Keel Infrastructure Corp. 10-K

ITEM 7 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS I. OVERVIEW 1. Introduction The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (the “MD&A”) for Bitfarms Ltd. (together with its subsidiaries, “we”, “our”, the “Company” or “Bitfarms”) should be read in conjunction with our audited annual consolidated financial statements and its accompanying notes for the year ended December 31, 2025 (the “Financial Statements”) included elsewhere in this Annual Report on Form 10-K. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual business, financial condition, and results of operations could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those discussed below and elsewhere in this Annual Report on Form 10-K, particularly under “Item 1A. Risk Factors.” See also “Cautionary Statement Regarding Forward-Looking Statements.” Our historical results are not necessarily indicative of the results that may be expected for any period in the future. Beginning with this Annual Report, we have transitioned from preparing our Financial Statements in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IFRS Accounting Standards”), to accounting principles generally accepted in the United States of America (“U.S. GAAP”). All comparative figures in this MD&A have been adjusted to U.S. GAAP for consistency. Our Financial Statements and this MD&A are reported in thousands of U.S. dollars and U.S. dollars, respectively, except where otherwise noted. In this MD&A, the following terms shall have the following definitions: Term Definition Q4 2025 Three months ended December 31, 2025 Q4 2024 Three months ended December 31, 2024 FY 2025 Twelve months ended December 31, 2025 FY 2024 Twelve months ended December 31, 2024 FY 2023 Twelve months ended December 31, 2023 49 I. OVERVIEW (Continued) 2. Company Overview Bitfarms is a North American digital and energy infrastructure company that develops, owns and plans to operate data centers and energy infrastructure for high-performance computing (“HPC”) and artificial intelligence (“AI”) workloads. In 2025, we began a significant transformation in our corporate strategy, pivoting away from our historical focus on Bitcoin Mining operations in the Americas to concentrate on the United States HPC data center market. This strategic realignment was driven by several key factors, including growing demand for AI compute capacity across North America and the volatility and operational challenges associated with our Latin American jurisdictions. As a result of these strategic decisions and challenges, we classified certain of our Latin American assets as “held for sale” and their operations as discontinued operations. Despite our discontinued operations related to Latin America, we continue to maintain our legacy Bitcoin Mining operations in the U.S. and Canada, to help fund operations and development efforts. Bitfarms was founded in 2017 and is publicly traded on the Nasdaq and TSX under the ticker symbol “BITF.” On or about April 1, 2026, we expect to complete our U.S. Redomiciliation process, pursuant to which shareholders of Bitfarms will exchange their shares for shares of a newly formed public company incorporated in the State of Delaware, Keel Infrastructure Corp. (“Keel”). On or about April 6, 2026, we expect to begin trading on the Nasdaq and TSX under the ticker symbol “KEEL”. Our mission is to deliver the infrastructure and energy required to support HPC and AI workloads. We have a portfolio of assets (our “Infrastructure Assets”) that include owned and operated power generation facilities with collocated Bitcoin Mining data centers, established grid interconnections within the wholesale electricity market administered by PJM Interconnection, L.L.C. (“PJM”) in Pennsylvania, and 100% renewable hydroelectric capacity in Québec, Canada and Washington state. Our Infrastructure Assets represent a 2.2 GW power capacity pipeline, comprising 648 MW of secured capacity and 1,513 MW of planned capacity in development, located across our U.S. Sites and Québec Sites. Currently, our Infrastructure Assets are deployed to support our Bitcoin Mining activities. We are developing our Infrastructure Assets to support HPC data centers, and expect to continue such development in the coming years. HPC Infrastructure is our primary growth area. We are developing data centers designed to support HPC and AI workloads, with the intention of leasing capacity to hyperscalers, cloud service providers, AI companies, and enterprises under long-term contracts. We expect these contracts to deliver higher cash flows per megawatt and greater revenue predictability than Bitcoin Mining. As of December 31, 2025, this growth area had not yet generated revenue. 50 I. OVERVIEW (Continued) 2. Company Overview (Continued) As its historical core business, Bitfarms owns and operates data centers housing computers (referred to as “Miners”) designed for the purpose of validating transactions on the Bitcoin Blockchain (referred to as “Mining”). Bitfarms generally operates its Miners 24 hours per day to produce computational power used for hashing calculations (measured by hashrate) that Bitfarms sells to Mining Pool operators under a formula-driven rate commonly known in the industry as Full Pay Per Share (“FPPS”). Under FPPS, Mining Pool operators compensate Mining companies for their computational power used for hashing calculations, measured by hashrate, based on what the Mining Pool operator would expect to generate in revenue for a given time period if there was no randomness involved. The fee paid by a Mining Pool operator to Bitfarms for its computational power used for hashing calculations may be in cryptocurrency, U.S. dollar, or another currency. However, the fees are paid to Bitfarms on a daily basis in Bitcoin. Bitfarms accumulates the cryptocurrency and transaction fees it receives or exchanges them for U.S. dollar through reputable and established cryptocurrency trading platforms. As of December 31, 2025, Bitfarms operated 14.8 EH/s. Through 2024 and 2025, we upgraded our fleet to 85,442 new-generation ASIC miners (Bitmain T21, S21, S21 Pro, S21 Hydro, and S21+ models), reaching peak capacity of 19.5 EH/s and 19 w/TH efficiency in the first quarter of 2025 prior to the shutdown of our Argentina operations. We do not plan to invest incremental capital in expanding our hashrate and expect Mining to wind down progressively as sites are converted to HPC and AI workloads. To support and accelerate the development of our HPC data center projects, we undertook several significant financing and operational initiatives. As described in Note 3 to the Financial Statements, we acquired Stronghold Digital Mining, Inc. (“Stronghold”) on March 14, 2025 (the “Stronghold Transaction”). Through the acquisition of Stronghold, we now own and operate two refuse power generation facilities with a combined capacity of 473 MW. Both facilities qualify as an “Alternative Energy System” under Pennsylvania, U.S. law because Mining refuse is classified as a Tier II Alternative Energy Source (large-scale hydropower is also classified in this tier). We sell our electricity into the PJM Merchant Market under a professional services agreement with Customized Energy Solutions, Ltd. To support our co-located data centers, our primary fuel source at these facilities is waste which is provided by various third parties. We earn waste tax credits by utilizing refuse to generate electricity. We primarily consume the energy internally to support computational activities related to hashing calculations and sell any excess of energy we produce to the local energy supplier (the “Grid”). In October 2025, we advanced our HPC infrastructure strategy by acquiring the Sharon property in Pennsylvania, United States, for $38.7 million and entered into a purchase commitment of $128.7 million, payable in the next 12 months, for the development and expansion of HPC data center projects with Vertiv, a large publicly-traded American multinational provider of critical infrastructure and services for data centers. In October 2025, we raised $588.0 million through the issuance of Convertible Notes. In April 2025 we drew the initial tranche of $50.0 million of the Macquarie loan, and in October 2025, we borrowed $50.0 million through the conversion of our credit facility, with Macquarie Equipment Capital, Inc. (“Macquarie”). In February 2026, we fully repaid the $100.0 million Macquarie credit facility. 51 I. OVERVIEW (Continued) 3. Factors Affecting our Performance Ability to Secure Low-Cost Electricity HPC data centers and Bitcoin Mining consume extensive energy, including for both the Mining and cooling aspects of our operations. In particular, we believe the increasing difficulty of the network, driven by more miners and higher global hashrate, and the periodic halving adjustments of Bitcoin reward rates, as well as the global demand for HPC data centers for various use cases, and the need for reliability in such industry, will drive the increasing importance of access to power and cost effectiveness in HPC data centers and Bitcoin Mining over the long-term. Certain governments and regulators are increasingly focused on the energy and environmental impact of data centers used for Bitcoin Mining and HPC data centers. This has led, and could lead, to new governmental measures regulating, restricting or prohibiting the use of electricity for Bitcoin Mining and HPC data center operations, or could result in increased power costs for these types of power consumers. We currently maintain a portfolio of competitively priced electrical power. However, there is no guarantee that we will be able to negotiate additional power agreements on similar terms, or at all. The price we pay for electricity depends on numerous factors including sources of generation, regulatory environment, electricity market structure, commodity prices, transmission cost allocation, instantaneous supply/demand balances, counterparty consumption and procurement method. These factors may be subject to change over time and result in increased power costs. In addition, developments in the United States, including actions by the current U.S. administration, signal a policy shift away from supporting renewable energy which could result in fewer such projects being constructed and lead to increases in electricity prices as demand increases. There have also been legislative proposals and other legal developments targeting renewable energy and large electrical loads in certain states. Any reductions or modifications to, or the elimination of laws, programs or incentives that provide electricity to Bitcoin Mining companies or HPC data center operators or that support renewable energy, or the implementation of more arduous requirements for renewable energy projects, could potentially limit the availability of, and increase the costs we incur for, electricity, including renewable energy, in the United States. Competitive Environment We expect increasing global adoption of HPC and AI use cases as existing industries incorporate AI and other HPC-intensive processes and new industries emerge. We anticipate that the use of AI will expand to a broader set of enterprises that will utilize AI to drive internal efficiencies and implement AI into their products and services. As more non-AI-native organizations across a broader spectrum of industries run training and inference workloads on their own proprietary models, and as new industries with additional HPC and AI workload demands emerge, we believe we will be well-positioned to capture those workloads at our facilities. Our facilities are capable of handling these added workloads due to our utility relationships and power procurement capabilities, our Behind-the meter power generation experience, and experience with grid-management and flexible load operations, among other factors. Successful acquisitions of new customers will depend on our ability to provide sufficient, cost-competitive high-uptime supply for HPC and AI compute demands, demand from end-users of AI-enabled products and services, demand from end-users for HPC workloads, our overall pricing relative to competition, and the location and efficiency of our HPC infrastructure sites. If AI and other HPC-intensive use cases are not broadly adopted by enterprises to the extent we expect, or if new use cases do not emerge, our market opportunity may be smaller than we expect. 52 I. OVERVIEW (Continued) 3. Factors Affecting our Performance (Continued) Competitive Environment (Continued) We compete with a variety of Bitcoin Mining companies globally, including individual hobbyists, Mining Pools and public and private companies, as well as HPC data center operators including large and well-funded companies. We believe that, even if the price of Bitcoin decreases, the Bitcoin Mining market will continue to draw new Mining companies and increase the scale and sophistication of competition in the Bitcoin Mining industry, while the HPC Infrastructure sector continues to draw companies with significant resources to dedicate to growing their HPC data center business as well as expertise in the industry. Increasing competition generally results in an increase to the global hashrate, which in turn would generally lead to a reduction in the percentage share of the fixed Bitcoin network rewards that Bitcoin Mining companies, including Bitfarms, would earn, and may result in larger and more established HPC data center providers increasing their resource allocation and attention to the industry, which could make our ability to compete, including to attract and maintain customers, more difficult. Expansion into HPC infrastructure services and other energy-intensive use cases A key factor affecting our performance is our ability to expand into AI infrastructure services and other energy-intensive applications. We are leveraging our existing development and operational expertise to develop HPC data centers that support specialized workloads for enterprise and hyperscale customers and other next-generation, energy-intensive use cases. Success in this area depends on various factors, including our ability to secure and retain customers, manage capital efficiently, develop future sites, and compete effectively in emerging technology markets. While this expansion may increase operating and capital costs and expose us to execution and market risks, management believes our experience in power origination, development, and management in large-scale digital infrastructure development position us to capture long-term growth opportunities in the evolving AI sector and other next-generation, energy-intensive use cases. Market Value of Bitcoin We primarily derive our revenues from Bitcoin Mining. We earn Bitcoin in exchange for computational power used for hashing calculations from Mining Pool operators. We currently liquidate Bitcoin earned into fiat currencies such as U.S. dollar or Canadian dollar as needed. Because the compensation received from computational power used for hashing calculations is paid in Bitcoin, our operating and financial results are tied to fluctuations in the value of Bitcoin. In addition, positive or negative changes in the global hashrate impact Mining difficulty and therefore the quantity of Bitcoin earned from our computational power used for hashing calculations, and as a result, materially affect our revenue and margins. In a declining Bitcoin price environment, the Bitcoin Mining protocol may provide a natural downside protection for low-cost Bitcoin Miners through an adjustment to the number of Bitcoin Mined. For example, when the Bitcoin price falls, the ability for higher cost Mining companies to pay their operating costs may be impacted, which in turn may lead over time to higher cost Mining companies switching off their operations (for example, if their marginal cost of power makes it unprofitable to continue Mining, they may exit the network). As a result, in such circumstances the global hashrate may fall, and remaining low-cost Mining companies may benefit from an increased percentage share of the fixed Bitcoin network rewards. Conversely, in a rising Bitcoin price environment, additional Mining-related equipment may be deployed by Mining companies, leading to increased global hashrate in the overall network. 53 I. OVERVIEW (Continued) 3. Factors Affecting our Performance (Continued) Market Value Bitcoin (Continued) While the total supply of Bitcoin is capped at 21 million, the price of Bitcoin fluctuates because of the dynamic nature of the market for Bitcoin. The market for Bitcoin is rapidly changing and subject to global regulatory, tax, political, environmental, cybersecurity, and market factors beyond our control. For a discussion of other factors that could lead to material adverse changes in the market value of Bitcoin, which could in turn result in substantial damage to or even the failure of our Bitcoin business, see “Item 1A. Risk Factors—Risks Related to Our Business and Operations.” Furthermore, the rewards for each Bitcoin mined are subject to “halving” adjustments at predetermined intervals. At the inception of Bitcoin, the reward for Mining each block was set at 50 Bitcoin and this was cut in half to 25 Bitcoin on November 28, 2012 at block 210,000, cut in half to 12.5 Bitcoin on July 9, 2016 at block 420,000, cut in half to 6.25 Bitcoin on May 11, 2020 at block 630,000, and cut in half again to 3.125 Bitcoin on April 19, 2024 at block 840,000. The next two halving events for Bitcoin are expected to take place in 2028 at block 1,050,000 (when the reward will reduce to 1.5625 Bitcoin), and in 2032 at block 1,260,000 (when the reward will reduce to 0.78125 Bitcoin). As the rewards for each Bitcoin Mined reduce, the Bitcoin we earn relative to our hashrate capacity decreases. As a result, these adjustments have had, and are expected to continue to have, material effects on our operating and financial results. Efficiency of Mining Machines and HPC and AI Hardware As global Mining capacity increases, we would need to correspondingly increase our total hashrate capacity in order to maintain our proportionate share relative to the overall global hashrate to maintain the same amount of Bitcoin Mining revenue. Our Bitcoin Mining operations currently utilize the Bitmain S21 XP Miners, S21 Pro Miners, S21 Miners and T21 Miners. To remain cost competitive compared to other Mining industry participants, in addition to targeting cost effective sources of energy and operating efficient data center infrastructure, we would need to maintain an energy efficient Mining fleet, which would require capital outlays to purchase new Miners, so that we could make periodic upgrades to our existing Mining fleet. As we plan to operate our facilities to support HPC and AI uses, our future performance and success will depend in part on our ability to access the latest generation of high-performance networking and storage equipment required to operate our HPC data centers. From time-to-time, disruption in global supply chains may result in shortages of advanced Mining-related equipment and HPC and AI infrastructure components that meet our standards of quality and efficiency. 54 II. RESULT OF OPERATIONS 1. Production and Mining Operations 1 Key Performance Indicators In addition to our financial results and U.S. GAAP financial measures, we use certain key performance indicators to evaluate our business, identify trends, and make strategic decisions. The following table presents our key performance indicators for the years ended December 31, 2025, 2024 and 2023: Years ended December 31, 2025 2024 2023 2025 v. 2024 2024 v. 2023 % Change % Change Total Bitcoin earned through Bitcoin Mining 2,008 1,992 4,074 1 % (51 )% Bitcoin received through hosting revenue 1 46 — — 100 % — % Cost per kWh $ 0.049 $ 0.047 $ 0.049 4 % (5 )% Average Watts/Average TH efficiency* 18 25 36 (28 )% (31 )% Installed Watts/TH efficiency 19 21 35 (10 )% (40 )% * Average Watts represents the average energy consumption of deployed Miners Total Bitcoin earned Total Bitcoin earned represents the aggregate number of Bitcoin received in exchange from its computational power used for hashing calculations during the period. This metric is a key indicator of our operational performance and Mining productivity, as it reflects uptime, fleet efficiency, network difficulty, and deployed hashrate. During FY 2025, we earned 2,008 Bitcoin, compared to 1,992 Bitcoin earned during FY 2024, representing an increase of 1% from the previous year as a result of an increase in hashrate from our expansions and upgrades to our Miner fleet with higher efficiency Miners, partially offset by reduced Block Rewards following the April 2024 halving event and a 47% higher average Network Difficulty. During FY 2024, we earned 1,992 Bitcoin compared to 4,074 Bitcoin earned during FY 2023, representing a decrease of 51% from the previous year as a result of reduced Block Rewards following the April 2024 halving event and a 68% increase in average Network Difficulty, partially offset by an increase in hashrate from our expansions and upgrades to our Miner fleet with higher efficiency Miners. Cost per kWh Cost per kWh represents the average electricity price incurred to power our Mining operations. This metric allows users to assess our operational energy efficiency. Power cost is a key driver of Mining profitability. During FY 2025 the cost per kWh was $0.049 compared to $0.047 in FY 2024. The 4% increase is mainly due to higher cost of energy for the Panther Creek and Scrubgrass data centers. During FY 2024 the cost per kWh was $0.047 compared to $0.049 in FY 2023. The 5% decrease is mainly due to lower cost in North American Bitcoin data centers. 1 Excluding discontinued operations in Rio Cuarto, Argentina, which have been abandoned due to the halting of the energy supply since May 12, 2025 and economic uncertainty in the region, and in Paso Pe, Paraguay, which met the criteria to be classified as held for sale as we make a strategic shift towards HPC/AI Infrastructure in North America. 55 II. RESULT OF OPERATIONS (Continued) 1. Production and Mining Operations 1 (Continued) Key Performance Indicators (Continued) Average Watts/Average TH Average watts/Average TH measures the energy efficiency of our active Mining fleet by calculating the average power consumption in watts required to generate one TH per second of computational capacity. Lower Watts/TH indicates greater fleet efficiency, which directly impacts operating costs and Mining margins. We improved ending energy efficiency to 19 Watts/TH on December 31, 2025, compared to 21 Watts/TH on December 31, 2024, with our Mining fleet upgrades. This improvement resulted in a 18 average Watts/Average TH efficiency during FY 2025, compared to 25 average Watts/Average TH efficiency during FY 2024, representing an improvement of 28%. We maintained our ending energy efficiency at 21 Watts/TH as of December 31, 2024, which is consistent with the energy efficiency as of December 31, 2023. Our Mining fleet upgrades resulted in a 25 average Watts/Average TH efficiency during FY 2024, compared to 36 average Watts/Average TH efficiency during FY 2023, representing an improvement of 31%. The following table presents our key performance indicators as of December 31, 2025, 2024 and 2023: As of December 31, 2025 2024 2023 2025 v. 2024 2024 v. 2023 % Change % Change Current Energized Capacity (MW) 341 323 240 6 % 35 % Secured Growth Capacity (MW) 430 70 10 514 % 600 % Secured Gross Data Center Capacity (MW)* 648 393 250 65 % 57 % Identified Additional Gross Data Center Capacity (MW) 1,513 — — 100 % — % Total Pipeline (MW) 2,161 393 250 450 % 57 % * The current energized capacity at the Panther Creek and Scrubgrass site of 60 MW and 63 MW, respectively, are not under an energy service agreement. The capacity is therefore excluded from Secured Gross Data Center Capacity. Current Energized Capacity Current Energized Capacity represents the gross power capacity provided by utilities being used at our U.S. Sites and Québec Sites Secured Growth Capacity Secured Growth Capacity represents gross power capacity that is not currently available on site but for which the Company has executed an electric supply agreement with a utility, whereby the utility agrees to provide that power capacity at a specified future date. 1 Excluding discontinued operations in Rio Cuarto, Argentina, which have been abandoned due to the halting of the energy supply since May 12, 2025 and economic uncertainty in the region, and in Paso Pe, Paraguay, which met the criteria to be classified as held for sale as we make a strategic shift towards HPC/AI Infrastructure in North America. 56 II. RESULT OF OPERATIONS (Continued) 1. Production and Mining Operations 1 (Continued) Key Performance Indicators (Continued) Secured Gross Data Center Capacity Secured Gross Data Center Capacity represents the total amount of gross power capacity that is subject to electric supply agreements with utilities, including both power capacity currently available on site and power capacity that utilities have agreed to deliver at a future date. Identified Additional Gross Data Center Capacity Gross power capacity that has not been contracted under an electric supply agreement but is currently being evaluated at the U.S. Sites and Quebec Sites. This includes capacity that is currently under utility load studies as well as potential on-site, behind-the-meter natural gas power generation at Scrubgrass. Total Pipeline Total Pipeline represents the sum of Secured Gross Data Center Capacity and Identified Additional Gross Capacity. This measure encompasses both committed capacity and early-stage opportunities under evaluation. Management monitors the total pipeline to understand the full spectrum of current and potential future growth and to prioritize development efforts aligned with strategic objectives. 1 Excluding discontinued operations in Rio Cuarto, Argentina, which have been abandoned due to the halting of the energy supply since May 12, 2025 and economic uncertainty in the region, and in Paso Pe, Paraguay, which met the criteria to be classified as held for sale as we make a strategic shift towards HPC/AI Infrastructure in North America. 57 II. RESULT OF OPERATIONS (Continued) 2. Financial Performance Consolidated Financial & Operational Results Year ended December 31, (U.S.$ in thousands except where indicated) 2025 2024 2023 2025 v. 2024 2024 v. 2023 $ Change % Change $ Change % Change Revenues 229,276 133,274 120,400 96,002 72 % 12,874 11 % Cost of revenues (248,180 ) (149,186 ) (144,142 ) (98,994 ) 66 % (5,044 ) 3 % Gross loss (18,904 ) (15,912 ) (23,742 ) (2,992 ) 19 % 7,830 (33 )% Gross margin (1) (8 )% (12 )% (20 )% — — — — Operating expenses General and administrative expenses (78,339 ) (61,925 ) (33,867 ) (16,414 ) 27 % (28,058 ) 83 % Change in fair value of digital assets (50,522 ) 26,015 7,558 (76,537 ) (294 )% 18,457 244 % Realized gain on sale of digital assets 28,219 27,209 7,713 1,010 4 % 19,496 253 % (Loss) gain on disposition of property, plant and equipment and deposits (1,612 ) 227 (2,055 ) (1,839 ) (810 )% 2,282 111 % Impairment of long-lived assets and deposits (28,442 ) (3,628 ) (5,604 ) (24,814 ) 684 % 1,976 (35 )% Operating loss (149,600 ) (28,014 ) (49,997 ) (121,586 ) 434 % 21,983 (44 )% Operating margin (1) (65 )% (21 )% (42 )% — — — — Interest income 6,288 6,037 1,420 251 4 % 4,617 325 % Interest expense (8,623 ) (745 ) (2,865 ) (7,878 ) nm 2,120 (74 )% (Loss) gain on derivative assets and liabilities (50,415 ) 17,819 48 (68,234 ) (383 )% 17,771 nm Gain on extinguishment of long-term debt — — 12,835 — — % (12,835 ) (100 )% Other expense (6,063 ) (2,110 ) (1,528 ) (3,953 ) 187 % (582 ) 38 % Total other (expense) income (58,813 ) 21,001 9,910 (79,814 ) (380 )% 11,091 112 % Loss before taxes from continuing operations (208,413 ) (7,013 ) (40,087 ) (201,400 ) nm 33,074 (83 )% Income tax (expense) recovery (101 ) (346 ) 154 245 (71 )% (500 ) (325 )% Loss from continuing operations (208,514 ) (7,359 ) (39,933 ) (201,155 ) nm 32,574 (82 )% Loss from discontinued operations (2) (76,030 ) (21,006 ) (15,578 ) (55,024 ) 262 % (5,428 ) 35 % Net loss (284,544 ) (28,365 ) (55,511 ) (256,179 ) 903 % 27,146 (49 )% nm: not meaningful The financial performance discussed below for continuing operations does not include our Argentina and Paraguay operations. 1 Gross margin and Operating margin are supplemental financial ratios; refer to Section 4 - Non-GAAP and Other Financial Measures and Ratios . 2 Excluding discontinued operations in Rio Cuarto, Argentina, which have been abandoned due to the halting of the energy supply since May 12, 2025 and economic uncertainty in the region, and in Paso Pe, Paraguay, which met the criteria to be classified as “held for sale” as we make a strategic shift towards HPC Infrastructure in North America. 58 II. RESULT OF OPERATIONS (Continued) 2. Financial Performance (Continued) A. Revenues from continuing operations FY 2025 v. FY 2024 Revenues were $229.3 million in FY 2025 compared to $133.3 million in FY 2024. The increase of $96.0 million, or 72% is mainly due to a $78.0 million increase in Bitcoin Mining revenue resulting from the increase in average Bitcoin price and the increase in Bitfarms’ average hashrate. During FY 2025, we mined 2,008 Bitcoins with an average Bitcoin price of $100,942, compared to 1,992 Bitcoins with an average Bitcoin price of $63,715 in FY 2024. In addition, following the acquisition of Stronghold in the first quarter of 2025, our Energy Sales and Hosting Revenue increased by $14.0 million and $4.5 million, respectively. These increases were partially offset by a higher Network Difficulty and lower Bitcoin Block Rewards following the Bitcoin halving event that occurred on April 19, 2024. We earned our revenues during FY 2025 from our North American operations. The United States and Canada accounted for 51% and 49% of total revenues, respectively, compared to 12% and 88% in FY 2024, respectively. In FY 2025, revenues from our continuing operations in the United States increased by $99.9 million compared to FY 2024. The increase is mainly due to the average hashrate increase of the United States operations of 5.1 EH/s and the increase in average Bitcoin price, partially offset by a higher Network Difficulty, as well as the decrease in Block Rewards following the Bitcoin halving event that occurred on April 19, 2024. Our acquisition of Stronghold facilities as part of the Stronghold Transaction contributed to 1.4 EH/s, or 23% of the hashrate increase. Revenues from our continuing operations in Canada decreased by $3.9 million, compared to FY 2024 due to the factors mentioned above, partially offset by the average hashrate increase of Canada operations of 0.9 EH/s and the increase in average Bitcoin price. FY 2024 v. FY 2023 Revenues were $133.3 million in FY 2024 compared to $120.4 million in FY 2023. The increase of $12.9 million, or 11%, is primarily due to a $12.8 million increase in Bitcoin Mining revenue resulting from the increase in average Bitfarms’ hashrate and the increase in average Bitcoin price. During FY 2024, we mined 1,992 Bitcoins with an average Bitcoin price of $63,715, compared to 4,074 Bitcoins with an average Bitcoin price of $28,311 in FY 2023. The increase was partially offset by a higher Network Difficulty and the fewer Bitcoin earned resulting from lower Bitcoin block rewards following the Bitcoin halving event that occurred on April 19, 2024. We earned our revenues during FY 2024 from our North American continuing operations. Canada and the United States accounted for 88% and 12% of total revenues, respectively, in line with FY 2023. In FY 2024, revenues from our operations in Canada increased by $7.8 million compared to FY 2023. The increase is mainly due to the average hashrate increase of Canada operations of 1.3 EH/s and the increase in average Bitcoin price. Revenues from our United States operations increased by $5.0 million during FY 2024 compared to FY 2023 due to the increase in average Bitcoin price. Both increases were partially offset by a higher Network Difficulty and the decrease in block rewards following the Bitcoin halving event that occurred on April 19, 2024. 59 II. RESULT OF OPERATIONS (Continued) 2. Financial Performance (Continued) B. Cost of Revenues from continuing operations FY 2025 v. FY 2024 Our cost of revenues was $248.2 million for FY 2025 compared to $149.2 million for FY 2024. The higher cost of revenues was largely due to a $50.2 million, or 623%, increase in infrastructure expenses. Infrastructure expenses increased by $32.5 million in relation to the operating expenses at the Panther Creek and Scrubgrass power plants following the acquisition of Stronghold in the first quarter of 2025. The Stronghold infrastructure expenses consisted of $11.8 million of plant maintenance costs, $11.9 million of labor costs and other employee benefits, and $8.8 million of other operating expenses. We had a $9.2 million increase in customs duty expenses during the year following a determination by the U.S. Customs and Border Protection regarding Miners we imported in 2021. Sales tax recoveries in FY 2025 were nil, compared to $25.8 million received in FY 2024 for sales taxes we paid between February 5, 2022 and April 2024 after having received confirmation from the provincial tax authorities that Canadian sales taxes were refundable. Energy expenses in FY 2025 increased by $19.9 million, or 33% largely due to a $32.3 million increase in fuel expenses from our power plants following the acquisition of Stronghold in the first quarter of 2025. In addition, electricity costs increased by $10.3 million as we added new and more efficient Miners resulting in increased energy utilization to an average of 212 MW during FY 2025 compared to 146 MW for the same period in 2024. The increase was partially offset by Rights to Renewable Energy Credits (“RECs”) and Waste Tax Credits (“WTCs”) of $17.1 million and $5.7 million, respectively, compared to nil in FY 2024. Our hosting expenses were $7.7 million in FY 2025, compared to nil in FY 2024, largely due to a $4.4 million increase in electricity costs incurred in Q1 2025 as well as a non-recurring increase of $3.3 million in hosting expenses as we had our Miners hosted at Stronghold’s Panther Creek and Scrubgrass facilities in the first quarter of 2025, prior to the Stronghold acquisition. The increases in cost of revenues were partially offset by a $4.4 million decrease in non-cash depreciation and amortization expenses due to the accelerated depreciation recorded in FY 2024 related to the upgrade program which reduced the anticipated useful life of older Miners, offset by the additional depreciation related to the business acquisition in FY 2025. FY 2024 v. FY 2023 Our cost of revenues was $149.2 million for FY 2024 compared to $144.1 million for FY 2023. The increase in cost of revenues was largely due to a $37.5 million increase in non-cash depreciation and amortization expenses mainly attributable to accelerated depreciation of the older Miners that were replaced through the fleet upgrade as we progressively installed new Miners in 2024. The increases were partially offset by a $25.8 million sales tax recovery due to the confirmation we received from the provincial tax authorities that Canadian sales taxes we paid from February 5, 2022 onwards are refundable, and an $8.3 million decrease in energy expenses due to Canadian sales taxes on our energy and infrastructure expenses no longer being expensed in FY 2024. 60 II. RESULT OF OPERATIONS (Continued) 2. Financial Performance (Continued) C. General & Administrative Expenses from continuing operations FY 2025 v. FY 2024 For FY 2025, our G&A expenses were $78.3 million, compared to $61.9 million in FY 2024. The increase in G&A expenses of $16.4 million, or 27%, was largely due to an $8.0 million increase in salaries and wages due to (i) the increase in our overall headcount in FY 2025 compared to FY 2024 to support the expansion in the United States as well as merit and market-based adjustments and cost of living salary increases and (ii) the salaries paid to Stronghold employees following the acquisition in the first quarter of 2025. Our insurance, duties and other costs increased by $3.7 million due to higher property and liability insurance expenses as a result of expanded infrastructure and a larger number of Miners deployed as well as increases in property taxes, other taxes, permits and software licenses to support the global expansion. The $2.1 million sales tax recovery received in FY 2024 compared to nil in FY 2025 was due to the same reasons as explained above. The increases were partially offset by a $2.3 million decrease in professional services largely due to legal and accounting fees incurred in FY 2024 associated with nonrecurring activities including (i) the Stronghold Transaction, (ii) the Strategic Alternatives Review Process as defined in our 2024 Annual MD&A, (iii) the response to the shareholder dispute involving Riot Platforms Inc., including with respect to our implementation and defense of the shareholder rights plan adopted on June 20, 2024 and having entered into the Settlement Agreement, and (iv) the settlement of the employment claim against us brought by our former CEO, compared to nil in FY 2025. FY 2024 v. FY 2023 For FY 2024, our G&A expenses were $61.9 million, compared to $33.9 million for the same period in 2023. The increase of $28.1 million, or 83%, in G&A expenses was largely due to a $16.6 million increase in professional services related to legal and accounting fees associated with non-recurring activities in FY 2024 is due to the same reasons as explained in the section FY 2025 v. FY 2024 above. Our salaries and wages increased by $8.9 million due to (i) the increase in our overall headcount in FY 2024 compared to FY 2023 to support the global expansion as well as merit and market-based adjustments and cost of living salary increases and (ii) the termination payment under the former CEO’s employment agreement totaling $1.6 million which was paid in the second quarter of 2024 after the former CEO’s departure and a final settlement payment of $2.5 million paid in the third quarter of 2024, ending any outstanding litigation or claims. Insurance, duties and other costs increased by $2.6 million due to increases in property and liability insurance expenses as a result of expanded infrastructure and a larger number of Miners deployed as well as increases in property taxes, other taxes, permits and software licenses to support the global expansion. The increases were partially offset by a $2.1 million sales tax recovery received in FY 2024 compared to nil in FY 2023 due to the same reason as explained in the section FY 2025 v. FY 2024 above. 61 II. RESULT OF OPERATIONS (Continued) 2. Financial Performance (Continued) D. Total other (expense) income from continuing operations FY 2025 v. FY 2024 Interest expense was $8.6 million in FY 2025, compared to $0.7 million for FY 2024 as a result of the interest expense on the Macquarie credit facility and the Convertible Notes issued during FY 2025. Losses on derivative assets and liabilities were $50.4 million in FY 2025 compared to a $17.8 million gain in FY 2024 due to unrealized losses of $63.9 million during FY 2025 on open positions of capped call transactions entered into during FY 2025 in connection with the Convertible Notes, in addition to a realized loss on Bitcoin redemption options of $2.4 million during FY 2025 as we settled or forfeited all remaining positions. For more details about capped call transactions, refer to Note 10 ( Derivative Assets and Liabilities ) and Note 22 ( Financial Instruments ) to the Financial Statements. Our other expenses were $6.1 million for FY 2025, compared to a $2.1 million expense for FY 2024. The $4.0 million unfavorable change was largely due to (i) an unfavorable change in other financial expenses of $3.1 million mainly due to $2.7 million in non-recurring interest on customs duties in FY 2025; (ii) a $3.1 million unfavorable change in amortization of transaction costs and debt discount related to the Macquarie credit facility and the Convertible Notes; and partially offset by (iii) $1.8 million favorable change from the gain on settlement of refundable deposits during FY 2025 and the loss on initial recognition of these refundable deposits during FY 2024. FY 2024 v. FY 2023 Interest income was $6.0 million for FY 2024, compared to $1.4 million for FY 2023. The increase was due to our higher average cash balance during FY 2024 compared to FY 2023. Interest expense was $0.7 million for FY 2024, compared to $2.9 million for FY 2023. The decrease in interest expense was due to (i) the extinguishment in February 2023 of the BlockFi Lending LLC (“BlockFi”) Loan that commenced on February 18, 2022 as described below and (ii) the NYDIG ABL LLC (“NYDIG”) Loan that commenced on June 15, 2022 and was fully repaid in February 2024. Gains of $17.8 million on derivative assets and liabilities were recognized in FY 2024 compared to nil in FY 2023 largely due to a $15.9 million gain on our capitalization on Bitcoin price near all-time highs to close out Synthetic HODL positions, combined with the $2.1 million gain from the change in the fair value of the Bitcoin redemption option. A $12.8 million gain on extinguishment of long-term debt and lease liabilities was recognized during FY 2023. In February 2023, we negotiated with BlockFi the settlement of the loan in its entirety for cash consideration of $7.8 million, resulting in a gain on extinguishment of long-term debt of $12.6 million compared to nil in FY 2024. 62 II. RESULT OF OPERATIONS (Continued) 2. Financial Performance (Continued) E. Discontinued Operations In 2025, we began a significant transformation in our corporate strategy, pivoting away from our Latin American Bitcoin Mining operations to concentrate on the U.S. HPC infrastructure market. As a result of these strategic decisions, we classified certain of our Latin American assets as “held for sale” and their operations as discontinued operations. i. Argentina’s operations as discontinued operations During the second quarter of 2025, our energy supplier halted the supply of electricity to our Rio Cuarto, Argentina Bitcoin data center. Following this event, on August 11, 2025, we determined that we would discontinue and abandon our operations in Rio Cuarto, Argentina. We negotiated to eliminate our asset retirement obligation and reduced the reserved power to a minimum. As of September 30, 2025, our Argentina operations were abandoned and classified as a discontinued operation. During the year ended December 31, 2025, discontinued operations in Argentina resulted in a net loss of $43.7 million, which is mainly explained by an impairment loss on long-lived assets and deposits of $35.3 million. ii. Paraguay’s operations as discontinued operations and assets held for sale During the first quarter of 2025, we finalized the sale of our Yguazu Bitcoin data center in Paraguay. During the third quarter of 2025, we determined that the Paso Pe Bitcoin data center met the criteria to be classified as held for sale, and all operations in Paraguay were classified as discontinued operations as we make a strategic shift towards HPC infrastructure projects in North America. The sale of the Paso Pe Bitcoin data center operations is anticipated to close within twelve months of the date the Bitcoin data center was classified as “held for sale”. Refer to Note 11 - Assets Held for Sale and Discontinued Operations to the Financial Statements for more information on the results of Argentina’s and Paraguay’s operations and Note 12 - Impairment to the Financial Statements for more details on the impairment loss of our Paraguay and Argentina asset groups. During the year ended December 31, 2025, discontinued operations in Paraguay resulted in a net loss of $32.3 million, which is largely explained by an impairment loss on long-lived assets and deposits of $38.1 million. 63 II. RESULT OF OPERATIONS (Continued) 2. Financial Performance (Continued) F. Change in fair value of digital assets FY 2025 v. FY 2024 In FY 2025, a $50.5 million loss on the change in fair value of digital assets was recognized, compared to a gain of $26.0 million in FY 2024, primarily due to a decline in Bitcoin prices and realization of gains on disposal of Bitcoin during the year. FY 2024 v. FY 2023 In FY 2024, a $26.0 million gain on the change in fair value of digital assets was recorded, compared to $7.6 million for FY 2023, primarily due to an increase in Bitcoin prices during the year. G. Realized gain on sale of digital assets from continuing operations FY 2025 v. FY 2024 In FY 2025, the realized gain on disposition of digital assets amounted to $28.2 million, compared to $27.2 million for FY 2024 as a result of a higher Bitcoin average selling price, partially offset by a lower quantity of Bitcoin sold. FY 2024 v. FY 2023 In FY 2024, the realized gain on sale of digital assets amounted to $27.2 million, compared to $7.7 million for FY 2023 as a result of a higher Bitcoin average selling price, partially offset by a lower quantity of Bitcoin sold. H. (Loss) gain on disposition of property, plant and equipment and deposits from continuing operations FY 2025 v. FY 2024 In FY 2025, the loss on disposition of property, plant and equipment and deposits amounted to $1.6 million, compared to a gain of $0.2 million for FY 2024. FY 2024 v. FY 2023 In FY 2024, the gain on disposition of property, plant and equipment and deposits amounted to $0.2 million, compared to a loss of $2.1 million for FY 2023. I. Impairment of long-lived assets and deposits FY 2025 v. FY 2024 In FY 2025, the impairment of long-lived assets and deposits was $28.4 million, compared to $3.6 million for FY 2024, primarily due to the impairment recognized on assets “held for sale”. FY 2024 v. FY 2023 In FY 2024, the impairment of long-lived assets and deposits was $3.6 million, compared to $5.6 million for FY 2023. The decrease is largely due to the termination of importation of Miners agreements with external brokers during FY 2023 resulting in an impairment of short-term deposits made to external brokers in addition to the FY 2023 impairment on Suni mineral assets. 64 II. RESULT OF OPERATIONS (Continued) 3. Selected Quarterly Information from Continuing Operations 1 Set forth below is unaudited supplemental quarterly financial information that reflects material retrospective adjustments to our consolidated statements of operations as a result of the transition to U.S. GAAP and is intended to assist investors in evaluating our results of operations on a consistent basis across periods. This data should be read in conjunction with our unaudited condensed consolidated financial statements and audited consolidated financial statements and related notes for the relevant period. These quarterly operating results are not necessarily indicative of our operating results for a full year or any future periods. (U.S. $ in thousands except earnings per share) Q4 2025 Q3 2025 Q2 2025 Q1 2025 Q4 2024 Q3 2024 Q2 2024 Q1 2024 Revenues 52,748 67,969 60,908 47,651 37,752 27,072 31,425 37,025 (Loss) income from continuing operations, net (171,210 ) (12,127 ) 13,196 (38,373 ) 41,561 (26,412 ) (21,541 ) (967 ) Basic (loss) earnings per share from continuing operations (0.31 ) (0.02 ) 0.02 (0.08 ) 0.09 (0.06 ) (0.05 ) — Diluted (loss) earnings per share from continuing operations (0.31 ) (0.02 ) 0.02 (0.08 ) 0.09 (0.06 ) (0.05 ) — Revenues decreased in Q4 2025 compared to the third quarter of 2025, following a general upward trend throughout 2024 and the first three quarters of 2025. The quarter-over-quarter decline reflects changes in operating and market conditions during the period. Net loss from continuing operations increased in Q4 2025 compared to the third quarter of 2025. The higher net loss was primarily driven by the decline in revenues and the impact of operating expenses and other costs that did not decrease proportionately, contributing to greater variability in quarterly results. Quarterly results have been and are expected to continue to be affected by market conditions, cost structure, and non-cash items. Although the Bitcoin Mining industry experiences volatility, Bitcoin prices are not generally subject to seasonality or seasonal effects. Seasonal fluctuations in energy supply, however, may impact our operations. We had operations in Québec, Canada, where power was sourced from Hydro-Québec, Hydro-Magog, Hydro-Sherbrooke and the City of Baie-Comeau. We also had operations in Washington state, United States, that were powered by the Grant County Power Utility District, as well as operations in Pennsylvania, United States, that were powered by Stronghold and the PJM Interconnection Merchant Market. Among other phenomena, changing weather in Québec (Canada), Washington state (United States) and Pennsylvania (United States) may impact seasonal electricity needs and costs. Periods of extreme cold or extreme hot weather may contribute to service interruptions in Bitcoin Mining operations. Changes to supply and/or demand of electricity may result in curtailment of electricity to our Bitcoin Mining operations. Our geographical diversification may reduce the risk and extent of extreme weather and other external factors unduly affecting our overall performance. 1 This data excludes the discontinued operations in Río Cuarto, Argentina and in Paraguay. On May 12, 2025, our energy provider GMSA, halted the supply of electricity to the Company’s Rio Cuarto Bitcoin data center with energized capacity of 58 MW. On August 11, 2025, three months after being informed that electricity supply was being halted and with no path forward to resume operations in the future, the decision was made to shut down the plant, which was abandoned by September 30, 2025. Additionally, as of September 30, 2025, the Paso Pe BTC data center met the criteria to be classified as “held for sale”, and all operations in Paraguay were designated as discontinued operations as we make a strategic shift towards HPC/AI infrastructure in North America. 65 II. RESULT OF OPERATIONS (Continued) 4. Non-GAAP and Other Financial Measures and Ratios Non-GAAP financial measures from continuing operations 1 In addition to our results determined in accordance with U.S. GAAP, we utilize a number of non-GAAP financial measures and ratios in assessing operating performance, including “EBITDA”, “EBITDA margin”, “Adjusted EBITDA” and “Adjusted EBITDA margin”. Non-GAAP measures and ratios may exclude the impact of certain items and are used internally when analyzing operating performance. The definitions of the non-GAAP measures referenced herein, and the reasons the Board and Management use such non-GAAP measures, are set forth below. These measures are provided as additional information to supplement U.S. GAAP measures by providing further understanding of our results of operations from Management’s perspective. Accordingly, they should not be considered in isolation nor as a substitute for analysis of our financial information reported under U.S. GAAP. Furthermore, because our calculation of these non-GAAP financial measures may differ from other companies, our presentation of these measures may not be comparable to similarly-titled measures of other companies. The definitions and the data in the non-GAAP section exclude the discontinued operations in Rio Cuarto, Argentina and in Paraguay. 66 II. RESULT OF OPERATIONS (Continued) 4. Non-GAAP and Other Financial Measures and Ratios (Continued) A. Reconciliation of Consolidated Net (loss) income from continuing operations to EBITDA and Adjusted EBITDA from Continuing Operations EBITDA is defined as net income (loss) from continuing operations adjusted to exclude: (i) interest expense; (ii) interest income; (iii) income tax expense; and (iv) depreciation and amortization. EBITDA Margin is defined as the percentage obtained when dividing EBITDA by Revenues. EBITDA and EBITDA Margin are used to: ● Assess profitability before the impact of different financing methods, income taxes, depreciation of capital assets and amortization of intangible assets; ● Provide the users of the MD&A with additional information to assist them in understanding components of our financial results, including a more complete understanding of factors and trends affecting our performance; and ● Facilitate comparisons of cash operating performance excluding the impact of charges and credits associated with financing our operations and growth from period to period and to assist Management in preparing annual operating budgets and forecasts. Adjusted EBITDA is defined as EBITDA adjusted to exclude: (i) stock-based compensation; (ii) realized gain and loss on disposition of digital assets; (iii) change in fair value of digital assets; (iv) non-cash finance expenses; (v) asset impairment charges; (vi) gain on settlement of Refundable Hosting Deposits, disposition of marketable securities, gains or losses on derivative assets and liabilities and discount expense on VAT receivable; (vii) loss (gain) on derecognition and revaluation of warrants and warrant issuance costs; (viii) loss on currency exchange; (ix) sales tax recovery; and (x) other non-recurring items that do not reflect our core performance. Adjusted EBITDA Margin is defined as the percentage obtained when dividing Adjusted EBITDA by Revenues. Adjusted EBITDA and Adjusted EBITDA Margin are used to: ● Assess profitability before the impact of all of the items in calculating EBITDA in addition to certain other non-cash expenses; ● Provide the users of the MD&A a consistent comparable metric for profitability of our core operations across time periods; and ● Facilitate comparisons of operating performance from period to period and to assist Management in preparing annual operating budgets and forecasts. 67 II. RESULT OF OPERATIONS (Continued) 4. Non-GAAP and Other Financial Measures and Ratios (Continued) A. Reconciliation of Consolidated Net (loss) income from continuing operations to EBITDA and Adjusted EBITDA from Continuing Operations (Continued) Year ended December 31, (U.S.$ in thousands except where indicated) 2025 2024 2023 2025 v. 2024 2024 v. 2023 $ Change % Change $ Change % Change Revenues 229,276 133,274 120,400 96,002 72 % 12,874 11 % Loss before taxes from continuing operations (208,413 ) (7,013 ) (40,087 ) (201,400 ) nm 33,074 (83 )% Interest income (6,288 ) (6,037 ) (1,420 ) (251 ) 4 % (4,617 ) 325 % Interest expense 8,623 745 2,865 7,878 nm (2,120 ) (74 )% Depreciation and amortization 98,130 102,469 65,043 (4,339 ) (4 )% 37,426 58 % Sales tax recovery - depreciation and amortization — (8,760 ) — 8,760 100 % (8,760 ) 100 % EBITDA (107,948 ) 81,404 26,401 (189,352 ) (233 )% 55,003 208 % EBITDA margin (47 )% 61 % 22 % Stock-based compensation 14,768 12,079 10,606 2,689 22 % 1,473 14 % Realized gain on disposition of digital assets (28,219 ) (27,209 ) (7,713 ) (1,010 ) 4 % (19,496 ) 253 % Change in fair value of digital assets 50,522 (26,015 ) (7,558 ) 76,537 nm (18,457 ) 244 % Impairment of long-lived assets and deposits 28,442 3,628 5,604 24,814 684 % (1,976 ) (35 )% Loss (gain) on derivative assets and liabilities 50,415 (17,819 ) (48 ) 68,234 nm (17,771 ) nm Gain on extinguishment of long-term debt — — (12,835 ) — — % 12,835 100 % Gain on derecognition of warrants — (62 ) — 62 100 % (62 ) 100 % Gain on settlement of Refundable Hosting Deposits (945 ) — — (945 ) 100 % — — % Costs not associated with ongoing operations (1) 13,283 13,766 — (483 ) (4 )% 13,766 100 % Sales tax recovery - prior years - energy and infrastructure and G&A expenses (2) — (16,063 ) 9,281 16,063 100 % (25,344 ) (273 )% Other expense (income) (3) 8,620 7,604 2,775 1,016 13 % 4,829 174 % Adjusted EBITDA 28,938 31,313 26,513 (2,375 ) (8 )% 4,800 18 % Adjusted EBITDA margin 13 % 23 % 22 % nm: not meaningful 1 Costs not associated with ongoing operations for the year ended December 31, 2025 includes $9.2 million of customs duties following a determination by the U.S. Customs and Border Protection regarding Miners imported by us in 2021, $1.6 million of professional fees related to the acquisition of Stronghold, $1.4 million of professional fees related to the U.S. re-domiciliation and $0.8 million related to the U.S. GAAP conversion, $0.2 million of professional fees related to exit strategies for our South America operations, and $0.1 million of professional fees related to the sale of Yguazu. Costs not associated with ongoing operations for the year ended December 31, 2024 include $12.4 million of professional fees incurred in relation to the dispute with Riot Platforms Inc. and $1.3 million of professional fees related to the acquisition of Stronghold. 2 Sales tax recovery relating to energy and infrastructure and general and administrative expenses have been allocated to their respective periods; refer to Note 25- Additional Details to the Statement of Operations to the Financial Statements. 3 Other expense for the year ended December 31, 2025 includes $3.4 million of other financial expense included in Other expenses (income) of the Statement of Operations, $3.1 million related to the amortization of the credit facility transaction costs, the $1.6 million loss on disposal of PPE and the $0.4 million loss on exchange rates. Other income for the year ended December 31, 2024 includes $4.1 million of termination payments, $1.5 million of Washington sales and property taxes, $0.9 million loss on initial recognition of refundable hosting deposit, $0.9 million loss on exchange rates, $0.3 million of other financial expense included in Other expenses (income) of the Statement of Operations and $0.2 million gain on disposal of PPE. Other income for the year ended December 31, 2023 includes the $2.1 million loss on disposal of PPE, $0.9 million of other financial expense included in Other expenses (income) of the Statement of Operations, $0.8 million Washington tax reversal and $0.6 million loss on exchange rates. 68 III. LIQUIDITY AND CAPITAL RESOURCES 1. Overview As discussed below, our current financing strategy involves (a) strategically selling the Bitcoin we earn and the Bitcoin we hold in treasury and (b) utilizing short-term debt, long-term debt and equity instruments (including the 2024 at-the-market equity offering program (“2024 ATM Program”) to fund our expansion activities, operating expenses and debt service requirements. We may require additional funds to complete our 2026 growth plans as the cash flows generated from Mining activities are expected to decrease as sites are transitioned to HPC/AI. 2. Cash Flows The following discussion on cash flows include the discontinued operations in Rio Cuarto, Argentina and in Paraguay. On May 12, 2025, our energy provider Generación Mediterránea S.A (“GMSA”), halted the supply of electricity to our Rio Cuarto Bitcoin data center with energized capacity of 58 MW. On August 11, 2025, three months after being informed that electricity supply was being halted and with no path forward to resume operations in the future, the decision was made to shut down the plant, which was abandoned by September 30, 2025. Additionally, as of September 30, 2025, the Paso Pe Bitcoin data center met the criteria to be classified as “held for sale”, and all operations in Paraguay were designated as discontinued operations as we make a strategic shift towards HPC infrastructure in North America. Cash Flows used in Operating Activities FY 2025 v. FY 2024 Cash flows used in operating activities increased by $84.9 million during FY 2025 compared to FY 2024. The Company’s operating cash flows are negative as the proceeds from the Bitcoin sold from its Mining operations are classified within investing activities. The increase in cash flow used in operating activities is driven primarily by a higher cash G&A expenses from continuing operations, net of sales tax refund, of $13.7 million. We incurred higher cash energy costs of $36.9 million from continuing operations, including the sales tax recovery of $17.0 million recognized during FY 2024 for energy costs, and higher infrastructure expenses from continuing operations of $50.2 million. Our working capital increased by $8.6 million as explained in Working Capital Section of this MD&A. The increase was partially offset by net proceeds of $13.3 million received from the disposition of RECs and WTCs in FY 2025, compared to nil in FY 2024. 69 III. LIQUIDITY AND CAPITAL RESOURCES (Continued) 2. Cash Flows (Continued) Cash Flows used in Operating Activities (Continued) FY 2024 v. FY 2023 Cash flows used in operating activities increased by $34.8 million during FY 2024 compared to FY 2023. The increase in cash flow used in operating activities is driven primarily by higher cash G&A expenses, net of sales tax refund, of $26.6 million, and higher cash energy cost from discontinued operations of $24.7 million. Our working capital decreased by $10.2 million as explained in the Working Capital section of this MD&A. In addition, there was an increase in income taxes paid, with $1.5 million paid during FY 2024, compared to $11.6 million refunded during FY 2023. The increase was partially offset by interest income received of $5.6 million in FY 2024 compared to $1.8 million in FY 2023, mainly due to interest collected from the sales tax refund and from the higher average cash balance during 2024. We incurred lower cash energy cost from continuing operations of $25.4 million, net of sales tax refund. In addition, there was a decrease in interest expenses paid, with $1.7 million during FY 2024, compared to $13.9 million paid during FY 2023, mainly due to eliminating the remaining NYDIG loan balance in February 2024. Cash Flows from Investing Activities FY 2025 v. FY 2024 Cash flows from investing activities increased by $282.1 million during FY 2025 compared to FY 2024. The increase in cash flows from investing activities is driven primarily by the net addition of $65.7 million of PPE during FY 2025, compared to $281.5 million for the same period in 2024, and lower equipment prepayments of $32.8 million in FY 2025, primarily due to the acquisition of Miners and infrastructure build-out. In addition, we received proceeds of $63.0 million from the sale of the Yguazu Bitcoin data center. Proceeds earned from sale of digital assets increased by $19.0 million as a result of higher Bitcoin prices when selling 1,765 Bitcoin in FY 2025 compared to lower Bitcoin prices when selling 2,419 Bitcoin in FY 2024. Lastly, we paid refundable deposits of $15.6 million in FY 2024, compared to nil in FY 2025. The increase was partially offset by net payments for derivative assets and liabilities that amounted to $18.5 million in FY 2025, compared to $17.2 million of net proceeds in FY 2024, and the acquisition of Stronghold which included $48.1 million of cash payment in FY 2025. 70 III. LIQUIDITY AND CAPITAL RESOURCES (Continued) 2. Cash Flows (Continued) Cash Flows from Investing Activities (Continued) FY 2024 v. FY 2023 Cash flows used in investing activities decreased by $249.4 million during FY 2024 compared to FY 2023. The decrease in cash flows used in investing activities is driven primarily by $281.5 million of net additions of PPE during FY 2024, compared to $45.3 million for the same period in 2023. We paid $15.6 million in Refundable Hosting Deposits in FY 2024, compared to nil during FY 2023. In addition, we received $2.3 million of net proceeds in FY 2024 from the purchase and disposition of marketable securities to fund the Argentina expansion activities, compared to $12.2 million of net proceeds for the same period in 2023. The decrease was partially offset by $30.1 million more in equipment prepayments in FY 2024 compared to FY 2023, primarily due to the acquisition of Miners and infrastructure build-out. We had an increase in proceeds from sale of digital assets earned of $22.8 million as a result of selling Bitcoin in FY 2024 with significantly higher prices compared to FY 2023. Net proceeds from the disposition of derivative assets and liabilities amounted to $17.2 million in FY 2024 as we capitalized on near all-time highs on the Bitcoin price to close out all Synthetic HODL positions compared to nil in FY 2023. Cash Flows from Financing Activities Cash flows from financing activities increased by $398.7 million from $295.6 million for FY 2024 to $694.3 million for FY 2025. Cash flows from financing activities increased by $206.6 million from $89.1 million for FY 2023 to $295.6 million for FY 2024. FY 2025 We raised $588.0 million through the issuance of convertible notes, $100.0 million through the Macquarie credit facility, partially offset by $22.1 million of transaction costs, and $72.7 million of net proceeds from our 2024 ATM Program as discussed below. Through the exercise of stock options and warrants, we raised $35.7 million of net proceeds. The amounts raised were partially offset by $10.0 million related to the repurchase and cancellation of shares. FY 2024 We raised $289.5 million of net proceeds from our 2024 ATM Program as discussed below, and $8.9 million of net proceeds from the exercise of stock options and warrants. The amounts raised were partially offset by scheduled and one-time payments relating to the principal repayments of $4.0 million to fully repay the NYDIG loan, which matured and expired in February 2024. 71 III. LIQUIDITY AND CAPITAL RESOURCES (Continued) 2. Cash Flows (Continued) Cash Flows from Financing Activities (Continued) FY 2023 We raised $68.5 million of net proceeds from an at-the-market equity offering program, which was initiated on August 16, 2021 and expired on September 12, 2023 (“2021 ATM program”), $43.8 million of net proceeds from the private placement completed in November 2023, and $13.0 million of net proceeds from the exercise of stock options and warrants. The amounts raised were partially offset by repayments towards the long-term debt of $30.5 million. The long-term debt repayments included the settlement of the remaining $20.4 million principal balance of the BlockFi Loan on February 8, 2023 for cash consideration of $7.8 million, as discussed below. We made principal repayments of $22.2 million towards the NYDIG Loan, and fully repaid the principal amount of the remaining equipment financing (the “Foundry Loans”) before maturity and without prepayment penalty for $0.8 million. Macquarie Loan In April 2025, we signed a credit facility for up to $300.0 million (the “Credit Facility”) with Macquarie. In October 2025, we converted the entirety of the Credit Facility into a $300.0 million project debt facility for the development of the Panther Creek property and secured at the project level with a parent company guarantee. During the year ended December 31, 2025, we drew the initial tranche of $50.0 million and the second tranche of $50.0 million for a total of $100.0 million drawn. In February 2026, the Credit Facility was fully repaid. Convertible Notes In October 2025, we issued $588.0 million aggregate principal amount of convertible senior notes (the “Convertible Notes”), which included the full exercise of the purchasers’ option to purchase up to an additional $88.0 million aggregate amount of Convertible Notes. Transaction costs of $18.9 million relating to agent fees and legal fees were capitalized and deducted from the carrying amount of the Convertible Notes. Net proceeds from the offering of the Convertible Notes were $569.1 million. At-The-Market Equity Offering Program We commenced the 2024 ATM Program on March 11, 2024, by means of a prospectus supplement dated March 8, 2024 (“March Supplement”), to our short form base shelf prospectus dated November 10, 2023 (“Base Shelf”), and U.S. registration statement on Form F-10, which included a prospectus supplement related to the 2024 ATM Program. We capitalized $0.9 million of professional fees and registration expenses to initiate the 2024 ATM Program. 72 III. LIQUIDITY AND CAPITAL RESOURCES (Continued) 2. Cash Flows (Continued) Cash Flows from Financing Activities (Continued) At-The-Market Equity Offering Program (Continued) We filed amended and restated prospectus supplements dated October 4, 2024, and December 17, 2024, providing disclosure regarding the Stronghold Transaction and amending and restating the March Supplement, to our existing $375.0 million Base Shelf, with both the Base Shelf and amended and restated prospectus supplement forming a part of our registration statement on Form F-10. On October 7, 2025, the 2024 ATM Program was completed, as we issued a total of 165,091,099 common shares in exchange for gross proceeds of $375.0 million, receiving net proceeds of $363.2 million since the inception of the 2024 ATM Program . During FY 2025, we issued 29,616,939 common shares in the 2024 ATM Program in exchange for gross proceeds of $75.1 million at an average share price of approximately $2.54. We received net proceeds of $72.7 million after paying commissions of $2.3 million to the sales agent. During FY 2024, we issued 135,474,160 common shares in the 2024 ATM program in exchange for gross proceeds of $299.9 million at an average share price of approximately $2.21. We received net proceeds of $290.5 million after paying commissions of $9.0 million to the sales agent, in addition to $0.4 million of other transaction fees. We capitalized $0.9 million of professional fees and registration expenses to initiate the 2024 ATM Program. During FY 2023, we issued 52,120,899 common shares in the 2021 ATM program in exchange for gross proceeds of $70.8 million at an average share price of approximately $1.36. We received net proceeds of $68.5 million after paying commissions of $2.2 million to the sales agent, in addition to $0.1 million of other transaction fees. 73 III. LIQUIDITY AND CAPITAL RESOURCES (Continued) 2. Cash Flows (Continued) Cash Flows from Financing Activities (Continued) Use of Proceeds We used the proceeds from the 2024 ATM Program prudently to support the growth and development of our major Mining capital expenditure program, as described in Section 5 - HPC data center and Bitcoin Mining Expansion Projects of this MD&A, as well as for working capital and general corporate purposes. We do not intend to make significant further capital investments in Mining in the near future as we focus on our HPC data center development. Described below are the actual use of proceeds from the commencement of the 2024 ATM Program on March 11, 2024 through December 31, 2025: (U.S. $ in thousands except where indicated) Categories Use of proceeds Miner fleet upgrade 222,261 Paso Pe (Paraguay) expansion 1 27,506 Baie-Comeau (Canada) expansion 9,200 Yguazu (Paraguay) expansion 2 31,506 Acquisition of Stronghold 48,084 United States expansion 25,772 Used proceeds 364,329 Commissions to sales agents and other transaction costs 10,671 Total proceeds raised 375,000 Maximum proceeds available 375,000 Remaining proceeds available — 1 Cash flows include the discontinued operations in Rio Cuarto, Argentina and in Paraguay. On May 12, 2025, our energy provider GMSA, halted the supply of electricity to our Rio Cuarto Bitcoin data center with energized capacity of 58 MW. On August 11, 2025, three months after being informed that electricity supply was being halted and with no path forward to resume operations in the future, the decision was made to shut down the plant, which was abandoned by September 30, 2025. Additionally, as of September 30, 2025, the Paso Pe facility met the criteria to be classified as “held for sale”, and all operations in Paraguay were designated as discontinued operations as we made a strategic shift towards HPC/AI infrastructure in North America. 2 During the first quarter of 2025, the Company finalized the sale of its Yguazu Bitcoin data center in Paraguay. BlockFi Loan On February 18, 2022, our subsidiary, Backbone Mining Solutions Inc. (“Backbone Mining”), entered into a $32.0 million equipment financing facility with BlockFi. On February 8, 2023, we negotiated with BlockFi a settlement of the loan in its entirety for cash consideration of $7.8 million, discharging Backbone Mining of all further obligations and resulting in a gain on extinguishment of long-term debt of $12.6 million. Upon settlement, all of Backbone Mining’s assets, including 6,100 Miners collateralizing the loan, became unencumbered. 74 III. LIQUIDITY AND CAPITAL RESOURCES (Continued) 2. Cash Flows (Continued) Cash Flows from Financing Activities (Continued) Private Placements FY 2025 v. FY 2024 v. FY 2023 During FY 2025, 1,000,000 warrants and 111,111 broker warrants related to the 2023 private placement were exercised resulting in the issuance of 1,111,111 common shares for proceeds of approximately $1.3 million. In addition, 111,111 broker warrants were exercised on a cashless basis in exchange for 65,672 common shares. During FY 2024, 5,000,000 warrants and 111,111 broker warrants related to the 2023 private placement were exercised, resulting in the issuance of 5,111,111 common shares for proceeds of approximately $6.0 million. During FY 2023, we received total net proceeds of $51.6 million from the 2023 private placement and 6,962,693 warrants and 2,306,667 broker warrants were exercised. 3. Capital Resources Our capital management objective is to provide financial resources that will enable us to maximize the return to our shareholders while optimizing our cost of capital and ensuring we have sufficient liquidity to fund our operating and growth activities. In order to achieve this objective, we monitor our capital structure and make adjustments as required in light of our funding requirements, changes in economic conditions, the cost of providing and the availability of financing, and the risks to which we are exposed. Our financing strategy is to maintain a flexible capital structure that optimizes the cost of capital at an acceptable level of risk, to preserve our ability to meet financial obligations as they come due, and to ensure we have sufficient financial resources to fund our organic and acquisitive growth. Based on our current plans and business conditions, we believe that our existing cash and Bitcoin, together with cash generated from operations and our future investing and financing activities, will be sufficient to satisfy our anticipated cash requirements for the next 12 months and beyond. Our expansion into HPC/AI infrastructure development is expected to increase capital intensity and shift the timing of cash inflows relative to capital outlays. In October 2025, we drew an additional $50.0 million from the Macquarie Credit Facility, bringing the total drawn to $100.0 million and completed an offering of $588.0 million aggregate principal amount of convertible senior notes which included an option by the initial purchasers to purchase $88.0 million aggregate amount of convertible senior notes. Net proceeds were approximately $569.1 million after transaction fees and approximately $69.1 million was used to fund a 125% capped call transaction. In February 2026, the Credit Facility was fully repaid and the cash balance of $57.5 million is no longer restricted. 75 III. LIQUIDITY AND CAPITAL RESOURCES (Continued) 3. Capital Resources (Continued) On July 22, 2025, we announced that the TSX had approved a normal course issuer bid (“NCIB”), under which we may repurchase up to 49,943,031 of our common shares, representing approximately 10% of our public float as of July 14, 2025. Purchases under the NCIB commenced on July 28, 2025, and will terminate no later than July 27, 2026. All common shares purchased on the TSX or Nasdaq under the NCIB will be cancelled. We entered into an automatic repurchase arrangement with a designated broker to facilitate repurchases under the NCIB, including during pre-determined blackout periods. The timing and number of shares repurchased will be determined by Management based on market conditions. During the year ended December 31, 2025, we repurchased 7,807,141 common shares for cancellation through the Corporate Share Buyback Program under the NCIB in exchange for $9.9 million at an average share price of approximately $1.27 and paid $0.1 million of commissions to the purchasing agent. Developing and constructing data centers requires substantial up-front capital expenditures for land, substations, interconnection and specialized cooling systems, which may temporarily reduce liquidity. Although we expect to fund a portion of these expenditures through the strategic use of Bitcoin holdings and cash available, we may also supplement these sources with external financing depending on market conditions and project timing. We are likely to require additional capital to respond to technological advancements, competitive dynamics or technologies, business opportunities, challenges, acquisitions or unforeseen circumstances and, in either the short-term or long-term, may determine to engage in equity or debt financings. If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it, our ability to continue to grow or support our business and to respond to business challenges could be significantly limited. In particular, the ongoing impacts of inflation and fluctuations in interest rates, global conflicts and other macroeconomic factors, including the imposition and enforceability of tariffs or other changes in trade policies and related uncertainties, have resulted in, and may continue to result in, significant disruption and volatility in the global financial markets, reducing our ability to access capital. If we are unable to raise additional funds when or on the terms desired, our business, financial condition and results of operations could be adversely affected. 76 III. LIQUIDITY AND CAPITAL RESOURCES (Continued) 3. Capital Resources (Continued) Digital Asset Management Program We operate a digital asset management program under which we hold Bitcoin for its intrinsic value and as a source of liquidity. We maintain internal controls over the management of our digital assets and evaluate and enhance these controls as appropriate, on a quarterly basis. Under this program, Management is authorized to sell daily Bitcoin production, and, if warranted by market conditions and projected financing requirements, to sell up to 1,000 Bitcoin from treasury at its discretion. The following table presents the total Bitcoin sold and proceeds in FY 2025 , which was used to fund operations and expansion plans : Three months ended (U.S. $ in thousands except where indicated) March 31, 2025 June 30, 2025 September 30, 2025 December 31, 2025 Quantity of Bitcoin sold 428 1,052 185 100 Total proceeds 37,263 100,471 21,561 11,796 The sale of Bitcoin as described above, while we continued to earn Bitcoin, resulted in total holdings of 2,060 BTC as of December 31, 2025, of which 64 BTC are restricted, valued at approximately $180.3 million based on a Bitcoin price of approximately $87,500, as of December 31, 2025. Bitcoin 2.1 program for digital assets management During Q3 2025, we implemented a new program, Bitcoin 2.1. Bitcoin 2.1 is a multi-strategy program that primarily sells both short and long dated out of the money calls on the Bitcoin in treasury and future Bitcoin production in order to offset Bitcoin production costs and potentially achieve higher revenues per Bitcoin sold. Bitcoin 2.1 is designed as a low-cost and low-risk funding mechanism for energy infrastructure investments and has no objective around Bitcoin accumulation. The Board authorized the risk management committee to deploy up to (i) 100% of our Bitcoin in treasury, plus (ii) three months of expected forward production calculated on a rolling basis, plus (iii) $10.0 million under Bitcoin 2.1 to be actively managed and participate in volatility-targeting strategies. During the year ended December 31, 2025, we recognized a net gain of $18.0 million, which consisted of unrealized gains on open positions of $1.3 million and realized gains on closed positions of $16.6 million. During the year ended December 31, 2025, total cash cost per Bitcoin would be reduced to $75,400 after considering the realized and unrealized gain on Bitcoin option contracts. 77 III. LIQUIDITY AND CAPITAL RESOURCES (Continued) 4. Contractual Obligations Our contractual obligations are summarized in Note 22 ( Financial instruments - b. Risk management policy - Liquidity risks ) to the Financial Statements. 5. Lawsuits Our lawsuits are summarized in Note 27 ( Commitments and Contingencies ) to the Financial Statements. 6. Commitments Our commitments are summarized in Note 27 ( Commitments and Contingencies ) to the Financial Statements. 7. Contingent liability Our contingent liability is summarized in Note 27 ( Commitments and Contingencies ) to the Financial Statements. 78 III. LIQUIDITY AND CAPITAL RESOURCES (Continued) 8. Working Capital As of December 31, As of December 31, (U.S. $ in thousands except where indicated) 2025 2024 $ Change % Change Total Current Assets 826,465 213,735 612,730 287 % Total Current Liabilities 148,112 28,155 119,957 426 % Working Capital 678,353 185,580 492,773 266 % We continue to place importance on maintaining sufficient liquidity to fund our HPC/AI development activities. We also anticipate requiring additional funds to complete our 2026 growth plans. As of December 31, 2025, we had working capital of $678.4 million, compared to $185.6 million as of December 31, 2024. The increase in working capital was largely due to our cash increasing by $513.9 million as explained in the “Liquidity and Capital Resources” section above. Our digital assets increased by $60.2 million, mainly due to our Bitcoin balance increasing by 775, partially offset by a lower Bitcoin price as of December 31, 2025. We had a $19.2 million increase in assets “held for sale” mainly due to the reclassification of the assets of the Paso Pe Bitcoin data center as “held for sale” for $25.3 million. Inventories increased by $7.5 million mainly attributable to (i) the acquisition of Stronghold, (ii) the acquisition of Mining repairs equipment, and (iii) the accelerated purchase of inventories. We had an $18.5 million increase in RECs and WTCs derived from Stronghold’s refuse operations. In addition, accounts receivables increased by $4.2 million due to the Stronghold acquisition and its plant-related energy sales. The increase was partially offset by a $20.7 million increase in accounts payable and accrued expenses, largely due to (i) $11.8 million attributable to Stronghold, and (ii) the accrued liability of $9.2 million related to custom duties. Our short-term prepaid deposits decreased by $8.2 million mainly relating to the usage up to May 2025 of the prepayment of electricity to our energy supplier in Argentina during FY 2024, and the subsequent write-down of the remaining portion of the prepayment. Lastly, there was a $2.8 million increase in derivative liabilities due to higher open position of Bitcoin options and selling contracts as of December 31, 2025. 79 VI. CRITICAL ACCOUNTING POLICIES AND ESTIMATES We describe our most significant accounting policies in detail in Note 2 (Significant Accounting Policies) to our consolidated financial statements, included elsewhere in this Annual Report. Management regularly evaluates its estimates and their underlying assumptions using historical experience and other factors it believes to be reasonable under the circumstances. The following select accounting policies and estimates are believed to be critical to understanding this MD&A, but are not limited to: Estimation of useful lives of property, plant, and equipment Property, plant and equipment are carried at cost, including directly attributable costs, less accumulated depreciation, accumulated impairment losses and any related investment grants, and include the initial estimate of the costs of dismantling and removing the item and restoring the site on which the item is located when a legal obligation exists at the time the asset is placed in service. We determine the estimated useful lives, residual values and related depreciation expense based on historical experience, anticipated usage, technological changes and replacements schedules. Determining useful lives requires judgment regarding the expected period over which the assets will provide economic benefits, and is subject to uncertainty, particularly in industries where assets may become obsolete due to technological innovation or changes in business strategy. Management periodically reviews these estimates and adjusts them when events or changes in circumstances indicate that the current estimated useful lives may no longer be appropriate, which would affect the timing and amount of depreciation expense, resulting in changes that could have a material impact on our financial results in future periods. Impairment of long-lived assets Our long-lived assets (including property, plant, and equipment, right-of-use assets and intangible assets with finite useful lives) are assessed for impairment when events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. When indicators of potential impairment are present, we prepare a projected undiscounted cash flow analysis for the respective asset or asset group, and if the sum of the undiscounted cash flow is less than the carrying amount of the asset or asset group, an impairment loss is recognized equal to the excess of the carrying amount over the fair value of the asset or asset group. Impairment losses are recognized in the consolidated statements of operations in the period in which the impairment is identified and are not reversed in subsequent periods. Indicators of impairment may include significant declines in market demand, adverse changes in business or economic conditions, technological obsolescence, or a decision to significantly modify or dispose of an asset. These estimates require significant judgment and are sensitive to changes in assumptions regarding future revenues, operating costs and market conditions. Actual future outcomes could result in different conclusions that could materially affect the consolidated financial statements. Measurement of financial instruments We measure certain derivative financial instruments and assets at fair value either on a recurring or non-recurring basis depending on their nature. Derivative financial instruments reflect the estimated amounts that we would receive or pay, taking into consideration counterparty risk or our credit risk, and in the case of embedded derivatives, are determined using a combination of the Monte Carlo simulation model to simulate future prices based on probability factors and the Black-Scholes Model. Derivative financial instruments include, but are not limited, to Bitcoin option and selling contracts, Bitcoin redemption options and capped calls. Changes in fair value are recognized in (Loss) gain on derivative assets and liabilities, and may have a material impact on the amounts reported in our financial statements. 80 VII. RECENT AND SUBSEQUENT EVENTS Our recent and subsequent events are summarized in Note 28 to the Financial Statements.