What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-08-13 compared with 2025-05-15 · 284 added, 239 removed, 172 unchanged (75% of the section changed)

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When we refer to the “2025 Quarter” and the “2024 Quarter” we are referring to

the three months ended March 31, 2025 and March 31, 2024, respectively.

is a Nasdaq-listed U.S.-based blockchain technology company focused on blockchain infrastructure, with its primary operations currently

centered on the Ethereum network.

Our core focus is on driving scalable growth through a diverse range of blockchain-focused technological

solutions, emphasizing Ethereum infrastructure, including block-building and validator node operations.

the three months ended June 30, 2025 and June 30, 2024, respectively.

When we refer to the “2025 Period” and the “2024

Period” we are referring to the six months ended June 30, 2025 and June 30, 2024, respectively.

(“BTCS” or the “Company”), short for Blockchain Technology Consensus Solutions, is a publicly traded,

Ethereum-first blockchain infrastructure and digital asset treasury company committed to driving scalable revenue and ETH

accumulation through its unique capital formation and blockchain infrastructure strategies, collectively referred to as the

DeFi/TradFi Flywheel.

By combining decentralized finance (“DeFi”) and traditional finance (“TradFi”)

mechanisms with its blockchain infrastructure operations, comprising NodeOps (staking) and Builder+ (block building), BTCS provides

leveraged exposure to Ethereum (ETH) by integrating scalable revenue generation with a structured, yield-focused ETH accumulation

Flywheel Funding Strategy

DeFi/TradFi Flywheel represents a transformative extension of BTCS’s Ethereum-first strategy, combining innovative financing mechanisms

from both decentralized and traditional markets to optimize capital efficiency and grow its ETH treasury.

The Company’s planned

capital formation approach includes At-The-Market (“ATM”) equity offerings, above market convertible debt issuance, and on-chain

borrowing through DeFi protocols, such as Aave.

These capital sources are strategically aligned with BTCS’s operating infrastructure,

staking rewards from NodeOps, and ETH transaction fees captured through Builder+, creating a self-reinforcing flywheel designed to increase

ETH per share while minimizing shareholder dilution.

This approach reflects BTCS’s commitment to revenue scalability, ETH accumulation,

and capital stewardship.

Infrastructure:

blockchain infrastructure centers on supporting the validation of transactions and securing proof-of-stake (“PoS”) and delegated

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

The Company manages a network of cloud-based validator nodes that perform essential

network functions, including transaction validation (“attestation”) activities and proposing new blocks.

Through these activities,

BTCS earns native token rewards by staking its own crypto assets on validator nodes operated by BTCS and third parties.

evaluation of blockchain networks involves comprehensive due diligence procedures, including assessments of blockchain quality, reward

potential, and the technical challenges associated with running validator nodes.

Criteria for assessing blockchain quality encompass

factors such as i) market and on-chain statistics, ii) liquidity, iii) potential blockchain utility, iv) history and milestones, v) growth

and development roadmap, vi) use cases, vii) community interest, viii) quality of documentation, ix) decentralization, and x) any other

publicly available information.

This process ensures BTCS focuses on high-potential blockchain networks while mitigating technical and

operational risks.

Building – Builder+

central focus of BTCS’s current operations is its Ethereum block-building initiatives under Builder+, which commenced operations

Through Builder+ we purchase block space and leverage advanced algorithmic processes to construct blocks for on-chain validation.

The goal of Builder+ is to maximize revenue by optimizing the contents and structure of each block.

The Company aims to maximize the

value of tokens earned by increasing the number of blocks we purchase while minimizing the payments to validators required for purchasing

has rapidly become a key driver of BTCS’s revenue growth, leveraging its scalable and efficient technology to expand its operational

footprint within the Ethereum ecosystem.

While Builder+ operated exclusively on Ethereum prior to April 1, 2025, we have since expanded

into block-building on Binance Smart Chain.

Builder+’s flexible design enables potential adaptation to other blockchain networks,

aligning with BTCS’s vision to diversify its infrastructure operations over time.

Staking-as-a-Service

operates a non-custodial Staking-as-a-Service (“StaaS”) business model that enables crypto asset holders to participate in

network consensus mechanisms by staking and delegating to BTCS-operated validator nodes.

As a non-custodial validator operator, the Company

receives a percentage of a crypto asset 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 alternative for crypto asset holders to participate in blockchain networks’

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

StaaS provider maintains a ministerial role in validating transactions on a given dPoS network on behalf of its Delegators by (1) using

open-source software to stake the relevant crypto assets;

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

remain online to validate transactions;

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

a non-custodial StaaS provider, we do not hold or take possession of any Delegator funds, crypto assets, or crypto asset rewards at

any point during the staking or delegation process.

Delegation does not involve the transfer of crypto asset ownership to a

All Delegator assets remain under the sole control of the Delegator.

During the process of staking, delegated crypto

assets remain in the Delegator’s digital wallets.

The blockchain network calculates rewards earned, which are then distributed

directly to the Delegator’s wallet.

The blockchain network does not distribute any of the Delegator’s earned crypto

rewards to BTCS.

At no point does the Validator gain access, control, or custody of the original staked crypto assets or the earned

crypto rewards through staking to its node.

Therefore, the Company does not have any exposure to the custodial risks that a crypto

exchange would have related to excessive redemptions or withdrawals of crypto assets, suspension of redemptions, or withdrawals.

Further, we do not issue or hold crypto assets on behalf of third parties and have no exposure to the risks an exchange would have

with respect to loans, rehypothecation, or margin.

following table details the blockchain networks on which BTCS operates nodes that support third-party delegations as part of our staking-as-a-service

operations, including the amount of third-party crypto assets delegated to our non-custodial validator nodes, as of March 31, 2025:

Blockchain Network

Validator Fee Percentage %

Delegated Crypto Assets (Native Tokens)

Delegated Crypto Assets ($USD)

the three months ended March 31, 2025, BTCS ceased operating validator nodes on Avalanche (AVAX).

In April 2025, BTCS also ceased operating

validator nodes on Akash (AKT) and Kava (KAVA) networks.

complement our core blockchain infrastructure, BTCS has developed “ChainQ,” an AI-powered blockchain data and analytics

platform designed to increase accessibility and transparency within the blockchain ecosystem.

Currently in beta testing phase,

ChainQ simplifies on-chain data access and analysis for cryptocurrency holders, delivering deeper insights into blockchain activity

while adhering to data privacy standards.

By indexing public data from our blockchain infrastructure operations, ChainQ provides an intuitive platform for exploring

on-chain data.

forward, BTCS remains committed to enhancing its blockchain infrastructure capabilities, with a strong emphasis on its Ethereum block-building

The Company is poised to leverage its expertise in validator node management and block-building optimization as it seeks

scalable opportunities within the rapidly evolving blockchain ecosystem.

is dedicated to remaining at the forefront of blockchain innovation and staying adaptable to opportunities across the broader blockchain

This strategic agility positions BTCS to navigate the evolving blockchain landscape while maximizing its impact.

NodeOps (staking) and Builder+ (block building)

BTCS operates Ethereum validator nodes through its NodeOps initiative, earning ETH-denominated staking rewards for securing the network.

BTCS’s proprietary block builder, Builder+, constructs and submits optimized blocks to Ethereum’s blockchain.

By leveraging

algorithmic strategies, Builder+ competes in the decentralized block space marketplace to capture ETH-denominated transaction fees.

is designed for scalable revenue generation, and its architecture allows for efficient deployment across select EVM-compatible ecosystems,

such as Binance Smart Chain (“BSC”).

This enables BTCS to expand its infrastructure footprint and generate additional revenue

while maintaining a core focus on ETH accumulation.

Builder+ is a central driver of BTCS’s growth strategy, reflecting the Company’s

emphasis on scalable and efficient revenue generation.

has paused further development of its consumer-facing platform ChainQ.

Additionally, during the six months ended June 30, 2025, BTCS

completed the wind-down of staking-as-a-service and validator operations on Avalanche (AVAX), Cosmos (ATOM), Akash (AKT), and Kava (KAVA),

and liquidated the majority of its alt-coin holdings, which also included Axie Infinity (AXS) and NEAR protocol (NEAR).

These moves were

part of a strategic focus to concentrate on Ethereum-based revenue and ETH accumulation.

tables below detail BTCS’s quarterly crypto asset holdings for each quarter from Q1 2024 through Q1 2025.

Assets Held at the End of the Following Calendar Quarters:

Assets Held as of the End of the Following Calendar Quarters:

Ethereum (ETH)

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Avalanche (AVAX)

Axie Infinity (AXS)

NEAR Protocol (NEAR)

BNB Chain (BNB)

Rocket Pool (RPL)

Axie Infinity (AXS)

NEAR Protocol (NEAR)

Polkadot (DOT)

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Band Protocol (BAND)

Oasis Network (ROSE)

Market Value of Crypto Assets at the End of the Following Calendar Quarters:

Market Value of Crypto Assets as of the End of the Following Calendar Quarters:

Ethereum (ETH)

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Avalanche (AVAX)

Axie Infinity (AXS)

NEAR Protocol (NEAR)

BNB Chain (BNB)

Rocket Pool (RPL)

Axie Infinity (AXS)

NEAR Protocol (NEAR)

Polkadot (DOT)

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Band Protocol (BAND)

Oasis Network (ROSE)

of Crypto Assets at the End of the Following Calendar Quarters:*

of Crypto Assets as of the End of the Following Calendar Quarters:*

Ethereum (ETH)

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Avalanche (AVAX)

Axie Infinity (AXS)

NEAR Protocol (NEAR)

BNB Chain (BNB)

Rocket Pool (RPL)

Axie Infinity (AXS)

NEAR Protocol (NEAR)

Polkadot (DOT)

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Band Protocol (BAND)

Oasis Network (ROSE)

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

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Cosmos (ATOM)

Solana (SOL) *

Axie Infinity (AXS) *

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Avalanche (AVAX) *

Stader (SD) *

Rocket Pool (RPL) *

Polygon (POL)

Polkadot (DOT) *

Kusama (KSM) *

Polygon (POL) *

Tezos (XTZ) *

Cardano (ADA) *

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Oasis Network (ROSE)

Revenue includes amounts earned from staking to third-party validator nodes.

All or a portion of revenue earned from staking to third-party validator nodes

assets earned from block building through Builder+

Ethereum (ETH)

BNB Chain (BNB)

Market Value of Crypto Asset Rewards Earned Recognized as Revenue

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Cosmos (ATOM)

Solana (SOL) *

Axie Infinity (AXS) *

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Avalanche (AVAX) *

Stader (SD) *

Rocket Pool (RPL) *

Polygon (POL)

Polkadot (DOT) *

Kusama (KSM) *

Polygon (POL) *

Tezos (XTZ) *

Cardano (ADA) *

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Oasis Network (ROSE)

Total revenue from blockchain

infrastructure staking activities through NodeOps

revenue from blockchain infrastructure staking activities through NodeOps

All or a portion of revenue earned from staking to third-party validator nodes

1 unchanged sentence

Ethereum (ETH)

Total revenue from block-building

through Builder+

of Operations for the Three Months Ended March 31, 2025 and 2024

following tables reflect our operating results for the three months ended March 31, 2025 and 2024:

For the Three Months Ended

Blockchain infrastructure revenues

BNB Chain (BNB)

Total revenue from block-building through Builder+

of Operations for the Three and Six Months Ended June 30, 2025 and 2024

following tables reflect our operating results for the three and six months ended June 30, 2025 and 2024:

the Three Months Ended

infrastructure revenues

infrastructure costs

and administrative

and development

and related expenses

(gains) losses on crypto asset transactions

operating expenses

income (expenses):

in unrealized appreciation (depreciation) of crypto assets

in fair value of warrant liabilities

other income (expenses)

income (loss)

$ (6,727,869 )

For the Six Months Ended

Validator revenue

Total revenues

Cost of revenues

Blockchain infrastructure costs

Validator expense

Operating expenses:

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Other income (expenses):

Interest income

Interest expense

Change in unrealized appreciation (depreciation) of crypto assets

(12,896,989 )

$ (27,633,489 )

Change in fair value of warrant liabilities

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(13,197,964 )

(27,408,339 )

Net income (loss)

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The increase was primarily

attributable to the expansion of our Builder+ operations, which focus on Ethereum block-building activities.

attributable to the continued expansion of our Builder+ operations, which focus on block-building activities across Ethereum and Binance

Smart Chain (BSC).

the 2025 Quarter, Builder+ operations contributed approximately $2,509,000 of total revenue, while our NodeOps business contributed approximately

The significant year-over-year increase in revenue reflects the continued scaling of our Builder+ operations, which resulted

in a substantial increase in block rewards earned during the period.

we anticipate continued growth in both the number of block rewards and staking rewards earned, the fair value of such rewards may fluctuate

due to the inherent volatility of crypto asset markets.

As a result, the amount of revenue recognized in future periods may be materially

impacted by market price movements of the underlying crypto assets at the time of reward receipt or recognition.

of revenues increased during the 2025 Quarter, primarily due to higher Validator Payments made to external parties to secure block space

for purchasing block space as part of our block-building activities under Builder+.

Validator Payments totaled approximately $1,480,000

during the 2025 Quarter.

These additional costs are partially offset by the efficiencies realized in our blockchain infrastructure validating

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

The significant year-over-year increase in revenue reflects the continued scaling of our Builder+ operations and the commencement

of Binance Smart Chain (BSC) block building, which together resulted in a substantial increase in block rewards earned during the period.

building on BSC contributed approximately $408,000, representing approximately 16% of Builder+ revenue and 15% of overall revenue for

the 2025 Quarter.

the 2025 Period, revenue increased to approximately $4,461,000 from approximately $1,013,000 in the 2024 Period, driven by the same factors

described above.

we anticipate continued growth in both the number of block rewards and staking rewards earned due to scaling of staked ETH, the fair

value of such rewards may fluctuate due to the inherent volatility of crypto asset markets.

As a result, the amount of revenue recognized

in future periods may be materially impacted by market price movements of the underlying crypto assets at the time of reward receipt

or recognition.

of revenues increased during the 2025 Quarter and 2025 Period, primarily due to higher Validator Payments made to external parties to

secure block space as part of our block-building activities under Builder+.

Validator Payments totaled approximately $2,813,000 during

the 2025 Quarter and approximately $4,293,000 during the 2025 Period.

costs are partially offset by the efficiencies realized in our blockchain infrastructure validating operating costs, including streamlining

of infrastructure hosting fees and reduction of services provided by vendors.

we continue to expand block-building operations and increase block production, we expect cost of revenues to rise correspondingly.

costs may grow at a greater rate than revenue, likely reducing gross margins.

the 2025 Quarter, we incurred negative gross margins, as the losses from Builder+ activities outweighed the positive gross margins from

our high-margin NodeOps operations.

Costs may grow at a greater rate than revenue, particularly in periods of aggressive expansion, which

could further pressure gross margins.

and Administrative Expenses

and administrative expenses increased during the 2025 Quarter compared to the 2024 Quarter.

The increase was primarily attributable to

higher payments for order flow associated with supporting Ethereum block-building activities, expanded investor relations services, and

higher accounting fees, including increases in audit fees.

and administrative expenses increased during the 2025 Quarter and 2025 Period compared to the corresponding periods in 2024.

was primarily attributable to higher payments for order flow associated with supporting block-building activities, expanded investor

relations services, and higher accounting fees, including increases in audit fees.

growth in general and administrative expenses reflects the Company’s ongoing investment in operational infrastructure to support

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and Development Expenses

and development expenses increased during the 2025 Quarter compared to the 2024 Quarter, primarily due to continued investment in Builder+

strategies and development.

The Company also continued the development of ChainQ during the period, although the primary focus of research

and development activities remained centered on enhancing Builder+ operations.

We expect research and development costs to remain consistent

or moderately increase in future periods, with an emphasis on disciplined cost management, particularly for third-party development services.

and development expenses increased during the 2025 Quarter and 2025 Period compared to the prior-year periods, primarily due to continued

investment in Builder+ strategies and development.

The primary focus of research and development activities remained centered on enhancing

Builder+ operations, including the commencement of block building on Binance Smart Chain (BSC) during the 2025 Quarter.

We expect research

and development costs to remain consistent or moderately increase in future periods, with an emphasis on disciplined cost management,

particularly for third-party development services.

and Related Expenses

and related expenses increased during the 2025 Quarter compared to the 2024 Quarter, primarily due to the addition of employee headcount

and larger accruals for estimated performance-based bonuses tied to operational and financial milestones.

The Company continues to rely

on non-cash equity-based compensation as a core element of its overall compensation strategy, and we expect total compensation costs

to increase in future periods as additional personnel are added and as further accruals for performance-based incentives are recognized.

expenses increased during the 2025 Quarter compared to the 2024 Quarter, primarily due to expanded advertising campaigns and promotional

and related expenses decreased during the 2025 Quarter but increased during the 2025 Period compared to the prior-year periods.

in the Quarter was primarily attributable to timing differences in performance-based bonus accruals, while the increase in the Period

reflects the addition of employee headcount and accruals for estimated performance-based bonuses tied to operational and financial milestones.

The Company continues to rely on non-cash equity-based compensation as a core element of its overall compensation strategy, and we expect

total compensation costs to increase in future periods as additional personnel are added and as further accruals for performance-based

incentives are recognized.

expenses increased during the 2025 Period compared to the 2024 Period, primarily due to expanded advertising campaigns and promotional

activities aimed at enhancing brand visibility and supporting business development initiatives.

The Company expects that marketing spend

are expected to remain at current or higher levels in future periods, in line with strategic growth objectives and broader customer engagement

will remain at current or higher levels in future periods, in line with strategic growth objectives and broader customer engagement efforts.

Losses on Crypto Asset Transactions

losses on crypto asset transactions during the 2025 Quarter were primarily driven by the sale of Kusama (KSM), which the Company had

held with a long-standing unrealized loss totaling approximately $1.3 million that was recognized upon sale.

This transaction reflects

the Company’s strategic exit from its KSM-related operations and holdings.

losses on crypto asset transactions during the 2025 Quarter and 2025 Period were primarily driven by the sale of non-ETH crypto asset

holdings, which the Company had held with long-standing unrealized losses that were recognized upon sale.

These transactions reflect the

Company’s strategic exit from its non-core related operations and holdings.

Additional realized gains or losses may be recognized

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Income (Expenses)

income (expense) for the 2025 Quarter was primarily impacted by changes in the fair value of the Company’s crypto assets and warrant

recognition of unrealized depreciation of crypto assets during the 2025 Quarter, compared to unrealized appreciation during the 2024

Quarter, contributed significantly to the year-over-year change.

These fluctuations reflect movements in the fair market value of

the Company’s crypto asset holdings, which are directly influenced by the volatility of crypto markets.

Market volatility

remains difficult to predict and can materially affect the value of assets reported on our balance sheet and the related effects on

our results of operations.

Interest Income

income (expense) for the 2025 Quarter and 2025 Period was primarily impacted by changes in the fair value of the Company’s crypto

assets and warrant liabilities.

Interest income earned on ETH

deposited as collateral on the Aave DeFi lending protocol was a new source of other income during the 2025 Quarter.

While the impact of

interest income was not significant for the 2025 Quarter, we anticipate it to increase in future periods as we increase the amount of

ETH deposited as collateral in connection with our planned expanded leverage on DeFi protocol lending.

Interest Expense

Interest expense during the 2025

Quarter and 2025 Period reflects interest accrued on borrowings under the Aave DeFi lending protocol, as well as interest incurred in

connection with the issuance of the May 2025 convertible note.

This includes both cash interest paid and the amortization of debt discount

over the term of the convertible note.

We expect interest expense to

increase significantly in future periods as we continue to utilize decentralized borrowings through platforms such as Aave, and as a result

of the issuance of an additional $10,000,000 convertible note in July 2025 with terms similar to the May 2025 note.

Change in unrealized appreciation

(depreciation) of crypto assets

recognition of unrealized depreciation of crypto assets during the 2025 Period, compared to unrealized appreciation during the 2024 Period,

contributed significantly to the year-over-year change.

These fluctuations reflect movements in the fair market value of the Company’s

crypto asset holdings, which are directly influenced by the volatility of crypto markets.

Market volatility remains difficult to predict

and can materially affect the value of assets reported on our balance sheet and the related effects on our results of operations.

Change in fair value of warrant liabilities

Additionally,

the decrease in the fair value of warrant liabilities during the 2025 Quarter contributed to a reduction in non-cash expense.

the decrease in the fair value of warrant liabilities during the 2025 Period contributed to a reduction in non-cash expense.

The valuation

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income (loss)

decline in net income for the 2025 Quarter compared to the 2024 Quarter was primarily driven by a sharp reversal in the fair value of

crypto assets, resulting in significant unrealized losses during the period.

In contrast, the prior-year quarter benefited from substantial

unrealized gains.

This swing in non-cash fair value adjustments reflects ongoing crypto market volatility, which may continue to materially

impact results in future periods.

expenses also increased meaningfully, led by higher compensation costs—including increased performance bonus accruals tied to revenue

growth—and a rise in marketing spend to support strategic growth initiatives.

Additionally, the Company recognized realized losses

on crypto asset transactions during the 2025 Quarter, compared to immaterial realized gains in the prior-year period.

combined impact of these factors contributed to a substantial year-over-year decrease in net income.

income for the 2025 Quarter increased to approximately $3,882,000, compared to a net loss of approximately $6,728,000 in the 2024 Quarter,

resulting in a year-over-year improvement of approximately $10,610,000.

The improvement was primarily driven by the positive change in

the fair value of the Company’s crypto asset holdings, as crypto markets experienced an uptick during the 2025 Quarter.

This resulted

in significant unrealized gains on crypto assets, contributing substantially to the net income.

this quarterly gain, the Company reported a net loss of approximately $13,387,000 for the 2025 Period, compared to net income of approximately

$5,529,000 in the 2024 Period.

The six-month loss reflects a carryover of unrealized depreciation recorded in the first quarter of 2025,

when markets experienced notable weakness.

In addition, realized losses on the sale of several non-ETH crypto asset holdings contributed

to the year-to-date net loss.

Operating expenses also increased

meaningfully, led by higher compensation costs, including increased performance bonus accruals tied to revenue growth and asset values,

and a rise in marketing spend to support strategic growth initiatives.

income (loss) may continue to fluctuate significantly due to the volatility in the crypto asset markets, impacting changes in the fair

4 unchanged sentences

Wainwright”), pursuant to which the Company may offer and sell (assuming an effective registration

statement on Form S-3), 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.

September 14, 2021 through May 13, 2025, the Company sold a total of 7,383,868 shares of Common Stock under the ATM Agreement for

aggregate total gross proceeds of approximately $25,839,000 at an average selling price of $3.50 per share, resulting in net proceeds

of approximately $24,997,000 after deducting commissions and other transaction costs.

due to the SEC’s baby shelf requirements, the Company is currently limited in its sales of Common Stock under the ATM Agreement

to no more than one-third of its public float (calculated as the aggregate market value of outstanding Common Stock held by non-affiliates)

during any 12-month period, provided that the amount of securities that may be sold under the Form S-3 may fluctuate based on changes

in the Company’s public float and stock price.

As of May 13, 2025, the Company would be limited in its sale of shares under the

ATM Agreement to approximately $12,138,000, subject to ongoing changes in the Company’s public float and stock price.

statement on Form S-3), from time to time, shares of its Common Stock through H.C.

Wainwright, subject to the availability of an effective

registration statement on Form S-3.

The initial ATM sales were conducted under a $100,000,000 shelf registration statement that became

effective in September 2021.

October 4, 2024, a new Form S-3 registration statement became effective, increasing the total amount of securities that may be offered

and sold under the Company’s shelf registration to $250,000,000.

As of the date of this report, there was approximately $104,341,000 available for sale under this Form S-3 registration

22, 2025, the Company entered into an amendment to its engagement with H.C.

Wainwright in connection with a new Form S-3 registration

statement filed on July 23, 2025, to register up to $2,000,000,000 of securities for future issuance (the “New Registration Statement”).

The New Registration Statement was approved by the SEC and declared effective on August 1, 2025.

As of the date of this report, the Company had not sold any securities under the New Registration Statement.

September 14, 2021 through August 12, 2025, the Company sold a total of 32,762,523 shares of Common Stock under the ATM Agreement

for aggregate total gross proceeds of approximately $163,597,000 at an average selling price of $4.99 per share, resulting in

net proceeds of approximately $158,539,000 after deducting commissions and other transaction costs.

Borrowing (Aave)

April 2025 through August 12, 2025, the Company borrowed a total of approximately $52,947,000 in USDT through Aave, a decentralized

finance protocol, using Ethereum (ETH) as collateral, and repaid approximately $1,447,000 during the same period.

As of August 12, 2025, the Company had approximately $51,702,000 in outstanding borrowings, inclusive of accrued

interest, collateralized by approximately 38,400 ETH with a fair market value of approximately $176,062,000, based on the ETH closing

price of $4,584 on that date.

Borrowings accrue interest at variable rates determined by Aave’s on-chain smart contracts, which adjust dynamically

based on protocol liquidity and market demand.

ETH collateral posted also accrues variable interest.

These rates are published and updated

in real-time at aave.com, and the net cost of capital may fluctuate based on protocol-level market conditions.

Notes Payable

May 2025, the Company completed a private placement of Senior Secured Convertible Notes in the aggregate principal amount of approximately

$7.8 million, for net cash proceeds of approximately $7.3 million.

In connection with the offering, the Company also issued approximately

1.9 million five-year warrants, exercisable at $2.75 per share.

The Notes mature in May 2027, bear interest at a rate of 6% per annum,

and are convertible into shares of Common Stock at a conversion price of $5.85 per share.

July 2025, the Company entered into an additional private placement of Senior Secured Convertible Notes in the aggregate principal amount

of approximately $10.0 million, for net cash proceeds of approximately $9.5 million.

In connection with the offering, the Company agreed

to issue approximately 879,000 five-year warrants, exercisable at $8.00 per share.

The Notes mature in July 2027, bear interest at 6%

per annum, and are convertible into shares of Common Stock at a conversion price of $13.00 per share.

Company intends to use the proceeds from both offerings primarily to accelerate the accumulation of Ethereum (ETH), expand operational

capacity, and support the continued expansion of its blockchain infrastructure operations.

Company’s consolidated financial statements have been prepared assuming that it will continue as a going concern, which contemplates

continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business.

is the ability of a company to generate sufficient funds to support its current and future operations, satisfy its obligations as they come due, and

otherwise operate on an ongoing basis.

As of March 31, 2025, the Company had approximately $270,000 of cash and working capital of

approximately $20,202,000.

of May 13, 2025, subsequent to the financing described below, the Company had approximately $7,747,000 of cash and cash equivalents,

and the fair market value of the Company’s crypto assets was approximately $30,741,000.

in Note 11 – Subsequent Events , on May 13, 2025, the Company issued $7,810,526 of 5% Original Issue Discount Senior Secured

Convertible Notes for a purchase price of $7,420,000.

(i) are convertible into shares of the Company’s common stock

at a conversion price of $5.85 per share, (ii) mature on May 13, 2027, and (iii) accrue interest at a rate of 6% per annum, which may

be paid on a quarterly basis in either cash or freely tradable shares of the Company’s common stock.

The Company also had

approximately $320,000 in debt obligations outstanding under its lending arrangement with AAVE Protocol as of May 13, 2025.

The Company believes that its existing cash and crypto assets, together

with the proceeds from the May 13 financing and the ability to raise additional funds through its ATM Agreement, provide sufficient liquidity

to meet working capital requirements, anticipated capital expenditures, strategic funding needs, and contractual obligations for at least

the next twelve months from the filing date of this report.

This assessment is based on current market conditions, regulatory environment,

and the Company’s operational plans, all of which are subject to change.

is the ability of a company to generate sufficient funds to support its current and future operations, satisfy its obligations as they

come due, and otherwise operate on an ongoing basis.

As of June 30, 2025, the Company had approximately $639,000 of cash and working

capital of approximately $35,514,000.

As of August 12, 2025, subsequent

to the financing described below, the Company had approximately $4,211,000 of cash and cash equivalents, and the fair market value of

the Company’s crypto assets was approximately $323,043,000.

of August 12, 2025, the Company had total debt obligations of approximately $69,563,000, consisting of approximately $51,702,000 under

its lending arrangement with Aave Protocol and approximately $17,861,000 convertible notes payable.

Company believes that its existing cash and crypto assets, together with the proceeds from the convertible note financing and the ability

to raise additional funds through its ATM Agreement, provide sufficient liquidity to meet working capital requirements, anticipated capital

expenditures, strategic funding needs, and contractual obligations for at least the next twelve months from the filing date of this report.

This assessment is based on current market conditions, regulatory environment, and the Company’s operational plans, all of which

are subject to change.

of our staked crypto assets may be locked up for varying durations, depending on the specific blockchain protocol, and we may be unable

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technical issues, network congestion, or regulatory changes could further restrict our ability to access or liquidate these assets.

periods for our staked crypto assets range from several hours to six months.

periods for our staked crypto assets range from several hours to 30 days.

During times of instability in the cryptocurrency markets,

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Used in Operating Activities

used in operating activities was approximately $1,902,000 during the 2025 Quarter compared to approximately $769,000 for the 2024 Quarter.

used in operating activities was approximately $3,236,000 during the 2025 Period, compared to approximately $1,693,000 for the 2024 Period.

Significant non-cash adjustments impacting operating cash flows included:

Approximately

$3,598,000 related to stock-based compensation, reflecting the issuance of equity-based awards to employees, including performance-based

equity awards.

$3,845,000 of stock-based compensation, primarily reflecting the issuance of equity-based awards to employees, including performance-based

Approximately

$1,480,000 related to Validator Payments made in native crypto asset tokens as part of our Ethereum block-building operations.

$4,302,000 of Validator Payments made in native crypto asset tokens as part of our block-building operations.

Approximately

$14,531,000 in unrealized depreciation of crypto assets, driven by market value decreases during the 2025 Quarter.

$5,738,000 of unrealized depreciation of crypto asset holdings due to price volatility.

Approximately

$1,689,000 in revenue earned in native crypto assets, which does not result in immediate cash inflows.

anticipate that equity-based compensation will decrease during Fiscal 2025, as the achievement of performance-based awards has become

more challenging due to the recent pullback in crypto market values and related revenue impacts.

Non-cash adjustments related to revenue

earned in native crypto assets and Validator Payments are expected to grow as we continue scaling our Ethereum block-building operations.

However, the magnitude of these non-cash adjustments will continue to be influenced by the inherent volatility of crypto markets, which

can materially impact both asset valuations and operational outputs.

$4,160,000 of realized losses from crypto asset sales, primarily related to the liquidation of non-core crypto asset holdings.

Approximately

$4,461,000 in revenue earned in native crypto assets, which does not generate immediate cash inflows.

Approximately

$3,286,000 reduction in accrued compensation, reflecting the payment of performance-based bonuses during the period.

expect non-cash adjustments such as Validator Payments and crypto-denominated revenue to continue growing as Builder+ operations scale

across Ethereum and Binance Smart Chain.

However, the magnitude of these adjustments will remain sensitive to market conditions and crypto

asset price fluctuations.

The use of performance-based equity compensation may continue, and given the Company’s recent fundraising

efforts and operational scaling, the pace of such accruals could increase in future periods.

Used in Investing Activities

used in investing activities was approximately $34,000 during the 2025 Quarter compared to approximately

$19,000 for the 2024 Quarter.

Net cash inflows from investing activities resulted from the sale and purchase of crypto assets.

We anticipate

similar levels of crypto assets sales in future quarters to fund operating activities.

Net cash used in investing

activities was approximately $13,366,000 during the 2025 Period, compared to net cash provided by investing activities of

approximately $531,000 in the 2024 Period.

The 2025 activity primarily reflects the purchase of approximately $14,179,000 of crypto

assets, including approximately $14,130,000 of Ethereum to support validator operations and the Company’s long-term

accumulation strategy.

The Company also invested $250,000 in a private blockchain-based technology company during the 2025 Period.

These purchases were partially offset by proceeds of approximately $1,065,000 from sales of non-core productive crypto assets as we

continue to streamline operations.

expect that purchases of ETH and other productive crypto assets will continue in future periods as the Company executes on its ETH treasury

accumulation and validator scaling strategies.

Provided by Financing Activities

provided by financing activities was approximately $229,000 during the 2025 Quarter compared to approximately $0 for the 2024 Quarter.

The cash inflows from financing activities were entirely from proceeds of Common Stock sold pursuant to the ATM Agreement.

Company anticipates continuing to raise proceeds through Common Stock sales under the ATM Agreement to fund operational needs.

financing activities will remain aligned with our strategic priorities, including the scaling of block-building operations and ongoing

blockchain infrastructure development.

provided by financing activities was approximately $15,263,000 during the 2025 Period, compared to approximately $240,000 in the 2024

Financing inflows during the 2025 Period were primarily driven by:

proceeds of approximately $7,306,000 from the May 2025 issuance of senior secured convertible

notes and related five-year warrants

proceeds of approximately $4,079,000 from Common Stock sales under the Company’s At-the-Market

(“ATM”) equity program.

borrowings of approximately $4,000,000 in USDT via Aave, a decentralized finance (DeFi) lending

The Company also paid debt issuance

costs of approximately $123,000 during the 2025 Period.

Company anticipates future financing activity may include additional DeFi borrowings and capital raised through the ATM program or convertible

instruments, aligned with its strategy to scale blockchain infrastructure operations and accumulate ETH.

Balance Sheet Transactions

of March 31, 2025, there were no off-balance sheet arrangements and we were not a party to any off-balance sheet transactions.

of June 30, 2025, 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.

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ACCOUNTING PRONOUNCEMENTS

information on recent accounting pronouncements, see Note 3 - Summary of Significant Accounting Policies to the Unaudited

Consolidated Condensed Financial Statements.

information on recent accounting pronouncements, see Note 3 - Summary of Significant Accounting Policies to the Unaudited Consolidated

Condensed Financial Statements.

NOTE REGARDING FORWARD-LOOKING STATEMENTS

report contains forward-looking statements, including statements regarding our liquidity, our belief that our blockchain

infrastructure efforts will form the core growth for our business, including but not limited to Builder+, StakeSeeker, and ChainQ,

plans to expand our PoS operations, potential growth opportunities for the Company, our views regarding blockchain technology,

anticipated increases in our revenues and gross margins and our 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.

report contains forward-looking statements, including statements regarding our liquidity, our growth strategy, our ability to

generate scalable and efficient revenue, anticipated

increases in our revenues and gross margins, and our 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

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(iv) potential decreases in the value of our crypto assets and rewards;

(v) risks related to the loss or

theft of private withdrawal keys resulting in the complete loss of crypto assets and rewards;

and (vi) other risks and

uncertainties described in our filings with the SEC, including our Form 10-K for the year ended December 31,

Any forward-looking statement made by us speaks only as of the date on which it is made.

Factors or events that could cause

our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them.

We undertake no

obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or

otherwise, except as may be required by law.

(v) competition, (vi) risks

related to the loss or theft of private withdrawal keys resulting in the complete loss of crypto assets and rewards;

and (vii) other

risks and uncertainties described in our filings with the SEC, including our Form 10-K for the year ended December 31, 2024.

forward-looking statement made by us speaks only as of the date on which it is made.

Factors or events that could cause our actual

results to differ may emerge from time to time, and it is not possible for us to predict all of them.

We undertake no obligation to

publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as

may be required by law.

3 Quantitative and Qualitative Disclosures About Market Risk

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