What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2023-08-11 compared with 2023-05-12 · 107 added, 99 removed, 111 unchanged (65% of the section changed)

9 unchanged sentences

When we refer to the “2023 Quarter” and the “2022 Quarter” we are referring to

the three months ended March 31, 2023 and March 31, 2022 quarters, respectively.

the three months ended June 30, 2023 and June 30, 2022 quarters, respectively.

When we refer to the “2023 Period” and the

“2022 Period” we are referring to the six months ended June 30, 2023 and June 30, 2022, respectively.

is an early entrant in the cryptocurrency market and a publicly-traded U.S.

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consensus mechanisms through staking and delegating their crypto assets to Company operated validator nodes.

As a non-custodial

validator operator, the company receives a percentage of token holders’ staking rewards generated as a validator node fee, for

our ministerial role in hosting the validator node.

This creates an opportunity for scalable revenue and business growth with

limited additional costs.

The company’s StaaS strategy provides a more accessible and cost-effective way for crypto asset

holders to participate in blockchain networks’ consensus mechanisms, promoting the growth and adoption of blockchain

The company’s internally-developed dashboard, StakeSeeker, is a non-custodial platform that allows users to learn

how to earn staking rewards through direct participation in blockchain consensus algorithms and analyze their crypto portfolios

across exchanges and wallets through a comprehensive crypto dashboard and education center.

As a non-custodial validator

operator, the Company receives a percentage of token holders’ staking rewards generated as a validator node fee, for our ministerial

role in hosting the validator node.

This creates an opportunity for scalable revenue and business growth with limited additional costs.

The Company’s StaaS strategy provides a more accessible and cost-effective way for crypto asset holders to participate in blockchain

networks’ consensus mechanisms, promoting the growth and adoption of blockchain technology.

The Company’s internally-developed

dashboard, StakeSeeker, is a non-custodial platform that allows users to learn how to earn staking rewards through direct participation

in blockchain consensus algorithms and analyze their crypto portfolios across exchanges and wallets through a comprehensive crypto dashboard

and education center.

table below describes BTCS’s quarterly crypto asset holdings as of the 2022 Quarter through the 2023 Quarter.

Assets Held at Period End

Bitcoin (BTC)

Ethereum (ETH)

Cardano (ADA)

Polkadot (DOT)

Cosmos (ATOM)

Polygon (MATIC)

Avalanche (AVAX)

Algorand (ALGO)

Axie Infinity (AXS)

Band Protocol (BAND)

Oasis Network (ROSE)

NEAR Protocol (NEAR)

Infinity (AXS)

Protocol (BAND)

Network (ROSE)

Protocol (NEAR)

Value of Crypto Assets at Period End

Bitcoin (BTC)

Ethereum (ETH)*

Cardano (ADA)

Polkadot (DOT)

Cosmos (ATOM)

Polygon (MATIC)

Avalanche (AVAX)

Algorand (ALGO)

Axie Infinity (AXS)

Band Protocol (BAND)

Oasis Network (ROSE)

NEAR Protocol (NEAR)

Infinity (AXS)

Protocol (BAND)

Network (ROSE)

Protocol (NEAR)

of Crypto Assets at Period End

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

following table presents the Fair Value of Crypto Assets held compared to the GAAP Book Value reported on the Company’s

balance sheet.

March 31, 2023

following table presents the Fair Value of Crypto Assets held compared to the GAAP Book Value reported on the Company’s balance

June 30, 2023

December 31, 2022

Bitcoin (BTC)

Ethereum (ETH)

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NEAR Protocol (NEAR)

of Operations for the Three Months Ended March 31, 2023 and 2022

following tables reflect our operating results for the three months ended March 31, 2023 and 2022:

For the Three Months Ended

Validator revenue

Total revenues

Evmos (EVMOS)

of Operations for the Three and Six Months Ended June 30, 2023 and 2022

following tables reflect our operating results for the three and six months ended June 30, 2023 and 2022:

the Three Months Ended June 30,

Cost of revenues

Validator expense

and administrative

and development

and related expenses

loss on digital assets/currencies

gains on digital asset/currency transactions

operating expenses

General and administrative

Research and development

Compensation and related expenses

Impairment loss on crypto assets/currencies

Realized gains on crypto asset/currency transactions

Total operating expenses

income (expenses):

in fair value of warrant liabilities

Distributions

to warrant holders

other income (expenses)

Change in fair value of warrant liabilities

Distributions to warrant holders

Total other income (expenses)

$ (1,018,453 )

$ (7,724,673 )

decrease in revenue during the 2023 Quarter as compared to the 2022 Quarter is primarily due to a drop in the fair value of our crypto

the Six Months Ended June 30,

Cost of revenues

and administrative

and development

and related expenses

loss on crypto assets/currencies

(11,322,716 )

gains on crypto asset/currency transactions

operating expenses

(12,553,179 )

income (expenses):

in fair value of warrant liabilities

Distributions

to warrant holders

other income (expenses)

$ (2,431,822 )

$ (13,465,416 )

decrease in revenue during the 2023 Period as compared to the 2022 Period is primarily due to a drop in the fair value of our crypto

assets earned as rewards for staking since the market’s highs in Q1 of 2022.

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in the cryptocurrency markets may impact the market prices of the crypto assets we earn from staking.

decrease in cost of revenues is due to efficiencies realized in our blockchain infrastructure validating operating costs, including streamlining

of web service hosting fees and reduction of services provided by vendors.

We believe our cost of revenues will increase as we continue

to ramp up our business.

However, we believe gross margin will improve as we add scale to our blockchain infrastructure operations and

reduce costs as a result of increased operational efficiencies, leading to improved gross profits.

decrease in operating expenses in the 2023 Quarter is primarily due to the $3.3 million impairment loss on crypto assets (which we refer

to as a “Crypto Asset Impairment”) during the 2022 Quarter, compared to only a $95,000 Crypto Asset Impairment during the

2023 Quarter.

decrease in cost of revenues during the 2023 Period as compared to the 2022 Period is due to efficiencies realized in our blockchain

infrastructure validating operating costs, including streamlining of web service hosting fees and reduction of services provided by vendors.

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

However, we believe gross margin will improve as

we add scale to our blockchain infrastructure operations and reduce costs as a result of increased operational efficiencies, leading

to improved gross profits.

decrease in operating expenses in the 2023 Period is primarily due to the $12.2 million impairment loss on crypto assets (which we refer

to as a “Crypto Asset Impairment”) during the 2022 Period, compared to only a $0.9 million Crypto Asset Impairment during

the 2023 Period.

In addition, the decrease is also due to the non-cash $1.7 million equity-based contingent bonuses granted to employees

and our non-employee directors during the 2022 Quarter for the achievement of performance milestones compared to only $271,000 equity-based

compensation during the 2023 Quarter.

and our non-employee directors during the 2022 Period for the achievement of performance milestones compared to only $0.5 million equity-based

compensation during the 2023 Period.

believe operating expenses will increase as the Company continues to utilize equity-based compensation incentives as a core part of our

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Income (Expenses)

changes in other income for the years reported was primarily due to the increase in the

fair value of warrant liabilities.

This non-cash expense is driven by the value of our stock price at the end of each quarter, which

we cannot predict.

decrease in our net loss for the 2023 Quarter was primarily due to the decrease in operating expenses and changes in other income (expenses)

changes in other income for the periods reported were primarily due to the increase in the fair value of warrant liabilities.

This non-cash

expense is driven by the value of our stock price at the end of each quarter, which we cannot predict.

decrease in our net loss for the 2023 Period was primarily due to the decrease in operating expenses and changes in other income (expenses)

as discussed above.

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and Capital Resources

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 10, 2023, the Company sold a total of 2,970,839 shares of Common Stock under the ATM Agreement for aggregate

total gross proceeds of approximately $15,040,000 at an average selling price of $5.06 per share, resulting in net proceeds of approximately

$14,562,000 after deducting commissions and other transaction costs.

On September 14, 2021, the Company

entered into an At-The-Market Offering Agreement (the “ATM Agreement”) with H.C.

Wainwright & Co., LLC, as agent (“H.C.

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

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 August 9, 2023, the Company

sold a total of 3,442,181 shares of Common Stock under the ATM Agreement for aggregate total gross proceeds of approximately $15,626,000

at an average selling price of $4.54 per share, resulting in net proceeds of approximately $15,122,000 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

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on an ongoing basis.

As of March 31, 2023, the Company had approximately $1.4 million of cash.

As of June 30, 2023, the Company had approximately $0.9 million of cash.

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

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for us to the same extent as cash and cash equivalents.

of May 10, 2023, the Company had approximately $1.1 million of cash and the fair value of the Company’s liquid crypto

assets was approximately $18.9 million, which includes $14.6 million of staked Ethereum considered to be liquid after the successful

Shanghai upgrade on Ethereum’s network in April 2023.

As of August 9, 2023, the Company

had approximately $0.8 million of cash and the fair value of the Company’s liquid crypto assets was approximately $18.7 million.

The Company has no outstanding debt.

As of May 10, 2023, the Company also

has approximately $6.4 million available under the ATM 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 stock price.

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.

used in operating activities was approximately $1.1 million during the 2023 Quarter compared to $1.1 million for the 2022 Quarter.

used in investing activities was $86,000 during the 2023 Quarter compared to $8.2 million for the 2022 Quarter.

Net cash outflow for

investing activities was used primarily for the purchase of crypto assets for our blockchain infrastructure operations.

provided by financing activities was $509,000 during the 2023 Quarter compared to $10.1 million for the 2022 Quarter.

The cash inflows

from financing activities were entirely from proceeds from the Common Stock sold pursuant to the ATM Agreement.

The Company has plans

to continue to raise proceeds from the sale of Common Stock to fund operations as needed.

As of August 9, 2023, the Company also has approximately $5.8 million available under

the ATM 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 stock price.

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

Cash used in operating activities

was approximately $2.0 million during the 2023 Period compared to $0.7 million for the 2022 Period.

Cash used in investing activities

was $84,000 during the 2023 Period compared to $8.8 million for the 2022 Period.

Net cash outflow for investing activities was used primarily

for the purchase of crypto assets for our blockchain infrastructure operations.

Cash provided by financing activities

was $0.9 million during the 2023 Period compared to $10.0 million for the 2022 Period.

The cash inflows from financing activities were

entirely from proceeds from the Common Stock sold pursuant to the ATM Agreement.

The Company has plans to continue to raise proceeds from

the sale of Common Stock to fund operations as needed.

Balance Sheet Transactions

of March 31, 2023, there were no off-balance sheet arrangements and we were not a party to any off-balance sheet transactions.

of June 30, 2023, there were no off-balance sheet arrangements 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.

Critical Accounting

Policies and Estimates

the material accounting policies that are critical in making the estimates and judgments in our Annual Report on Form 10-K for the fiscal

year ended December 31, 2022, under the caption “Management’s Discussion and Analysis—Critical Accounting Policies and

There has been no material change in critical accounting policies or estimates during the period covered by this report.

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