,893,000.
We may suffer losses due to staking, delegating, and other related services. Crypto assets which utilize PoS consensus mechanisms enable holders to earn rewards by operating nodes and participating in decentralized governance, bookkeeping and transaction confirmation activities on their underlying blockchain networks. We stake certain of our crypto assets and operate nodes on blockchain networks through our blockchain infrastructure operations.
Crypto assets which utilize PoS consensus mechanisms enable holders to earn rewards by operating nodes and participating in decentralized governance, bookkeeping and transaction confirmation activities on their underlying blockchain networks. We stake certain of our crypto assets and operate nodes on blockchain networks through our blockchain infrastructure operations.
At that point, revenue is recognized. 24 Cost of Revenue The Company’s cost of revenue related to its blockchain infrastructure operations primarily includes direct production costs associated with transaction validation on the network, cloud-based server hosting expenses related to our validator nodes, and allocated employee salaries dedicated to node maintenance and support.
Cost of Revenues The Company’s cost of revenues related to its blockchain infrastructure operations primarily includes direct production costs associated with transaction validation on the network, cloud-based server hosting expenses related to our validator nodes and Builders, and allocated employee salaries dedicated to node maintenance and support.
A lack of stability in an exchange market and the closure or temporary shutdown of larger crypto exchanges due to fraud, business failure, hackers or malware, or government-mandated regulation may reduce confidence in crypto assets overall and result in greater volatility in crypto asset values. These potential consequences of an exchange’s failure could adversely affect an investment in us.
A lack of stability in an exchange market and the closure or temporary shutdown of larger crypto exchanges due to fraud, business failure, hackers or malware, or government-mandated regulation may reduce confidence in crypto assets overall and result in greater volatility in crypto asset values.
Our articles of incorporation allow for our Board to create new series of preferred stock without further approval by our shareholders, which could adversely affect the rights of the holders of our Common Stock. Our Board has the authority to fix and determine the relative rights and preferences of preferred stock.
Our articles of incorporation allow for our Board to create new series of preferred stock without further approval by our shareholders, which could adversely affect the rights of the holders of our Common Stock.
These factors may decrease liquidity or volume or may otherwise increase volatility or other assets trading on a ledger-based system, which may adversely affect us.
These factors may decrease liquidity or volume or may otherwise increase volatility or other assets trading on a ledger-based system, which may adversely affect us. Such circumstances could adversely affect an investment in us.
The Company’s fractional share of awards received from delegating to a third-party validator node is proportionate to the crypto assets staked by the Company compared to the total crypto assets staked by all Delegators to that node at that time. The provision of validating blockchain transactions is an output of the Company’s ordinary activities.
The Company’s fractional share of awards received from delegating to a third-party validator node is proportionate to the crypto assets staked by the Company compared to the total crypto assets staked by all Delegators to that node at that time.
While the markets have appeared to recover as of February 2024, crypto and stock prices have nonetheless experienced substantial volatility in recent years, and in the event of adverse market conditions, consumers may elect to sell their crypto assets, or decline to increase their holdings, rather than hold and stake them to our nodes.
Crypto markets and stock prices have experienced substantial volatility in recent years, and in adverse market conditions, consumers may elect to sell their crypto assets or decline to increase their holdings, rather than hold and stake them to our nodes.
Such lack of controls and responses to such circumstances 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 Ethereum or other crypto assets we acquire or hold, and harm investors.
Such lack of controls and responses to such circumstances 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 Ethereum or other crypto assets we acquire or hold, and harm investors. 42 Security Risks Related to Our Crypto Asset Holdings Our crypto assets may be subject to loss, damage, theft or restriction on access.
For example, we issued a total of 14,542,803 shares of Series V Preferred Stock in June 2023, which preferred stock comes with a 20% liquidation preference over our Common Stock and also has certain rights to dividend and distributions at the discretion of the Board.
For example, we issued a total of 15,033,231 shares of Series V Preferred Stock, which has a 20% liquidation preference over our Common Stock and also has certain rights to dividend and distributions at the discretion of the Board.
Options Stock options issued under the Company’s long-term incentive plans are granted with an exercise price equal to no less than the market price of the Company’s stock at the date of grant and expire up to ten years from the date of grant. These options often vest over a one-year period.
Options Stock options issued under the Company’s equity incentive plans are granted with an exercise price equal to no less than the market price of the Company’s stock at the date of grant and expire up to ten years from the date of grant.
Such factors 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 harm investors. 29 Risks Related to Crypto Assets A particular crypto asset’s status as a “security” in any relevant jurisdiction is subject to a high degree of uncertainty, with a growing number of regulators taking the position that certain crypto assets are securities and bringing enforcement actions accordingly, and if we are unable to properly characterize a crypto asset or comply with the applicable regulatory requirements, we may be subject to regulatory scrutiny, investigations, fines, and other penalties, which may adversely affect our business, operating results, and financial condition.
A particular crypto asset’s status as a “security” in any relevant jurisdiction is subject to a high degree of uncertainty, with a growing number of regulators taking the position that certain crypto assets are securities and bringing enforcement actions accordingly, and if we are unable to properly characterize a crypto asset or comply with the applicable regulatory requirements, we may be subject to regulatory scrutiny, investigations, fines, and other penalties, which may adversely affect our business, operating results, and financial condition.
Therefore, economic downturns or a recession will cause a reduction in delegation traffic to our nods by causing consumers to reduce spending on investments or non-essential items such as crypto assets. Similarly, a decline in the popularity or public perception of such crypto assets would yield a similar result.
Economic downturns or a recession could significantly reduce delegation traffic to our nodes as consumers may reduce spending on investments or non-essential items such as crypto assets. Similarly, a decline in the popularity or public perception of crypto assets could yield a similar result.
There is a lack of liquid markets, and possible manipulation of blockchain/cryptocurrency-based crypto assets. Crypto assets that are represented and trade on a ledger-based platform may not necessarily benefit from viable trading markets.
Such events could have a material adverse effect on an investment in us. There is a lack of liquid markets, and possible manipulation of blockchain/cryptocurrency-based crypto assets. Crypto assets that are represented and trade on a ledger-based platform may not necessarily benefit from viable trading markets.
Expected Term – The Company’s expected term represents the weighted-average period that the Company’s stock options are expected to be outstanding. The expected term is based on the expected time to post-vesting exercise of options by employees. The Company uses historical exercise patterns of previously granted options to derive employee behavioral patterns used to forecast expected exercise patterns.
The expected term is based on the expected time to post-vesting exercise of options by employees. The Company uses historical exercise patterns of previously granted options to derive employee behavioral patterns used to forecast expected exercise patterns.
For example, California enacted the California Consumer Privacy Act, or CCPA, which became effective in 2020.
For example, California enacted the California Rights Privacy Act, or CPRA, which augmented the California Privacy Rights Act, became effective in 2020.
Additional complexities can arise with respect to crypto asset operations. Changes in these rules or their interpretation or changes in underlying assumptions, estimates or judgments by our management could significantly change our reported or expected financial performance.
Additional complexities can arise with respect to crypto asset operations. Changes in these rules or their interpretation or changes in underlying assumptions, estimates or judgments by our management could significantly change our reported or expected financial performance. If our estimates or judgments relating to our critical accounting policies prove to be incorrect, our operating results could be adversely affected.
The risk of technical failures, bugs, or vulnerabilities in our block builder software could lead to operational disruptions and potential financial losses. Our Ethereum block-building process heavily relies on advanced algorithms and technology. The risk of technical failures, bugs, or vulnerabilities in our block builder software could lead to operational disruptions and potential financial losses.
Our Ethereum block-building process heavily relies on advanced algorithms and technology. Technical failures, bugs, or vulnerabilities in our block builder software could lead to significant operational disruptions and potential financial losses that may be substantial and could materially impact our business.
Further, if our examination of a crypto asset is incorrect, we may incur regulatory penalties and private investor liabilities since Section 5 of the Securities Act is a strict liability statute much like selling spoiled milk and state securities laws generally impose liability for negligence for misrepresentations.
Further, if our examination of a crypto asset is incorrect, we may incur regulatory penalties and private investor liabilities since Section 5 of the Securities Act imposes strict liability for unregistered securities offerings, regardless of intent, and state securities laws generally impose liability for negligent misrepresentations.
This lock-up period often extends beyond the time at which the transaction is validated. We currently stake certain of our crypto assets and operate nodes on blockchain networks through our blockchain infrastructure services business.
This lock-up period often extends beyond the time at which the transaction is validated. We currently stake certain of our crypto assets and operate nodes on blockchain networks through our blockchain infrastructure services business. During times of high volatility or downturns, we may be unable to liquidate certain crypto assets to the extent desired.
From the period September 14, 2021 through March 19, 2024, the Company sold a total of 4,346,748 shares of Common Stock under the ATM Agreement for aggregate total gross proceeds of approximately $17,256,000 at an average selling price of $3.97 per share, resulting in net proceeds of approximately $16,696,000 after deducting commissions and other transaction costs.
From the period September 14, 2021 through March 17, 2025, the Company sold a total of 6,401,461 shares of Common Stock under the ATM Agreement for aggregate total gross proceeds of approximately $24,230,000 at an average selling price of $3.79 per share, resulting in net proceeds of approximately $23,445,000 after deducting commissions and other transaction costs.
There is a risk that part or all of our crypto assets could be lost, stolen, destroyed or become inaccessible. We believe that our crypto assets will be an appealing target to hackers or malware distributors seeking to destroy, damage, or steal our crypto assets.
There is a risk that part or all of our crypto assets could be lost, stolen, destroyed or become inaccessible. Our crypto assets are an appealing target to hackers or malware distributors seeking to destroy, damage, or steal our crypto assets, and we have experienced attempts to breach our security measures in the past.
According to ASC 820, fair value is defined as the price that would be received for an asset in a current sale, assuming an orderly transaction between market participants on the measurement date.
ASC 820 defines fair value as the price that would be received for an asset in a current sale, assuming an orderly transaction between market participants on the measurement date. Market participants are considered to be independent, knowledgeable, and willing and able to transact.
The cost of such compliance would result in the Company incurring substantial additional expenses, and the failure to register if required would have a materially adverse impact to conduct our operations. 31 If the SEC concludes that our non-custodial staking business involves the offer and sale of a security in violation of Section 5 of the Securities Act of 1933 and the courts conclude the SEC is correct, we will be required to cease our staking as a service business and seek another business opportunity and may be subject to monetary and other penalties.
If the SEC concludes that NodeOps our non-custodial staking business involves the offer and sale of a security in violation of Section 5 of the Securities Act of 1933 and the courts conclude the SEC is correct, we will be required to cease our staking as a service business and seek another business opportunity and may be subject to monetary and other penalties.
It may be time-consuming, difficult and costly for us to develop, implement and maintain the internal controls and reporting procedures required by the Sarbanes-Oxley Act. We may need to hire additional financial reporting, internal controls and other finance personnel in order to develop and implement appropriate internal controls and reporting procedures.
It may be time-consuming, difficult and costly for us to develop, implement and maintain the internal controls and reporting procedures required by the Sarbanes-Oxley Act.
Certain of our staked crypto assets may be locked up for varying durations, depending on the specific blockchain protocol, and we may be unable to unstake them in a timely manner in order to liquidate to the extent desired. Lock-up periods for our staked crypto assets range from several hours to six months.
Certain of our staked crypto assets may be locked up for varying durations, depending on the specific blockchain protocol, and we may be unable to unstake them in a timely manner to liquidate to the extent desired, which could materially impact our liquidity position.
The Company generates revenue through staking rewards generated from its blockchain infrastructure operations. The transaction consideration the Company receives – the crypto asset awards and gas fees – are a non-cash consideration, which the Company measures at fair value on the date received.
The transaction consideration the Company receives - the crypto asset awards and gas fees - are a non-cash consideration, which the Company measures at fair value on the date received.
The Company recorded realized gains (losses) on crypto assets of approximately ($604,000) and $507,000 during the years ended December 31, 2023 and 2022, respectively. Revenue Recognition The Company recognizes revenue under ASC 606 , Revenue from Contracts with Customers .
Realized gains (losses) on sale of crypto assets are included in other income (expenses) in the consolidated statements of operations. The Company recorded realized losses on crypto assets of approximately $766,000 and $604,000 during the years ended December 31, 2024 and 2023, respectively. 24 Revenue Recognition The Company recognizes revenue under ASC 606, Revenue from Contracts with Customers.
Bitcoin and Ethereum have been deemed to fall within the definition of a commodity and, we may be required to register and comply with additional regulation under the CEA, including additional periodic report and disclosure standards and requirements.
We cannot be certain as to how future regulatory developments will impact the treatment of Bitcoin, Ethereum, and other crypto assets under the law. 36 Bitcoin and Ethereum have been deemed to fall within the definition of a commodity and, we may be required to register and comply with additional regulation under the CEA, including additional periodic report and disclosure standards and requirements.
Under ASC 718, awards result in a cost that is measured at fair value on the awards’ grant date, based on the estimated number of awards that are expected to vest and will result in a charge to operations. Share-based payment awards exchanged for services are accounted for at the fair value of the award on the estimated grant date.
ASC 718 addresses all forms of share-based payment awards including shares issued under employee stock purchase plans and stock incentive shares. Under ASC 718, awards result in a cost that is measured at fair value on the awards’ grant date, based on the estimated number of awards that are expected to vest and will result in a charge to operations.
As of March 19, 2024, the Company had approximately $870,000 of cash and the fair market value of the Company’s liquid crypto assets was approximately $35,665,000. The Company has no outstanding debt.
As of March 17, 2025, the Company had approximately $261,000 of cash and cash equivalents and the fair market value of the Company’s liquid crypto assets was approximately $21,440,000. The Company has no outstanding debt.

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