BTC Digital Ltd.BTCT财报

ITEM 3. KEY INFORMATION A. [Reserved] B. Capitalization and Indebtedness Not Applicable C. Reasons for the Offer and Use of Proceeds. Not Applicable. D. Risk Factors In addition to the other information contained in this Annual Report and in other documents we file with or furnish to the U.S.

Securities and Exchange Commission (the “SEC”), the following risk factors should be considered in evaluating our business. The occurrence of any of the events or developments described below could materially harm our business, financial condition, results of operations and prospects. In such an event, the market price of our ordinary shares could decline.

Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may materially impair our business operations. Summary of Risk Factors Our business is subject to a number of risks of which you should be aware before making an investment decision.

Among these important risks are the following, which are more fully described below: Risks Related to Our Business and Industry Risks and uncertainties related to our cryptocurrency business and industry include, but are not limited to, the following: ● We have a limited operating history of blockchain and cryptocurrency business. ● As the operating entities develop their blockchain and cryptocurrency business, our total revenue and cash flow will become materially dependent on the market value of digital assets and the volume of digital assets received from their mining efforts.

If such market value or volume declines, our business, operating results and financial condition would be adversely affected. ● The cost of acquiring new mining machines has historically been capital intensive, and is likely to continue to be very capital intensive, which may have a material and adverse effect on our business and results of operations. ● The price of new mining machines may be linked to the market price of bitcoin and other cryptocurrencies, and our costs of obtaining new and replacement mining machines may increase along with the market price of bitcoin and other cryptocurrencies, which may have a material and adverse effect on our financial condition and results of operations. 1 ● Because the only type of cryptocurrency we currently mine is bitcoin, our future success will depend in large part upon the value of bitcoin, and any sustained decline in its value could adversely affect our business and results of operations. ● To the extent that the profit margins of bitcoin mining operations are not high, operators of bitcoin mining operations are more likely to immediately sell bitcoin rewards earned by mining in the market, thereby constraining growth of the price of bitcoin, which could adversely impact us. ● We are subject to risks associated with our need for significant electrical power. ● The cryptocurrencies stored by the operating entities may be subject to accidental or unauthorized loss or theft or otherwise may be access restricted.

Risks Related to Bitcoin Risks and uncertainties related to bitcoin include, but are not limited to, the following: ● The trading price of bitcoin, which may be subject to pricing risks, including volatility related risks, has historically been subject to wide swings.

A material decrease in the price of bitcoin could have a materially adverse effect on our business and results of operations. ● The markets for bitcoin may be underregulated. As a result, the market price of bitcoin may be extremely volatile.

Rapid decreases in the price of bitcoin could have a materially adverse effect on our business and results of operations. ● Banks and financial institutions may not provide banking services, or may cut off services, to businesses that engage in cryptocurrency-related activities. ● We have an evolving business model subject to various uncertainties. ● It may be illegal now, or in the future, to acquire, own, hold, sell or use bitcoin, or other cryptocurrencies, participate in blockchains or utilize similar cryptocurrency assets in one or more countries, the ruling of which would adversely affect us. ● The development and acceptance of competing blockchain platforms or technologies may cause demand for bitcoin to decrease.

Risks Related to Governmental Regulation and Enforcement ● If bitcoins are determined to be investment securities, and we hold a significant portion of our assets in bitcoins, investment securities or non-controlling equity interests of other entities, we may inadvertently violate the Investment Company Act of 1940 (the “Investment Company Act”).

We could incur large losses to modify our operations to avoid the need to register as an investment company or could incur significant expenses to register as an investment company or could terminate operations altogether. ● We may be required to register as an investment company under the Investment Company Act.

In such event, we may be deemed as operating as an unregistered investment company in violation of the Investment Company Act and required to register as an investment company or to adjust our strategies. ● We cannot be certain as to how future regulatory developments will impact our business and any such additional regulatory requirements, or changes in how existing requirements are interpreted and applied, may cause us to cease all or certain of our operations or change our business model. 2 ● If U.S. and/or foreign regulators and other government entities assert jurisdictions over cryptocurrencies and cryptocurrency markets, we may be subject to additional regulations imposed by these regulators and government entities and may be required to alter our business operations to gain compliance with these regulations, as a result of which we may experience increased compliance costs and our business operations, financial position and results of operations may be materially and adversely affected. ● If regulatory changes or interpretations of our activities require us to register under the regulations promulgated by FinCEN under the authority of the U.S.

Bank Secrecy Act, or otherwise under state laws, we may incur significant compliance costs, which may have a material negative effect on our business and the results of its operations. Risks Related to Our Ordinary Shares and the Trading Market ● Our share price has been volatile and not entirely related to our performance and financial results.

The price of our ordinary shares may be subject to further volatility in the future. ● We may issue additional ordinary shares or other equity securities without your approval, which would dilute your ownership interests and may depress the market price of our ordinary shares. ● We are not expected to pay dividends on our ordinary shares in the foreseeable future. ● You may face difficulties in protecting your interests, and your ability to protect your rights through U.S. courts may be limited, because we were formed under Cayman Islands law.

Risk Factors Risks Related to Our Business and Industry We have launched our blockchain and cryptocurrency business in early 2022 and have a limited operating history. Since early 2022, we have started to transition the business focus to blockchain and cryptocurrency business through the operating entities.

Accordingly, we have a limited operating history, which makes an evaluation of our future prospects difficult. Our operating results will likely fluctuate moving forward as we focus on increasing our capacity and as the market price of bitcoin fluctuates.

We may need to make business decisions that could adversely affect our operating results, such as modifications to our business structure, or operations.

Additionally, as we have limited experience in the blockchain and cryptocurrency business, our efforts in developing such business may not succeed and we may not be able to generate sufficient revenue to cover our investment and become profitable.

In the fiscal year ended December 31, 2024, we generated revenue in the amount of $11.7 million from our cryptocurrency business, and generated net loss of $2.0 million from our cryptocurrency business. We may not continue to generate substantial revenue or net income from our blockchain and cryptocurrency business, if at all.

If we do not effectively manage our growth, we may not be able to execute on our business plan, respond to competitive pressures or take advantage of market opportunities and our business, financial condition, and results of operations could be materially harmed.

As the operating entities develop their blockchain and cryptocurrency business, our total revenue and cash flow will become materially dependent on the market value of digital assets and the volume of digital assets received from our mining efforts. If such market value or volume declines, our business, operating results and financial condition would be adversely affected.

As we develop our blockchain and cryptocurrency business, the operating cash flow will be materially dependent on our ability to sell cryptocurrency for fiat currency as needed.

As such, any declines in the number of cryptocurrencies that we successfully mine, the price of such cryptocurrencies or market liquidity for cryptocurrencies and digital assets generally would adversely affect our revenue and ability to fund the operations. 3 The price of cryptocurrencies and digital assets and associated demand for buying, selling, and trading cryptocurrencies and digital assets have historically been subject to significant volatility.

For example, Bitcoin’s aggregate market value was $250 billion in October 2020, surpassed $1 trillion in October 2021, decreased to $0.37 trillion in October 2022, and rose to over $1.4 trillion in March 2024, based on Bitcoin prices quoted on major exchanges.

The price and trading volume of any digital asset is subject to significant uncertainty and volatility, depending on a number of factors, including: ● market conditions across the broader blockchain ecosystem; ● trading activities on digital asset platforms worldwide, many of which may be unregulated, and may include manipulative activities; ● investment and trading activities of highly active retail and institutional users, speculators, mining machines and investors; ● the speed and rate at which digital assets are able to gain worldwide adoption as a medium of exchange, utility, store of value, consumptive asset, security instrument or other financial assets, if at all; ● changes in user and investor confidence in digital assets and digital asset platforms; ● publicity and events relating to the blockchain ecosystem, including public perception of the impact of the blockchain ecosystem on the environment; ● unpredictable social media coverage or “trending” of digital assets; ● the functionality and utility of digital assets and their associated ecosystems and networks, including digital assets designed for use in various applications; ● consumer preferences and perceived value of digital assets; ● increased competition from other payment services or other digital assets that exhibit better speed, security, scalability or other characteristics; ● the correlation between the prices of digital assets, including the potential that a crash in one digital asset or widespread defaults on one digital asset exchange or trading venue may cause a crash in the price of other digital assets, or a series of defaults by counterparties on digital asset exchanges or trading venues; ● regulatory or legislative changes and updates affecting the blockchain ecosystem; ● the characterization of digital assets under the laws of various jurisdictions around the world; ● the maintenance, troubleshooting and development of the blockchain networks underlying digital assets, including by mining machines, validators and developers worldwide; ● the ability for digital asset networks to attract and retain mining machines or validators to secure and confirm transactions accurately and efficiently; ● ongoing technological viability and security of digital assets and their associated protocols, smart contracts, applications and networks, including vulnerabilities against hacks and scalability; ● fees and speed associated with processing digital asset transactions, including on the underlying blockchain networks and on digital asset platforms; ● financial strength of market participants; 4 ● interruptions in service from, or failures of, major digital asset trading platforms; ● availability of an active derivatives market for various digital assets; ● availability of banking and payment services to support digital asset-related projects; ● level of interest rates and inflation; and ● monetary policies of governments, trade restrictions and fiat currency devaluations.

There is no assurance that any digital asset, including Bitcoin, will maintain its value or that there will be meaningful levels of trading activities to support markets in any digital asset.

A decline in the market value of digital assets or in the demand for trading digital assets could lead to a corresponding decline in the value of our cryptocurrency assets, their returns on investments in mining machines, and could adversely affect their business, operating results and financial condition.

Digital assets may be subject to momentum pricing due to speculation regarding future appreciation or depreciation in value, leading to greater volatility. Momentum pricing typically is associated with growth stocks and other assets whose valuation, as determined by the investing public, accounts for future changes in value.

It is possible that momentum pricing of digital assets has resulted, and may continue to result, in speculation regarding future changes in the value of digital assets, making digital assets’ prices more volatile.

As a result, digital assets may be more likely to fluctuate in value due to changing investor confidence, which could impact future appreciation or depreciation in digital asset prices. As a result, our business, operating results and financial condition could be adversely affected.

The cost of acquiring new mining machines has historically been capital intensive and is likely to continue to be very capital intensive, which may have a material and adverse effect on our business and results of operations.

The success and profitability of our mining operations conducted depends largely on the costs, including costs of mining machines and electricity, associated with our mining activities. We can be profitable only if such costs are lower than the prices of the cryptocurrencies we mine when we sell them.

Our mining machines experience ordinary wear and tear from operation and may also face more significant malfunctions caused by factors which may be beyond our control. Over time, we will replace those mining machines which are no longer functional with new mining machines we manufacture.

Additionally, as technology evolves, we are required to continue investing in research and development to invent newer models of mining machines to remain competitive in the market. All of the mining machines deployed by us will degrade due to ordinary wear and tear from usage.

Additionally, all of these machines will eventually become obsolete, and may also be lost or damaged due to factors outside of our control. Once such event happens, these mining machines will need to be repaired or replaced along with other equipment from time to time for us to stay competitive.

This upgrading process requires substantial capital investment, and we may face challenges in doing so on a timely and cost-effective basis based on our ability to develop new mining machines with greater processing power and our access to adequate capital resources.

If we are unable to obtain adequate numbers of new and replacement mining machines at scale, we may be unable to remain competitive in our highly competitive and evolving industry.

If this happens, we may not be able to mine cryptocurrencies through our subsidiaries as efficiently or in similar amounts as our competitors and, as a result, our business and financial results could suffer. This could, in turn, materially and adversely affect the trading price of our securities and our investors could lose part or all of their investment.

The price of new mining machines may be linked to the market price of bitcoin and other cryptocurrencies, and our costs of obtaining new and replacement mining machines may increase along with the market price of bitcoin and other cryptocurrencies, which may have a material and adverse effect on our financial condition and results of operations.

Our financial condition and results of operations are dependent on our ability to sell the bitcoin the operating entities mine at a price greater than our costs to produce that bitcoin.

We incur significant up-front capital costs each time we acquire new mining machines, and, if future prices of bitcoin are not sufficiently high, we may not realize the benefit of these capital expenditures.

As the price for new mining machines we buy increases, our cost to mine a single bitcoin also increases, therefore requiring a corresponding increase in the price of bitcoin for us to maintain our results of operations, to the extent we sell the bitcoin shortly after mining it. 5 We have observed significant fluctuations in market prices for bitcoin, to the extent that we are unable to reasonably predict future prices for the bitcoin the operating entities mine.

The market price of bitcoin could decrease during this time to the point at which it no longer becomes profitable for the operating entities to use such equipment to mine bitcoin and, as a result, our business and financial results could suffer.

This could, in turn, materially and adversely affect the trading price of our securities and our investors could lose part or all of their investment. Reports have been released that the prices of new mining machines are adjusted according to the price of bitcoin.

As a result, the cost of new machines can be unpredictable, and could also be significantly higher than our historical cost for new mining machines. As a result, at times, the operating entities may obtain mining machines and other hardware from third parties at higher prices, to the extent they are available.

While we cannot know definitively if these two phenomena are linked, we have seen a measurable increase in the prices for new mining machines offered by third party manufacturers during periods of increased market prices for bitcoin, and such prices may continue to track the volatility in the market price of bitcoin.

The global supply chain for mining machines is presently constrained due to unprecedented demand coupled with a global semiconductor (including microchip) shortage, with a significant portion of available mining machines being acquired by companies with substantial resources. Semiconductors are utilized in various devices and products and are a crucial component of manning machines.

Supply chain constraints coupled with increasing demand has led to increased pricing and limited availability for semiconductors. Prices for both new and older models of mining machines have been on the rise and these supply constraints are expected to continue for the foreseeable future. China, a major supplier of miners, has seen a production slowdown as a result of COVID-19.

Should similar outbreaks or other disruptions to the China-based global supply chain for mining hardware occur, the operating entities may not be able to obtain adequate replacement parts for their existing mining machines or to obtain additional mining machines on a timely basis, if at all, or the operating entities may only be able to acquire mining machines at premium prices.

Such events could have a material adverse effect on our ability to pursue our strategy, which could have a material adverse effect on our business and the value of our securities.

Because the mining machines owned by the operating entities are designed specifically to mine bitcoin, our future success will depend in large part upon the value of bitcoin, and any sustained decline in its value could adversely affect our business and results of operations.

Our operating results will depend upon the value of bitcoin because it is the only cryptocurrency the operating entities currently mine. Specifically, our revenues from our bitcoin mining operations are based upon two factors: (1) the number of bitcoin rewards the operating entities successfully mine and (2) the value of bitcoin.

In addition, our operating results are directly impacted by changes in the value of bitcoin because under the value measurement model, both realized and unrealized changes will be reflected in our statement of operations. This means that our operating results will be subject to changes based upon increases or decreases in the value of bitcoin.

The introduction of alternative cryptocurrencies, such as those backed by central banks known as Central Bank Digital Currencies, could significantly reduce the demand for bitcoin. This would reduce both our ability to earn mining rewards and transaction fees and would also impair our ability to monetize the bitcoin we earn.

Our reliance primarily on a limited assortment of miner models from a single manufacturer may subject our operations to increased risk of failure. The performance and reliability of the operating entities’ mining machines and our technology is critical to our reputation and operations.

Because the operating entities currently use a limited assortment of mining machines in their fleet, if there are issues with those machines, such as a design flaw in the ASIC chips they employ, our entire system could be affected.

The operating entities currently use a few different models of mining machines, but if there are issues with such machines, we may have to rely on a single model of mining machine. Any system error or failure may significantly delay response times or even cause our system to fail.

Any disruption in our ability to continue mining could result in lower yields and harm our reputation and business.

Any exploitable weakness, flaw, or error common to the type of mining machines we use affects all such mining machines; therefore, if a defect or other flaw exists and is exploited, all or a substantial portion of our mining operations could go offline simultaneously.

Any interruption, delay or system failure could result in financial losses, a decrease in the trading price of shares of our ordinary shares and damage to our reputation. 6 Because the only type of cryptocurrency we currently mine is bitcoin, our future success will depend in large part upon the value of bitcoin, and any sustained decline in its value could adversely affect our business and results of operations.

Our operating results will depend in large part upon the value of bitcoin because it is the only cryptocurrency we currently mine. Specifically, our revenues from our bitcoin mining operations are based upon two factors: (1) the number of bitcoin rewards we successfully mine and (2) the value of bitcoin.

In addition, our operating results are directly impacted by changes in the value of bitcoin. This means that our operating results will be subject to swings based upon increases or decreases in the value of bitcoin.

The introduction of alternative cryptocurrencies, such as those backed by central banks known as Central Bank Digital Currencies, could significantly reduce the demand for bitcoin. This would reduce both our ability to earn mining rewards and transaction fees, and would also impair our ability to monetize the bitcoin we earn in accordance with our financial projections.

To the extent that the profit margins of bitcoin mining operations are not high, operators of bitcoin mining operations are more likely to immediately sell bitcoin rewards earned by mining in the market, thereby constraining growth of the price of bitcoin, which could adversely impact us.

Over the past few years, bitcoin mining operations have evolved from individual users mining with computer processors, graphics processing units and first-generation ASIC servers. New processing power being added by incorporated and unincorporated “professionalized” mining operations is gaining market share. Professionalized mining operations may use proprietary hardware or sophisticated ASIC machines acquired from ASIC manufacturers.

Acquiring this specialized hardware at scale requires the investment of significant up-front capital, and mining operations incur significant expenses related to the operation of this hardware at scale, such as leasing operating space (often in data centers or warehousing facilities), incurring electricity costs to run the mining machines and employing technicians to operate mining farms.

With the greater scale of professionalized mining operations (compared to individual mining operations) comes pressure to maintain profit margins on the rapid sale of bitcoin, whereas individual mining operations in past years were more likely to hold newly mined bitcoin for more extended periods.

To the extent the price of bitcoin declines and such profit margin is constrained, professionalized mining operations are incentivized to sell bitcoin earned from mining operations soon after mining.

This rapid selling of newly mined bitcoin greatly increases the volume of bitcoin that would otherwise be available for sale under normal market circumstances, creating downward pressure on the market price of bitcoin rewards.

Profit margin for a bitcoin mining operation is in essence the value of bitcoin mined by a professionalized mining operation minus the allocable capital and operating costs to mine bitcoin.

A professionalized mining operation may be more likely to rapidly sell a higher percentage of its newly mined bitcoin if it is operating at a low profit margin and it may partially or completely cease operations if its profit margin is negative.

In a low profit margin environment, a higher percentage could be sold more rapidly, thereby potentially depressing bitcoin prices. Lower bitcoin prices could result in further tightening of profit margins for professionalized mining operations, creating a network effect that may further reduce the price of bitcoin until mining operations with higher operating costs become unprofitable.

Ultimately this effect could force professionalized mining operations to reduce mining power or temporarily cease mining operations The operating entities’ mining operations, including the sites in which their mining machines are operated or that are currently under construction, may experience damages, including damages that are not covered by insurance.

The operating entities’ current mining operations and any future mining operations they establish will be subject to a variety of risks relating to their physical condition and operation, including, but not limited to: ● the presence of construction or repair defects or other structural or building damage; ● any noncompliance with or liabilities under applicable environmental, health or safety regulations or requirements or building permit requirements; 7 ● any damage resulting from natural disasters, such as hurricanes, earthquakes, fires, floods and windstorms; and ● claims by employees and others for injuries sustained at our properties, including as a result of exposure to high voltage operations, extreme temperature conditions in the operating entities’ mining farms, exposure to on-site contaminants and pollutants and dangers posed by the liquid-cooling reservoirs located at their sites.

For example, the operating entities’ mining farms could be rendered temporarily or permanently inoperable as a result of a fire or other natural disaster or by a terrorist or other attack on the mine. The security and other measures the operating entities take to protect against these risks may not be sufficient.

Additionally, the operating entities’ mining farms could be materially adversely affected by a power outage or loss of access to the electrical grid or loss by the grid of cost-effective sources of electrical power generating capacity. The operating entities do not currently maintain any insurance cover for their operations.

In the event of a loss at any of the mining farms in their network, the operating entities may not be able to remediate that loss in a timely manner or at all and the operating entities may lose some or all of the future revenues anticipated to be derived from such mining farms.

The operating entities do not maintain any insurance coverage for the cryptocurrency mining machines, and any potential material losses could materially and adversely affect their business and results of operations. The operating entities maintain insurance coverage for their cryptocurrency mining sites; however, the mining machines are not insured.

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS Management’s Discussion and Analysis of Financial Condition and Results of Operations You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and related notes appearing elsewhere in this Annual Report.

Some of the information contained in this discussion and analysis, including information with respect to our plans and strategy for our business and our expectations with respect to liquidity and capital resources, includes forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, those risks and uncertainties described in “Item 3. Key Information—D.

Risk Factors” and “Cautionary Note on Forward-Looking Statements” sections in this Annual Report. Our actual results could differ materially from the results described in or implied by these forward-looking statements. 40 Overview BTC Digital Ltd. (“we”, “us” “our” and the “Company”) is a crypto asset technology company based in the U.S. with a focus on bitcoin mining.

We also generate revenue through mining machines resale and rental business operations. In fiscal year 2024, we generated a substantial majority of our revenue from bitcoin mining and mining machines resale.

We store all of our bitcoins mined in hot wallets, or cryptocurrency wallets connected to the Internet, and may from time to time exchange bitcoins mined for fiat currency to generate cash flow to fund our business operations.

We attribute our growth since we launched our crypto asset business in 2022 to our competitive strengths in diversified revenue streams, dedicated team and efforts towards regulatory compliance, and our experienced and visionary management team. As of December 31, 2024, we owned a total of 2,411 mining machines with a total hash rate of 288PH/S.

We manage and operate our mining machines at the facility in Arkansas. In the fiscal year ended December 31, 2024, we mined a total of 19.959 bitcoins, generating US$1.2 million in revenue. Historically, the price of bitcoins has fluctuated significantly.

The profitability of our bitcoin mining operations and our operation results have been and will continue to be directly impacted by the trading price of bitcoins. To mitigate these risks, we have launched a mining machines resale and rental business.

We have maintained business relationship with a major machine manufacturer, AGM Technologies Ltd, from which we source mining machines on an order-by-order basis, often at prices lower than market prices. We will then resell mining machines when there is a shortage of machines available on the market and resale prices are higher.

Additionally, from time to time, we rent out our mining machines to customers at a rate calculated based on the total bitcoins mined. We seek to rent out a greater percentage of our fleet at times when bitcoin prices are lower to generate cash flow.

We believe research and development capacities are key to our continued long-term growth and will afford us with the ability to mine bitcoins with greater hash rate and power efficiency and the opportunity to further expand our service or product offerings and diversify our revenue streams.

Through the Joint Venture (as defined below), we have participated in the design and development of equipment dedicated for mining machines and infrastructure, including high voltage power supply, liquid-cooling systems, and hash boards. In the near future, we plan to continue investing in research and development and the Joint Venture and accumulate knowledge in the cryptocurrency industry.

Prior Business Operations On October 20, 2022, pursuant to the terms of the VIE contractual arrangements, Zhuhai Meizhilian Education Technology Co., Ltd. (“Zhuhai Meten”) and Zhuhai Likeshuo Education Technology Co., Ltd.

(“Zhuhai Likeshuo”) unilaterally terminated their respective contractual arrangements with 30-day advanced notices to their respective former VIEs, namely Shenzhen Meten International Education Co., Ltd. and Shenzhen Likeshuo Education Co., Ltd. (the “former VIEs”). The termination of the VIE contractual arrangements were effective on November 19, 2022.

As the VIE structure has been unwound, the financial results of the VIEs and their subsidiaries are no longer consolidated into the Company’s financial statements after the effective date.

As of the date of this report, we only operate cryptocurrency mining business in the U.S., and we no longer provide English language training (“ELT”) services, which services were provided by the former VIEs.

The following are descriptions of the former VIEs’ business, and the operating results of which were consolidated into the Company’s financial statements for the first half of 2022. Through the former VIEs, we were an ELT service provider in China. China’s ELT market is segmented into general ELT, test-oriented ELT and after-school language training sectors.

The former VIEs offered a comprehensive ELT service portfolio comprising of general adult ELT, junior ELT, overseas training services, online ELT and other English language-related services to students from a wide range of age groups.

The former VIEs conducted their business through offline-online business model designed to maximize compatibility within their business segments in order to scale up at relatively low costs.

As of November 22, 2022, the former VIEs had a nationwide offline learning center network of 17 self-operated learning centers covering seven cities in two provinces, autonomous regions and municipalities in China, and one franchised learning center in China.

Leveraging their experience gained from operating offline learning centers, the former VIEs launched the online English learning platform “Likeshuo” in 2014 to further expand their service reach to a larger student base.

As of November 22, 2022, the former VIEs had approximately 2.09 million registered users on the “Likeshuo” platform and cumulatively over 485,000 paying users who purchased their online ELT courses or trial lessons.

As of the same date, the cumulative number of student enrollments for the former VIEs’ online ELT courses since 2014 was approximately 230,000 and the former VIEs had delivered over 6.0 million accumulated course hours to the students online.

The former VIEs took advantage of their business model of combining offline learning center network and online platform to deepen their market penetration and further develop their business. 41 The former VIEs’ qualified personnel, centralized management system driven by artificial intelligence, and technical expertise enabled the former VIEs to create a learning environment that caters to the specific learning demands of the students.

The former VIEs had a high-caliber teaching staff and an experienced content development team, who were supported by the former VIEs’ centralized teaching and management systems to optimize the students’ learning experiences.

As of November 22, 2022, the former VIEs had a team of 524 full-time teachers, study advisors and teaching service staff, of which 245 were study advisors and teaching service staff for our offline and online businesses.

As of the same date, the former VIEs also had 40 full-time and part-time foreign teachers from English-speaking countries for the offline ELT services. The former VIEs had a dedicated content development team focusing on developing practical and innovative education materials independently and in collaboration with strategic partners.

The former VIEs had built highly centralized and scalable management systems to manage teaching, marketing, finance and human resources activities across offline and online businesses. In addition to management systems, the former VIEs had made significant investments in developing platforms and systems to support teaching activities.

For example, the former VIEs utilized the intelligent tracking and learning coaching function of artificial intelligence-driven teaching management systems to record and analyze the students’ real-time learning process and personalize the course content to address the students’ learning needs. A.

Operating Results The following table sets forth a summary of our consolidated results of operations, both in absolute amounts and as a percentage of total net revenue, for the period indicated. This information should be read together with our consolidated financial statements and related notes included elsewhere in this report on Form 20-F.

The operating results in any period are not necessarily indicative of the results that may be expected for any future period.

Years ended December 31, 2022 2023 2024 US$ % US$ % US$ % Summary Consolidated Statements of Operations: Revenues 57,914 100.0 9,073 100.0 11,675 100.0 Cost of revenues (37,862 ) (85.1 ) (10,208 ) (112.5 ) (11,560 ) (99.0 ) Gross profit/(loss) 20,052 14.9 (1,135 ) (12.5 ) 115 1.0 Operating expenses: Selling and marketing expenses (11,431 ) (19.7 ) (225 ) (2.5 ) (355 ) (3.0 ) General and administrative expenses (15,211 ) (26.3 ) (1,121 ) (12.4 ) (2,438 ) (20.9 ) Loss from operations (6,590 ) (11.4 ) (2,481 ) (27.3 ) (2,678 ) (22.9 ) Realized gain on exchange of digital assets (273 ) (0.5 ) 34 0.4 713 6.1 Interest income 19 - 1 - - Interest expenses (23 ) - (63 ) (0.7 ) (48 ) (0.4 ) Losses on disposal and closure of subsidiaries and branches (2,639 ) (4.6 ) Government grants 404 0.7 Equity in income on equity method investments 512 0.9 12 0.1 75 0.6 Gain on disposal of discontinued operations 10,835 18.7 Foreign currency exchange gain, net 202 0.3 - - - - Other, net 3,306 5.7 (327 ) (3.6 ) (51 ) (0.4 ) Gain/(Loss) before income tax 5,753 9.9 (2,824 ) (31.1 ) (1,989 ) (17.0 ) Income tax expense (116 ) (0.2 ) - - - - Net gain/(loss) 5,637 9.7 (2,824 ) (31.1 ) (1,989 ) (17.0 ) 42 For the years Ended of December 31, 2024 Compared to the years Ended of December 31, 2023 Revenues Years ended December 31, 2022 2023 2024 US$ % US$ % US$ % Educational Training Business 46,083 79.6 - - - - Cryptocurrency-related business Bitcoin mining 2,392 4.1 2,882 31.8 1,190 10.2 Mining machines resale 8,817 15.2 5,485 60.5 9,124 78.1 Other mining-related business 622 1.1 706 7.7 1,361 11.7 Subtotal 11,831 20.4 9,073 100.0 11,675 100.0 Total 57,914 100.0 9,073 100.0 11,675 100.0 Note: The Educational Training Business was operated through the former VIEs and their subsidiaries.

Following the divestiture of the former VIEs and their subsidiaries, the Company’s continuing operations are solely comprised of cryptocurrency-related businesses. Accordingly, the following discussion and analysis reflect only the financial results from continuing operations related to the cryptocurrency business.

Our total revenue increased by 28.7% from US$9.1 million in the years ended December 31, 2023 to US$11.7 million in the years ended December 31, 2024. This was primarily due to the increase in mining machines resale by 66.3% from US$5.5 million to US$9.1 million.

The increase in mining machines resale was mainly due to the bitcoin price surge, during 2024, Bitcoin’s price ranged from a low of $39,567.28 on January 23 to a peak of $102,900 on December 5, an increase of roughly $63,333 or about 160%, which increase market demand for mining machines.

Cost of Revenues Our total cost of revenues increased by 13.2% from US$10.2 million in the years ended December 31, 2023 to US$11.6 million in the years ended December 31, 2024. This increase was mainly due to the growth of business volume.

Gross Profit and Gross Profit Margin As a result of the foregoing, our gross profit increased from negative US$1.1 million in the years ended December 31, 2023 to US$115 thousand in the years ended December 31, 2024.

Our gross profit margin increased from negative 12.5% in the years ended December 31, 2023 to 1.0% in the years ended December 31, 2024. 43 Selling and Marketing Expenses Our selling and marketing expenses increased from US$225 thousand in the years ended December 31, 2023 to US$355 thousand in the years ended December 31, 2024.

This increase was mainly due to the growth of mining machine resale business, which correspondingly led to the increase in sales expenses. General and Administrative Expenses Our general and administrative expenses increased by 117.5% from US$1.1 million in the years ended December 31, 2023 to US$2.4 million in the years ended December 31, 2024.

This increase was primarily due to (i) the rise in expenses related to the Employee Stock Option Plan, which amounted to US$0.57 million; (ii)a credit impairment loss of US$0.48 million. Interest Expenses Our interest expenses decreased from US$63 thousand in the years ended December 31, 2023 to US$48 thousand in the years ended December 31,2024.

This reduction is consistent with the decrease in short-term loans. Realized gain on exchange of digital assets Our Realized gain on exchange of digital assets increased from US$0.03 million to US$0.7 million, this was mainly attributable to the significant surge in the price of bitcoin in 2024.

Equity in Income on Equity Method Investments Our gain on equity method investments was US$12 thousand and US$75 thousand for the years ended December 31, 2023 and 2024, respectively.

Loss Before Income Tax As a result of the foregoing, we had a loss before income tax of US$2.8 million in the years ended December 31, 2023, as compared to a net loss of US$2.0 million in the years ended December 31, 2024.

Net Loss As a result of the foregoing, we had a net loss of US$2.8 million in the years ended December 31, 2023, as compared to a net loss of US$2.0 million in the years ended December 31, 2024. Non-GAAP Financial Measures To supplement our consolidated financial statements which are presented in accordance with U.S.

GAAP, we also use adjusted net income and adjusted EBITDA as additional non-GAAP financial measures. We present these non-GAAP financial measures because they are used by our management to evaluate its operating performance.

We also believe that such non-GAAP financial measures provide useful information to investors and others in understanding and evaluating our consolidated results of operations in the same manner as our management and in comparing financial results across accounting periods and to those of its peer companies.

Adjusted net income and adjusted EBITDA should not be considered in isolation or construed as alternatives to net income/(loss) or any other measure of performance or as indicators of our operating performance. Investors are encouraged to compare the historical non-GAAP financial measures with the most directly comparable GAAP measures.

Adjusted net income and adjusted EBITDA presented here may not be comparable to similarly titled measures presented by other companies. Other companies may calculate similarly titled measures differently, limiting their usefulness as comparative measures to our data.

We encourage investors and others to review our financial information in its entirety and not rely on a single financial measure. 44 Adjusted net income represents net income/(loss) before share-based compensation and offering expenses.

The table below sets forth a reconciliation of our adjusted net income for the periods indicated: Years ended December 31, 2022 2023 2024 US$ US$ US$ (in thousands, except for percentages) Net Income/(loss) 5,637 (2,824 ) (1,989 ) Add: Share-based compensation expenses 849 138 571 Adjusted net loss 6,486 (2,686 ) (1,418 ) In addition, adjusted EBITDA represents the net income/(loss) before interest expenses, income tax expenses, depreciation and amortization, and excluding share-based compensation expenses and offering expenses.

The table below sets forth a reconciliation of our adjusted EBITDA for the periods indicated: Years ended December 31, 2022 2023 2024 US$ US$ US$ (in thousands, except for percentages) Net Income/(loss) 5,637 (2,824 ) (1,989 ) Subtract: Net interest loss (4 ) (62 ) (48 ) Add: Income tax expense 116 - - Depreciation and amortization 4,176 3,151 3,671 EBITDA 9,933 389 1,730 Add: Share-based compensation expenses 849 138 571 Adjusted EBITDA 10,782 527 2,301 Taxation Cayman Islands We are incorporated in the Cayman Islands.

Under the current law of the Cayman Islands, we are not subject to income or capital gains tax. In addition, dividend payments are not subject to withholding tax in the Cayman Islands.

British Virgin Islands Under the current laws of the British Virgin Islands, companies formed in the British Virgin Islands are not subject to tax on income or capital gains. Delaware The Delaware corporate tax rate is 8.7%. This tax rate applies to limited liability companies that elect to be treated as corporations and report net taxable income.

Our subsidiary, Meten Block Chain LLC was formed in Delaware and elects to be treated as corporation. 45 Hong Kong Our wholly-owned subsidiary in Hong Kong, Meten Education (Hong Kong) Limited, is subject to an income tax rate of 16.5% for taxable income earned in Hong Kong.

No Hong Kong profit tax has been levied in our consolidated financial statements as Meten Education (Hong Kong) Limited had no assessable income for the years ended December 31, 2023 and 2024. Critical Accounting Policies We prepare our financial statements in accordance with U.S.

GAAP, which requires our management to make judgment, estimates and assumptions that affect our reporting of, among other things, assets and liabilities, contingent assets and liabilities and revenue and expenses.

We continually evaluate these judgments, estimates and assumptions based on our own historical experience, knowledge and assessment of relevant current business and other conditions, our expectations regarding the future based on available information and various assumptions that we believe to be reasonable, which together form our basis for making judgments about matters that are not readily apparent from other sources.

Since the use of estimates is an integral component of the financial reporting process, our actual results could differ from those estimates. Some of our accounting policies require a higher degree of judgment than others in their application.

The selection of critical accounting policies, the judgments and other uncertainties affecting the application of those policies and the sensitivity of reported results to changes in conditions and assumptions are factors that should be considered when reviewing our financial statements.

We believe the following accounting policies involve the most significant judgments and estimates used in the preparation of our financial statements. You should read the following description of critical accounting policies, judgments and estimates in conjunction with our consolidated financial statements and other disclosures included herein. Share-based compensation Share-based compensation costs are measured at the grant date.

The compensation expense in connection with the shares awarded to employees is recognized using the straight-line method over the requisite service period. Forfeitures are estimated at the time of grant, with such estimate updated periodically and with actual forfeitures recognized currently to the extent they differ from the estimate.

In determining the fair value of the shares awarded to employees, the discounted cash flow pricing model has been applied. B. Liquidity and Capital Resources Our principal sources of liquidity have been from cash generated from operating activities. As of December 31, 2022, 2023 and 2024, we had US$48,000, US$43,000 and US$14.9 million, respectively, in cash and cash equivalents.

Cash and cash equivalents consist of cash on hand placed with banks or other financial institutions and highly liquid investment which are unrestricted as to withdrawal and use and have original maturities of three months or less when purchased.

We intend to finance future working capital requirements and capital expenditures from cash generated from operating activities, and funds raised from financing activities, including the net proceeds we received from the transactions.

We believe that our current available cash and cash equivalents will be sufficient to meet our working capital requirements and capital expenditures in the ordinary course of business for the next twelve months.

However, we may require additional cash resources due to the changing business conditions or other future developments, including any investment or acquisition we may decide to selectively pursue. If our existing cash resources are insufficient to meet our requirements, we may seek to sell equity or equity-linked securities, sell debt securities or borrow from banks.

We cannot assure you that financing will be available in the amounts we need or on terms acceptable to us, if at all. The sale of additional equity securities would result in additional dilution to our shareholders.

The incurrence of indebtedness and issuance of debt securities would result in debt service obligations and could result in operating and financial covenants that restrict our ability to pay dividends to our shareholders. 46 The following table sets forth a summary of our cash flows for the periods presented: For the Years ended December 31, 2022 2023 2024 US$ US$ US$ (in thousands) Summary Consolidated Cash flow Data: Net cash generated from/(used in) operating activities (31,046 ) 3,808 1,5 57 Net cash used in investing activities (2,356 ) (4,620 ) (7 ,000 ) Net cash generated from financing activities 7,752 807 20,3 00 Net increase/(decrease) in cash and cash equivalents (25,650 ) (5 ) 14,857 Cash and cash equivalents at the beginning of y ear 25,698 48 43 Cash and cash equivalents at the end of y ear 48 43 14,900 Operating Activities Net cash flow used in operating activities amounted to US$31 million for the year ended December 31, 2022.

ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS A. Major Shareholders We are required by the Companies Act to keep a register of our shareholders. Under English law, the ordinary shares are deemed to be issued when the name of the shareholder is entered in the register of members.

The register of members therefore is prima facie evidence of the identity of our shareholders, and the shares that they hold. The register of members generally provides limited, or no, information regarding the ultimate beneficial owners of our ordinary shares. See Item 6.E. — Share Ownership for a description of our major shareholders. 57 B.

Related Party Transactions The Company’s related parties balance consisted of the following: Relationship with related parties Name of party Relationship Mr. Jishuang Zhao Former Chairman of our Board of Directors Mr. Yupeng Guo Acting Chief Financial Officer Mr.

Siguang Peng Chief Executive Officer and Director Met Chain Co., Limited An associate of the Company Transactions with related parties In the year ended December 31, 2024, we repaid amount due to Mr. Jishuang Zhao of US$2.4 million, Met Chain Co., Limited of US$1.8 million. In the year ended December 31, 2023, we repaid amount due to Mr.

Jishuang Zhao of US$2.5 million. In the year ended December 31, 2022, we received advances from Mr. Yupeng Guo in the amount of approximately RMB2 million (US$0.3 million), from Mr. Jishuang Zhao in the amount of approximately RMB10.14 million (US$1.5 million), and from Met Chain Co., Limited in the amount of approximately RMB14.08 million (US$2.0 million).

Amount due to related parties As of December 31, 2024, our outstanding balance due to Mr. Yupeng Guo was US$0.3 million, our outstanding balance due to Mr. Jishuang Zhao was US$2.0 million, and our outstanding balance due to Met Chain Co., Limited was US$2.0 million. C. Interests of Experts and Counsel Not applicable.