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The following is a summary of the principal risks associated with an investment in our securities:
−Removed: • Our success depends in large part on our ability to earn bitcoin profitably and to attract customers for our hosting capabilities in a profitable manner.
−Removed: • We may not be able to maintain our competitive position as the Bitcoin network experience increases in total network hash rate.
+Added: • Our success depends in large part on our ability to timely and successfully convert our existing facilities to support our HPC customers and to attract new HPC customers.
+Added: Delays in the expansion or modification of existing facilities or the construction of new facilities or significant cost overruns could present significant risks to our business and could have a material adverse effect on our business, financial condition and results of operations .
+Added: • Currently our HPC business is highly dependent on a single customer.
+Added: • Our increased focus on HPC hosting may not be successful and depends on the continuing development and resource and computational requirements of HPC hosting applications such as cloud computing, machine learning and artificial intelligence and continuing need for the infrastructure and services we provide.
+Added: If our target customer markets, which are new and still developing, do not grow or develop as expected or in a manner consistent with our current business model, our business, financial condition and results of operation would be adversely affected.
+Added: • Our success is also dependent on our ability to earn bitcoin profitably, and we may not be able to maintain our competitive position as the Bitcoin network experience increases in total network hash rate.
• Our business is capital intensive, we will need to raise additional capital, and failure to obtain the necessary capital when needed will force us to delay, limit or terminate our expansion efforts or other operations, which would have a material adverse effect on our business, financial condition and results of operations.
−Removed: • We are subject to risks associated with our need for significant electric power and the limited availability of power resources, which could have a material adverse effect on our business, financial condition and results of operations.
−Removed: An inability to purchase and develop additional sources of low-cost renewable sources of energy effectively will have a material adverse effect on our business, financial condition and results of operations.
+Added: • We are subject to risks associated with our need for significant electric power and the limited availability of electrical power and resources, equipment and materials designed to provide usable electrical power within our facilities.
+Added: In addition, public sentiment regarding electrical power generation, usage and storage, high volume electrical use and climate change, may limit our access to electrical power, decrease available facility sites, and increase our costs and limit the demand for our HPC colocation services.
+Added: An inability to purchase and develop additional sources of low-cost sources of energy effectively or to obtain real estate, materials and equipment to operate our facilities efficiently will have a material adverse effect on our business, financial condition and results of operations.
• Any failure in our critical systems, facilities or services we provide could lead to disruptions in our and our customers’ businesses and could harm our reputation and result in financial penalty and legal liabilities, which would reduce our revenue and have a material adverse effect on our business, financial condition and results of operations.
−Removed: • Physical risks and regulatory changes relating to climate change may impact our costs, our access to materials and resources and demand for cryptocurrencies, potentially adversely impacting our business, capital expenditures, results of operations, financial condition and competitive position.
• If there are significant changes to the method of validating blockchain transactions, such changes could reduce demand for our blockchain hosting services.
• We may be vulnerable to physical security breaches, which could disrupt our operations and have a material adverse effect on our business, financial condition and results of operations.
−Removed: • A slowdown in market and economic conditions, particularly those impacting the blockchain industry and the blockchain hosting market, could have a material adverse effect on our business, financial condition and results of operations.
−Removed: • We have identified material weaknesses in our internal control over financial reporting.
−Removed: Such material weaknesses may result in material misstatements of our financial statements or cause us to fail to meet our periodic reporting obligations.
−Removed: We may also identify additional material weaknesses in the future or otherwise fail to maintain an effective system of internal control.
+Added: • A slowdown in market and economic conditions, particularly those impacting the cloud computing, machine learning and AI industries, the demand for HPC infrastructure and services, and the blockchain industry and the blockchain hosting market, could have a material adverse effect on our business, financial condition and results of operations.
• Digital assets, and bitcoin in particular, are subject to price volatility.
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• If the award of bitcoin and/or transaction fees for solving blocks is not sufficiently high to incentivize transaction processors, such processors may reduce or cease expending processing power on a particular network, which could negatively impact the utility of the network, reduce the value of its bitcoin and have a material adverse effect on our business, financial condition and results of operations.
−Removed: • As required by the terms of our existing debt agreements, we sell our bitcoin earned from mining as they are received, which limits the amount of digital assets we hold, thus preventing us from recognizing any gain from the appreciation in value of the digital assets we have sold and may sell in the future.
+Added: • The cash needs of our HPC hosting growth initiatives will limit the amount of digital assets we hold, thus preventing us from recognizing any gain from the appreciation in value of the digital assets we have sold and may sell in the future.
• Any change in the interpretive positions of the SEC or its staff with respect to digital asset mining firms could have a material adverse effect on us.
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federal and state legislatures and regulatory agencies will enact laws and regulations to regulate digital assets and digital asset intermediaries, such as digital asset exchanges and custodians.
−Removed: • Increasing scrutiny and changing expectations from government regulators, investors, lenders, customers, and other market participants with respect to our Environmental, Social and Governance (“ESG”) policies may impose additional costs on us or expose us to additional risks.
+Added: • Increasing scrutiny and changing expectations from government regulators, investors, lenders, customers, and other market participants with respect to Environmental, Social and Governance (“ESG”) policies may impose additional costs on us or expose us to additional risks.
• Our compliance and risk management methods might not be effective and may result in outcomes that could adversely affect our reputation, operating results, and financial condition.
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• Our actual financial results after emergence from bankruptcy may not be comparable to our historical financial results or our projections filed with the Bankruptcy Court or otherwise made public in the course of the Chapter 11 Cases.
−Removed: moreover, our emergence from bankruptcy may affect our business and business relationships.
−Removed: • Our substantial level of indebtedness and our current liquidity constraints could adversely affect our financial condition and our ability to service our indebtedness, which could negatively impact your ability to recover your investment in our securities.
−Removed: Risks Related to our Business and Industry
−Removed: Our success depends in large part on our ability to earn bitcoin and attract customers for our hosting capabilities in a profitable manner.
−Removed: Increases in power costs have impacted our ability to earn digital assets efficiently and reduced bitcoin pricing have reduced our operating margins.
−Removed: Continued increases in power costs and unfavorable prices for digital assets will impact our ability to attract customers for our services, harm our growth prospects and could have a continuing material adverse effect on our business, financial condition and results of operations.
−Removed: Our success depends in large part on our ability to earn bitcoin and to attract customers for our hosting capabilities in a profitable manner, which we may not be able to do if:
−Removed: • there is a reduction in the demand for bitcoin causing the price of bitcoin to fall and the demand for our hosted mining solutions to be negatively impacted, reducing our revenue.
−Removed: Falling bitcoin prices will also reduce revenue from our self-mining operations.
−Removed: • high energy costs, supply chain disruptions or government regulation compliance costs increase mining costs and reduce revenue and profitability;
+Added: Risks Related to our Businesses and Industries
+Added: Our success depends in large part on our ability to timely and successfully convert our existing facilities to support our HPC customers and to attract new HPC customers.
+Added: Delays in the expansion or modification of existing facilities or the construction of new facilities or significant cost overruns could present significant risks to our business and could have a material adverse effect on our business, financial condition and results of operations.
+Added: Our ability to timely and successfully convert our existing facilities to support our HPC customers will be negatively impacted by:
+Added: • deficiencies, delays or failures in performance by construction firms retained to build, build-out or remodel our facilities;
+Added: • disruptions in the supply chain or excessive demand for construction materials, electrical transformers, generators and other materials used in high performance data centers that delay receipt of, or make unavailable, required supplies, materials and equipment;
+Added: • difficulties in generating sufficient cash flow or obtaining necessary financing that delay or prevent the completion of planned facilities;
+Added: • failure to timely pay construction costs and expenses, including failure on the part of our customers to pay or reimburse costs and expenses when due;
+Added: • delays in obtaining necessary government approvals, receipt of power allocations, land acquisitions and easements, as well as change orders, modification to designs and construction plans that delay construction, increase costs or that reduce the usable electrical power footprint.
+Added: Currently our HPC business is highly dependent on a single customer.
+Added: One customer, CoreWeave, currently accounts for 100% of our HPC Hosting segment revenue.
+Added: Our success in the HPC Hosting segment is highly dependent on the success of CoreWeave and the fulfillment by it of its obligations under our existing contractual arrangements.
+Added: Any failure to meet CoreWeave’s expectations, including, but not limited to, failure to fulfill our contractual
+Added: obligations, could result in cancellation or non-renewal of our business relationship, or harm to our business relationship that could impact our future growth and which could have a material adverse effect on our business, financial condition and results of operations.
+Added: Our increased focus on HPC hosting may not be successful and depends on the continuing development and resource and computational requirements of HPC hosting applications such as cloud computing, machine learning and artificial intelligence and continuing need for the infrastructure and services we provide.
+Added: If our target customer markets, which are new and still developing, do not grow or develop as expected or in a manner consistent with our current business model, our business, financial condition and results of operation would be adversely affected.
+Added: Further, increases in power costs could negatively impact our hosting customers’ demand for services, harm our growth prospects and could have a material adverse effect on our business, financial condition and results of operations.
+Added: Our success also depends in large part on our ability to attract additional customers and retain our existing customer for our HPC Hosting capabilities in a profitable manner, which we may not be able to do if:
+Added: • there is a reduction in the demand for HPC hosting applications such as cloud computing, machine learning and artificial intelligence;
+Added: • rapid innovation and technological disruption in cloud computing, machine learning and artificial intelligence decrease computational requirements and therefore lower demand for our HPC hosting offerings;
+Added: • high energy costs, supply chain disruptions (including labor availability), government regulation, and compliance costs increase HPC hosting service costs, reduces potential demand for services and reduce revenue and profitability;
• we fail to provide competitive hosting terms or effectively market them to potential customers;
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• we are unable to provide services that our existing and potential customers desire.
−Removed: • either we or our customers are unable to secure an adequate supply of new generation digital asset mining equipment to host with us;
−Removed: • there is a slowdown in the growth of the internet generally as a medium for commerce and communication.
+Added: Our success in our digital asset segments depends in large part on our ability to earn bitcoin in a profitable manner.
+Added: In the past, increases in power costs have impacted our ability to earn digital assets efficiently and reduced bitcoin pricing have reduced our operating margins.
+Added: Future increases in power costs and unfavorable prices for digital assets will harm our growth prospects and could have a material adverse effect on our business, financial condition and results of operations.
+Added: Our success in our digital asset segments depends in large part on our ability to earn bitcoin and to provide services to the customers of our hosting capabilities in a profitable manner, which we may not be able to do if:
+Added: • there is a reduction in the demand for bitcoin causing the price of bitcoin to fall reducing revenue from our self-mining operations;
+Added: • high energy costs, supply chain disruptions or government regulation compliance costs increase mining costs and reduce revenue and profitability;
+Added: • we are unable to secure an adequate supply of new generation digital asset mining equipment.
We may not be able to maintain our competitive position as the Bitcoin network experiences increases in total network hash rate.
As the relative market prices of a digital asset, such as bitcoin, increases, more companies are encouraged to mine for that digital asset and as more miners are added to the network, its total hash rate increases.
−Removed: In order for us to maintain its competitive position under such circumstances, we must increase our total hash rate by acquiring and deploying more mining machines, including new miners with higher hash rates.
+Added: In order for us to maintain our competitive position under such circumstances, we must increase our total hash rate by acquiring and deploying more mining machines, including new miners with higher hash rates.
There are currently only a few companies capable of producing a sufficient number of machines with adequate quality to address the increased demand.
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Our business is capital intensive, and failure to obtain the necessary capital when needed will force us to delay, limit or terminate our expansion efforts or other operations, which would have a material adverse effect on our business, financial condition and results of operations.
−Removed: The costs of constructing, developing, operating and maintaining digital asset mining and facilities, and owning and operating a large fleet of the latest generation mining equipment, are substantial.
−Removed: Our mining operations can only be successful and ultimately profitable if the costs, including hardware and electricity costs, associated with earning digital assets are lower than the price of the digital assets we earn.
−Removed: Falling digital asset prices, significantly
−Removed: higher energy prices, inflation and supply chain disruptions have increased electricity costs, delayed miner deployments and reduced our profitability.
+Added: The costs of constructing, developing, operating and maintaining our HPC and digital mining facilities, and owning and operating a large fleet of the latest generation digital mining equipment, are substantial.
+Added: Our HPC hosting operations may be impacted by costs and expenses beyond our control or require capital investment that neither we nor our customers are able to bear, reducing our revenue and profitability.
+Added: Our digital asset mining operation can only be successful and ultimately profitable if the costs, including hardware and electricity costs, associated with earning digital assets are lower than the price of the digital assets we earn.
+Added: Falling digital asset prices or asset prices that do not keep pace with higher energy prices, significantly higher energy prices, inflation and supply chain disruptions reduce our profitability.
Our miners experience ordinary wear and tear from operation and may also face more significant malfunctions caused by factors which may be beyond our control, increasing our costs and reducing our revenue and profitability.
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If we are unable to obtain adequate numbers of new and replacement miners at scale, we may be unable to remain competitive in our highly competitive and evolving industry.
−Removed: Moreover, in order to grow our hosting business, we need additional facilities to increase our capacity for more miners.
−Removed: The costs of constructing, developing, operating and maintaining hosting facilities and growing our hosting operations have increased significantly and may continue to increase in the future, which have made it difficult for us to attract new customers, expand our business and to operate our facilities profitably.
+Added: Moreover, in order to grow our hosting business, we may need additional facilities to increase our capacity for more miners.
+Added: The costs of constructing, developing, operating and maintaining hosting facilities and growing our hosting operations may not be profitable or possible.
We may need to raise additional funds through equity or debt financings in order to meet our operating and capital needs.
−Removed: Current market conditions have made raising additional debt or equity financing difficult and may not be available when needed or, if available, may not be available on satisfactory terms.
+Added: Raising additional debt or equity financing may be difficult and may not be available when needed or, if available, may not be available on satisfactory terms.
An inability to generate sufficient cash from operations or to obtain additional debt or equity financing have adversely affected our results of operations.
Our business is highly dependent on a small number of digital asset mining equipment suppliers.
−Removed: Our business is highly dependent upon digital asset mining equipment suppliers such as Bitmain (as defined herein) providing an adequate and timely supply of new generation digital asset mining machines at economical prices to customers intending to purchase our hosting and other solutions.
−Removed: The growth in our business is directly related to increased demand for hosting services and digital assets such as bitcoin which is dependent in large part on the availability of new generation mining machines offered for sale at a price conducive to profitable digital asset mining, as well as the trading price of digital assets such as bitcoin.
+Added: Our business is highly dependent upon a few digital asset mining equipment suppliers providing an adequate and timely supply of new generation digital asset mining machines at economical prices.
+Added: The growth in our business is dependent in large part on the availability of new generation mining machines offered for sale at a price conducive to profitable digital asset mining, as well as the trading price of digital assets such as bitcoin.
The market price and availability of new mining machines fluctuates with the price of bitcoin and can be volatile.
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In addition, as more companies seek to enter the mining industry, the demand for machines may outpace supply and create mining machine equipment shortages.
−Removed: Digital asset mining equipment suppliers, such as Bitmain, may not be able to keep pace with any surge in demand for mining equipment.
+Added: Digital asset mining equipment suppliers, may not be able to keep pace with any surge in demand for mining equipment.
Further, manufacturing mining machine purchase contracts are not favorable to purchasers and we may have little or no recourse in the event a mining machine manufacturer defaults on its mining machine delivery commitments.
−Removed: If we and our customers are not able to obtain a sufficient number of digital asset mining machines at favorable prices, our growth expectations, liquidity, financial condition and results of operations will be negatively impacted.
+Added: If we are not able to
+Added: obtain a sufficient number of digital asset mining machines at favorable prices, our growth expectations, liquidity, financial condition and results of operations will be negatively impacted.
Miner manufacturers may continue requiring significant advance deposits before orders are fulfilled and delivered.
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If we are unable to consistently obtain accurate proportionate rewards from our mining pool operators, we may experience reduced reward for our efforts, which would have an adverse effect on our business and operations.
−Removed: A portion of our revenue comes from the fees we receive for the services we provide to a small number of hosting customers, and the insolvency of, loss of, or significant decrease in business from, a number of these customers or our failure to continually attract new customers could have a material adverse effect on our business, financial condition and results of operations.
−Removed: We previously generated a significant portion of our hosting revenue from a small number of hosting customers.
−Removed: Since December 2022, we have terminated most of our hosting customers to increase the Company’s overall profitability.
−Removed: As of December 31, 2023, our largest hosting customer accounts for 49% of our overall hosting revenue and 11% of our total revenue.
−Removed: Any failure to meet our end-users’ expectations, including, but not limited to, any inability to meet their requirements for increased hosting capacity at attractive rates, could result in cancellation or non-renewal of our business relationships.
−Removed: Our increased focus on self-mining could be interpreted by our current and prospective customers as being competitive or inconsistent with our third-party hosting operations.
−Removed: If these customers reduced spending on our services, or changed their outsourcing strategy by moving to in-house facilities or outsourcing to other service providers, and we are not able to offset that lost revenue or replace the reduced capacity utilization with our own mining equipment, it could have a material adverse effect on our business, financial condition and results of operations.
−Removed: We have made significant investments in our business, such as acquiring additional facilities and equipment, and incurring additional costs in connection with the expansion of our business to meet our anticipated mining needs as well as the anticipated needs of both current and future customers.
−Removed: Accordingly, if we fail to obtain significant additional customers or fail to increase our self-mining operations, it could have a material adverse effect on our business, financial condition and results of operations.
−Removed: To the extent one or more of our key customers commences bankruptcy proceedings pursuant to Title 11 of the United States Code, our contracts with such customers may be subject to rejection under applicable provisions of the Bankruptcy Code or, if we so agree, may be renegotiated.
−Removed: Further, during any such bankruptcy proceeding, prior to assignment and assumption, rejection or renegotiation of such contracts, the bankruptcy court may temporarily authorize the payment of value for our services less than contractually required, which could have a material adverse effect on our business, financial condition and results of operations and cash flows.
−Removed: The resolution of any outstanding claims against such a customer or counterparty is dependent on the terms of the plan of reorganization and is inherently uncertain and subject to factors outside of our control.
−Removed: Delays in the expansion of existing facilities or the construction of new facilities or significant cost overruns could present significant risks to our business and could have a material adverse effect on our business, financial condition and results of operations.
−Removed: The servers used for digital asset mining and hosting require the use of facilities with a highly specialized infrastructure and considerable, reliable power in order to compete effectively.
−Removed: Our strategy is to increase our mining capacity and increase substantially the number of miners we operate.
−Removed: In order to meet our financial plan, we need to expand our existing facilities or build new facilities.
−Removed: Our debt covenants may limit our ability to incur additional indebtedness, make certain investments or needed capital expenditures or complete other significant transactions, and therefore may restrict our ability to pursue certain opportunities.
−Removed: We may face challenges in obtaining suitable land to build new facilities or to develop facilities on land we currently own or lease and need to work closely with the local power suppliers and local governments of the places where our proposed facilitates are located.
−Removed: We also may face challenges in generating sufficient cash or obtaining financing necessary to complete or develop planned facilities on time.
−Removed: Delays in actions that require the assistance of such third parties, in receiving required permits and approvals or in mediations with local communities, if any, and lack of available capital, will negatively impact our construction timelines and budget or result in any new facilities not being completed at all.
−Removed: Expansion of existing facilities, construction of new facilities, and sales of one or more existing facilities is being evaluated.
−Removed: Expansion and construction require us to procure and rely on the experience of one or more designers, general contractors and subcontractors, and we or such designers or contractors may experience financial or other problems during the design or construction process that could delay completion of planned facilities.
−Removed: We may also experience quality control issues as we implement any upgrades in our hosting capacity through the installation and maintenance of chipsets and servers or new cooling technologies such as immersion and water curtain cooling.
−Removed: Our business will be negatively impacted if we are unable to run our mining operations in a way that is technologically advanced, economically and energy efficient and temperature controlled.
−Removed: If we are unsuccessful, we will damage our miners and the miners of third parties and the profitability of our mining operations.
−Removed: Delays in the supply of power required to support a facility would cause material and negative effects on our revenue growth, profitability and results of operations.
−Removed: Delay in completing a project, or any substantial cost increase or failure to obtain sufficient capital to complete a project, would materially adversely affect our business, financial condition and results of operations.
If we do not accurately predict our facility requirements, it could have a material adverse effect on our business, financial condition and results of operations.
The costs of building out, leasing and maintaining our facilities constitute a significant portion of our capital and operating expenses.
−Removed: In order to manage growth and ensure adequate capacity for our digital mining operations and new and existing hosting customers while minimizing unnecessary excess capacity costs, we continuously evaluate our short- and long-term data center capacity requirements.
+Added: In order to manage growth and ensure adequate capacity for our new and existing HPC hosting customers while minimizing unnecessary excess capacity costs, we continuously evaluate our short- and long-term data center capacity requirements.
If we overestimate our business’ capacity requirements or the demand for our services and therefore secure excess data center capacity, our operating margins could be materially reduced.
If we underestimate our data center capacity requirements, we may not be able to service the required or expanding needs of our existing customers and may be required to limit new customer acquisition, which could have a material adverse effect on our business, financial condition and results of operations.
−Removed: We are subject to risks associated with our need for significant electric power and the limited availability of power resources, which could have a material adverse effect on our business, financial condition and results of operations.
−Removed: An inability to purchase and develop additional sources of low-cost renewable sources of energy effectively will have a material adverse effect on our business, financial condition and results of operations.
−Removed: Our mining and hosting services require a significant amount of electric power.
+Added: We are subject to risks associated with our need for significant electric power and the limited availability of electrical power and resources, equipment and materials designed to provide usable electrical power within our facilities, which could have a material adverse effect on our business, financial condition and results of operations.
+Added: An inability to purchase and develop additional sources of low-cost sources of energy effectively or to obtain real estate, materials and equipment to operate our facilities efficiently will have a material adverse effect on our business, financial condition and results of operations.
+Added: Our businesses require a significant amount of electric power.
The costs of electric power account for a significant portion of our cost of revenue.
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The cost of power at our facilities is dependent on our ability to perform under the terms in the power contracts we are a party to, which we may be unable to do successfully.
−Removed: Pursuant to these power contracts, if we fail to curtail our power usage when called upon or fail to satisfy certain eligibility requirements for monthly bill credits, our power costs would increase.
−Removed: Further, governments and government regulators may potentially seek to restrict or prohibit the ability of electricity suppliers to provide electricity to our facilities and mining operators in times of electricity shortage or otherwise.
+Added: Pursuant to power contracts that require curtailment, if we fail to curtail our power usage when called upon or fail to satisfy certain eligibility requirements for monthly bill credits, our power costs would increase.
+Added: Further, governments and government regulators may potentially seek to restrict or prohibit the ability of electricity
+Added: suppliers to provide electricity to our facilities in times of electricity shortage or otherwise.
+Added: To that end, public sentiment regarding electrical power generation, usage and storage, high volume electrical use and climate change, may limit our access to electrical power, decrease available facility sites, and increase our costs and limit the demand for our HPC colocation services.
Any system downtime resulting from disruptions, curtailments, insufficient power resources or power outages could have a material adverse effect on our business, financial condition and results of operations.
−Removed: Our operations do not run on back-up generators in the event of a power outage or curtailment.
+Added: Our HPC operations run on back-up generators in the event of a power outage or curtailment that may not be sufficient to support our operations for the magnitude or duration of the power outage or curtailment.
Increased power costs and limited availability and curtailment of power resources will reduce our revenue and have a material and adverse effect on our cost of revenue and results of operations.
If we fail to accurately estimate the factors upon which we base our contract pricing, we may generate less profit than expected or incur losses on those contracts, which could have a material adverse effect on our business, financial condition and results of operations.
−Removed: Our hosting contracts are generally priced on the basis of estimated power consumption by our clients, along with other costs of service, as adjusted for actual costs.
−Removed: Our ability to earn a profit on such contracts requires that we accurately estimate the costs involved and outcomes likely to be achieved and assess the probability of generating sufficient hosting capacity within the contracted time period.
+Added: Our hosting contracts are generally priced on the basis of estimated power consumption by our clients and the other costs of providing electrical power and other services.
+Added: Our ability to earn a profit on such contracts requires that we accurately estimate the costs involved and outcomes likely to be achieved, provide services efficiently and assess the probability of generating sufficient hosting capacity within budgeted costs and expenses during the contracted time period.
In addition, we may not be able to obtain all expected benefits, including tax abatements or government incentives offered in opportunity zones.
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Threats to network and data security are increasingly diverse and sophisticated.
−Removed: Security breaches, computer malware and computer hacking attacks have been a prevalent concern in the bitcoin exchange market since the launch of the Bitcoin network.
+Added: Security breaches, computer malware and computer hacking attacks have been a prevalent concern in our businesses.
Despite our efforts and processes to prevent these, our computer servers and computer systems may be vulnerable to cybersecurity risks, including denial-of-service attacks, physical or electronic break-ins, employee theft or misuse and similar disruptions from unauthorized tampering with our computer servers and computer systems.
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Any of these events could expose us to liability, damage our reputation, reduce customer confidence in our services and otherwise have a material adverse effect on our business, financial condition and results of operations.
−Removed: Furthermore, we believe that as
−Removed: our assets grow, we may become a more appealing target for security threats, such as hackers and malware.
+Added: Furthermore, we believe that as our assets grow, we may become a more appealing target for security threats, such as hackers and malware.
If an actual or perceived breach of our digital asset accounts occurs, the market perception of our effectiveness could be harmed.
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Therefore, the adaptation to new processes and technologies could result in lower revenue, lower margins and/or higher costs, which could have a material adverse effect on our business, financial condition and results of operations.
−Removed: If there are significant changes to the method of validating blockchain transactions, such changes could reduce demand for our blockchain hosting services.
+Added: If there are significant changes to the method of validating blockchain transactions, such changes could reduce demand for digital assets like bitcoin.
New digital asset transaction protocols are continuously being deployed, and existing and new protocols are in a state of constant change and development.
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These protocols may include a “proof-of-stake” algorithm or an algorithm based on a protocol other than proof-of-work, which may decrease the reliance on computing power as an advantage to validating blocks.
−Removed: Our mining operations, and, to our knowledge, the operations of our potential hosting customers, are currently designed to primarily support a proof-of-work consensus algorithm.
−Removed: Should the algorithm shift from a proof-of-work validation method to a proof-of-stake method, mining would require less energy and may render any company that maintains advantages in the current climate (for example, from lower priced electricity, processing, real estate or hosting) less competitive.
+Added: Our mining operations are currently designed to primarily support a proof-of-work consensus algorithm.
+Added: Should the algorithm shift from a proof-of-work
+Added: validation method to a proof-of-stake method, mining would require less energy and may render any company that maintains advantages in the current climate (for example, from lower priced electricity, processing, real estate or hosting) less competitive.
As a result of our efforts to optimize and improve the efficiency of our digital asset mining operations, we may be exposed to the risk in the future of losing the benefit of our capital investments and the competitive advantage we hope to gain from this as a result, and may be negatively impacted if a switch to proof-of-stake validation were to occur.
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• negative consumer perception of digital assets, including digital assets specifically and digital assets generally.
−Removed: A decline in the popularity or acceptance of digital assets could materially impact us or our potential hosting customers, which could have a material adverse effect on our business, financial condition and results of operations.
+Added: A decline in the popularity or acceptance of digital assets could have a material adverse effect on our business, financial condition and results of operations.
We may not be able to adequately protect our intellectual property rights and other proprietary rights, which could have a material adverse effect on our business, financial condition and results of operations.
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For example, there may be issued patents of which we are not aware that our services or products infringe on.
−Removed: Also, there may be patents we believe we do not infringe on, but that we may ultimately be found to by a court of law or government regulatory agency.
+Added: Also, there may be patents we believe we do not infringe on, but that we may ultimately be found to by a court of law or government
+Added: regulatory agency.
Moreover, patent applications are in some cases maintained in secrecy until patents are issued.
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We may not be able to hire and retain these personnel at compensation levels consistent with our existing compensation and salary structure at this stage in our development.
−Removed: We may be unable to attract and retain our senior
−Removed: executives and other key personnel, which could have a material adverse effect on our business, financial condition and results of operations.
−Removed: A slowdown in market and economic conditions, particularly those impacting the blockchain industry and the blockchain hosting market, could have a material adverse effect on our business, financial condition and results of operations.
−Removed: We and our customers are affected by general business and economic conditions in the United States and globally, particularly those impacting the blockchain industry and the blockchain hosting market.
+Added: We may be unable to attract and retain our senior executives and other key personnel, which could have a material adverse effect on our business, financial condition and results of operations.
+Added: A slowdown in market and economic conditions, particularly those impacting the cloud computing, machine learning and AI industries, the demand for HPC infrastructure and services, and the blockchain industry and the blockchain hosting market, could have a material adverse effect on our business, financial condition and results of operations.
+Added: We and our customers are affected by general business and economic conditions in the United States and globally, particularly those impacting the cloud computing, machine learning and AI industries.
These conditions include short-term and long-term interest rates, inflation, money supply, political issues, legislative and regulatory changes, including the imposition of new tariffs affecting our or our customers’ products and services, fluctuations in both debt and equity capital markets and broad trends in industry and finance, all of which are beyond our control.
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These events and circumstances are largely outside of our influence and control.
−Removed: We are heavily dependent on Chinese manufacture of equipment, much of which has historically been for sale within China and other countries outside the United States.
−Removed: We believe that historically China was a location of significant digital asset mining at low electric power rates.
−Removed: Recently, China and other foreign governments have taken action to prohibit or significantly restrict digital asset mining.
−Removed: For example, in May and June 2021, in their efforts to curb digital asset trading and mining, regulators in several Chinese Provinces, including Qinghai, Inner Mongolia and Sichuan, announced policies to curb or ban local digital asset mining operations.
−Removed: The long-term impact of such restrictions is unknown and could be detrimental to our business and profitability.
−Removed: Whether or not the lack of mining activity in China will negatively impact Chinese miner manufacturing and the development, price, availability of new and enhanced mining equipment is unknown.
−Removed: Should China or other countries that currently restrict digital asset mining eliminate such restrictions or actually seek to enhance such mining activity, the likely increase in mining activity would likely reduce our revenue and profitability.
+Added: We believe that nation states are actively mining bitcoin for their own treasuries, increasing network hash rate, reducing the Company’s share of network hash rate, and thereby reducing the Company’s revenue, profitability and financial results of operations.
Global conflict could negatively impact the Company’s business, results of operations and financial conditions.
5 unchanged sentences
Changes in tariffs or import restrictions could have a material adverse effect on our business, financial condition and results of operations.
−Removed: Equipment necessary for digital asset mining is almost entirely manufactured outside of the United States.
+Added: Much of the equipment necessary for HPC hosting and almost entirely all of the equipment necessary for digital asset mining is manufactured outside of the United States.
There is currently significant uncertainty about the future relationship between the United States and various other countries, including China, the European Union, Canada, and Mexico, with respect to trade policies, treaties, tariffs and customs duties, and taxes.
5 unchanged sentences
These tariffs have increased costs of digital asset mining equipment, and new or additional tariffs or other restrictions on the import of equipment necessary for digital asset mining could have a material adverse effect on our business, financial condition and results of operations.
−Removed: We have identified material weaknesses in our internal control over financial reporting.
−Removed: Such material weaknesses may result in material misstatements of our financial statements or cause us to fail to meet our periodic reporting obligations.
−Removed: We may also identify additional material weaknesses in the future or otherwise fail to maintain an effective system of internal control.
−Removed: In connection with the audit of our consolidated financial statements for the year ended December 31, 2023, we and our indepen dent registered public accounting firm identified the following material weaknesses in the Company’s internal control over financial reporting:
−Removed: (1) t he Company did not design and implement program change management controls for certain financially relevant systems to ensure that IT program and data changes affecting the Company’s (i) financial IT applications, (ii) digital currency mining equipment, and (iii) underlying accounting records, are identified, tested, authorized and implemented appropriately to validate that data produced by its relevant IT system(s) were complete and accurate.
−Removed: Automated process-level controls and manual controls that are dependent upon the information derived from such financially relevant systems were also determined to be ineffective as a result of such deficiency.
−Removed: (2) t he Company did not design and/or implement user access provisioning controls to ensure appropriate segregation of duties that would adequately restrict user access to the financially relevant systems and data to the appropriate Company personnel;
−Removed: and (3) the Company’s internal controls over financial reporting did not operate effectively at all times to ensure transactions were recorded timely and in accordance with GAAP.
−Removed: Appropriate segregation of duties was also not maintained at all times during the year.
+Added: In the past, we have identified material weaknesses in our internal control over financial reporting, and additional material weaknesses may occur in the future.
+Added: Effective internal control over financial reporting is necessary for us to provide reliable financial reports and, together with adequate disclosure controls and procedures, is designed to prevent fraud.
+Added: In connection with the audit of our consolidated financial statements for the year ended December 31, 2023, we and our indepen dent registered public accounting firm identified material weaknesses in the Company’s internal control over financial reporting which were subsequently remediated.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
−Removed: With the oversight of our senior management and audit committee, we have instituted plans to remediate the material weakness and will continue to take remediation steps, including hiring additional key supporting accounting personnel with public company reporting and accounting operations experience.
−Removed: In addition, we are formalizing inter-departmental communication, including establishing appropriate standing and ad hoc committees and enhancing electronic document storage for key financial transactions.
−Removed: We believe the measures described above will remediate the material weaknesses identified and strengthen our internal control.
−Removed: While we implement our plan to remediate the material weaknesses described above, we cannot predict the success of such plan or the outcome of its assessment of these plans at this time.
−Removed: If our steps are insufficient to remediate the material weaknesses successfully and otherwise establish and maintain an effective system of internal control over financial reporting, the reliability of our financial reporting, investor confidence, and the value of our securities could be materially and adversely affected.
−Removed: Implementation of this plan may not remediate these deficiencies in our internal control over financial reporting and additional material weaknesses or significant deficiencies in our internal control over financial reporting may be identified in the future.
+Added: If our internal control over financial reporting or our disclosure controls and procedures are not effective, including the steps taken to remediate our prior material weaknesses, the reliability of our financial reporting, investor confidence, and the value of our securities could be materially and adversely affected.
The failure to implement and maintain effective internal control over financial reporting could result in errors in our financial statements that could result in a restatement of its financial statements, causing us to fail to meet its reporting obligations.
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Even if shareholders are able to hold their securities for the long-term, their securities may never generate a profit, since digital asset markets have historically experienced extended periods of flat or declining prices, in addition to sharp fluctuations.
−Removed: should be aware that bitcoin and other digital assets may not maintain their long-term value in terms of future purchasing power and that the acceptance of digital asset payments by mainstream retail merchants and commercial businesses may not continue to grow.
+Added: Investors should be aware that bitcoin and other digital assets may not maintain their long-term value in terms of future purchasing power and that the acceptance of digital asset payments by mainstream retail merchants and commercial businesses may not continue to grow.
If the price of bitcoin or other digital assets declines, our profitability will decline.
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In July 2016, the reward for validating a new block was reduced to 12.5 bitcoin, and in May 2020, the reward was further reduced to 6.25 bitcoin.
−Removed: The next halving for the bitcoin blockchain is anticipated to occur in April 2024 at block 840,000.
+Added: In April 2024, the Bitcoin protocol executed its fourth planned halving, wherein the bitcoin rewards issued for each solved block declined from 6.25 bitcoin to 3.125 bitcoin.
+Added: The next halving for the bitcoin blockchain is anticipated to occur sometime in 2028.
In addition, other networks may operate under rules that, or may alter their rules to, limit the distribution of new digital assets.
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To the extent that the profit margins of digital asset mining operations are not high, mining participants are more likely to sell their earned bitcoin, which could constrain bitcoin prices.
−Removed: Over the past few years, digital asset mining operations have evolved from individual users mining with computer processors, graphics processing units and first-generation ASIC servers.
+Added: Over the past few years, digital asset mining operations have evolved from individual users mining with computer processors, GPUs and first-generation ASIC servers.
Currently, new processing power is predominantly added by incorporated and unincorporated “professionalized” mining operations.
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Lower digital asset prices could result in further tightening of profit margins for professionalized mining operations creating a network effect that may further reduce the price of digital assets until mining operations with higher operating costs become unprofitable forcing them to reduce mining power or cease mining operations temporarily.
−Removed: Such circumstances could have a material adverse effect on our
−Removed: business, prospects or operations and potentially the value of bitcoin and any other digital assets we earn through self-mining or otherwise acquire or hold for our own account.
+Added: Such circumstances could have a material adverse effect on our business, prospects or operations and potentially the value of bitcoin and any other digital assets we earn through self-mining or otherwise acquire or hold for our own account.
Mining operators may sell a substantial amount of digital assets into the market, which may exert downward pressure on the price of the applicable digital asset and, in turn, could have a material adverse effect on our business, financial condition and results of operations.
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Whereas it is believed that individual operators in past years were more likely to hold digital assets for more extended periods, the immediate selling of newly transacted digital assets by operators may increase the supply of such digital assets on the applicable exchange market, which could create downward pressure on the price of the digital assets and, in turn, could have a material adverse effect on our business, financial condition and results of operations.
−Removed: As required by the terms of our existing debt agreements, we sell our digital assets, including bitcoin, obtained from mining as they are earned, which limits the amount of digital assets we hold, thus preventing us from recognizing any gain from the appreciation in value of the digital assets we have sold and may sell in the future.
−Removed: The terms of our debt agreements require that we sell our digital assets, including bitcoin, as we receive them.
+Added: The cash needs of our HPC hosting growth initiatives will limit the amount of digital assets we hold, thus preventing us from recognizing any gain from the appreciation in value of the digital assets we have sold and may sell in the future.
+Added: We are no longer required to sell our digital assets, including bitcoin, as we receive them under our existing debt agreements.
+Added: However, the significant cash required by our expected HPC hosting growth initiatives will require us to sell the digital assets we earn periodically as cash needs and our treasury management policies dictate.
When we sell a digital asset, we are unable to benefit from any future appreciation in the underlying value of that digital asset.
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Our business model has evolved in the past and continues to do so.
−Removed: After originally being founded in order to engage in the business of verifying and confirming transactions on a blockchain (also known as transaction processing, or “mining”), we became engaged primarily in providing infrastructure hosting services to our commercial counterparties.
−Removed: More recently, we decided to substantially increase our focus on digital asset mining for our own account.
−Removed: We have also recently terminated the contracts of several of our hosting customers to improve overall Company profitability and in furtherance of the Company’s emphasis on self-mining.
−Removed: We may adjust our business model further from time to time, including trying to offer additional types of products or services, such as a blockchain application designed by us, blockchain services and other related businesses, or entering into strategic partnerships or acquisitions.
−Removed: We have generated limited revenue from such services, and we do not know whether any of them will be successful.
−Removed: The evolution of and modifications to our business strategy will continue to increase the complexity of our business and placed significant strain on our management, personnel, operations, systems, technical performance and financial resources.
+Added: After originally being founded in order to engage in the business of verifying and confirming transactions on a blockchain (also known as transaction processing, or “mining”), we have begun the provision of digital infrastructure colocation services to a third party engaged in high performance computing and have announced plans to convert most of our existing facilities to provide colocation services to other HPC customers.
+Added: We have generated limited revenue from providing HPC services, and we do not know whether our change in business model will be successful.
+Added: To date, our revenue has primarily come from digital asset mining for our own account and digital asset mining hosting services.
+Added: The evolution of and modifications to our business strategy will continue to increase the complexity of our business and have placed significant strain on our management, personnel, operations, systems, technical performance and financial resources.
Future additions to or modifications of our business strategy are likely to have similar effects.
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We may not be able to compete effectively against our current and future competitors, which could have a material adverse effect on our business, financial condition and results of operations.
−Removed: The digital asset mining industry is highly innovative, rapidly evolving and characterized by healthy competition, experimentation, frequent introductions of new products and services and uncertain and evolving industry and regulatory
−Removed: requirements.
+Added: The businesses in which we currently operate and the HPC business in which we intend to grow are highly innovative, rapidly evolving and characterized by healthy competition, experimentation, frequent introductions of new products and services and uncertain and evolving industry and regulatory requirements.
We expect competition to further intensify in the future as existing and new competitors introduce new products or enhance existing products.
−Removed: We compete against a number of companies operating both within the United States and abroad, that have greater financial and other resources and that focus on digital asset mining, including businesses focused on developing substantial bitcoin mining operations.
−Removed: If we are unable to compete successfully, or if competing successfully requires us to take costly actions in response to the actions of our competitors, our business, operating results and financial condition could be adversely affected.
+Added: We compete against a number of companies operating both within the United States and abroad that have greater financial and other resources at their disposal .
+Added: If we are unable to compete
+Added: successfully, or if competing successfully requires us to take costly actions in response to the actions of our competitors, our business, operating results and financial condition could be adversely affected.
We compete with other bitcoin miners and with a range of hosting providers and blockchain providers for some or all of the services we offer.
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Risks Related to Regulatory Framework
+Added: Our interactions with a blockchain may expose us to specially designated nationals (“SDN”) or blocked persons or cause us to violate provisions of law that did not contemplate distributed ledger technology.
+Added: The Office of Financial Assets Control of the U.S.
+Added: Department of Treasury (“OFAC”) requires us to comply with its sanction program and not conduct business with persons named on its SDN list.
+Added: However, because of the pseudonymous nature of blockchain transactions, we may inadvertently engage in transactions with persons named on OFAC’s SDN list.
+Added: Our internal policies prohibit any transactions with such SDN individuals, but we may not adequately determine the ultimate identity of the individual with whom we transact with respect to selling digital assets.
+Added: In addition, in the future, OFAC or another regulator, may require us to screen transactions for OFAC addresses or other bad actors before including such transactions in a block, which may increase our compliance costs, decrease our anticipated transaction fees and lead to decreased traffic on our network.
+Added: Any of these factors, consequently, could have a material adverse effect on our business, prospects, financial condition, and operating results.
+Added: Moreover, federal law prohibits any U.S.
+Added: person from knowingly or unknowingly possessing any visual depiction commonly known as child pornography.
+Added: Recent media reports have suggested that persons have imbedded such depictions on one or more blockchains.
+Added: Because our business requires us to download and retain one or more blockchains to effectuate our ongoing business, it is possible that such digital ledgers contain prohibited depictions without our knowledge or consent.
+Added: To the extent government enforcement authorities literally enforce these and other laws and regulations that are impacted by decentralized distributed ledger technology, we may be subject to investigation, administrative or court proceedings, and civil or criminal monetary fines and penalties, all of which could harm our reputation and could have a material adverse effect on our business, prospects, financial condition, and operating results.
+Added: If regulatory changes or interpretations of our activities require our registration as a money services business (“MSB”) under the regulations promulgated by the Financial Crimes Enforcement Network (“FinCEN”) under the authority of the U.S.
+Added: Bank Secrecy Act, or otherwise under state laws, we may incur significant compliance costs, which could be substantial or cost-prohibitive.
+Added: If we become subject to these regulations, our costs in complying with them may have a material negative effect on our business and the results of our operations.
+Added: To the extent that our activities cause us to be deemed an MSB under the regulations promulgated by FinCEN under the authority of the U.S.
+Added: Bank Secrecy Act, we may be required to comply with FinCEN regulations, including those that would mandate us to implement anti-money laundering programs, make certain reports to FinCEN and maintain certain records.
+Added: To the extent that our activities would cause us to be deemed a “money transmitter” (“MT”) or equivalent designation, under state law in any state in which we may operate, we may be required to seek a license or otherwise register with a state regulator and comply with state regulations that may include the implementation of anti-money laundering programs, maintenance of certain records and other operational requirements.
+Added: For example, in August 2015, the New York State Department of Financial Services enacted the first U.S.
+Added: regulatory framework for licensing participants in “virtual currency business activity.” The regulations, known as the “BitLicense,” are intended to focus on consumer protection and regulate the conduct of businesses that are involved in “virtual currencies” in New York or with New York customers and prohibit any person or entity involved in such activity to conduct activities without a license.
+Added: Such additional federal or state regulatory obligations may cause us to incur extraordinary expenses.
+Added: Furthermore, we may not be capable of complying with certain federal or state regulatory obligations applicable to MSBs and MTs.
+Added: If we are deemed to be subject to and determine not to comply with such additional regulatory and registration requirements, we may act to dissolve and liquidate.
If we were deemed an “investment company” under the Investment Company Act of 1940, as amended (the “1940 Act”), applicable restrictions could make it impractical for us to continue our business as contemplated and could have a material adverse effect on our business.
9 unchanged sentences
government securities and cash items) on an unconsolidated basis will comprise digital assets that could be considered investment securities.
−Removed: Accordingly, we do not
−Removed: believe that we are an inadvertent investment company by virtue of the 40% inadvertent investment company test as described in the second bullet point above.
+Added: Accordingly, we do not believe that we are an inadvertent investment company by virtue of the 40% inadvertent investment company test as described in the second bullet point above.
Although we do not believe any of the digital assets we may own, acquire, earn or mine are securities, there is still some regulatory uncertainty on the subject, see “— There is no one unifying principle governing the regulatory status of digital assets nor whether digital assets are securities in any particular context.
3 unchanged sentences
government securities and cash items) on an unconsolidated basis.
−Removed: We are putting in place policies that we expect will work to keep the investment securities held by us at less than 40% of our total assets, which may include acquiring assets with our cash, liquidating our investment securities or seeking no-action relief or exemptive relief from the SEC if we are unable to acquire sufficient assets or liquidate sufficient investment securities in a timely manner.
+Added: We are putting in place
+Added: policies that we expect will work to keep the investment securities held by us at less than 40% of our total assets, which may include acquiring assets with our cash, liquidating our investment securities or seeking no-action relief or exemptive relief from the SEC if we are unable to acquire sufficient assets or liquidate sufficient investment securities in a timely manner.
As Rule 3a-2 is available to an issuer no more than once every three years, and assuming no other exclusion were available to us, we would have to keep within the 40% limit for at least three years after we cease being an inadvertent investment company.
13 unchanged sentences
In addition, as a consequence of our seeking to avoid the need to register under the 1940 Act on an ongoing basis, we may be limited in our ability to engage in digital asset mining operations or otherwise make certain investments or engage in certain transactions, and these limitations could result in our holding assets we may wish to sell or selling assets we may wish to hold, which could materially and adversely affect our business, financial condition and results of operations.
−Removed: If regulatory changes or interpretations of our activities require our registration as a money services business (“MSB”) under the regulations promulgated by the Financial Crimes Enforcement Network (“FinCEN”) under the authority of the U.S.
−Removed: Bank Secrecy Act, or otherwise under state laws, we may incur significant compliance costs, which could be substantial or cost-prohibitive.
−Removed: If we become subject to these regulations, our costs in complying with them may have a material negative effect on our business and the results of our operations.
−Removed: To the extent that our activities cause us to be deemed an MSB under the regulations promulgated by FinCEN under the authority of the U.S.
−Removed: Bank Secrecy Act, we may be required to comply with FinCEN regulations, including those that would mandate us to implement anti-money laundering programs, make certain reports to FinCEN and maintain certain records.
−Removed: To the extent that our activities would cause us to be deemed a “money transmitter” (“MT”) or equivalent designation, under state law in any state in which we may operate, we may be required to seek a license or otherwise register with a state regulator and comply with state regulations that may include the implementation of anti-money laundering programs, maintenance of certain records and other operational requirements.
−Removed: For example, in August 2015, the New York State Department of Financial Services enacted the first U.S.
−Removed: regulatory framework for licensing participants in “virtual currency business activity.” The regulations, known as the “BitLicense,” are intended to focus on consumer protection and regulate the conduct of businesses that are involved in “virtual currencies” in New York or with New York customers and prohibit any person or entity involved in such activity to conduct activities without a license.
−Removed: Such additional federal or state regulatory obligations may cause us to incur extraordinary expenses.
−Removed: Furthermore, we may not be capable of complying with certain federal or state regulatory obligations applicable to MSBs and MTs.
−Removed: If we are deemed to be subject to and determine not to comply with such additional regulatory and registration requirements, we may act to dissolve and liquidate.
Recent developments have increased the likelihood that U.S.
1 unchanged sentence
Beginning in the fourth quarter of 2021 and continuing throughout 2022 and much of 2023, digital asset prices fell.
−Removed: This decline and other factors have led to volatility and disruption in the digital asset markets and financial difficulties for several prominent industry participants, including digital asset trading platforms, hedge funds and lending platforms.
−Removed: The collapse of TerraUSD and Luna and the bankruptcy filings of FTX and its subsidiaries, Three Arrows Capital, Ltd.
−Removed: (“Three Arrows”), Celsius Mining LLC (“Celsius”), Voyager Digital Ltd.
−Removed: (“Voyager”), Genesis Global Holdco, LLC (“Genesis Global”) and BlockFi Inc.
−Removed: have resulted in calls for heightened scrutiny and regulation of the digital asset industry, with a specific focus on digital asset exchanges, platforms, and custodians.
−Removed: The failures of risk management and other control functions at other companies that played a role in these events could accelerate an existing regulatory trend toward stricter oversight of crypto asset platforms and the crypto economy.
−Removed: Federal and state legislatures and regulatory agencies are expected to introduce and enact new laws and regulations to regulate digital asset intermediaries, such as digital asset exchanges and custodians.
+Added: This decline and other factors led to volatility and disruption in the digital asset markets and financial difficulties for several prominent industry participants, including digital asset trading platforms, hedge funds and lending platforms.
+Added: Federal and state legislatures and regulatory agencies have already enacted and are expected to continue to introduce and enact new laws and regulations to regulate digital asset intermediaries, such as digital asset exchanges and custodians.
The Federal Reserve Board, U.S.
2 unchanged sentences
Commodity Futures Trading Commission (the “CFTC”), FinCEN, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, and the Federal Bureau of Investigation), among other regulators, as well as the White House, have issued reports and releases concerning digital assets, including bitcoin and digital asset markets.
+Added: Most recently, in January 2025, the Acting SEC Chairman announced the launch of a crypto task force dedicated to developing a comprehensive and clear regulatory framework for crypto assets, in contrast to the SEC’s prior reliance on enforcement actions to regulate cryptocurrencies.
However, the extent and content of any forthcoming laws and regulations are not yet ascertainable with certainty, and they may not be ascertainable in the near future.
14 unchanged sentences
On April 20, 2021, the U.S.
−Removed: House of Representatives passed a bipartisan bill titled “Eliminate Barriers to Innovation
−Removed: Act of 2021” (H.R.
+Added: House of Representatives passed a bipartisan bill titled “Eliminate Barriers to Innovation Act of 2021” (H.R.
If passed by the Senate and enacted into law, the bipartisan bill would create a digital assets working group to evaluate the current legal and regulatory framework around digital assets in the United States and define when the SEC may have jurisdiction over a particular token or digital asset (i.e., when it is a security) and when the CFTC may have jurisdiction (i.e., when it is a commodity).
15 unchanged sentences
Governments may in the future take regulatory actions that prohibit or severely restrict the right to acquire, own, hold, sell, use or trade digital assets or to exchange digital assets for fiat currency.
−Removed: Ownership of, holding or trading in digital assets may then be considered illegal and subject to sanction.
+Added: Ownership of, holding or trading in digital assets may then be
+Added: considered illegal and subject to sanction.
Governments may also take regulatory action that may increase the cost and/or subject digital asset mining companies to additional regulation.
6 unchanged sentences
The increased focus and activism related to ESG may hinder our access to capital, as investors and lenders may reconsider their capital investment allocation as a result of their assessment of our ESG practices.
−Removed: If our ESG practices do not meet evolving regulator, investor, lender, customer or other industry stakeholder expectations and standards or if we do not adapt to or comply with regulator, investor, lender, customer or other
−Removed: industry shareholder expectations and standards, our reputation, ability to attract and/or retain employees, financial condition and/or share price could be negatively impacted.
+Added: If our ESG practices do not meet evolving regulator, investor, lender, customer or other industry stakeholder expectations and standards or if we do not adapt to or comply with regulator, investor, lender, customer or other industry shareholder expectations and standards, our reputation, ability to attract and/or retain employees, financial condition and/or share price could be negatively impacted.
We may also incur additional costs if we do not adapt to or comply with stakeholder expectations about our electricity usage and other ESG concerns.
6 unchanged sentences
To the extent that any of these creators make misleading and/or fraudulent disclosures or do not comply with federal, state or foreign laws, or if we are unable to uncover all material information about these digital assets and/or their creators, we may not be able to make a fully informed business decision relating to our transacting in or otherwise involving such digital assets, which could have a material adverse effect on our business, financial condition and results of operations.
−Removed: Our interactions with a blockchain may expose us to specially designated nationals (“SDN”) or blocked persons or cause us to violate provisions of law that did not contemplate distributed ledger technology.
−Removed: The Office of Financial Assets Control of the U.S.
−Removed: Department of Treasury (“OFAC”) requires us to comply with its sanction program and not conduct business with persons named on its SDN list.
−Removed: However, because of the pseudonymous nature of blockchain transactions, we may inadvertently and without our knowledge engage in transactions with persons named on OFAC’s SDN list.
−Removed: Our internal policies prohibit any transactions with such SDN individuals, but we may not be adequately capable of determining the ultimate identity of the individual with whom we transact with respect to selling digital assets.
−Removed: In addition, in the future, OFAC or another regulator, may require us to screen transactions for OFAC addresses or other bad actors before including such transactions in a block, which may increase our compliance costs, decrease our anticipated transaction fees and lead to decreased traffic on our network.
−Removed: Any of these factors, consequently, could have a material adverse effect on our business, prospects, financial condition, and operating results.
−Removed: Moreover, federal law prohibits any U.S.
−Removed: person from knowingly or unknowingly possessing any visual depiction commonly known as child pornography.
−Removed: Recent media reports have suggested that persons have imbedded such depictions on one or more blockchains.
−Removed: Because our business requires us to download and retain one or more blockchains to effectuate our ongoing business, it is possible that such digital ledgers contain prohibited depictions without our knowledge or consent.
−Removed: To the extent government enforcement authorities literally enforce these and other laws and regulations that are impacted by decentralized distributed ledger technology, we may be subject to investigation, administrative or court proceedings, and civil or criminal monetary fines and penalties, all of which could harm our reputation and could have a material adverse effect on our business, prospects, financial condition, and operating results.
Our compliance and risk management methods might not be effective and may result in outcomes that could adversely affect our reputation, operating results, and financial condition.
10 unchanged sentences
As a result, the marketplace may lose confidence in, or may experience problems relating to, digital asset exchanges, which may cause the price of bitcoin to decline.
−Removed: For example, in the first half of 2022, each of Celsius, Voyager, and Three Arrows declared bankruptcy, resulting in a loss of confidence among participants in the digital asset ecosystem and negative publicity surrounding digital assets more broadly.
+Added: For example, in the first half of 2022, each of Celsius Mining, LLC, Voyager Digital Ltd., and Three Arrows Capital Ltd.
+Added: declared bankruptcy, resulting in a loss of confidence among participants in the digital asset ecosystem and negative publicity surrounding digital assets more broadly.
In November 2022, BlockFi Inc.
and FTX Trading Ltd (“FTX”), the third largest digital asset exchange by volume at the time, halted customer withdrawals, and, shortly thereafter, FTX and its subsidiaries filed for bankruptcy.
−Removed: Most recently, in January 2023, Genesis Global and certain affiliates filed for bankruptcy.
+Added: Most recently, in January 2023, Genesis Global Holdco.
+Added: LLC and certain affiliates filed for bankruptcy.
In response to these events, the digital asset markets, including the market for bitcoin specifically, have experienced price volatility and several other entities in the digital asset industry have been, and may continue to be, negatively affected, further undermining confidence in the digital asset market and in bitcoin.
86 unchanged sentences
Any systemic delays in the recording and confirmation of transactions on the blockchain could result in greater exposure to double-spending transactions and a loss of confidence in certain or all digital asset networks, which could have a material adverse effect on our business, prospects, financial condition, and operating results.
−Removed: Risks Related to the Restructuring, our Indebtedness and Liquidity
−Removed: Our actual financial results after emergence from bankruptcy may not be comparable to our projections filed with the Bankruptcy Court or otherwise made public in the course of the Chapter 11 Cases .
−Removed: In connection with the Disclosure Statement and Plan of Reorganization that we filed with the Bankruptcy Court and the hearing to consider confirmation of our Plan of Reorganization (as well as in certain other filings), we prepared projected financial information for various reasons, including to demonstrate to the Bankruptcy Court the feasibility of the Plan of Reorganization and our ability to continue operations upon our emergence from Chapter 11.
−Removed: Those projections were prepared solely for the purposes stated therein and have not been, and will not be, updated on an ongoing basis and should not be relied upon by investors.
−Removed: At the time they were prepared, the projections reflected numerous assumptions concerning our anticipated future performance with respect to then prevailing and anticipated market and economic conditions that were and remain beyond our control and that may not materialize.
−Removed: Projections are inherently subject to substantial and numerous uncertainties and to a wide variety of significant business, economic and competitive risks and the assumptions underlying the projections or valuation estimates may prove to be wrong in material respects.
−Removed: Actual results may vary significantly from those contemplated by the projections.
−Removed: As a result, investors should not rely on those projections.
−Removed: We have just emerged from bankruptcy under Chapter 11 of the United States Bankruptcy Code, which could adversely affect our business, reputation and business relationships.
−Removed: It is possible that having just recently emerged from the Chapter 11 Cases could adversely affect our business, reputation and relationships with vendors, suppliers, service providers, customers, employees and other third parties.
−Removed: As a result of our recent emergence, the following risks exist:
−Removed: • vendors, suppliers, customers, service providers or other contract counterparties could terminate their relationships with us or require financial assurances or other enhanced performances;
−Removed: • we may face challenges in renewing existing contracts and competing for new business;
−Removed: • a significant portion of our assets including our miners and our mining facilities are pledged to various of our creditors;
−Removed: • we may face the tightening of payment or credit terms and/or increases in the price of supplied goods or services;
−Removed: • it may be more difficult to attract, motivate and/or retain key executives and employees;
−Removed: • employees may be distracted from the performance of their duties or more inclined to pursue other employment opportunities;
−Removed: • competitors may take business away from us, and our ability to attract and retain customers may be negatively impacted.
−Removed: Upon emergence from the Chapter 11 Cases, the composition of our Board of Directors changed significantly.
−Removed: Pursuant to the Plan of Reorganization, the composition of our Board of Directors changed significantly upon emergence from the Chapter 11 Cases.
−Removed: Our Board of Directors now includes members appointed by our prospective significant stockholders and significant holders of our debt.
−Removed: While we expect to engage in an orderly transition process as we integrate newly appointed board members, our Board of Directors may change views on strategic initiatives and a range of issues that will determine our future.
−Removed: As a result, the future strategy and plans of ours may differ materially from those of the past.
−Removed: “Directors, Executive Officers and Corporate Governance” for information regarding our Board of Directors and our key management members following emergence from the Chapter 11 Cases.
−Removed: The ability to attract and retain key personnel is critical to the success of our business and may be affected by our emergence from bankruptcy.
−Removed: The success of our business depends on key personnel.
−Removed: The ability to attract and retain these key personnel may be affected by our emergence from bankruptcy, the uncertainties currently facing the business and changes we may make to the organizational structure to adjust to changing circumstances.
−Removed: Any potential delays in adopting our management incentive plan and other executive benefits and compensation may make it difficult to retain key personnel and we may need to enter into retention or other arrangements that could be costly to maintain.
−Removed: If executives, managers or other key personnel resign, retire or are terminated, or their service is otherwise interrupted, we may not be able to replace them in a timely manner and we could experience significant declines in productivity.
−Removed: Our substantial level of indebtedness and our current liquidity constraints could adversely affect our financial condition and our ability to service our indebtedness, which, together with the impact of the Chapter 11 process, could negatively impact your ability to recover your investment in our securities.
−Removed: We have a substantial amount of indebtedness, which requires significant interest payments.
−Removed: As of December 31, 2023, we and our subsidiaries had approximately $865.5 million aggregate principal amount of indebtedness outstanding.
−Removed: Our substantial level of indebtedness and the current constraints on our liquidity could have important consequences, including the following:
−Removed: • we must use a substantial portion of our cash flow from operations to pay interest and principal on our indebtedness, which reduces or will reduce funds available to us for other purposes such as working capital, capital expenditures, other general corporate purposes and potential acquisitions;
−Removed: • our ability to refinance such indebtedness or to obtain additional financing for working capital, capital expenditures, acquisitions or general corporate purposes may be impaired;
−Removed: • our leverage may be greater than that of some of our competitors, which may put us at a competitive disadvantage and reduce our flexibility in responding to current and changing industry and financial market conditions;
−Removed: • there are significant constraints on our ability to generate liquidity through incurring additional debt;
−Removed: • we may be more vulnerable to economic downturn and adverse developments in our business;
−Removed: • to the extent our debt with variable interest rates is not swapped at a fixed rate, we may be subject to increased exposure to rising interest rates;
−Removed: • we may be more limited in the types of activities and assets we are permitted to engage in, own or acquire;
−Removed: • consents may be required for certain transactions that we may wish to effect, and such consents may not be granted or granted only on unfavorable terms;
−Removed: • failure to comply with the financial and other restrictive covenants in our debt instruments which, among other things, require us to maintain specified financial ratios and limit our ability to incur debt and sell assets, could result in an event of default that could have a material adverse effect on our business or prospects if not cured or waived.
−Removed: We and our subsidiaries may be able to incur substantial additional indebtedness in the future, subject to the restrictions contained in the agreements governing our indebtedness.
−Removed: To the extent new indebtedness is added to our debt levels, including as a result of satisfying interest payment obligations on certain of our indebtedness with payments-in-kind, the related risks that we now face could intensify.
−Removed: If we are unable to comply with our covenants under our indebtedness, our liquidity may be further adversely affected.
−Removed: Our ability to meet our expenses, to remain in compliance with our covenants under our debt instruments and to make future principal and interest payments in respect of our debt depends on, among other factors, our operating performance, competitive developments and financial market conditions, all of which are significantly affected by financial, business, economic and other factors.
−Removed: We are not able to control many of these factors.
−Removed: Given current industry and economic conditions, our cash flow may not be sufficient to allow us to pay principal and interest on our debt and meet our other obligations.
−Removed: For example, in October 2022 the Company determined not to make certain payments with respect to several of its debt facilities, equipment financing facilities and leases and other financings, including its two bridge promissory notes.
−Removed: As a result, the creditors under these debt facilities may exercise remedies following any applicable grace periods and pursuant to any confirmed plan of reorganization, including electing to accelerate the principal amount of such debt, suing the Company for nonpayment, increasing interest rates to default rates, or taking action with respect to collateral, where applicable.
−Removed: Although our credit and guarantee agreement (the “Exit Credit Agreement”), the indentures and forms of notes governing the New Secured Convertible Notes and the New Secured Notes (the “New Indentures”) and other existing indebtedness contain restrictions on the incurrence of additional indebtedness, these restrictions are subject to a number of qualifications and exceptions, and any additional indebtedness incurred in compliance with these restrictions could be substantial.
−Removed: Indebtedness subjects us to the risk of higher interest rates, which could cause our future debt service obligations to increase significantly.
−Removed: Our borrowings under the Exit Credit Agreement are at variable rates of interest and expose us to interest rate risk.
−Removed: Interest rates under these financing arrangements are generally determined by a Secured Overnight Financing (“SOFR”) based rate.
−Removed: SOFR-based rates tend to fluctuate based on general interest rates, rates set by the U.S.
−Removed: Federal Reserve and other central banks and general economic conditions.
−Removed: If interest rates increase, our debt service obligations on such variable rate indebtedness would increase even though the amount borrowed remained the same, and our ability to make payments of principal and interest on the New Secured Notes and New Secured Convertible Notes (as well as on loans with respect to the Exit Credit Agreement) may be adversely impacted.
+Added: Risks Related to our Indebtedness and Liquidity
We may incur additional indebtedness to execute our long-term growth strategy, which may reduce our profitability.
2 unchanged sentences
Historically, we have financed these investments through cash flows from operation and external borrowings.
−Removed: These sources of capital may not be available to us in the future, and the Exit Credit Agreement, the New Indentures and other financing arrangements will place certain restrictions on our ability to enter into new debt arrangements.
+Added: These sources of capital may not be available to us in the future.
Our ability to arrange new financing, either at the corporate level, a non-recourse project-level subsidiary or otherwise, and the costs of such capital, are dependent on numerous factors, including credit availability from banks and other financial institutions, investor confidence in us and the regional markets in which we operate, maintenance of acceptable credit ratings or our financial performance and level of indebtedness.
1 unchanged sentence
If we are unable to fund capital expenditures for any reason, we may not be able to capture available growth opportunities and any such failure could have a material adverse effect on our results of operations and financial condition.
−Removed: The Exit Credit Agreement, the New Indentures and the miner equipment lender facility (the “New Miner Equipment Lender Facility”) entered into in connection with the Plan of Reorganization contain a number of restrictive covenants which could limit our ability to finance future operations, acquisitions or capital needs or to engage in other business activities that may be in our interest.
−Removed: The Exit Credit Agreement, the New Indentures and the New Miner Equipment Lender Facility contain certain operating and other restrictions on us.
−Removed: Among other things, such restrictions affect and limit or prohibit our ability to:
−Removed: • incur additional indebtedness;
−Removed: • create or incur liens;
−Removed: • engage in fundamental changes or changes of control;
−Removed: • sell or otherwise dispose of assets;
−Removed: • make investments or acquisitions;
−Removed: • pay dividends and distributions or repurchase capital stock;
−Removed: • prepay, redeem or repurchase certain subordinated indebtedness;
−Removed: • create negative pledge clauses;
−Removed: • enter into transactions with affiliates.
−Removed: The restrictions contained in our debt agreements could (i) limit our ability to plan for or react to market or economic conditions or meet capital needs or otherwise restrict our activities or business plans and (ii) adversely affect our ability to finance our operations, acquisitions, investments or strategic alliances or other capital needs or to engage in other business activities that would be in our interest.
−Removed: A breach of any of these covenants or our inability to comply with required financial ratios could result in a default under all or certain of our debt instruments.
+Added: Our indebtedness and liabilities could limit the cash flow available for our operations, expose us to risks that could adversely affect our business, financial condition and results of operations and impair our ability to satisfy our obligations under the notes.
+Added: As of December 31, 2024, we had approximately $1.12 billion aggregate principal amount of indebtedness for borrowed money.
+Added: We may also incur additional indebtedness to meet future financing needs.
+Added: Our indebtedness could have significant negative consequences for our security holders and our business, results of operations and financial condition by, among other things:
+Added: • increasing our vulnerability to adverse economic and industry conditions;
+Added: • limiting our ability to obtain additional financing;
+Added: • requiring the dedication of a substantial portion of our cash flow from operations to service our indebtedness, which will reduce the amount of cash available for other purposes;
+Added: • limiting our flexibility to plan for, or react to, changes in our business;
+Added: • diluting the interests of our existing stockholders as a result of issuing shares of our common stock upon conversion of the notes;
+Added: • placing us at a possible competitive disadvantage with competitors that are less leveraged than us or have better access to capital.
+Added: Our business may not generate sufficient funds, and we may otherwise be unable to maintain sufficient cash reserves, to pay amounts due under our indebtedness, including the notes, and our cash needs may increase in the future.
+Added: In addition, any future indebtedness that we may incur may contain financial and other restrictive covenants that limit our ability to operate our business, raise capital or make payments under our other indebtedness.
+Added: If we fail to comply with these covenants or to make payments under our indebtedness when due, then we would be in default under that indebtedness, which could, in turn, result in that and our other indebtedness becoming immediately payable in full.
+Added: We may be unable to raise the funds necessary to repurchase the 2029 Convertible Notes or the 2031 Convertible Notes for cash following a fundamental change, the optional repurchase date, or during the free convertibility period, as applicable, or to pay any cash amounts due upon conversion of 2029 Convertible Notes or the 2031 Convertible Notes, and our other indebtedness may limit our ability to repurchase 2029 Convertible Notes or the 2031 Convertible Notes or pay cash upon their conversion.
+Added: Holders of the $460.0 million aggregate principal amount of our 3.00% Convertible Senior Notes due 2029 (the “2029 Convertible Notes”), subject to a limited exception, may require us to repurchase their notes for cash following certain corporate events that constitute a “fundamental change” equal to the principal amount of the notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change repurchase date.
+Added: From and after June 1, 2029, noteholders may convert their notes at any time at their election until the close of business on the scheduled trading day immediately before September 1, 2029.
+Added: The Company will settle conversions by paying or delivering, as applicable, cash, shares of its common stock or a combination of cash and shares of its common stock, at its election.
+Added: Further, holders of the $625.0 million aggregate principal amount of our 0.00% convertible senior notes due 2031 (the “2031 Convertible Notes”), subject to a limited exception, may require us to repurchase their notes on December 15, 2027 or following certain corporate events that constitute a “fundamental change” at a cash repurchase price equal to the principal amount of the notes to be repurchased, plus accrued and unpaid special interest and additional interest, if any, to, but excluding, the optional repurchase date or the fundamental change repurchase date, as applicable.
+Added: From and after March 17, 2031, noteholders may convert their notes at any time at their election until the close of business on the scheduled trading day immediately before June 15, 2031.
+Added: The Company will settle conversions by paying or delivering, as applicable, cash, shares of its common stock or a combination of cash and shares of its common stock, at its election.
+Added: Both the 2029 Convertible Notes and 2031 Convertible Notes might also be converted by noteholders based on certain triggering events based on the trading price of the Company’s common stock or the note, as applicable.
+Added: We may not have enough available cash or be able to obtain financing at the time we are required to repurchase the 2029 Convertible Notes or 2031 Convertible Notes or pay any cash amounts due upon conversion of the 2029 Convertible Notes or 2031 Convertible Notes.
+Added: In addition, applicable law, regulatory authorities and the agreements governing our other indebtedness may restrict our ability to repurchase the 2029 Convertible Notes or 2031 Convertible Notes or pay any cash amounts due upon conversion.
+Added: Our failure to repurchase the 2029 Convertible Notes or 2031 Convertible Notes or pay any cash amounts due upon conversion when required under the indenture governing the 2029 Convertible Notes or the indenture governing the 2031 Convertible Notes, as applicable, will constitute a default under the applicable indenture.
+Added: A default under either indenture or the fundamental change itself could also lead to a default under agreements governing our other indebtedness, which may result in that other indebtedness becoming
+Added: immediately payable in full.
+Added: We may not have sufficient funds to satisfy all amounts due under the other indebtedness, the 2029 Convertible Notes or the 2031 Convertible Notes.
+Added: Provisions in our indentures could delay or prevent an otherwise beneficial takeover of us.
+Added: Certain provisions in the 2029 Convertible Notes or 2031 Convertible Notes, or any future notes, and the indentures governing these notes could make a third-party attempt to acquire us more difficult or expensive.
+Added: For example, if a takeover constitutes a fundamental change, then, except as described in this offering memorandum, noteholders will have the right to require us to repurchase their notes for cash.
+Added: In addition, if a takeover constitutes a make-whole fundamental change, then we may be required to temporarily increase the conversion rate.
+Added: In either case, and in other cases, our obligations under the 2029 Convertible Notes or 2031 Convertible Notes, or any future notes, and the indentures governing these notes could increase the cost of acquiring us or otherwise discourage a third party from acquiring us or removing incumbent management, including in a transaction that noteholders or holders of our common stock may view as favorable.
+Added: The conditional conversion feature of the notes, if triggered, may adversely affect our financial condition and results of operations.
+Added: In the event the conditional conversion feature of the notes is triggered, noteholders will be entitled to convert the notes at any time during specified periods at their option.
+Added: If one or more noteholders elect to convert their notes, unless we elect to satisfy our conversion obligation by delivering solely shares of our common stock (other than paying cash in lieu of delivering any fractional share), we would be required to settle a portion or all of our conversion obligation through the payment of cash, which could adversely affect our liquidity.
+Added: In addition, even if noteholders do not elect to convert their notes, we could be required under applicable accounting rules to reclassify all or a portion of the outstanding principal of the notes as a current rather than long-term liability, which would result in a material reduction of our net working capital.
+Added: The accounting method for the 2029 Convertible Notes and 2031 Convertible Notes, or any future notes, could adversely affect our reported financial condition and results.
+Added: The accounting method for reflecting the 2029 Convertible Notes or 2031 Convertible Notes, or any future notes, on our balance sheet, accruing amortized interest expense for these notes and reflecting the underlying shares of our common stock in our reported diluted earnings per share may adversely affect our reported earnings and financial condition.
Risks Related to Taxes
11 unchanged sentences
It is likely that we will undergo an ownership change under Sections 382 and 383 of the Internal Revenue Code as a result of the consummation of the Plan of Reorganization, which may limit our ability to utilize our federal NOL and capital loss carryforwards and certain other tax attributes, subject to the potential application of the special bankruptcy exception in Section 382(l)(5) of the Internal Revenue Code.
−Removed: We have not determined whether or not we would qualify for such special bankruptcy exception, and even if
−Removed: we did so qualify, whether or not we would elect out of such exception.
+Added: We have not determined whether or not we would qualify for such special bankruptcy exception, and even if we did so qualify, whether or not we would elect out of such exception.
Further, even if the consummation of the Plan of Reorganization does not cause an ownership change, it could increase the likelihood that we undergo such an ownership change in the future.
28 unchanged sentences
In addition, a tax authority or court may not agree with any particular interpretation of the relevant laws.
−Removed: In 2022, significant changes to U.S.
−Removed: federal income tax laws were proposed by the current presidential administration, including increasing the U.S.
−Removed: income tax rate applicable to corporations from 21% to 28% and changes implicating information reporting with respect to digital assets.
−Removed: Congress may include some or all of these proposals in future legislation.
−Removed: There is uncertainty regarding
−Removed: whether these proposals will be enacted and, if enacted, their scope, when they would take effect, and whether they would have retroactive effect.
State, local or other jurisdictions could impose, levy or otherwise enforce tax laws against us.
28 unchanged sentences
Future sales and issuances of our capital stock or rights to purchase capital stock could result in additional dilution of the percentage ownership of our stockholders and could cause our stock price to decline.
−Removed: We may issue additional securities, including shares of New Common Stock as a result of the conversion or exercise, as applicable, of the New Secured Convertible Notes, the New Warrants, options or restricted stock units (“RSUs”).
−Removed: In addition, the Company may choose to issue shares of New Common Stock pursuant to the CVRs or as interest on the New Secured Convertible Notes.
+Added: We may issue additional securities, including shares of New Common Stock as a result of the conversion or exercise, as applicable, of the New Warrants, options or restricted stock units (“RSUs”).
+Added: In addition, the Company may choose to issue shares of New Common Stock pursuant to the CVRs.
Future sales and issuances of our capital stock or rights to purchase our capital stock could result in substantial dilution to our existing stockholders.
We may issue and sell New Common Stock, convertible securities, warrants and other equity securities in one or more transactions at prices and in a manner as we may determine from time to time.
−Removed: If we sell any such securities in subsequent transactions, investors may be materially diluted.
+Added: If we sell any
+Added: such securities in subsequent transactions, investors may be materially diluted.
New investors in such subsequent transactions could gain rights, preferences and privileges senior to those of holders of our New Common Stock.
−Removed: In addition, we have agreed to register the resale of a significant number of shares of our capital stock held by certain of our stockholders, including Bitmain.
−Removed: As a result of these agreements, capital stock held by these stockholders may become eligible for future sale without restriction.
−Removed: Accordingly, these stockholders then may freely resell their shares in the open market, which could cause our stock price to decline.
The market price and trading volume of our securities could decline if securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business.
5 unchanged sentences
We have never declared nor paid cash dividends on our capital stock.
−Removed: Our New Secured Notes and our Exit Credit Agreement restrict our ability to pay dividends and we currently intend to retain any future earnings to finance the operation and expansion of our business, and we do not expect to declare or pay any dividends in the foreseeable future.
+Added: We currently intend to retain any future earnings to finance the operation and expansion of our business, and we do not expect to declare or pay any dividends in the foreseeable future.
As a result, stockholders must rely on sales of their securities after price appreciation as the only way to realize any future gains on their investment.
−Removed: We qualify as an “emerging growth company” within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure requirements available to emerging growth companies, such decision could make our securities less attractive to investors and may make it more difficult to compare our performance to the performance of other public companies.
−Removed: We qualify as an “emerging growth company” as defined in Section 2(a)(19) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”).
−Removed: As such, we are eligible for and intend to take advantage of certain exemptions from various reporting requirements applicable to other public companies that are not “emerging growth companies” for as long as we continue to be an emerging growth company, including, but not limited to, (a) not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, (b) exemptions resulting in reduced disclosure obligations regarding executive compensation in the Company’s periodic reports and proxy statements and (c) exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
−Removed: As a result, our stockholders may not have access to certain information they may deem important.
−Removed: We will remain an emerging growth company under the JOBS Act until the earliest of (1) the last day of the fiscal year (a) following February 12, 2026, the fifth anniversary of the date of the first sale of common equity securities of the Company in a registered offering, (b) in which we have total annual gross revenue of at least $1.235 billion or (c) in which we are deem ed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates meets or exceeds $700.0 million as of the prior June 30th and (2) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.
−Removed: We cannot predict whether investors will find our securities less attractive because of our reliance on these exemptions.
−Removed: If some investors find our securities less attractive as a result of our reliance on these exemptions, the trading prices of our securities may be lower than they otherwise would be, there may be a less active trading market for our securities and the trading prices of our securities may be more volatile.
−Removed: Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards.
−Removed: The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies, but that any such an election to opt out is
−Removed: We have elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard.
−Removed: This may make comparison of our financial statements with those of another public company, which is neither an emerging growth company nor an emerging growth company which has opted out of the extended transition period, difficult or impossible because of the potential differences in accounting standards used.
+Added: We no longer qualify as an “emerging growth company” as of December 31, 2024, and, as a result, we will no longer be able to avail ourselves of certain reduced disclosure requirements applicable to emerging growth companies and/or smaller reporting companies.
+Added: Based on the market value of our common stock held by non-affiliates as of June 30, 2024, we ceased to qualify as an emerging growth company as of December 31, 2024, and as such, we are no longer able to take advantage of any of the exemptions from various reporting requirements that are applicable to emerging growth companies effective as of December 31, 2024.
+Added: We expect that the loss of our emerging growth company status and compliance with these additional requirements will increase our legal and financial compliance costs.
+Added: In addition, any failure to comply with these additional requirements in a timely manner, or at all, could have an adverse effect on our business and results of operations and could cause a decline in the price of our common stock.
+Added: Risks Related to our Restructuring
+Added: Our actual financial results after emergence from bankruptcy may not be comparable to our projections filed with the Bankruptcy Court or otherwise made public in the course of the Chapter 11 Cases .
+Added: In connection with the Disclosure Statement and Plan of Reorganization that we filed with the Bankruptcy Court and the hearing to consider confirmation of our Plan of Reorganization (as well as in certain other filings), we prepared projected financial information for various reasons, including to demonstrate to the Bankruptcy Court the feasibility of the Plan of Reorganization and our ability to continue operations upon our emergence from Chapter 11.
+Added: Those projections were prepared solely for the purposes stated therein and have not been, and will not be, updated on an ongoing basis and should not be relied upon by investors.
+Added: At the time they were prepared, the projections reflected numerous assumptions concerning our anticipated future performance with respect to then prevailing and anticipated market and economic conditions that were and remain beyond our control and that may not materialize.
+Added: Projections are inherently subject to substantial and numerous uncertainties and to a wide variety of significant business, economic and competitive risks and the assumptions underlying the projections or valuation estimates may prove to be wrong in material respects.
+Added: Actual results may vary significantly from those contemplated by the projections.
+Added: As a result, investors should not rely on those projections.
+Added: Upon emergence from the Chapter 11 Cases, the composition of our Board of Directors changed significantly.
+Added: Pursuant to the Plan of Reorganization, the composition of our Board of Directors changed significantly upon emergence from the Chapter 11 Cases.
+Added: Our Board of Directors now includes members appointed by our prospective significant stockholders and significant holders of our debt.
+Added: Our Board of Directors may change views on strategic initiatives and a range of issues that will determine our future.
+Added: As a result, the future strategy and plans of ours may differ materially from those of the past.
+Added: “Directors, Executive Officers and Corporate Governance” for information regarding our Board of Directors and our key management members following emergence from the Chapter 11 Cases.
+Added: The ability to attract and retain key personnel is critical to the success of our business and may be affected by our emergence from bankruptcy.
+Added: The success of our business depends on key personnel.
+Added: The ability to attract and retain these key personnel may be affected by our emergence from bankruptcy, the uncertainties currently facing the business and changes we may make to the organizational structure to adjust to changing circumstances.
+Added: Any potential delays in adopting our management incentive plan and other executive benefits and compensation may make it difficult to retain key personnel and we may need to enter into retention or other arrangements that could be costly to maintain.
+Added: If executives, managers or other key personnel resign, retire or are terminated, or their service is otherwise interrupted, we may not be able to replace them in a timely manner and we could experience significant declines in productivity.
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.