What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2024-03-21 compared with 2023-03-31 · 386 added, 271 removed, 86 unchanged (88% of the section changed)

(“BTCS” or the “Company”) is an early entrant in the crypto asset (also referred to “cryptocurrencies”,

“crypto”, or “tokens”) market and one of the first U.S.

publicly-traded companies with a primary focus on blockchain

infrastructure and staking.

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

blockchain networks that power Web3, earning native token rewards by staking our proof-of-stake crypto assets.

Our Digital Asset Platform,

StakeSeeker, is designed to empower users to better understand and grow their crypto holdings with innovative portfolio analytics and

a non-custodial process to earn staking rewards through the direct participation in blockchain consensus algorithms.

INFRASTRUCTURE OVERVIEW

primary objective of blockchain infrastructure operations is to secure blockchains by validating transactions and earning rewards for

Two main consensus mechanisms are currently used to secure blockchains:

proof-of-work (“PoW”) and proof-of-stake

is a consensus mechanism that requires nodes to dedicate computational resources to validate transactions on a blockchain.

In PoW, miners

use energy-consuming computers to do “work,” and they are rewarded with crypto assets for validating transactions on the

(“BTCS” or the “Company”) is a Nasdaq listed company operating in the blockchain technology sector since

2014 and is one of the only U.S.

publicly traded companies with a primary focus on proof-of-stake blockchain infrastructure.

focus is on driving scalable growth through a diverse range of business streams leveraging and built on top of our core and proven blockchain

infrastructure operations.

BTCS secures and operates validator nodes on cutting-edge blockchain networks that power Web 3, earning native

token rewards by staking our proof-of-stake crypto assets (also referred to “cryptocurrencies”, “crypto”, “crypto

assets”, “digital assets”, or “tokens”), with an emphasis on Ethereum.

Our innovative “StakeSeeker”

platform empowers crypto holders with an analytics-focused cryptocurrency dashboard.

We also offer a non-custodial Staking-as-a-Service

solution, enabling users to earn staking rewards, while we earn a percentage of token holders’ rewards, creating the potential

for scalable revenue with limited additional costs.

We recently introduced “Builder+”, an Ethereum block builder.

leverages advanced algorithms to maximize profit through optimized block construction and creates opportunities for new scalable revenue

Infrastructure

blockchain infrastructure entails operating validator nodes (or “nodes”) on various proof-of-stake (“PoS”) and

delegated proof-of-stake (“dPoS”)-based blockchain networks.

In connection with the validation of transactions occurring

on those blockchain networks, BTCS stakes (or “delegates”) blockchain-based crypto assets native to those blockchains networks

(“native crypto assets”) to earn staking rewards.

We also specialize in operating validator nodes on various PoS and dPoS-based

blockchain networks, including Ethereum, Cosmos, Kava, Tezos, Avalanche, Kusama, Mina, Akash, Evmos, Oasis, and NEAR Protocol.

utilizes cloud infrastructure to operate and run its validator nodes and does not operate a data center or own physical assets such as

In addition to staking our crypto assets to our nodes, we also stake certain crypto assets to nodes operated by third-parties.

blockchain infrastructure is akin to Bitcoin’s proof-of-work (“PoW”) mining consensus mechanism but differs in a few

PoW is a consensus mechanism that requires nodes to dedicate computational resources to validate transactions on a blockchain.

In PoW, miners use energy-consuming computers to do “work,” and they are rewarded with crypto assets for validating transactions

on the blockchain.

The reward is comprised of transaction fees and crypto assets.

Bitcoin is an example of a PoW blockchain, and it is the largest

and most secure PoW blockchain.

is a consensus mechanism that requires validator nodes (or “nodes”) to dedicate financial resources, such as staking holdings

of a crypto asset, to participate in the consensus algorithm.

Validators, the equivalent of miners in PoW networks, operate nodes and

validate transactions on the blockchain.

Validators are rewarded in crypto assets for aligning behavior with the rules of the algorithm.

Bad behavior can be penalized by slashing the validator’s holdings and/or rewards.

Validators can also be removed from the network

for breaking the network rules.

Ill-intentioned behavior among validators is discouraged, allowing for the blockchain to be properly

maintained and secured.

PoS blockchains consume over 99% less energy than PoW blockchains, according to the Ethereum Foundation.

proof-of-stake (“DPoS”) is a PoS variant blockchain consensus mechanism where token holders can participate

in a blockchain network by either running their own validator node (“Validator”) or delegating their holdings to existing

validator nodes and earning rewards for securing the network (“Delegation”, “Delegating” or “Staking”).

is a non-custodial process that allows token holders (“Delegators”) to maintain control of their private keys and revoke

their delegation at any time (subject to the rules of a particular blockchain).

There is no transfer of ownership, often referred to

as “private keys” of Delegator’s crypto assets as part of the Delegation process.

Delegation provides a method for

token holders to designate to a validator node operator the ministerial task of running a validator node while still participating in

the network consensus mechanism and earning rewards.

crypto asset reward is determined by the blockchain networks consensus algorithm, can change over time, and varies from blockchain to

A Validator broadcasts to the network its fee, typically as a percent of the crypto asset reward, which is publicly available.

Both the reward paid to the Delegator and the fee paid to the Validator are distributed by the blockchain network.

The Validator never

takes possession of either the Delegators staked crypto assets or crypto asset rewards.

is committed to operating blockchain infrastructure as a Validator that is secure, efficient, and scalable.

We specialize in operating

validator nodes on various DPoS and PoS-based blockchain networks, including Ethereum, Cosmos, Kava, Tezos, Avalanche, Kusama, Mina,

Akash, Cardano, Oasis, and NEAR Protocol.

The Company stakes the crypto assets native to these blockchains on the validator nodes it

operates to earn rewards in connection with the validation of transactions occurring on those blockchain networks.

blockchain infrastructure operations form the core growth for its Digital Asset Platform, StakeSeeker.

BTCS utilizes cloud

infrastructure to operate and run its validator nodes and does not operate a data center or own physical assets such as servers.

BTCS plans to expand its PoS operations to secure other disruptive blockchain protocols that allow for Delegating.

Staking-as-a-service

(“StaaS”) is a central component of BTCS’s strategy.

StaaS allows crypto asset holders to earn rewards by participating

in network consensus mechanisms through Staking and Delegating their crypto assets to Company-operated validator nodes.

As a non-custodial

Validator operator, BTCS receives a percentage of token holders’ staking rewards generated as a validator node fee, creating the

opportunity for potential scalable revenue and business growth with limited additional costs.

January 2023, the Company launched a beta version of StakeSeeker, its proprietary Digital Asset Platform.

StakeSeeker is a comprehensive

crypto dashboard and education center for crypto asset holders to learn how to earn crypto rewards by Staking through its non-custodial

Stake Hub and evaluate their crypto portfolios across exchanges and wallets in a single analytics platform.

The internally-developed

dashboard utilizes application programming interfaces (APIs) to read user data from digital wallets and crypto exchanges and does not

allow for the trading of crypto assets.

delegation process central to DPoS blockchains and our StaaS strategy revolves around the non-custodial nature of these networks.

blockchain network calculates rewards earned, which are then distributed directly to the Delegator’s wallet.

At no point does the

Validator take custody of the staked crypto assets or rewards earned through Staking.

Therefore, BTCS does not obtain custody or facilitate

transfers of any third-party assets in its role as a Validator or StaaS provider.

self-custody of crypto assets by Delegators is a critical aspect of our non-custodial staking model.

Recent headlines of bankruptcies,

fraud, risk management failures, and misappropriation of customer assets in the crypto industry have raised concerns about the security

of custodial exchanges and similar platforms.

BTCS ensures that substantially all of its crypto assets are held in secure digital wallets,

with less than 0.1% of its crypto assets on crypto exchanges.

Our exposure to companies such as FTX, Blockfi, and Celsius is limited

to the negative impact these platforms had on the value of our assets in the crypto markets.

StakeSeeker’s

Stake Hub is central to BTCS’s growth strategy, allowing users to Delegate their crypto assets to the Company’s validator

The growth of both StakeSeeker’s user base as well as the number and size of staked crypto assets by Delegators to Company-run

validator nodes is critical to BTCS’s strategy and success.

The Company believes that StaaS provides a more accessible and cost-effective

way for crypto asset holders to participate in blockchain network consensus mechanisms, thereby promoting the growth and adoption of

blockchain technology.

Conversely, PoS is a consensus mechanism that requires

validator nodes to dedicate financial resources in the form of crypto assets, which are staked to participate in the consensus algorithm.

Validators, the equivalent of miners in PoW networks, operate nodes and validate transactions on the blockchain.

Validators are rewarded

in crypto assets for aligning behavior with the rules of the algorithm.

primarily earn crypto assets through the operation of our non-custodial validator nodes, with the intention of enhancing our production

of crypto assets in various blockchain networks.

While we have no formal policy, our primary objective is to hold and re-stake these

earned crypto assets for network security and additional production opportunities, we may, on occasion, sell a portion for cash to meet

operational needs.

Our primary cryptocurrency exchange is Kraken;

however, we also have basic accounts with multiple alternative cryptocurrency

exchanges and OTC desks.

As of the filing date, we have no exclusive agreements with any cryptocurrency exchanges, nor do we maintain

margin or other type accounts that could create additional liability for the Company.

Our approach to our crypto asset holdings remains

adaptable to evolving market conditions and operational requirements.

of the Company’s crypto asset held can be found under “Item 7.

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and Results of Operations.”

Staking-as-a-Service

BTCS’s blockchain infrastructure operations, we validate transactions on behalf of those who delegate their crypto holdings (or

“Stake”) to BTCS-operated validator nodes (referred to as “Staking as a Service” or “StaaS”) on dPoS

is a non-custodial process that allows token holders (“Delegators”, or “customers”) to maintain control of their

private keys and revoke their delegation at any time (subject to the rules of a particular blockchain).

There is no transfer of ownership,

often referred to as “private keys”, of any Delegator’s crypto assets as part of the Delegation process.

provides a method for token holders to designate to a validator node operator the ministerial task of running a validator node while

still participating in the network consensus mechanism and earning rewards.

providers are operators of computer infrastructure and validation software that allow them and their Delegators to stake certain native

crypto assets utilizing a dPoS consensus protocol.

dPoS protocols provide for the validation of transactions on the related network

as well as a “sybil resistance” mechanism to help secure the network.

nodes comprising a blockchain network use a protocol (or set of rules) to reach an agreement as to whether a given transaction proposed

by a user of the network is valid under the rules of the protocol and should be added to the ledger (such agreement being referred to

as “consensus”).

Protocols typically group transactions into blocks that can only be added to the common ledger when validated

by a sufficient percentage of a dispersed network of unrelated computers or servers called “nodes” in the network.

record (or “blockchain”) is maintained on the ledger by adding these groups (or “blocks”) of transactions to

the chain, and the nodes constantly automatically monitor the blocks to ensure record accuracy.

networks rely on validators who own native crypto assets and operate nodes for the network to confirm the validity of the transactions

comprising each block to be added to the network ledger.

The dPoS protocol software run by the relevant network nodes generally determines

the validator node for each block at random, though each blockchain may have differing selection criteria.

To be eligible to validate

transactions and to write new blocks to the chain, validators are required to “stake” the relevant native crypto assets whereby

validators commit value (in the form of the native crypto asset) to the underlying network and lock their native crypto assets, preventing

them from otherwise transacting with those native crypto assets while they are staked.

The dPoS mechanism is a sybil-resistance tool

(fights against attacks on nodes) that incentivizes validators to confirm transactions that conform to the rules of the protocol at the

risk of losing their staked crypto assets (“slashing”).

Validators utilizing their native crypto assets to participate in

dPoS protocols secure the relevant network and receive staking rewards for doing so.

a non-custodial Validator operator, BTCS may charge a validator node fee, typically determined as a percent of the crypto asset rewards

earned on crypto assets delegated to its node, creating the opportunity for potential scalable revenue and business growth with limited

additional costs.

This fee is broadcast by the Validator to the network and publicly available.

Both the crypto reward paid to the Delegator

and the crypto fee paid to the Validator are distributed by the blockchain network.

These “validator fees” in the dPoS network

encourage validators to participate in the network and thereby help to secure and decentralize the network.

StaaS provider maintains a ministerial role in validating transactions on a given dPoS network on behalf of its Delegators by:

(1) arranging

transactions using open-source software to stake the relevant crypto assets;

(2) monitoring the nodes it is operating to ensure the computers

remain online to validate transactions;

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

a StaaS provider, BTCS does not take custody of or pool Delegator crypto assets or Delegator crypto rewards (i.e.

BTCS does not take

possession of users’ private “keys” or “crypto”).

The rewards earned on delegated crypto assets are sent

directly to Delegators by the respective blockchain network and are never in BTCS’s possession.

Therefore, BTCS does not obtain

custody or facilitate transfers of any third-party crypto assets in its role as a Validator or StaaS provider.

Company’s internally developed “StakeSeeker” platform is a personal finance software and education center with a

comprehensive crypto dashboard for crypto asset holders to connect, monitor, track, and analyze their crypto portfolios across

exchanges and wallets in a single analytics platform.

The StakeSeeker dashboard reads user data from digital wallets and utilizes

application programming interfaces (APIs) to read data from crypto exchanges and is non-custodial, meaning it does not allow for the

trading or custody of crypto assets.

StakeSeeker’s Stake Hub functions as an educational center, offering users guidance on

how to delegate their crypto assets to our non-custodial validator nodes, along with the ability to monitor such delegation

activities through data analysis.

StakeSeeker does not provide or facilitate direct crypto asset delegation through its StakeHub,

nor does it facilitate transaction execution on our platform.

Stake Hub’s primary role is to offer instructional support and

monitoring capabilities.

Crypto asset holders are able to delegate to our validator nodes without signing up for our StakeSeeker

conversely, crypto asset holders can delegate to validator nodes not operated by the Company and utilize our StakeSeeker

software and data analytics.

The StakeSeeker platform is currently free-to-use for registered users so is not currently generating

The Company is not a broker-dealer or an investment advisor and does not provide any such related services.

StakeSeeker operates exclusively as an informational and educational resource for the monitoring and analysis of

crypto assets, with its non-custodial and non-transactional approach ensuring compliance with federal securities laws, thereby precluding

any regulatory concerns as the platform continues to develop.

provides a valuable analytical platform to crypto enthusiasts and strategically seeks to entice users with its features.

One underlying

strategic objective of the platform is to drive the expansion of Delegators to our validator nodes.

The growth of the size of delegations

is central to the scalability of BTCS’s StaaS business strategy.

The Company believes that StaaS provides a more accessible and

cost-effective way for crypto asset holders to participate in blockchain network consensus, thereby promoting the growth and adoption

of blockchain technology.

estimated staking rewards, expressed as the Annual Percentage Reward (APR), as displayed on StakeSeeker’s Stake Hub and our StakeSeeker

website (www.stakeseeker.com), are determined using the most recent network data obtained through API data pulls from www.stakingrewards.com,

a third-party blockchain data provider.

To ensure accuracy and consistency, BTCS conducts periodic checks to validate the APR data obtained

against the data reported on each respective blockchain network’s blockchain explorer.

Disclosure on StakeSeeker’s website

clearly states that the APR presented is not guaranteed and does not include StakeSeeker’s validator fee.

The APR figures are provided

for informational purposes and are subject to change based on the dynamics of the underlying blockchain networks.

Company anticipates taking the StaaS Platform out of beta prior to the end of 2024.

The current functionality allows crypto asset holders

to connect, monitor, track, and analyze their crypto portfolios across exchanges and wallets in a single analytics platform.

In the future

we may add support for additional blockchains and provide other analytic tools.

We are also exploring the feasibility of adding Ethereum

non-custodial staking to StakeSeeker in 2024.

We anticipate the costs associated with doing so would be in line with our historical research

and development costs.

Block Building

February 1, 2024, we introduced Builder+, a newly developed Ethereum block builder (“Builder”) to maximize validator earnings

by utilizing advanced algorithms to construct optimized blocks for on-chain validation.

Builders actively monitor the Ethereum transaction

queue, known as the “mempool”, for pending transactions and strategically reorder them to create ‘optimized blocks’ containing

transactions with the highest fees.

Builders pay a fee to Validators for block space in order to increase the chances of their blocks

being selected by a validator and, in return, earn the associated crypto transaction fees.

represents an innovative extension of our core Ethereum blockchain infrastructure operations, aimed at driving scalable revenue growth

by leveraging our current Ethereum validator operations.

We seek to capture a larger share of the Builder market within the Ethereum

ecosystem with Builder+ and secure a share of the crypto rewards generated by Ethereum validators who use Builder+.

We believe this market

offers significant potential for scalable revenue growth.

was in the development and testing phase in 2023 and did not have a material impact on our operations or 2023 financial results.

is an under-development AI-powered blockchain data and analytics platform, designed to allow users to query real-time and historical

on-chain blockchain data.

Through comprehensive indexing of public blockchain data from our Blockchain Infrastructure operations, ChainQ

is intended to provide an intuitive and straightforward platform for users to access on-chain data.

We continue to incur costs associated

with the research and development of ChainQ, with a goal to publicly launch in 2024.

and Key Storage

prioritizes self-custody of its crypto assets through secure storage of most of its crypto assets in cold digital wallets, with the goal

of typically maintaining less than 0.1% of its crypto assets on crypto exchanges at any given time, except during necessary transfers

between wallets and exchanges for sales or purchases.

Occasionally, we may use hot wallets or move crypto assets to exchanges for operational

or transactional requirements.

Additionally, we regularly transfer crypto assets to more secure cold wallets when appropriate.

December 31, 2023, 97% of BTCS’s crypto assets were held in cold storage wallets and 3% of crypto assets were held in other storage

wallets, including hot wallets.

Company currently does not maintain any insurance policies that provide coverage for potential losses of crypto assets in cases of theft,

lost keys, or any other events that might lead to the loss of private keys or crypto assets held within our secure digital wallets.

cold wallet private keys are protected through a variety of methods, including key sharding, key encryption, and offline encrypted key

storage in safety deposit boxes situated across multiple geographic locations.

We believe this multi-layered approach ensures the utmost

security for our crypto assets.

a result of our prioritizing the self-custody of our crypto assets, our exposure to crypto related companies that have declared bankruptcy

such as FTX, BlockFi, and Celsius has been limited to the negative impact these platforms had on the value of our assets in the crypto

AND MARKET OVERVIEW (CRYPTO ASSET AND BLOCKCHAIN TECHNOLOGIES)

and Cryptocurrencies

blockchain technologies utilize a decentralized and encrypted ledger that is designed to offer a secure, efficient, verifiable, and permanent

way of storing records and other information without the need for intermediaries.

Crypto assets, which include and are often referred

to as cryptocurrencies, serve multiple purposes.

They can serve as a medium of exchange, store of value or unit of account, and provide

non-financial and next generation uses.

Blockchain technologies are being evaluated for a multitude of industries due to their potential

impact in many areas of business, finance, information management, and governance.

Cryptocurrencies

are decentralized currencies that enable near instantaneous transfers.

Transactions occur via an open source, cryptographic protocol

platform which uses peer-to-peer technology to operate with no central authority.

An online network of nodes hosts a public transaction

ledger, known as a blockchain, and each cryptocurrency is associated with a source code that comprises the basis for the cryptographic

and algorithmic protocols governing its blockchain.

In a cryptocurrency network, every peer node has its own copy of the blockchain,

which contains records of every historical transaction - effectively containing records of all account balances.

Each account is identified

solely by its unique public key (making it effectively anonymous) and is secured with its associated private key (a password).

The combination

of private and public cryptographic keys constitutes a secure digital identity in the form of a digital signature, providing strong control

of ownership.

Most blockchain network infrastructures are collectively maintained by a decentralized public user base.

is decentralized, it does not rely on either governmental authorities or financial institutions to create, transmit or determine the

value of the currency units.

Rather, the value is determined by market factors, supply and demand for the units, the prices being set

in transfers by mutual agreement or barter among transacting parties.

Since transfers do not require involvement of intermediaries or

third parties, there are currently limited transaction costs in direct peer-to-peer transactions.

Units of cryptocurrency can be converted

to fiat currencies, such as the U.S.

dollar, at rates determined on various cryptocurrency exchanges.

Cryptocurrency prices are quoted

on various exchanges and fluctuate with extreme volatility.

believe certain cryptocurrencies offer many advantages over traditional fiat currencies, although many of these factors also present

potential disadvantages and may introduce additional risks, including:

as a fraud deterrent, as cryptocurrencies are digital and cannot be counterfeited or reversed arbitrarily by a sender;

of counterparty risk;

trusted intermediary required;

theft prevention;

are verified and protected through a confirmation process, which prevents the problem of double spending;

Decentralized

– no central authority (government or financial institution);

universally and not bound by government imposed or market exchange rates.

cryptocurrencies may not provide all of the benefits they purport to offer at all or at any time.

Businesses, including the Company,

seeking to develop upon, adopt, transact or rely upon blockchain technologies and cryptocurrencies operate within an untested and evolving

As with any new and emerging technology, there are potentially significant risks, not only related to the businesses’

opportunities the Company pursues, but also to the sector and industry as a whole, as well as the entirety of the concept behind blockchain

and cryptocurrency as value.

prioritizes self-custody of its crypto assets through secure storage of most of its crypto assets in cold digital wallets, with the goal

of typically maintaining less than 0.1% of its crypto assets on crypto exchanges at any given time, except during necessary transfers

between wallets and exchanges for sales or purchases.

Occasionally, we may use hot wallets or move crypto assets to exchanges for operational

or transactional requirements.

Additionally, we regularly transfer crypto assets to more secure cold wallets when appropriate.

December 31, 2023, 97% of BTCS’s crypto assets were held in cold storage wallets and 3% of crypto assets were held in other storage

Company currently does not maintain any insurance policies that provide coverage for potential losses of crypto assets in cases of theft,

lost keys, or any other events that might lead to the loss of private keys or crypto assets held within our secure digital wallets.

cold wallet private keys are protected through a variety of methods, including key sharding, key encryption, and offline encrypted key

storage in safety deposit boxes situated across multiple geographic locations.

We believe this multi-layered approach ensures the utmost

security for our crypto assets.

a result of our prioritizing the self-custody of our crypto assets, our exposure to crypto related companies that have declared bankruptcy

such as FTX, BlockFi, and Celsius has been limited to the negative impact these platforms had on the value of our assets in the crypto

Profile and Risks

6 unchanged sentences

of new laws and regulations, have not been fully explored or developed.

actions taken by the SEC, including enforcement actions brought against crypto asset companies with a focus on custodial staking, as

are more particularly described under certain “Risk Factors”, demonstrate the SEC’s position that many, if not

most, crypto assets may be securities and therefore reflect the reality that we will likely face increased government regulation and

oversight as our industry and government treatment of the crypto assets on which our operations are based continue to evolve.

developments follow the SEC’s July 25, 2017 DAO Report, wherein its Chairman expressed concerns about the “Wild

West” nature of the cryptocurrency market.

More recently, the SEC Enforcement Division has taken action against crypto asset

focused enterprises, and if the interpretations of federal securities laws are further expanded to apply to the Company, it would

adversely affect the Company’s future acquisition of crypto assets by limiting the amount of crypto asset securities

(“Digital Securities”) it may acquire, potentially limiting or precluding the use of its staking-as-a-service platform,

and creating increased compliance and legal costs.

In addition, each state has its own securities laws and regulations with varying

provisions and effect, any of which may require us to alter or reduce our current or planned operations in the future.

to monitor legislative matters related to our industry.

of the foregoing or other regulatory developments, in the future before we acquire or transact in crypto assets, we may be required to

examine how they were originally offered to determine if they were offered as an investment contract or other type of security.

actions taken by the SEC, including enforcement actions brought against crypto asset companies with a focus on custodial staking, are

more particularly described under certain “Risk Factors”, demonstrate the SEC’s position that many, if not most, crypto

assets may be securities and therefore reflect the reality that we will likely face increased government regulation and oversight as

our industry and government treatment of the crypto assets on which our operations are based continue to evolve.

These developments follow

the SEC’s July 25, 2017, DAO Report, wherein its Chairman expressed concerns about the “Wild West” nature of the cryptocurrency

More recently, the SEC Enforcement Division has taken action against crypto asset focused enterprises, and if the interpretations

of federal securities laws are further expanded to apply to the Company, it would adversely affect the Company’s future acquisition

of crypto assets by limiting the amount of crypto asset securities (“Digital Securities”) it may acquire, potentially limiting

or precluding the use of its blockchain infrastructure and other operations, and creating increased compliance and legal costs.

2020 the U.S.

Department of Justice (“DOJ”) published a report entitled “Cryptocurrency:

An Enforcement Framework”

that detailed the DOJ’s strategies and abilities to handle the threats posed by digital assets.

In January 2023, the House of Representatives

created the Financial Services Subcommittee on Digital Assets with the goal to develop rules and policies covering digital assets.

addition, each state has its own securities laws and regulations with varying provisions and effects, any of which may require us to

alter or reduce our current or planned operations in the future.

We continue to monitor legislative matters related to our industry.

of the foregoing or other regulatory developments, in the future, before we acquire or transact in crypto assets, we may be required

to examine how they were originally offered to determine if they were offered as an investment contract or other type of security.

of legal uncertainties, careful examination of the results of our compliance review will be required by experienced securities counsel.

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Further, while we believe our operations and platform are meaningfully different than Kraken’s

custodial staking platform that was subject to SEC enforcement proceedings in early 2023, that development or future positions the SEC

may take, including potentially against us and our business, may demonstrate a differing view and require us to adjust, reduce, limit

or even cease some or all of our operations or business plans.

If our compliance procedures and legal reviews prove to be incorrect,

we may incur the likelihood of prohibitive SEC penalties and/or private lawsuit defense costs and adverse rulings.

and Coinbase’s custodial staking platforms that were subject to SEC enforcement proceedings in 2023, that development or future

positions the SEC may take, including potentially against us and our business, may demonstrate a differing view and require us to adjust,

reduce, limit or even cease some or all of our operations or business plans.

If our compliance procedures and legal reviews prove to

be incorrect, we may incur the likelihood of prohibitive SEC penalties and/or private lawsuit defense costs and adverse rulings.

Gensler, the current SEC Chairman, has continued to voice his concerns about and continued intention to regulate crypto assets, referring

to decentralized finance, or DeFi, platforms that focus on crypto assets as well as the crypto assets themselves, and concluding by stating

that the SEC would “continue to take our authorities as far as they go.” There has not been any definitive guidance provided

as of the date of this Report, however a number of regulatory proceedings and enforcement actions have been brought against crypto assets

developers and their proponents.

Company intends to acquire additional crypto assets and to continue to develop and expand upon its Digital Asset Platform to enable

it to offer a wider range of functions and availability for use with a greater variety of crypto assets.

The Company currently owns

and plans to expand its crypto asset holdings, both through staking its existing crypto asset holdings on PoS blockchain networks

that the SEC would “continue to take our authorities as far as they go.” In late 2023, Mr.

Gensler stated that cryptocurrency

entrepreneurs have “generally built a business model around noncompliance with the law.” There has not been any definitive

guidance provided as of the date of this Report, however a number of regulatory proceedings and enforcement actions have been brought

against crypto assets developers and their proponents such as Coinbase, Binance, and Kraken.

Company may acquire additional crypto assets and continues to develop and expand upon its StakeSeeker, Builder+, and ChainQ platforms

to enable it to offer a wider range of functions and availability for use with a greater variety of crypto assets.

The Company currently

owns and plans to expand its crypto asset holdings, both through staking its existing crypto asset holdings on PoS blockchain networks

and potentially through other means.

In order to avoid being classified as an inadvertent investment company under the 1940 Act, we

actively focus, in consultation with legal counsel, on ensuring that our ownership of assets that are not considered securities

under the Act always exceed 60% of our total assets, excluding cash items.

By doing so, we can avoid being subject to the regulatory

requirements and oversight that apply to investment companies.

The ownership of crypto assets including Digital Securities may

change based on the definition of a security under the Securities Act of 1933 (the “Securities Act”) and applicable

court decisions.

The key definition is the term “investment contract” and what is an investment contract.

addition to the securities laws and investment company considerations, as our business model and operations continue to evolve,

including our Digital Asset Platform and its functionality, we may become subject to additional laws and regulations.

to the extent we collect, analyze, distribute, or otherwise use data concerning individuals or entities and their holdings and

transactions, we may become subject to the ever-growing number of data privacy and security laws within and without the U.S.

often have far-reaching implications for businesses.

In general these laws require disclosure and preventative measures designed to

protect users from unauthorized access or disclosure of their personal information, and impose fines and sanctions for failure to

comply with their requirements.

On the other hand, because transactions in crypto assets often provide a reasonable degree of

anonymity, they are susceptible to misuse for criminal activities, such as money laundering.

This misuse, or the perception of such

misuse (even if untrue), could lead to greater regulatory oversight of crypto platforms and operations such as ours, and there is

the possibility that regulators could close crypto platforms or other crypto asset-related technology and infrastructure with little

or no notice or opportunity for challenge, and prevent users of custodial platforms from accessing or retrieving crypto assets held

on or connected to such platforms or infrastructure.

For example, lawmakers and regulators have in recent years expressed views that

government oversight is needed, including with a view to curtailing the use of crypto asset use for malign and illegal

PoW crypto assets have also been subject to skepticism due to concerns about the high energy consumption used in mining on

blockchain networks.

For example, in September 24, 2021, China declared all transactions in and mining of crypto assets, including

Bitcoin, illegal based on concerns of high energy consumption.

In the U.S., in March 2022 President Biden issued Executive

Order 14067 on Ensuring the Responsible Development of Digital Assets , which prioritized the responsible development of

crypto assets in a manner which includes reducing negative climate impacts and environmental pollution.

While our focus is currently

on PoS blockchain networks which use significantly lower amounts of energy when compared to PoW, future regulations may arise in

response to these concerns that could apply to us and the cryptocurrency industry as a whole.

To avoid being inadvertently classified as an investment company under the 1940 Act, we actively

focus, in consultation with legal counsel, on ensuring that our ownership of assets that are not considered securities under the 1940

Act always exceed 60% of our total assets, excluding cash items.

In separate SEC complaints, the SEC identified Cardano, Tezos, Solana,

Cosmos, Polygon, Axie Infinity, and NEAR Protocol crypto assets as securities.

As a matter of practice the Company typically targets

keeping in excess of 60% of the Company’s total assets (excluding cash and government securities) in Ethereum.

Therefore, to the

extent the SEC identified all other crypto assets held by the Company excluding Ethereum as securities, the Company would still not meet

the definition of an “investment company” under Section 3(a)(1)(C) of the 1940 Act.

By doing so, we can avoid being subject

to the regulatory requirements and oversight that apply to investment companies.

Company has conducted a detailed legal analysis which has led us to determine that certain crypto assets that are identified as

securities by the SEC should not impact our business, financial condition, and results of operations.

Provided, however, if over 40%

of our assets are considered securities, excluding cash, we may be considered a 1940 Act company (see the risk factor on page 12

Further, the aforementioned assessments are risk-based judgments and not a legal standard or determination binding on any

regulatory body or court.

To the extent a regulatory body or court finds that our conclusions are incorrect, we may seek to cease

certain of our operations.

Any such action may adversely affect an investment in us.

addition to the securities laws and investment company considerations, as our business model and operations continue to evolve, including

StakeSeeker, Builder+, and ChainQ we may become subject to additional laws and regulations.

For example, to the extent we collect, analyze,

distribute, or otherwise use data concerning individuals or entities and their holdings and transactions, we may become subject to the

ever-growing number of data privacy and security laws within and without the U.S.

which often have far-reaching implications for businesses.

In general these laws require disclosure and preventative measures designed to protect users from unauthorized access or disclosure of

their personal information, and impose fines and sanctions for failure to comply with their requirements.

On the other hand, because

transactions in crypto assets often provide a reasonable degree of anonymity, they are susceptible to misuse for criminal activities,

such as money laundering.

This misuse, or the perception of such misuse (even if untrue), could lead to greater regulatory oversight

of crypto platforms and operations such as ours, and there is the possibility that regulators could close crypto platforms or other crypto

asset-related technology and infrastructure with little or no notice or opportunity for challenge, and prevent users of custodial platforms

from accessing or retrieving crypto assets held on or connected to such platforms or infrastructure.

For example, lawmakers and regulators

have in recent years expressed views that government oversight is needed, including with a view to curtailing the use of crypto asset

use for malign and illegal activities.

PoW crypto assets have also been subject to skepticism due to concerns about the high energy consumption used in mining on blockchain

In the U.S., in March 2022 President Biden issued Executive Order 14067 on Ensuring the Responsible Development of Digital

Assets , which prioritized the responsible development of crypto assets in a manner which includes reducing negative climate impacts

and environmental pollution.

In November 2022, the Governor of New York signed a law banning certain bitcoin mining operations that run

on carbon-based power sources for two years.

While our focus is currently on PoS blockchain networks which use significantly lower amounts

of energy when compared to PoW, future regulations may arise in response to these concerns that could apply to us and the cryptocurrency

industry as a whole.

the growing interest by regulators and other stakeholders, we anticipate that legislation and regulation of crypto assets is forthcoming

in the future.

and will intensify in the future.

the above developments, both our current and planned operations, and the cryptocurrency industry in general, continue to be subject to

expanding, complex and uncertain government oversight.

See “Risk Factors” beginning on page 17 and “Business”

beginning on page 3 for more information.

See “Risk Factors” beginning on page 12

and “Business” beginning on page 3 for more information.

both the regulatory landscape develops and journalistic familiarity with crypto assets increases, mainstream media’s understanding

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or all of our proposed activities.

Company’s current and future competition for our Digital Asset Platform is centered on the following areas:

Exchange based companies which offer custodial and/or non-custodial

staking solutions.

These exchanges have more robust customer bases to attract integrated staking services and may have more

resources to enhance either their custodial or non-custodial efforts in the future;

crypto asset focused companies and node operators, such as Blockdaemon, Allnodes, Everstake, Staked (acquired by Kraken), Figment,

P2P, Foundry, and Stakefish, that offer non-custodial crypto asset staking and run validator nodes;

mobile applications, websites, niche aggregation sites, which offer similar analytic services, such as CoinTracker, Koinly, CoinLedger

of mobile applications and websites, that offer secure storage solutions for crypto assets;

financial service firms and data analytics firms serving traditional asset markets that choose to offer data analytic solutions for

crypto assets;

Cryptocurrency

focused companies that offer exchange, payment processing, and financial services for crypto assets.

of our current and potential competitors have greater resources, longer histories, more users, and greater brand recognition.

devote more resources to technology, infrastructure, marketing and may be able to more rapidly develop their solutions.

Other companies

also may enter into business combinations or alliances that strengthen their competitive positions.

Our small team and relative lack

of capital is a competitive disadvantage.

Company’s current and future competition is centered on the following areas:

Exchange-Based

Companies in the exchange industry that offer both custodial and non-custodial staking solutions as well as other

blockchain infrastructure and data analytics pose a significant competitive challenge.

These exchanges often boast substantial customer

bases, making it easier for them to attract those looking for integrated staking services, portfolio tracking, and position them

well to enter blockchain infrastructure operations.

Additionally, they may possess greater resources, allowing them to enhance their

custodial or non-custodial staking offerings and other offerings in the future.

Asset-Focused Companies and Node Operators:

Numerous companies and node operators specializing in crypto assets compete with

our non-custodial crypto asset staking services and validator node operation.

Key competitors in this space include companies such

as Blockdaemon, Allnodes, Everstake, Figment, P2P, Foundry, Stakin, and Stakefish.

Services Providers:

Various mobile applications, websites, and niche aggregation sites, such as CoinTracker, Koinly, CoinLedger,

and Rotki, offer similar analytic services.

These competitors provide tools and insights that may overlap with StakeSeeker’s

Storage Solution Providers:

Providers of mobile applications and websites that offer secure storage solutions for crypto assets

represent another category of competition.

Financial Service and Data Analytics Firms:

Established financial service firms and data analytics companies serving traditional

asset markets may choose to enter the market by offering data analytic solutions as well as their own custodial or non-custodial

staking for crypto assets.

These entities can leverage their extensive resources, market presence, and expertise to enter the market.

Cryptocurrency-Focused

Companies specializing in cryptocurrency-related services, including exchanges, payment processing, and financial

services, are formidable competitors in the crypto asset space.

Blockchain Data Providers:

Companies offering data analytics and insights services, with accessible on-chain blockchain data

and user-friendly interfaces, like Chainalysis and Elliptic, pose competition in providing vital data and insights for crypto assets.

Block Builders and Relay Providers:

Competition also exists for Builder+, our block building initiative, from other Ethereum

block builders or relay providers who currently have significant market share.

of our current and potential competitors enjoy advantages such as greater financial resources, longer operational histories, larger user

bases, bigger teams, and stronger brand recognition.

Most are also not burdened with the additional costs and time commitments required

of being an exchange-listed public company.

These competitors may allocate more substantial resources to technology development, infrastructure

enhancement, and marketing efforts.

Moreover, they may be able to develop and deploy solutions more rapidly than us.

addition to existing competitors, the Company must contend with the potential of new entrants to the industry and the possibility of

industry consolidation through business combinations and alliances, which could further strengthen the competitive positions of our rivals.

Given our small team and relative lack of capital to many peers, we acknowledge that we face a competitive disadvantage in this landscape.

Company’s primary assets consist of its crypto assets and cash as well as its human capital and intellectual property noted below.

PROPERTY AND TRADE SECRETS

business depends in large part on our proprietary technology, particularly with regards to our Digital Asset Platform and operation of

validator nodes as part of our blockchain infrastructure, and our brand.

We rely on, and expect to continue to rely on, a combination

of trademark, domain name, and trade secret laws, as well as confidentiality and license agreements with our employees, contractors,

consultants, and third parties with whom we have relationships, to establish and protect our brand and intellectual property rights.

Asset Platform - StakeSeeker

Staking-as-a-service

is a central component of BTCS’s strategy.

StaaS allows crypto asset holders to earn rewards by participating in network consensus

mechanisms through Staking and Delegating their cryptocurrencies to Company-operated validator nodes.

As a non-custodial Validator operator,

BTCS receives a percentage of token holders’ staking rewards generated as a validator node fee, creating the opportunity for potential

scalable revenue and business growth with limited additional costs.

The staking rewards are paid directly by the network to the token

holder’s digital wallet and BTCS never takes custody of any staked tokens or earned rewards.

January 2023, the Company launched the beta of StakeSeeker, BTCS’s proprietary Digital Asset Platform.

StakeSeeker is a comprehensive

crypto dashboard and education center for crypto asset holders to learn how to earn crypto rewards by Staking through its non-custodial

Stake Hub and evaluate their crypto portfolios across exchanges and wallets in a single analytics platform.

Our internally-developed

dashboard utilizes APIs to read user data from digital wallets and crypto exchanges and does not allow for the trading of assets.

StakeSeeker’s

Stake Hub is central to BTCS’s growth strategy.

The growth of both StakeSeeker’s user base as well as the amount of staked

cryptocurrencies by Delegators to Company-run validator nodes are critical to BTCS’s growth strategy and success.

The Company believes

that StaaS provides a more accessible and cost-effective way for crypto asset holders to directly participate in blockchain networks’

consensus mechanisms while maintaining custody of both their staked crypto assets and crypto rewards, thereby promoting the growth and

adoption of blockchain technology.

business depends in large part on our proprietary technology, particularly with regards to StakeSeeker, the operation of validator nodes

as part of our blockchain infrastructure, our efforts and development with respect to our initiatives, and our brand.

We rely on, and

expect to continue to rely on, a combination of trademark, domain name, and trade secret laws, as well as confidentiality and license

agreements with our employees, contractors, consultants, and third parties with whom we have relationships, to establish and protect

our brand and intellectual property rights.

remains steadfast in its commitment to its core business of blockchain infrastructure operation, validation, and data analytics.

growth strategy is structured around expanding our infrastructure, attracting a larger Delegator base, tapping into the Ethereum MEV

market through Builder+, and launching ChainQ as a revenue-generating platform.

These initiatives are discussed further below and are

designed to position us for sustainable growth in the dynamic and evolving blockchain industry.

We will continue to monitor and adapt

our strategy to remain competitive and capitalize on emerging opportunities in the blockchain space.

of Blockchain Infrastructure:

primary objective is to expand our presence in the blockchain ecosystem by operating validator nodes on PoS and dPoS-based blockchain

To achieve this, subject to available capital, we plan to continue to identify promising blockchain networks and allocate resources

towards the development and operation of validator nodes.

of Delegator Base and Assets:

critical component of our growth strategy is to increase the number of Delegators and crypto assets delegated to our validator nodes

including our own.

We plan to achieve this by:

1) acquiring more crypto assets and staking them to our nodes, and 2) enhancing the StakeSeeker

platform’s capabilities as an educational center and analytical tool.

We believe that leveraging StakeSeeker’s capabilities

to provide insights and guidance will foster trust and confidence among potential Delegators.

Ethereum Block Builders Market with Builder+:

believe we are strategically positioned to capture a large share of the Builder market within the Ethereum ecosystem and available MEV

rewards through the introduction of Builder+.

Builder+ is an innovative solution designed to optimize validator earnings by actively

monitoring the Ethereum mempool and strategically reordering transactions to create optimized blocks.

To achieve this, we plan to promote

Builder+ and will seek to build strategic relationships to expand its adoption.

Continuous refinement of Builder+ algorithms and strategy

will be a priority to ensure competitiveness and maximize rewards for validators.

Out Subscription-Based ChainQ Offering:

are actively developing ChainQ, an AI-powered blockchain data and analytics platform, with the goal of launching it as a subscription-based

service in 2024.

ChainQ plans to provide users with access to real-time and historical on-chain blockchain data.

To achieve this, we

plan to work towards the completion of the development of ChainQ, potentially establish partnerships and collaborations with other blockchain

projects for integration, and implement a subscription-based pricing model to monetize the platform.

CAPITAL / EMPLOYEES

of December 31, 2022, we had 5 full-time employees, all of whom work full-time, none of which are covered by a collective bargaining

We hire consultants on an as-needed basis.

of December 31, 2023, we had five full-time employees, all of whom work full-time, none of which are covered by a collective bargaining

We engage third-party contractors and consultants on an as-needed basis.

are a remote-first Company.

We believe that allowing our employees to work in the location that best suits them provides us access to

a large talent pool and a sustained advantage in hiring and retaining employees and consultants in the United States and worldwide.

a larger talent pool and a sustained advantage in hiring and retaining employees and consultants in the United States and worldwide.

capital management is critical to our ongoing business success, which requires investing in our people.

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It is our intent to maintain a work environment that is free of harassment,

discrimination, or retaliation because of age (40 and older), race, color, national origin, ancestry, religion, sex, sexual orientation

discrimination, or retaliation because of age, race, color, national origin, ancestry, religion, sex, sexual orientation

(including transgender status, gender identity or expression), pregnancy (including childbirth, lactation, and related medical conditions),

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Warrants to Purchase Common Stock (weighted average exercise price of $11.50)

Total Shares Diluted

table above describes the shares of Common Stock which are outstanding and/or are issuable under outstanding securities.

Total Common Shares Diluted

Series V Preferred Stock (non-convertible)

table above describes the shares of Common Stock and Preferred Stock which are outstanding and/or are issuable under outstanding

The Series V preferred Stock is perpetual and does not convert into shares of the Company’s Common Stock.

Note Regarding Forward Looking Statements

report contains forward-looking statements, including our liquidity, our belief that our blockchain infrastructure efforts will form

the core growth for our Digital Asset Platform, our plans and development of our Digital Asset Platform and the integration of Staking-as-a-Service,

our belief regarding blockchain, and future business plans.

Forward-looking statements can be identified by words such as “anticipates,”

“intends,” “may,” “potential,” “continues,” “plans,” “seeks,”

“believes,” “estimates,” “expects” and similar references to future periods.

the core growth for our business, including but not limited to Builder+, StakeSeeker, and Chain, plans to expand our PoS operations,

growth opportunities for the Company, our belief regarding blockchain, expected increase in our revenues and gross margins and future

business plans.

Forward-looking statements can be identified by words such as “anticipates,” “intends,” “may,”

“potential,” “continues,” “plans,” “seeks,” “believes,” “estimates,”

“expects” and similar references to future periods.

Forward-looking

17 unchanged sentences

Discussion and Analysis of Financial Condition and Results of Operations.”

UNRESOLVED STAFF COMMENTS

of the date of this report, the Company did not have any owned or leased properties.

LEGAL PROCEEDINGS.

time to time, we are party to certain legal proceedings that arise in the ordinary course and are incidental to our business.

of no material, active or pending legal proceedings against us.

MINE SAFETY DISCLOSURES.

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-K

Item 1. Business