What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-05-13 compared with 2021-11-09 · 225 added, 184 removed, 78 unchanged (84% of the section changed)

2 Management’s Discussion and Analysis of Financial Condition and Results of Operations.

statements in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” are forward-looking

statements that involve risks and uncertainties.

Words such as may, will, should, would, anticipates, expects, intends, plans, believes,

seeks, estimates and similar expressions identify such forward-looking statements.

Readers are cautioned not to place undue reliance

on these forward-looking statements, which reflect management’s analysis only as of the date hereof.

We assume no obligation to

update these forward-looking statements to reflect actual results or changes in factors or assumptions affecting forward-looking statements.

Factors that could cause or contribute to these differences include those discussed in the Risk Factors contained in our Annual Report

on Form 10-K for the year ended December 31, 2020 and our Prospectus filed with the SEC on February 16, 2021 and the Prospectus Supplement

dated September 14, 2021.

following discussion and analysis of financial condition and results of operations should be read in conjunction with our historical

financial statements and the notes to those statements that appear elsewhere in this report.

Certain statements in the discussion contain

forward-looking statements based upon current expectations that involve risks and uncertainties, such as plans, objectives, expectations

and intentions.

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 discussed in the Risk Factors contained in our Annual Report on Form 10-K for the

year ended December 31, 2021.

When we refer to the “2022 Quarter” and the “2021 Quarter” we are referring to

the three months ended March 31, 2022 and March 31, 2021 quarters, respectively.

Additionally, the twelve months ending December 31,

2022 is referred to as “Fiscal 2022.”

is an early entrant in the Digital Asset market and one of the first U.S.

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technologies.

Through our blockchain-infrastructure operations, we secure disruptive next-generation blockchains by actively validating

transactions.

We are then rewarded with digital assets, while this process is similar to bitcoin mining the consensus mechanism is different.

Now we are building on the foundation of our pre-established infrastructure with the development of a digital asset data analytics dashboard.

The first feature of the dashboard, which is an open beta, allows users to evaluate their digital asset portfolios from multiple exchanges

on a single platform.

We also are developing and plan to integrate into the platform a staking-as-a-service feature that, once launched,

will allow users to participate in asset leveraging through securing blockchain protocols.

Through our blockchain-infrastructure operations, we secure disruptive next-generation blockchains and operate validator

nodes on various proof of stake-based blockchain networks, earning rewards of additional Digital Assets by actively validating transactions

on the networks.

While this process is similar to Bitcoin mining the consensus mechanism is different.

Now we are building on the foundation

of our pre-established infrastructure with the development of a Digital Asset Platform.

The first feature of the dashboard, which is

an open beta, allows users to evaluate their Digital Asset portfolios from multiple exchanges on a single platform.

We also are developing

and plan to integrate into the platform a Staking-as-a-Service feature that, once launched, will allow users to participate in asset

leveraging through securing blockchain protocols.

Infrastructure

infrastructure solutions can broadly be defined as earning a reward for securing a blockchain by validating transactions on that blockchain.

infrastructure operations can broadly be defined as earning a reward for securing a blockchain by validating transactions on that blockchain.

There are currently two main consensus mechanisms used to secure blockchains:

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The intention behind

both PoW and PoS is to make it practically infeasible for any single malicious actor to have enough computational power or ownership

both PoW and PoS is to make it practically impossible for any single malicious actor to have enough computational power or ownership

stake to successfully attack the blockchain.

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technical capabilities of running a node 24/7 that requires regular, active maintenance and industry expertise.

Company built its foundation on securing PoS blockchains.

Apart from Bitcoin and Ethereum, all of the Company’s digital asset holdings

are in tokens secured by PoS or similar consensus mechanisms that allow for Delegating and asset leveraging.

The Company is currently

actively operating validator nodes on Ethereum’s beacon chain, Cardano, Tezos, Avalanche, and Cosmos.

Building on that base, the

Company plans to expand its PoS operations to secure other disruptive blockchain protocols.

Company’s plan is that this blockchain infrastructure will form the core for the growth of its platform.

The Company utilizes cloud

infrastructure to operate and run its validator nodes and does not maintain its own physical assets, but may add this infrastructure

uses its blockchain infrastructure to operate validator nodes on various proof of stake-based blockchain networks.

In connection with

the validation of transactions occurring on those blockchain networks, BTCS will stake the Digital Assets native to those blockchains

on the validator nodes it operates in order to earn staking rewards.

BTCS may also use its blockchain infrastructure to validate and

sign transactions on behalf of customers that delegate their validation and voting rights to BTCS-operated validator nodes (referred

to as “Staking-as-a-Service” or “StaaS”).

StaaS provider maintains an active role in validating transactions on a given PoS network on behalf of its delegators by (1) arranging

transactions using software to stake the relevant Digital Assets;

(2) monitoring the nodes it is operating to ensure they remain online,

ready to validate transactions;

and (3) verifying transactions on the network when required to earn rewards.

from Bitcoin and Ethereum, all of the Company’s Digital Asset holdings are in tokens secured by PoS or similar consensus mechanisms

that allow for Delegating and asset leveraging.

The Company is currently actively operating validator nodes on Ethereum’s beacon

chain, Cardano, Tezos, Avalanche, Kusama, and Cosmos.

The Company has also staked the following tokens Polkadot, Terra, Algorand, and

Building on that base, the Company plans to expand its PoS operations to secure other disruptive blockchain protocols that also

allow for delegating.

Company believes its blockchain infrastructure efforts will form the core growth for its Digital Asset Platform.

The Company utilizes

cloud infrastructure to operate and run its validator nodes and does not maintain its own physical assets, but may add this infrastructure

in the future.

The Company is not currently securing PoW blockchains, such as Bitcoin’s blockchain, but may in the future.

Company currently holds the following Digital Assets which are core to its blockchain infrastructure efforts.

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Assets Held at Period End

Bitcoin (BTC)

Ethereum (ETH)

Cardano (ADA)

Polkadot (DOT)

Cosmos (ATOM)

Polygon (MATIC)

Avalanche (AVAX)

Algorand (ALGO)

Axie Infinity (AXS)

Market Value of Digital Assets at Period End

Market Value of Digital Assets

Bitcoin (BTC)

Ethereum (ETH)*

Cardano (ADA)

Polkadot (DOT)

Cosmos (ATOM)

Polygon (MATIC)

Avalanche (AVAX)

Algorand (ALGO)

Axie Infinity (AXS)

Approximately 9 ETH is not staked on Ethereum 2.0’s Beacon Chain.

of November 4, 2021 the fair market value of our digital assets was approximately $45.7 million.

of Digital Assets at Period End

Bitcoin (BTC)

Ethereum (ETH)

Cardano (ADA)

Polkadot (DOT)

Cosmos (ATOM)

Polygon (MATIC)

Avalanche (AVAX)

Algorand (ALGO)

Axie Infinity (AXS)

The prices have been rounded to the nearest whole dollar for prices above $100

Asset Platform

Company is also developing a proprietary digital asset data analytics dashboard aimed at allowing users to evaluate their crypto portfolio

holdings across multiple exchanges and chains on a single platform.

The internally-developed dashboard utilizes digital asset exchange

APIs to read user data and does not allow for the trading of assets.

In addition to portfolio monitoring, we are also working to integrate

a full suite of other features including decentralized exchanges, wallets, risk metrics and potentially a way for users to calculate

end-of year-reports for tax purposes.

We believe that increasing the number of features we offer may create a sticky user experience

across multiple, interrelated products.

Additionally,

the Company is currently developing and plans to integrate into the platform a proprietary staking-as-a-service feature aimed at allowing

users to delegate their tokens on next-generation PoS blockchains to Company operated validator nodes.

Company is also developing a proprietary Digital Asset Platform aimed at allowing users to evaluate their crypto portfolio holdings across

multiple exchanges and chains on a single platform.

The internally-developed dashboard utilizes Digital Asset exchange APIs to read user

data and does not allow for the trading of assets.

In addition to portfolio monitoring, we are also working to integrate a full suite

of other features including decentralized exchanges, wallets, risk metrics and potentially a way for users to calculate end-of year-reports

for tax purposes.

We believe that increasing the number of features we offer may create a sticky user experience across multiple, interrelated

Company is also currently developing and plans to integrate into the Digital Asset Platform a proprietary Staking-as-a-Service feature

aimed at allowing users to delegate supported cryptocurrencies through a non-custodial platform to BTCS operated validator nodes.

allows users to generate an annual percentage yield (“APY”) on their staked assets whereas validator node operators charge

a fee on users’ staked asset rewards earned in addition to earning an APY on staked assets.

In turn, the highly scalable nature

of both staking Digital Assets as well as allowing users to stake Digital Assets to earn token rewards is the premise behind BTCS’

Staking-as-a-Service platform.

Asset Treasury Strategy

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The Company will carefully

review its purchases of digital securities to avoid violating the 1940 Act and seek to reduce potential liabilities under the federal

securities laws.

review its purchases of digital securities to avoid violating the Investment Company Act of 1940 and seek to reduce potential liabilities

under the federal securities laws.

market is rapidly evolving and there can be no assurances that we will be competitive with industry participants that have or may have

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We believe that Adjusted EBITDA may be helpful to investors because it provides consistency and comparability

with past financial performance and the economic realities of our business specifically, but not limited to, the accounting for digital

However, Adjusted EBITDA is presented for supplemental informational purposes only, has limitations as an analytical tool, and

should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP.

Among other non-cash

and non-recurring items, Adjusted EBITDA excludes stock-based compensation expense (including stock-based compensation issued to service

providers), which has recently been, and will continue to be for the foreseeable future, a significant recurring expense for our business

and an important part of our compensation strategy.

In addition, other companies, including companies in our industry, may calculate

similarly titled non-GAAP measures differently or may use other measures to evaluate their performance, all of which could reduce the

usefulness of our non-GAAP financial measures as tools for comparison.

A reconciliation is provided below for each non-GAAP financial

measure to the most directly comparable financial measure stated in accordance with GAAP.

Investors are encouraged to review the related

GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial

measures, and not to rely on any single financial measure to evaluate our business.

with past financial performance and the economic realities of our business.

However, Adjusted EBITDA is presented for supplemental informational

purposes only, has limitations as an analytical tool, and should not be considered in isolation or as a substitute for financial information

presented in accordance with GAAP.

Among other non-cash and non-recurring items, Adjusted EBITDA excludes stock-based compensation expense

(including stock-based compensation issued to service providers), which has recently been, and will continue to be for the foreseeable

future, a significant recurring expense for our business and an important part of our compensation strategy.

In addition, other companies,

including companies in our industry, may calculate similarly titled non-GAAP measures differently or may use other measures to evaluate

their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison.

A reconciliation

is provided below for each non-GAAP financial measure to the most directly comparable financial measure stated in accordance with GAAP.

Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to

their most directly comparable GAAP financial measures, and not to rely on any single financial measure to evaluate our business.

calculate Adjusted EBITDA as net income (loss), adjusted to exclude, depreciation and amortization, interest expense, change in fair

value of warrant liabilities, stock-based compensation expense (including stock-based compensation issued to service providers),

and impairment of intangible digital assets.

value of warrant liabilities, and stock-based compensation expense (including stock-based compensation issued to service providers).

Adjusted EBITDA presented does not include adjustments for impairment of intangible Digital Assets.

following table provides a reconciliation of net income (loss) to Adjusted EBITDA:

Months Ended September 30,

income (loss)

Three Months Ended March 31,

Net income (loss)

$ (5,740,743 )

$ (6,782,175 )

to exclude the following:

and amortization

in fair value of warrant liabilities

of intangible digital assets

of Operations for the Three Months Ended September 30, 2021 and 2020

following table reflects our operating results for the three months ended September 30, 2021 and 2020:

Months Ended September 30,

and administrative

and development

and related expenses

Adjusted to exclude the following:

Depreciation and amortization

Interest expense

Change in fair value of warrant liabilities

Stock-based compensation

Adjusted EBITDA

of Operations for the Three Months Ended March 31, 2022 and 2021

following table reflects our operating results for the three months ended March 31, 2022 and 2021:

For the Three Months Ended

Validator revenue

Total revenues

Cost of revenues

Validator expense

Operating expenses:

(expenses) income:

on debt discount

in fair value of warrant liabilities

loss on digital assets/currencies

General and administrative

Research and development

Compensation and related expenses

Total operating expenses

Other income (expenses):

Interest expense

Amortization on debt discount

Change in fair value of warrant liabilities

Distributions to warrant holders

Impairment loss on digital assets/currencies

Realized gains (loss) on digital asset/currency transactions

Total other income (expenses)

$ (5,740,743 )

$ (6,782,175 )

dividends related to amortization of beneficial conversion feature of Series C-2 convertible preferred stock

loss attributable to common stockholders

Deemed dividends related to amortization of beneficial conversion feature of Series C-2 convertible preferred stock

Deemed dividends related to recognition of downround adjustment to conversion amount for Series C-2 convertible preferred stock

Net loss attributable to common stockholders

$ (5,740,743 )

$ (11,620,571 )

for the three months ended September 30, 2021 and 2020 were approximately $0.3 million and $0, respectively.

The increase is from our

blockchain infrastructure solutions validating revenue.

of revenues for the three months ended September 30, 2021 and 2020 were approximately $72,000 and $0, respectively.

The increase is from

our blockchain infrastructure validating operating costs, including, web service hosting fees, and cash and stock-based compensation

related to services provided by vendor.

expenses for the three months ended September 30, 2021 and 2020 were approximately $5.3 million and $0.9 million, respectively.

is primarily due to the issuance of 1.2 million options and issuance of 290,000 RSUs, which vested in September, rendering $4.7 million

in stock-based compensation expense during the three months ended September 30, 2021.

for the three months ended March 31, 2022 and 2021 were approximately $563,000 and $73,000, respectively.

The increase is from our blockchain

infrastructure validating revenue.

We believe revenues will increase as the Company continues to expand its blockchain infrastructure

of revenues for the three months ended March 31, 2022 and 2021 were approximately $138,000 and $15,000, respectively.

The increase is

from our blockchain infrastructure validating operating costs, including, web service hosting fees, and cash and stock-based compensation

related to services provided by vendors.

We believe our cost of revenues will increase as we continue to ramp up our business.

we believe gross margin will improve as we add scale to our blockchain infrastructure operations, leading to improved gross profits.

expenses for the three months ended March 31, 2022 and 2021 were approximately $2.2 million and $8.0 million.

The decrease is

primarily due to $7.3 million non-cash contingent bonuses granted to employees and our non-employee director during 2021 for the achievement

of performance milestones.

The equity compensation was not valued based on the Company’s stock price of $0.19, the last closing

date prior to the date of issuance of January 1, 2021 but instead, in accordance with GAAP, valued as of March 31, 2021 (the date the

Company received stockholder ratification).

On that date, the Company’s stock price was $1.03 which caused the significant corresponding

stock compensation expense.

We believe operating expenses will remain consistent as the Company continues to utilize equity-based bonus

incentives as a core part of its compensation strategy.

Income (Expenses)

income (expenses) for the three months ended September 30, 2021 and 2020 was approximately $1.2 million and $(0.1) million, respectively.

The decrease in other expenses is primarily due to a $2.0 million change in the fair value of warrant liabilities, partially offset by

$0.6 million increase in amortization of debt discount on our convertible notes and $0.2 million increase in impairment loss on digital

assets/currencies.

loss for the three months ended September 30, 2021 and 2020 was approximately $3.8 million and $1.0 million, respectively.

is primarily due to an increase of operating expenses, as discussed above.

loss attributable to common stockholders

incurred approximately $13,000 and $0 related to amortization of beneficial conversion feature of Series C-2 convertible preferred stock

for the three months ended September 30, 2021 and 2020, respectively.

Digital Asset Rewards Fair Market Value

fair market value as of September 30, 2021 of earned digital assets rewards for operating validator nodes for the three months ended

September 30, 2021 was $343,725.

of Operations for the Nine Months Ended September 30, 2021 and 2020

following table reflects our operating results for the nine months ended September 30, 2021 and 2020:

Months Ended September 30,

and administrative

and development

and related expenses

operating expenses

(expenses) income:

on debt discount

in fair value of warrant liabilities

loss on digital assets/currencies

gains (loss) on digital asset/currency transactions

other expenses

$ (15,466,585 )

$ (1,795,897 )

dividends related to amortization of beneficial conversion feature of Series C-2 convertible preferred stock

dividends related to recognition of downround adjustment to conversion amount for Series C-2 convertible preferred stock

loss attributable to common stockholders

$ (20,533,009 )

$ (1,795,897 )

for the nine months ended September 30, 2021 and 2020 were approximately $0.8 million and $0, respectively.

The increase is from our

blockchain infrastructure validating revenue.

of revenues for the nine months ended September 30, 2021 and 2020 were approximately $146,000 and $0, respectively.

The increase is from

our blockchain infrastructure validating operating costs, including, web service hosting fees, and cash and stock-based compensation

related to services provided by vendor.

expenses for the nine months ended September 30, 2021 and 2020 were approximately $15.6 million and $1.4 million, respectively.

is primarily due to the issuance of 1.2 million options, 0.7 million of which vested during the nine months ended September 30, 2021,

and issuance of 340,782 RSUs, 290,000 of which vested during the nine months ended September 30, 2021, rendering $13.3 million in stock-based

compensation expense.

expenses for the nine months ended September 30, 2021 and 2020 was approximately $0.5 million and $0.4 million, respectively.

in other expenses is primarily due to a $3.8 million impairment loss on digital assets/currencies and $1.7 million amortization of debt

discount and interest expense on our convertible notes, partially offset by $3.1 million in realized gains on digital assets/currency

transactions.

loss for the nine months ended September 30, 2021 and 2020 was approximately $15.5 million and $1.8 million, respectively.

is primarily due to increase of operating expenses, as mentioned above.

income (expenses) for the three months ended March 31, 2022 and 2021 was approximately $(3.9) million and $1.1 million, respectively.

The increase in other income is primarily from $3.3 million impairment loss on digital assets/currencies and $0.6 million change in fair

value of warrant liabilities.

loss for the three months ended March 31, 2022 and 2021 was approximately $5.7 million and $6.8 million, respectively.

is primarily due to the decrease of operating expenses and increase in other income (expense) as discussed above.

loss attributable to common stockholders

incurred approximately $0 and $16,000 related to amortization of beneficial conversion feature of Series C-2 convertible preferred stock,

and $5.0 million and $0 of deemed dividends related to recognition of anti-dilution adjustment to conversion amount for Series C-2 convertible

preferred stock for the nine months ended September 30, 2021 and 2020, respectively.

Digital Asset Rewards Fair Market Value

The fair market value as

of September 30, 2021 of earned digital assets rewards for operating validator nodes for the nine months ended September 30, 2021 was

and $0 and $4.8 million of deemed dividends related to recognition of anti-dilution adjustment to the conversion amount for Series C-2

convertible preferred stock for the three months ended March 31, 2022 and 2021, respectively.

and Capital Resources

Cash from Operating Activities

the nine months ended September 30, 2021, net cash used in operating activities was $3.9 million, which was primarily driven by a $15.5

million net loss and $5.8 million purchase of non-productive digital currencies, a $3.1 million realized gain on non-productive digital

assets/currencies transaction;

this was partially offset by the sale of non-productive digital assets/currencies of $4.3 million, a $3.8

million impairment loss on digital currencies, and $13.9 million in stock-based compensation.

cash used in operating activities was approximately $1.7 million for the nine months ended September 30, 2020.

Net cash used in operating

activities for the nine months ended September 30, 2020 was primarily driven by a $1.8 million net loss and $0.8 million purchase of

digital currencies, and partially offset by an impairment loss on digital currencies of $0.2 million.

Cash from Investing Activities

the nine months ended September 30, 2021, net cash used in investing activities was $9.5 million, which stemmed from the $9.5 million

purchase of productive digital assets/currencies for our blockchain infrastructure validator operations.

the nine months ended September 30, 2020, there were no investing activities.

Cash from Financing Activities

the nine months ended September 30, 2021, net cash provided by financing activities was approximately $13.5 million, which was primarily

driven by approximately $3.0 million in aggregate proceeds from common stock sold under our Equity Line Purchase Agreement, $1.0 million

proceeds from the issuance of convertible notes, $8.9 million in net proceeds from the issuance of common stock and warrants for cash,

$0.4 million from the cash exercise of Series C Warrants, $1.1 million in proceeds from the issuance of Series C-2 convertible preferred

stock, and $0.2 million in proceeds from common stock sold pursuant to the ATM Agreement.

the nine months ended September 30, 2020, net cash provided by financing activities was approximately $1.9 million, which was primarily

driven by approximately $1.4 million in aggregate proceeds from common stock sold under our Equity Line Purchase Agreement, and the issuance

of a $500,000 short term convertible note payable in April 2020.

of November 4, 2021, the Company had approximately $1.4 million of cash, approximately $97 million available under

the ATM Agreement, and the fair market value of the Company’s liquid digital assets was

approximately $8.8 million.

September 30, 2021, we had current assets of $4.3 million, long term assets of $8.8 million, and current liabilities of $4.7 million;

working capital amounted to $(0.4) million.

the nine months ended September 30, 2021, the Company received net proceeds of approximately $14.6 million from the issuance of:

C-2 convertible preferred stock, a convertible note, common stock and warrants issued pursuant to the Purchase agreement, common stock

issued pursuant to the Equity Line Purchase Agreement, the cash exercise of warrants, and the proceeds from the common stock sold pursuant

to the ATM Agreement.

On September 30, 2021, the fair market value of the Company’s liquid digital assets was approximately $6.2

As such, the Company has adequate cash to fund operations for at least the next twelve months.

September 14, 2021, the Company entered into an At-The-Market Offering Agreement (the “ATM Agreement”) with H.C.

& Co., LLC, as agent (“H.C.

Wainwright”), pursuant to which the Company may offer and sell, from time-to-time through

Wainwright, shares of the Company’s Common Stock having an aggregate offering price of up to $98,767,500.

From the period

September 14, 2021 through May 9, 2022, the Company sold a total of 2,268,742 shares of Common Stock under the ATM Agreement for aggregate

total gross proceeds of approximately $13,874,000 at an average selling price of $6.12 per share, resulting in net proceeds of approximately

$13,440,000 after deducting commissions and other transaction costs.

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.

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 March 31, 2022, the Company had approximately $2.6 million of liquid Digital Assets (i.e.

non-staked) and $2.2

million of cash.

of March 31, 2022, we held approximately 90 bitcoins that composed a majority of our non-staked liquid Digital Asset balance.

believe we will need to sell any of our bitcoins within the next twelve months to meet our working capital requirements, although we

may from time to time sell bitcoins as part of treasury management operations, including to increase our cash balances.

The Bitcoin market

historically has been characterized by significant volatility in its price, limited liquidity and trading volumes compared to sovereign

currencies markets, relative anonymity, a developing regulatory landscape, susceptibility to market abuse and manipulation, and various

other risks inherent in its entirely electronic, virtual form and decentralized network.

During times of instability in the Bitcoin market,

we may not be able to sell our bitcoins at reasonable prices or at all.

As a result, our bitcoins are less liquid than our existing cash

and cash equivalents and may not be able to serve as a source of liquidity for us to the same extent as cash and cash equivalents.

addition, upon sale of our bitcoin, we may incur additional taxes related to any realized gains or we may incur capital losses as to

which the tax deduction may be limited.

view our crypto asset investments as long-term holdings and we do not plan to engage in regular trading of crypto assets.

of instability in the market of crypto assets, we may not be able to sell our crypto assets at reasonable prices or at all.

our crypto assets are less liquid than our existing cash and cash equivalents and may not be able to serve as a source of liquidity for

us to the same extent as cash and cash equivalents.

of May 9, 2022, the Company had approximately $1.9 million of cash and the fair market value of the Company’s liquid Digital

Assets was approximately $8.7 million, which excludes $18.7 million of staked Ethereum.

The Company had no notes payable

or any other long-term debt outstanding.

As of May 9, 2022, the Company also has approximately $18.2 million available under the At

the Market Offering Agreement over the next twelve months under the Form S-3 baby shelf rules, although, the amount that we may raise

under the Form S-3 may increase or decrease based upon our then stock price.

The Company believes that the existing cash and liquid Digital

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.

used in operating activities was $1.1 million during the three months ended March 31, 2022 compared to $2.5 million for the three months

ended March 31, 2021.

used in investing activities was $8.2 million during the three months ended March 31, 2022 compared to $8.0 million for the three months

ended March 31, 2021.

Net cash outflow for investing activities was used primarily for the purchase of Digital Assets for blockchain

infrastructure operations.

provided by financing activities was $10.1 million during the three months ended March 31, 2022 compared to $13.4 million for the three

months ended March 31, 2021.

The cash inflows from financing activities were primarily from proceeds from the Common Stock sold pursuant

to the ATM Agreement ($10.5 million).

This was partially offset by a one time return of capital distribution of $635,000 made to record

holders as of March 17, 2022.

The Company has plans to continue to raise proceeds from the sale of Common Stock and issuance of debt

to fund operations as needed.

Balance Sheet Transactions

are not a party to any off-balance sheet transactions.

We have no guarantees or obligations other than those which arise out of normal

business operations.

of March 31, 2022, there were no off-balance sheet arrangement and we were not a party to any off-balance sheet transactions.

no guarantees or obligations other than those which arise out of normal business operations.

ACCOUNTING PRONOUNCEMENTS

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis