Digi Power X Inc. 10-K

Item 1. Business. As used in this Annual Report, the terms “we,” “us,” “our,” the “Corporation,” “Digi Power X Inc.” and “Digi Power” mean Digi Power X Inc. and its consolidated subsidiaries, unless otherwise indicated. Overview The Corporation is an innovative energy infrastructure company that develops cutting-edge data centers to drive the expansion of sustainable energy assets. With multiple sites, including our state-of-the-art combined cycle and high-capacity substations, we tap into and enhance the energy grid, supporting both industrial clients and broader energy markets. Our mission is to create efficient, reliable and cost-effective energy solutions by maximizing the potential of our power facilities and building advanced infrastructure to meet the demands of high-performance computing, bitcoin mining and other energy-intensive industries. Digi Power X is focused on developing, owning and operating data center facilities and delivering enterprise colocation and AI/GPU infrastructure services. The Corporation also owns a 60 MW gas fired power plant in North Tonawanda that currently operates as a peaker plant providing the grid with electrical power in times of peak demand. As of the date of this Annual Report, the Corporation has 17 employees. The Corporation receives digital currencies from “mining.” “Mining” is a process whereby “miners,” which are specialized computers with high amounts of computational processing power, compete to solve “blocks,” which are digital files where digital currency transactions are recorded on the blockchain. A miner that verifies and solves a new block is awarded a newly generated quantity of coins, in an amount which is usually proportional to the miner’s contributed hashrate or work (plus a small transaction fee), as an incentive to invest their computer power, as mining is critical to the continuing functioning and security of the networks on which digital currencies operate. A “mining pool” is a service operated by a mining pool operator that pools the resources of individual miners to share their processing power over a network. Mining pools emerged in response to the growing difficulty and network hashrate competing for bitcoin rewards on the bitcoin blockchain as a way of lowering costs and reducing the risk of an individual miner’s mining activities. The mining pool operator provides a service that coordinates the computing power of the independent mining enterprises participating in the mining pool. Mining pools are subject to various risks such as disruption and down time. In the event that a pool utilized by the Corporation experiences down time or is not yielding returns, results may be impacted. The Corporation participates in a mining pool that pays bitcoin rewards utilizing a “Full-Pay-Per-Share” payout of bitcoin based on a contractual formula, which calculates payout primarily based on the hashrate provided by the Corporation to the mining pool as a percentage of total network hashrate of the mining pool, along with other inputs. The Corporation is entitled to consideration even if a block is not successfully placed by the mining pool operator. The Corporation transitioned its mining operations completely to mining pool participation in 2022, which it utilized throughout the years ended December 31, 2024 and 2025. Miners require significant amounts of electrical power, and these energy requirements represent the Corporation’s largest operating expense. The Corporation’s operating and maintenance expenses are therefore principally composed of electricity to power its computing equipment as well as cooling and lighting, etc. Other site expenses include leasing costs for the facilities, internet access, equipment maintenance and software optimization, and facility security, maintenance and management. Ultimately, the central production line of the Corporation is converting electrical power into digital currencies through ‘mining’. Natural gas represents the largest operating cost associated with the generation of electricity at the Corporation’s power plant. The Corporation’s operation in the digital currency mining industry requires extensive knowledge of cryptocurrency mining, cryptocurrency economics and blockchain technology. Further, the Corporation’s focus on vertical integration with energy production and its focus on environmentally conscious development requires specialized knowledge of the energy procurement industry, with a particular focus on green energy. For the year ended December 31, 2025, the Corporation primarily recognized revenues with organizations in the digital currency space. The Corporation’s number of active miners per self-mining and colocation agreements for the year ended December 31, 2025 was approximately nil and 9,700, respectively. 1 All key components of the Corporation’s facilities are monitored including the intake air temperature, hash board temperature, voltage, hashrate, air temperature, exhaust air temperature and humidity. All parameters are monitored and changed remotely, as required. Parallel monitoring is performed by local on-site staff who are responsible for implementing any necessary repairs to mining infrastructure. In the event that the Corporation’s remote monitoring or any parallel monitoring identifies any malfunction or technical issue, personnel are dispatched to physically inspect and, if necessary, repair defective components. The Corporation intends to maintain an inventory of all necessary components for repair, which are kept at the same facility as such operations. During April 2021, the Corporation was approved for an account with Gemini. Gemini is a digital currency exchange and custodian that allows customers to buy, sell and store digital assets. Gemini was the first crypto exchange and custodian in the world to complete a SOC 2 Type 1 and a SOC 2 Type 2 examination. While a SOC 2 Type 1 evaluates the design and implementation of system controls at a point in time, a SOC 2 Type 2 evaluates whether these system controls have been operating effectively over a period of time. A SOC 2 Type 2 examination is the highest level of security compliance an organization can demonstrate, and Gemini completes this examination on an annual basis. As of March 31, 2026, the Corporation had holdings of approximately 51 bitcoins and 1,010 Ethereum in its Gemini account. Digital currencies are measured at fair value using the quoted price on the Gemini exchange. Gemini serves as our principal market. The Corporation believes any price difference between the principal market and an aggregated price to be immaterial. The Corporation performs credit due diligence in the normal course of business when beginning a relationship with counterparties, as well as during ongoing business activities. Gemini maintains insurance coverage for the cryptocurrency held on behalf of the Corporation in its online hot wallet. The Corporation has not been able to independently insure its mined digital currency. Given the novelty of digital currency mining and associated businesses, insurance of this nature is generally not available, or uneconomical for the Corporation to obtain which leads to the risk of inadequate insurance coverage. On occasion, to mitigate third-party risk, the Corporation will hold a portion of its digital currencies in cold storage solutions that are not connected to the internet. The Corporation’s digital assets that are held in cold storage are stored in safety deposit boxes at a bank branch. The wallets in which the Corporation stores its cryptocurrency assets are not multi-signature wallets; however, the Corporation secures the 24-word seed phrase, which facilitates recovery of the wallets should the wallets become lost, stolen or damaged, by partitioning the seed phrase in multiple parts, and securing each part in a separate location. Each part of the seed phrase is stored in either a safe or safety deposit box. The Corporation replicates this security protocol by taking the same 24-word seed phrase, partitioning this into several parts and storing each part in a secure location in a separate safe or safety deposit box than was used for the first copy of the seed-phrase. This duplication ensures that the digital currencies held via cold storage solutions will be recoverable by the Corporation, should the Corporation’s cold wallets become lost, stolen or damaged. During the year-ended December 31, 2025, and as of the date of this Annual Report, all of the Corporation’s cryptocurrency assets are currently held in its Gemini wallets. The vast majority of mining is now undertaken by mining pools, whereby miners organize themselves and pool their processing power over a network and mine transactions together. Rewards are then distributed proportionately to each miner based on the work/hashpower contributed. Mining pools became popular when mining difficulty and block time increased. While the rewards for successfully solving a block become considerably lower in the case of pooling, rewards are earned on a far more consistent basis, reducing the risk to miners with smaller computational power. As of the date of this Annual Report, the Corporation participates in one mining pool in order to smooth the receipt of rewards. Mining pools generally exist for each well-known cryptocurrency. High Performance Computing (HPC) and Miner Manufacturers and Suppliers The Corporation currently relies upon a limited number of suppliers from which it purchases its HPC related equipment and miners. HPC equipment is very sophisticated and may be subject to substantial price variations depending on market conditions. The prices of mining machines are negotiated on an individual basis, although the price at which a manufacturer is willing to sell miners often fluctuates with the price of the cryptocurrency that is able to be mined by the miners and, as such, may be subject to meaningful changes in price during periods of pricing volatility for cryptocurrencies. 2 Sources of Energy The Corporation’s operations use a blend of renewable energy, zero-carbon electricity, and non-renewable sources. Currently, 89% of the electricity consumed by the Corporation’s grid-based power across its two New York State sites is sourced from zero-carbon generation. Additionally, more than 50% of the total energy consumed at these sites is derived from renewable sources. The Corporation’s current carbon-neutrality efforts and initiatives include: ● 100% Carbon Neutral by 2026: The Corporation is targeting carbon neutrality across all operations by the end of 2026 through a combination of zero-carbon electricity procurement, operational efficiency improvements, and the use of high-quality, verified carbon offsets where necessary. While the original goal was 2025, the timeline has been adjusted to align with updated projections on New York State’s renewable energy deployment, which is slightly behind pace. The Corporation remains on track to meet its long-term target of using 100% renewable energy by 2030 ● Community Solar Leadership: The Corporation is the anchor subscriber to a 5 MW community solar project located in Grand Island, NY, just 15 miles from its East Delevan facility. This project will generate enough clean electricity to power more than 2,500 homes annually. Our participation directly supports the development of new renewable assets, adds clean energy to the grid, and helps reduce overall electricity costs and price volatility. ● Digigreen Initiative: An internal program focused on implementing sustainable, environmentally responsible, and economically sound practices. This initiative helps position the Corporation as an industry leader in reducing and eliminating its carbon footprint without sacrificing profitability. ● Crypto Climate Accord: As a signatory to this private sector-led initiative, the Corporation is working collaboratively with other crypto stakeholders to rapidly decarbonize the cryptocurrency industry. ● Proof of Green: The Corporation is developing internal measurement and reporting frameworks to track energy sourcing, emissions intensity, and carbon reduction progress across operations. These tools will enable regular environmental accountability reporting and provide strategic guidance to directors and shareholders on carbon reduction opportunities. ● Grid Support & Load Flexibility: The Corporation’s operations are capable of dynamically adjusting load in response to grid conditions, supporting system reliability during peak demand periods. This flexibility enables participation in demand response and other grid-balancing programs, further contributing to overall reductions in grid carbon intensity. Revenues For a description of our revenues for each of the two years in the period ended December 31, 2025, see Item 7 “ Management’s Discussion and Analysis of Financial Condition and Results of Operations .” Seasonality Mining machines are energy intensive and produce a high amount of heat. Typically, machines operate more efficiently in the colder seasons when operators do not need to utilize as many cooling methods. Additionally, dry seasons may lead to a shortage in power supply, and periods of high heat can result in energy grid stress, which can negatively impact the Corporation’s business operations if it experiences power supply interruption or reduces its energy consumption. The Corporation has previously, and may again in the future, voluntarily curtailed its energy consumption burden to assist the energy needs of the local communities in which it does business. Results of the Corporation’s business operations are largely influenced by the market value of bitcoins, and bitcoin volatility is tied to, among other things, its halving schedule and the other risks described in Item 1A. “ Risk Factors ” above. 3 Competition The digital currency mining industry is highly competitive. In addition, there exist many online companies that offer digital currency cloud mining services, as well as companies, individuals and groups that run their own mining farms. Miners can range from individual enthusiasts to professional mining operations with dedicated data centers, including those of the kind operated by the Corporation’s principal publicly listed competitors. There are several companies competing in the Corporation’s industry, including Riot Platforms, Inc., MARA Holdings, Inc., Bitfarms Ltd., Argo Blockchain Plc, Hut 8 Corp., HIVE Digital Technologies Ltd. and Cipher Digital Inc. As we expand into the development and operation of large-scale data centers supporting HPC and AI workloads, we also face competition from established data-center operators and infrastructure providers with significant capital resources and long-term power supply commitments. These competitors include Equinix, Inc., Digital Realty Trust, Inc., and CoreWeave, Inc., among others, as well as certain of our bitcoin mining competitors. We compete in this market for access to suitable land and power, engineering talent, and customers seeking scalable, energy-efficient data-center capacity. Regulation Bitcoin Mining Regulation We operate within a complex and rapidly evolving regulatory environment and are subject to a wide range of laws and regulations enacted by U.S. federal, state, and local governments, governmental agencies, and regulatory authorities, including the SEC, the Commodity Futures Trading Commission (the “CFTC”), the Federal Trade Commission (the “FTC”), and the Financial Crimes Enforcement network of the U.S. Department of Treasury, as well as similar entities in other countries. Other regulatory bodies have demonstrated an interest in regulating or investigating companies engaged in blockchain or cryptocurrency businesses. On July 18, 2025, the Guiding and Establishing National Innovation for U.S. Stablecoins Act (the “GENIUS Act”) was passed and signed into law in the United States, which directs for a federal regulatory framework for the issuance of “payment stablecoins” that are designed to be used as a means of payment and settlement. The GENIUS Act provides a framework for the issuance and oversight of “payment stablecoins” and specifies the circumstances under which such digital assets would not be treated or regulated as securities. More recently, the Digital Asset Market Clarity Act of 2025 passed the U.S. House of Representatives and is currently under consideration in the U.S. Senate. If passed in its current form, the CLARITY Act would grant the CFTC jurisdiction and regulatory authority with respect to “digital commodities,” including by establishing new registration requirements for digital commodity exchanges, brokers, and dealers. If passed, the CLARITY Act could impose additional regulatory requirements on companies holding digital assets as well as their asset managers. Regulations may substantially change in the future and it is presently not possible to know how regulations will apply to our business, or when they may be effective. While we anticipate that bitcoin mining will be an area of focus for regulators in 2026 and beyond, we cannot predict with certainty the impact regulations may have on our business or operations. As the regulatory and legal environment evolves, we may become subject to new laws and regulations by the SEC and other agencies, which may affect our mining operations and other activities. While the regulations applicable to our bitcoin mining operations in New York and Alabama are generally favorable, we may also become subject to additional regulatory requirements on a state and local level in the geographies in which we operate and as we strategically expand our operations into new areas. AI and HPC Hosting Regulation As we expand into the development and operation of large-scale data centers supporting HPC and AI workloads, our facilities are subject to various laws, ordinances and regulations. The development of advanced AI systems has raised concerns about possible misuse, bias, and the displacement of human workers. Governments and regulatory bodies are considering measures to ensure responsible development and deployment of AI systems, including guidelines for transparency, accountability, and fairness. We are monitoring evolving federal, state, and municipal policies that impact data center operations, including energy efficiency mandates, property regulations, and reporting and disclosure requirements. For additional discussion regarding our belief about the potential risks existing and future regulation pose to our business, see Part I, Item 1A. “Risk Factors” beginning on page 9 of this Annual Report. 4 Organizational Structure The table below describes, as of March 31, 2026, the date and jurisdiction of formation and functions of the Corporation’s significant subsidiaries. Other than US Data Centers, Inc., the Corporation’s significant subsidiaries are wholly-owned by the Corporation. Name Date of Formation Jurisdiction of Formation Assets Held/Function Function Digihost International, Inc. October 9, 2018 Delaware, U.S. Computer and electrical equipment U.S. based operational hub US Data Centers, Inc. February 7, 2025 Delaware, U.S. Patent application for a design of data center equipment Equipment manufacturing and distribution for HPC/AI application World Generation X, LLC June 1, 1989 Delaware, U.S. Power Plant and ancillary machinery needed for operation of plant Requisite power used to support operations Other than the entities listed in the table above, the Corporation does not have any significant subsidiaries. Property, Plants and Equipment Our principal executive office is located at 218 NW 24 th Street, 2 nd Floor, Miami, Florida, 33127. The Corporation has three facilities located in Buffalo, NY; North Tonawanda, NY; and Columbiana, AL. The Corporation has one power plant located in North Tonawanda. The “Buffalo Mining Facility” is located at 1001 East Delavan Ave., Buffalo, New York, with over 60,000 square feet under a 99-year lease. The North Tonawanda facility is located at 1070 Erie Ave., North Tonawanda, New York and covers approximately 13.5 acres of property. The Corporation acquired the property on February 8, 2023. It is a 60 MW power plant in North Tonawanda, New York. This renewable energy project, located in National Grid territory, is being managed by Williamsville, NY based energy supplier, EnergyMark LLC (“EnergyMark”). The community solar project is 5 MW in size and will produce roughly 9,500,000 kWh’s of clean electricity annually-enough to power more than 1,000 homes. The Corporation’s Buffalo Mining Facility remains the anchor subscriber to the project. The Columbiana facility is located at 130 Industrial Parkway, Columbiana, Alabama. The Corporation acquired the property on June 14, 2022. The site consists of approximately 160,000 square feet of office and industrial warehouse space with initial access to 28 MW of power with a total capacity of up to 55 MW. The Corporation also owns approximately 40 acres of land in North Carolina to accommodate a 200 MW power for future development into a Tier 1 and Tier 3 Data Center. 5 Intellectual Property We actively use specific hardware and software for digital asset mining operations. In certain cases, source code and other software assets may be subject to an open-source license, as much of the technology in the digital asset mining sector is open source. Similarly, AI inference models may be available on open-source terms, which benefits our service of AI and HPC workloads. We do not currently own any patents in connection with our existing and planned bitcoin mining-related operations. US Data Centers, Inc. has filed a provisional utility patent application in the U.S. for its AI-Ready Modular Solution (ARMS) 200 platform. In the future, we may seek to register additional patents in connection with our existing and planned digital energy and infrastructure operations. To protect and enforce our proprietary information and intellectual property, we rely upon trade secrets, trademarks, service marks, trade names, copyrights and other intellectual property rights. We maintain and pursue these rights both within the United States and in certain international jurisdictions. Human Capital Resources As of March 31, 2026, we employed 17 individuals and engaged 18 consultants and contractors. We strive to attract and retain professionals with expertise in digital assets, technology, engineering, compliance, and finance. We emphasize integrity, transparency, and risk discipline, support equal-opportunity employment, and maintain a safe and inclusive workplace. No employees are represented by a labor union, and we have experienced no work stoppages. We believe our employee relations are good. Corporate History The legal and commercial name of the Corporation is Digi Power X Inc. The Corporation was originally incorporated in Canada under the Business Corporations Act (British Columbia) on February 18, 2017 under the name Chortle Capital Corp. and later changed its name to HashChain Technology Inc. (“HashChain”) on September 18, 2017. HashChain, a corporation incorporated pursuant to the laws of British Columbia on February 18, 2017, was subject to a reverse take-over whereby the business and assets of HashChain and Digihost International, Inc. (“Digi International”) were combined by way of a share exchange between HashChain and shareholders of Digi International, which closed on February 14, 2020 (the “RTO”). Prior to the closing date of the RTO, the Corporation passed a special resolution authorizing an unlimited number of proportionate voting shares (“PV Shares”) and an unlimited number of SV Shares without par value. Upon closing of the RTO, HashChain filed articles of amendment to rename itself to Digihost Technology Inc. In connection with the RTO, all the issued and outstanding 6,530,560 HashChain common shares were exchanged for 6,530,560 SV Shares, and all of Digi International’s common shares were exchanged for 33,412,490 SV Shares and 10,000 PV Shares of the Corporation. In connection with and immediately prior to the closing of the RTO, Digi International entered into an agreement with Bit.Management, LLC, NYAM, LLC and BIT Mining International, LLC for the sale, transfer and assignment of a 100% right, title and interest in the leasehold improvements and equipment, the transfer of the lease of the Buffalo Mining Facility (as defined below) and transfer of a power contract for the supply of electricity at the facility. As consideration and immediately prior to the closing of the RTO, Digi International issued 104,000 Digi International common shares for an aggregate value of C$2,704,000. Digi International also entered into an agreement with BIT Mining International, LLC for the sale, transfer and assignment of a 100% right, title and interest in the leasehold improvements and equipment located at the Buffalo Mining Facility. As consideration and immediately prior to the closing of the RTO, Digi International issued 60,000 Digi International common shares for an aggregate value of C$1,560,000. The Corporation filed articles of amendment on March 4, 2025 changing its name from Digihost Technology Inc. to Digi Power X Inc. The Corporation’s principal place of business is located at 218 NW 24 th Street, 2 nd Floor, Miami, Florida 33127 and its registered office is located at 595 Howe Street - 10th Floor, Vancouver, BC V6C 2T5. The Corporation’s phone number is (917) 242-6549. The Corporation serves as its agent for service of process in Canada at its registered office located at 595 Howe Street - 10th Floor, Vancouver, BC V6C 2T5. 6 Corporate Developments The following is a summary of the general development of the Corporation’s business over the most recently completed fiscal year to date: Fiscal 2025 During 2025, the Corporation continued executing on our strategy to evolve from a solely digital asset mining-focused business into a power-backed AI infrastructure and Tier 3 data-center platform positioned to serve the accelerating global demand for AI compute, while still maintaining our digital asset mining business. In concert with this strategy, the Corporation invested approximately $11million in capital expenditures for the year ended December 31, 2025. During the year, Digi Power X executed a deliberate strategic pivot toward AI-ready, modular data-center infrastructure, anchored by our wholly-owned subsidiary, US Data Centers Inc. (“US Data Centers”). This transition reflects our belief that long-term value creation in the AI economy is driven by ownership of secured power, scalable infrastructure and flexible compute platforms. Central to this strategy is our proprietary ARMS (AI-Ready Modular Solution) platform, designed to rapidly deploy Tier 3 data-center capacity optimized for high-density AI and enterprise workloads. ARMS 200 Deployment In 2025, US Data Centers completed the design and build-out of ARMS 200, our flagship modular Tier 3 AI data-center pod. The ARMS 200 is currently being set up and is expected to begin deployment in the second quarter of 2026 at our Alabama facility, representing a transition from development to revenue-generating infrastructure. Key attributes of the ARMS 200 include: ● Tier 3 architecture with dual-path power redundancy; ● Modular scalability starting at 1 MW; ● Support for next-generation AI GPUs and liquid-cooling solutions; ● Accelerated deployment timelines During 2025, we also made utility and design patent filings covering both the ARMS branding and its modular architecture. Power Portfolio & Infrastructure Digi Power X significantly expanded and de-risked its power footprint in 2025, establishing a strong foundation for AI data-center growth. Upstate New York ● 123 MW secured in North Tonawanda ● 18.7 MW secured in Buffalo Alabama ● 70 MW secured, with continued development of a Tier 3 AI data-center site featuring dual-path power and GPU cluster readiness North Carolina ● 200 MW available for future development, with planning underway for phased AI data center deployment targeted for 2028-2029, subject to customary approvals, infrastructure buildout and market condition. These assets provide Digi Power X with substantial, grid-connected and scalable power across multiple U.S. regions. 7 AI Compute, NeoCloudz™️ and Customer Pipeline Throughout 2025, Digi Power X advanced its AI compute roadmap, including planning and deployment for next-generation AI GPUs (B200-class). In parallel, the Corporation continued development of NeoCloudz™, its GPU-as-a-Service platform offering flexible, high performance compute access for enterprises and AI-focused customers. The Corporation is currently in advanced negotiations with customers for 2026, covering both: ● AI data-center colocation; and ● GPU-as-a-Service offerings via NeoCloudz™ These discussions are intended to support contracted utilization as ARMS 200 and future deployments come online. Although discussions are in advanced stages, there is no guarantee that any such customer contracts will be finalized. Subsequent to Fiscal 2025 Subsequent to December 31, 2025, the Corporation announced a restructuring and clarification of its relationship with US Data Centers, Inc. (“USDC”), confirming that the Corporation retains a controlling equity interest and that USDC’s business is limited to the manufacturing and distribution of modular data center equipment, with no ownership interest or participation in the Corporation’s data center assets or revenues. On February 27, 2026, the Corporation completed its uplisting to Cboe Canada effective at market open on February 27, 2026. Following the uplisting from the TSX Venture Exchange to Cboe Canada, the Corporation’s subordinate voting shares continue to trade under the symbol “DGX” on Cboe Canada, and the shares continue to be listed on Nasdaq and trade under the symbol “DGXX”. The Corporation remains a “reporting issuer” under applicable Canadian securities laws through the transition from the TSX Venture Exchange to Cboe Canada. Following the uplisting to Choe Canada, the shares no longer trade on the TSX Venture Exchange and were voluntarily delisted from the TSX Venture Exchange effective as of close of market on February 26, 2026. Where You Can Find Other Information The Corporation’s website is www.digipowerx.com. The Corporation files reports and other information with the SEC. The SEC maintains a website that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. The Corporation’s electronic filings are available for viewing on the SEC’s website at https://www.sec.gov. We also file reports under Canadian regulatory requirements on SEDAR+; you may access our reports filed on SEDAR+ by accessing www.sedarplus.ca. The information on or accessible through the websites referenced herein is not part of and is not incorporated by reference into this Annual Report, and the inclusion of website addresses in this Annual Report is only for reference. 8