−Removed: The Company has included in Item 1A of Part 1 of its Annual Report on Form 10-K for the year ended December 31, 2024 (“Form 10-K”), a description of certain risks and uncertainties that could affect the Company’s business, future performance, bitcoin holdings, or financial condition (the “Risk Factors”).
−Removed: There have been no material changes to the Risk Factors we previously disclosed in our Form 10-K filed with the SEC, except as described below.
+Added: The Company has included in Item 1A of Part 1 of its Annual Report on Form 10-K for the year ended December 31, 2024 (“Form 10-K”), a description of certain risks and uncertainties that could affect the Company’s business, future performance, bitcoin holdings, or financial condition, as updated in Item 1A of Part 2 of its Quarterly Report on Form 10-Q for the quarter ended June 30, 2025 (the “Risk Factors”).
+Added: There have been no material changes to the Risk Factors we previously disclosed in our Form 10-K and Form 10-Q filed with the SEC.
Our operations could also be affected by additional factors that are not presently known to us or by factors that we currently consider immaterial to our business.
−Removed: Risks Related to Digital Assets
−Removed: Fluctuations in Quarterly Financial Results
−Removed: Our quarterly financials results may fluctuate, in part, as a result of fluctuations in the price of bitcoin, of which we have significant holdings and with respect to which we expect to continue to make significant future purchases, and potential fair value changes associated therewith;
−Removed: the incurrence of tax liabilities on future unrealized gains on our bitcoin;
−Removed: and our profitability and expectations for future profitability and their effect on our deferred tax balances and net income for the period in which any adjustment to our net deferred tax asset valuation allowance may be made, as well as increases or decreases in our unrecognized tax benefits.
−Removed: Limited Ability to Adjust Expenses
−Removed: We expect to use proceeds from equity or debt financings to pay our expenses and satisfy our liquidity needs that are in excess of our operating cash flows.
−Removed: If we are unable to secure equity or debt financing in a timely manner, on favorable terms, or at all, we may be required to sell bitcoin to satisfy our financial obligations.
−Removed: Such actions could cause significant variation in our financial results in any quarter.
−Removed: Risks Related to ownership of our Common Stock
−Removed: We completed a Reverse Stock Split of our shares of common stock, which may reduce and may limit the market trading liquidity of the shares due to the reduced number of shares outstanding and may potentially have an anti-takeover effect.
−Removed: We completed a Reverse Stock Split of our common stock by a ratio of 1-for-8 effective June 23, 2025.
−Removed: The primary objective of the Reverse Stock Split was to attempt to raise the per share trading price of our common stock.
−Removed: We believe that a low per share market price of our common stock impairs our marketability to, and acceptance by, institutional investors and other members of the investing public and creates a negative impression of us.
−Removed: Reducing the number of outstanding shares of our common stock through the Reverse Stock Split increased the per share trading price of our common stock.
−Removed: However, there is no assurance that:
−Removed: ● the market price per share of our common stock after the Reverse Stock Split will rise in proportion to the reduction in the number of shares outstanding before the Reverse Stock Split;
−Removed: ● the Reverse Stock Split will result in a per-share price that would attract brokers and investors who do not trade in lower-priced stocks;
−Removed: ● the Reverse Stock Split will result in a per-share price that will increase our ability to attract and retain employees and other service providers;
−Removed: ● the Reverse Stock Split will promote greater liquidity for our stockholders with respect to their shares.
−Removed: In addition, the Reverse Stock Split reduced the number of outstanding shares of our common stock without reducing the authorized number of shares of our common stock.
−Removed: Therefore, the number of shares of our common stock that are authorized and unissued has increased relative to the number of issued and outstanding shares of our common stock following the Reverse Stock Split.
−Removed: Our Board of Directors may authorize the issuance of the remaining authorized and unissued shares without further stockholder action for a variety of purposes, except as such stockholder approval may be required in particular cases by our Amended and Restated Certificate of Incorporation, applicable law or the rules of any stock exchange on which our securities may then be listed.
−Removed: The issuance of additional shares would be dilutive to our existing stockholders and may cause a decline in the trading price of our common stock.
−Removed: The issuance of authorized but unissued shares of common stock could be used to deter a potential takeover of us that may otherwise be beneficial to stockholders by diluting the shares held by a potential suitor or issuing shares to a stockholder that will vote in accordance with our Board of Directors’ desires.
−Removed: A takeover may be beneficial to independent stockholders because, among other reasons, a potential suitor may offer such stockholders a premium for their shares of stock compared to the then-existing market price.
−Removed: We do not have any plans or proposals to adopt provisions or enter into agreements that may have material anti-takeover consequences.
−Removed: The market price of our common stock is based on our performance and other factors, some of which are unrelated to the number of shares outstanding.
−Removed: If the market price of our common stock declines, the percentage decline as an absolute number and as a percentage of our overall market capitalization may be greater than would occur in the absence of the Reverse Stock Split.
−Removed: Our Chairman and CEO owns our Series A Voting Preferred Stock and will be able to exert significant control over matters subject to stockholder approval.
−Removed: Michael Mo, our Chairman and CEO, currently beneficially owns 2,668,612 shares of common stock and 1,000,000 shares of Series A Voting Preferred Stock that provide him with 72.76% of the voting power of our voting stock.
−Removed: Therefore, even after further offerings, he will have the ability to substantially influence us through this ownership position.
−Removed: For example, he may be able to significantly influence elections of directors, amendments of our organizational documents, or approval of any merger, sale of assets, or other major corporate transaction.
−Removed: His interests may not always coincide with our corporate interests or the interests of other stockholders, and he may act in a manner with which you may not agree or that may not be in the best interests of our other stockholders.
−Removed: So long as he continues to own a significant amount of our equity, he will continue to be able to strongly influence or effectively control our decisions.
−Removed: Changes in trade policies, including tariffs, could adversely affect our business.
−Removed: Geopolitical tensions and trade disputes can disrupt supply chains and increase the cost of our products.
−Removed: This could cause our products to be more expensive for customers, which could reduce the demand for, or attractiveness of, such products.
−Removed: In addition, a geopolitical conflict in a region where we operate could disrupt our ability to conduct business operations in that region.
−Removed: Countries also could adopt restrictive trade measures, such as tariffs, laws and regulations concerning investments and limitations on foreign ownership of businesses, taxation, foreign exchange controls, capital controls, employment regulations and the repatriation of earnings and controls on imports or exports of goods, technology, or data, any of which could adversely affect our operations and supply chain and limit our ability to offer our products and services as intended.
−Removed: Changes in laws or policies governing the terms of foreign trade, and in particular increased trade restrictions, tariffs or taxes on imports from countries where we manufacture products or from where we import products or raw materials (either directly or through our suppliers) could have an impact on our competitive position, business operations and financial results.
−Removed: For example, the U.S., China and other countries continue to implement restrictive trade actions, including tariffs, export controls, sanctions, legislation favoring domestic investment and other actions impacting the import and export of goods, foreign investment and foreign operations in jurisdictions in which we operate.
−Removed: Recently, the United States has announced tariffs and reciprocal tariffs on a wide range of products manufactured or produced worldwide, including Canada, China, the European Union, Japan and Mexico, among others.
−Removed: Several countries have similarly announced reciprocal or other tariffs impacting products manufactured or produced in the United States.
−Removed: The United States has and may in the future pause, reimpose or increase tariffs, and countries subject to such tariffs have and in the future may impose reciprocal tariffs or other restrictive trade measures in response to the imposition of tariffs by the United States.
−Removed: We are actively monitoring and evaluating the development and potential impacts of tariffs on our supply chain and results of operations.
−Removed: We maintain operations worldwide, including the jurisdictions impacted by the recently announced and contemplated tariffs.
−Removed: If the actual and potential tariffs and reciprocal tariffs are implemented as currently proposed, we expect that such actions could negatively impact our revenue growth and margins in future periods through increased costs, decreased demand and other adverse economic impacts.
−Removed: We could also experience increased material cost inflation and component shortages, as well as disruptions and delays in our supply chain.
−Removed: The net effect of these actions will depend on our ability to successfully mitigate and offset their impact, which may not be effective.
−Removed: Trade restrictions could be adopted with little to no advanced notice, and we may not be able to effectively mitigate the adverse impacts from such measures.
−Removed: Political uncertainty surrounding trade or other international disputes also could have a negative impact on customer confidence and willingness to invest capital, which could impair our future growth.
−Removed: Any of these events could increase the cost of our products, create disruptions to our supply chain and impair our ability to effectively operate and compete in the countries where we do business.
−Removed: If significant tariffs or other restrictions are placed on products or materials we import, or any related counter-measures are taken by foreign countries, our revenue and results of operations may be materially harmed.
−Removed: Tariffs and other trade restrictions-such as those imposed or threatened by the U.S.
−Removed: on goods from China and other countries-have increased uncertainty in global trade and may materially impact our operations.
−Removed: Several countries, including China, have responded with retaliatory tariffs and other counter-measures, which could escalate further.
−Removed: These actions affect products and raw materials we import and may result in higher input costs, supply chain disruptions and reduced competitiveness.
−Removed: The extent of the impact on our financial condition and results of operations will depend on the scope and duration of these tariffs and related trade policies, as well as our ability to mitigate associated cost pressures.
−Removed: Uncertainties in the interpretation and application of existing, new and proposed tax laws and regulations could materially affect our tax obligations and effective tax rate.
−Removed: The tax regimes to which we are subject or under which we operate are unsettled and may be subject to significant change.
−Removed: The issuance of additional guidance related to existing or future tax laws, or changes to tax laws or regulations proposed or implemented by the current or a future U.S.
−Removed: presidential administration, Congress, or taxing authorities in other jurisdictions, including jurisdictions outside of the United States, could materially affect our tax obligations and effective tax rate.
−Removed: To the extent that such changes have a negative impact on us, including as a result of related uncertainty, these changes may adversely impact our business, financial condition, results of operations, and cash flows.
−Removed: The amount of taxes we pay in different jurisdictions depends on the application of the tax laws of various jurisdictions, including the United States, to our international business activities, tax rates, new or revised tax laws, or interpretations of tax laws and policies, and our ability to operate our business in a manner consistent with our corporate structure and intercompany arrangements.
−Removed: The taxing authorities of the jurisdictions in which we operate may challenge our methodologies for pricing intercompany transactions pursuant to our intercompany arrangements or disagree with our determinations as to the income and expenses attributable to specific jurisdictions.
−Removed: If such a challenge or disagreement were to occur, and our position was not sustained, we could be required to pay additional taxes, interest, and penalties, which could result in one-time tax charges, higher effective tax rates, reduced cash flows, and lower overall profitability of our operations.
−Removed: Our financial statements could fail to reflect adequate reserves to cover such a contingency.
−Removed: Similarly, a taxing authority could assert that we are subject to tax in a jurisdiction where we believe we have not established a taxable connection, often referred to as a “permanent establishment” under international tax treaties, and such an assertion, if successful, could increase our expected tax liability in one or more jurisdictions.
−Removed: government recently enacted legislation commonly referred to as the One Big Beautiful Bill Act, that (along with other recent U.S.
−Removed: federal tax reform) has resulted in significant changes to the taxation of business entities including, among other changes, changes to the taxation of income derived from international operations, changes in the deduction and amortization of research and development expenditures, and limitations on the deductibility of business interest.
−Removed: Future guidance from the Internal Revenue Service and other tax authorities with respect to any legislation may affect us, and certain aspects of such legislation could be repealed or modified or sunset in future years.
−Removed: We are and may continue to be subject to short selling strategies.
−Removed: Short selling is the practice of selling securities that the seller does not own but rather has borrowed from a third party with the intention of buying identical securities back at a later date to return to the lender.
−Removed: The short seller hopes to profit from a decline in the value of the securities between the sale of the borrowed securities and the purchase of the replacement shares, as the short seller expects to pay less in that purchase than it received in the sale.
−Removed: As it is therefore in the short seller’s best interests for the price of the stock to decline, may short sellers publish, or arrange for the publication of, negative opinions regarding the relevant issuer and its business prospects to create negative market momentum and generate profits for themselves after selling a stock short.
−Removed: These short attacks have, in the past, led to selling of shares in the market.
−Removed: We are, and may in the future be, the subject of unfavorable allegations made by short sellers.
−Removed: For example, in April 2025, we were the subject of negative commentary from a short seller that alleged, among other things, that we made misleading statements regarding our financial performance, partnerships, customer contracts and pipeline, improperly inflated our revenue, and delivered unrealistic projections.
−Removed: We may in the future become subject to additional unfavorable reports.
−Removed: Any such allegations may be followed by periods of instability in the market price of our shares of common stock and could have a significant adverse impact on our reputation.
−Removed: We may be constrained in the manner in which we can proceed against the relevant short seller by principles of freedom of speech, applicable federal or state law or issues of commercial confidentiality.
−Removed: In addition, any related inquiry or formal investigation from a governmental organization or other regulatory body, including any inquiry from the SEC or the U.S.
−Removed: Department of Justice, could result in a material diversion of our management’s time and could have a material adverse effect on our business and results of operations.
−Removed: Such a situation could be costly and time-consuming and could distract our management from operating our business.
−Removed: We have not received any inquiry from any governmental agencies relating to the allegations in the recent short seller report, but we cannot predict that there will not be any inquiries in the future, which may at such time have a negative effect on our business and results of operations.
−Removed: Even if such allegations are ultimately proven to be groundless, allegations against us could adversely impact our business, and cause downward pressure and increased volatility in the price of our shares of common stock.
−Removed: Risks Relating to Our Bitcoin Treasury Strategy and Holdings
−Removed: WE ARE NOT REGISTERED AS AN INVESTMENT COMPANY UNDER THE INVESTMENT COMPANY ACT OF 1940 AND STOCKHOLDERS DO NOT HAVE THE PROTECTIONS ASSOCIATED WITH OWNERSHIP OF SHARES IN A REGISTERED INVESTMENT COMPANY NOR THE PROTECTIONS AFFORDED BY THE COMMODITIES EXCHANGE ACT.
−Removed: Our Bitcoin treasury strategy exposes us to various risks associated with Bitcoin.
−Removed: Bitcoin is a highly volatile asset .
−Removed: Bitcoin is a highly volatile asset that has traded below $50,000 per Bitcoin and above $123,000 per Bitcoin on the Coinbase exchange in the 12 months preceding the date of this quarterly report on Form 10-Q.
−Removed: The trading price of Bitcoin significantly decreased during prior periods, and such declines may occur again in the future.
−Removed: Notwithstanding this volatility, we have not historically hedged our Bitcoin holdings and have not adopted a hedging strategy with respect to Bitcoin.
−Removed: However, we may from time to time engage in hedging strategies as part of our treasury management operations if deemed appropriate and may, in the future, adopt a hedging strategy with respect to Bitcoin.
−Removed: Bitcoin does not pay interest or dividends .
−Removed: Bitcoin does not pay interest or other returns and we can only generate cash from our Bitcoin holdings if we sell our Bitcoin or implement strategies to create income streams or otherwise generate cash by using our Bitcoin holdings.
−Removed: Even if we pursue any such strategies, we may be unable to create income streams or otherwise generate cash from our Bitcoin holdings, and any such strategies may subject us to additional risks.
−Removed: Our Bitcoin holdings may significantly impact our financial results and the market price of our common stock .
−Removed: Our Bitcoin holdings may significantly affect our financial results and if we continue to increase our overall holdings of Bitcoin in the future as we execute on our treasury strategy, our Bitcoin holdings may have an even greater impact on our financial results and the market price of our common stock.
−Removed: In the first quarter of 2025, a decrease in the price of Bitcoin resulted in a $9.75 million decrease in the fair value of our Bitcoin holdings, whereas in the second quarter of 2025, an increase in the price of Bitcoin resulted in an $7.62 million increase in the fair value of our Bitcoin holdings.
−Removed: We recognize these changes in fair value in other income (expense), net in our condensed consolidated statements of operations.
−Removed: See “—Our historical financial statements do not reflect the potential variability in earnings that we may experience in the future relating to our Bitcoin holdings” below.
−Removed: Our Bitcoin treasury strategy has not been tested over an extended period of time or under different market conditions .
−Removed: We only adopted our Bitcoin treasury strategy in December 2024 and will need to continually examine the risks and rewards of this strategy.
−Removed: This Bitcoin treasury strategy has not been tested over an extended period of time or under different market conditions.
−Removed: For example, although we believe Bitcoin, due to its limited supply, has the potential to serve as a hedge against inflation in the long term, the short-term price of Bitcoin declined in recent periods during which the inflation rate increased.
−Removed: Some investors and other market participants may disagree with our Bitcoin treasury strategy or actions we undertake to implement it.
−Removed: If Bitcoin prices were to decrease or our Bitcoin treasury strategy otherwise proves unsuccessful, our financial condition, results of operations, and the market price of our common stock could be materially adversely affected.
−Removed: We are subject to counterparty risks, including in particular risks relating to our custodians .
−Removed: Although we have implemented various measures that are designed to mitigate our counterparty risks, including by storing substantially all of the Bitcoin we own in a custody account at a U.S.-based, institutional-grade custodian and negotiating contractual arrangements intended to establish that our property interest in custodially-held Bitcoin is not subject to claims of our custodians’ creditors, applicable insolvency law is not fully developed with respect to the holding of digital assets in custodial accounts.
−Removed: If our custodially-held Bitcoin were nevertheless considered to be the property of our custodians’ estates in the event that any such custodians were to enter bankruptcy, receivership or similar insolvency proceedings, we could be treated as a general unsecured creditor of such custodians, inhibiting our ability to exercise ownership rights with respect to such Bitcoin and this may ultimately result in the loss of the value related to some or all of such Bitcoin.
−Removed: Even if we are able to prevent our Bitcoin from being considered the property of a custodian’s bankruptcy estate as part of an insolvency proceeding, it is possible that we would still be delayed or may otherwise experience difficulty in accessing our Bitcoin held by the affected custodian during the pendency of the insolvency proceedings.
−Removed: Any such outcome could have a material adverse effect on our financial condition and the market price of our common stock.
−Removed: The broader digital assets industry is subject to counterparty risks, which could adversely impact the adoption rate, price, and use of Bitcoin.
−Removed: A series of recent high-profile bankruptcies, closures, liquidations, regulatory enforcement actions and other events relating to companies operating in the digital asset industry, including the filings for bankruptcy protection by Three Arrows Capital, Celsius Network, Voyager Digital, FTX Trading and Genesis Global Capital, the closure or liquidation of certain financial institutions that provided lending and other services to the digital assets industry, including Signature Bank and Silvergate Bank, SEC enforcement actions against Coinbase, Inc.
−Removed: and Binance Holdings Ltd., the placement of Prime Trust, LLC into receivership following a cease-and-desist order issued by Nevada’s Department of Business and Industry, and the filing and subsequent settlement of a civil fraud lawsuit by the New York Attorney General against Genesis Global Capital, its parent company Digital Currency Group, Inc., and former partner Gemini Trust Company, have highlighted the counterparty risks applicable to owning and transacting in digital assets.
−Removed: Although these bankruptcies, closures, liquidations and other events have not resulted in any loss or misappropriation of our Bitcoin, nor have such events adversely impacted our access to our Bitcoin, they have, in the short-term, likely negatively impacted the adoption rate and use of Bitcoin.
−Removed: Additional bankruptcies, closures, liquidations, regulatory enforcement actions or other events involving participants in the digital assets industry in the future may further negatively impact the adoption rate, price, and use of Bitcoin, limit the availability to us of financing collateralized by Bitcoin, or create or expose additional counterparty risks.
−Removed: Changes in our ownership of Bitcoin could have accounting, regulatory and other impacts .
−Removed: While we currently own or will own Bitcoin directly, we may investigate other potential approaches to owning Bitcoin, including indirect ownership (for example, through ownership interests in a fund that owns Bitcoin).
−Removed: If we were to own all or a portion of our Bitcoin in a different manner, the accounting treatment for our Bitcoin, our ability to use our Bitcoin as collateral for additional borrowings, and the regulatory requirements to which we are subject, may correspondingly change.
−Removed: For example, the volatile nature of Bitcoin may force us to liquidate our holdings to use it as collateral, which could be negatively effected by any disruptions in the crypto market, and if liquidated, the value of the collateral would not reflect potential gains in market value of Bitcoin, all of which could negatively affect our business and implementation of our Bitcoin strategy.
−Removed: Changes in the accounting treatment of our Bitcoin holdings could have significant accounting impacts, including increasing the volatility of our results.
−Removed: In December 2023, the FASB issued ASU 2023-08, which we have adopted, and which requires us to measure in-scope crypto assets (including our Bitcoin holdings) at fair value in our balance sheet, and to recognize gains and losses from changes in the fair value of our Bitcoin in net income (loss) each reporting period.
−Removed: We also treat our Bitcoin as long-term capital assets for tax purposes, so we record a valuation allowance for unrealized capital losses, which we reverse if it changes to an unrealized gain, which effects our effective tax rate in a given period.
−Removed: For example, in the first quarter of 2025, we recognized a $9.75 million decrease in the fair value of our Bitcoin holdings (and recorded a valuation for tax purposes), whereas in the second quarter of 2025, we recognized a $7.62 million increase (and reversed the valuation allowance for tax purposes).
−Removed: ASU 2023-08 also requires us to provide certain interim and annual disclosures with respect to our Bitcoin holdings.
−Removed: Due in particular to the volatility in the price of Bitcoin, we expect the adoption of ASU 2023-08 to continue to have a material impact on our financial results, increase the volatility of our financial results, affect the carrying value of our Bitcoin on our balance sheet, and potentially have adverse tax consequences, which in turn could have a material adverse effect on our financial results and the market price of our common stock.
−Removed: The broader digital assets industry, including the technology associated with digital assets, the rate of adoption and development of, and use cases for, digital assets, market perception of digital assets, the current administration’s plans for digital assets, and the legal, regulatory, and accounting treatment of digital assets are constantly developing and changing, and there may be additional risks in the future that are not possible to predict.
−Removed: Bitcoin and other digital assets are novel assets, and are subject to significant legal, commercial, regulatory and technical uncertainty.
−Removed: Bitcoin and other digital assets are relatively novel and are subject to significant uncertainty, which could adversely impact their price.
−Removed: The application of state and federal securities laws and other laws and regulations to digital assets is unclear in certain respects, and it is possible that regulators in the United States or foreign countries may interpret or apply existing laws and regulations in a manner that adversely affects the price of Bitcoin.
−Removed: federal government, states, regulatory agencies, and foreign countries may also enact new laws and regulations, or pursue regulatory, legislative, enforcement or judicial actions, that could materially impact the price of Bitcoin or the ability of individuals or institutions such as us to own or transfer Bitcoin.
−Removed: For example, the U.S.
−Removed: executive branch and SEC, among others in the United States and abroad, have been active in recent years, and laws including the European Union’s Markets in Crypto Assets Regulation and the U.K.’s Financial Services and Markets Act 2023 became law.
−Removed: However, the recent change in U.S.
−Removed: administration has resulted in a broader shift overall towards Bitcoin and other digital assets and the SEC has dismissed enforcement actions against Coinbase and Binance, and in June 2025, the U.S.
−Removed: Senate passed the “GENIUS Act” to create a federal framework for “payment stablecoins” among other measures.
−Removed: It is not possible to predict whether, or when, any of these developments will lead to increased or decreased regulations, or whether, or when, any other state or foreign legislative bodies will take actions or change positions with respect to digital assets.
−Removed: It is also not possible to predict the nature of any such additional authorities, how additional legislation or regulatory oversight might impact the ability of digital asset markets to function or the willingness of financial and other institutions to continue to provide services to the digital assets industry, nor how any new regulations or changes to existing regulations might impact the value of digital assets generally and Bitcoin specifically.
−Removed: The consequences of increased or different regulations of digital assets and digital asset activities could adversely affect the market price of Bitcoin and in turn adversely affect the market price of our common stock.
−Removed: Furthermore, other companies have begun to adopt strategies similar to ours with respect to Bitcoin and other digital assets, and this could result in new laws or regulations, or new interpretations of existing laws or regulations, impacting our Bitcoin treasury strategy, particularly if the adoption of digital asset strategies by other companies continues or accelerates.
−Removed: Moreover, the risks of engaging in a Bitcoin treasury strategy are relatively novel and have created, and could continue to create, complications due to the lack of experience that third parties have with companies engaging in such a strategy, such as increased costs of director and officer liability insurance or the potential inability to obtain such coverage on acceptable terms in the future.
−Removed: The growth of the digital assets industry in general, and the use and acceptance of Bitcoin in particular, may also impact the price of Bitcoin and is subject to a high degree of uncertainty.
−Removed: The pace of worldwide growth in the adoption and use of Bitcoin may depend, for instance, on public familiarity with digital assets, ease of buying, accessing or gaining exposure to Bitcoin, institutional demand for Bitcoin as an investment asset, the participation of traditional financial institutions in the digital assets industry, consumer demand for Bitcoin as a means of payment, and the availability and popularity of alternatives to Bitcoin.
−Removed: Even if growth in Bitcoin adoption occurs in the near or medium-term, there is no assurance that Bitcoin usage will continue to grow over the long-term.
−Removed: Because Bitcoin has no physical existence beyond the record of transactions on the Bitcoin blockchain, a variety of technical factors related to the Bitcoin blockchain could also impact the price of Bitcoin.
−Removed: For example, malicious attacks by miners, inadequate mining fees to incentivize validating of Bitcoin transactions, hard “forks” of the Bitcoin blockchain into multiple blockchains, and advances in digital computing, algebraic geometry, and quantum computing could undercut the integrity of the Bitcoin blockchain and negatively affect the price of Bitcoin.
−Removed: The liquidity of Bitcoin may also be reduced and damage to the public perception of Bitcoin may occur, if financial institutions were to deny or limit banking services to businesses that hold Bitcoin, provide Bitcoin-related services or accept Bitcoin as payment, which could also decrease the price of Bitcoin.
−Removed: Similarly, the open-source nature of the Bitcoin blockchain means the contributors and developers of the Bitcoin blockchain are generally not directly compensated for their contributions in maintaining and developing the blockchain, and any failure to properly monitor and upgrade the Bitcoin blockchain could adversely affect the Bitcoin blockchain and negatively affect the price of Bitcoin.
−Removed: Actions by U.S.
−Removed: banking regulators have reduced the ability of Bitcoin-related services providers to gain access to banking services and liquidity of Bitcoin may also be impacted to the extent that changes in applicable laws and regulatory requirements negatively impact the ability of exchanges and trading venues to provide services for Bitcoin and other digital assets.
−Removed: In addition, while the current U.S.
−Removed: administration has expressed support regarding the development and use of digital assets as the industry has anticipated, the specific regulatory frameworks are still to be developed.
−Removed: Expectations around U.S.
−Removed: digital asset policy, including potential sentiments that the U.S.
−Removed: government is not moving quickly enough or not meeting policy expectations, may adversely affect the price of Bitcoin.
−Removed: Bitcoin is a highly volatile asset, and fluctuations in the price of Bitcoin are likely to influence our financial results and the market price of our common stock.
−Removed: Bitcoin is a highly volatile asset, and fluctuations in the price of Bitcoin are likely to influence our financial results and the market price of our common stock.
−Removed: Our financial results and the market price of our common stock would be adversely affected, and our business and financial condition would be negatively impacted, if the price of Bitcoin decreased substantially (as it has in the past, such as during 2022), including as a result of:
−Removed: ● decreased user and investor confidence in Bitcoin, including due to the various factors described herein;
−Removed: ● investment and trading activities such as (i) trading activities of highly active retail and institutional users, speculators, other Bitcoin treasury companies, miners and investors, or of the U.S.
−Removed: or state governments, (ii) actual or expected significant dispositions of Bitcoin by large holders, and (iii) actual or perceived manipulation of the spot or derivative markets for Bitcoin or spot Bitcoin ETPs;
−Removed: ● negative publicity, media or social media coverage, or sentiment due to events in or relating to, or perception of, Bitcoin or the broader digital assets industry, for example, (i) public perception that Bitcoin can be used as a vehicle to circumvent sanctions, including sanctions imposed on Russia or certain regions related to the ongoing conflict between Russia and Ukraine, or to fund criminal or terrorist activities, such as the purported use of digital assets by Hamas to fund its terrorist attack against Israel in October 2023;
−Removed: (ii) expected or pending civil, criminal, regulatory enforcement or other high profile actions against major participants in the Bitcoin ecosystem, including the SEC’s subsequently dismissed enforcement actions against Coinbase, Inc.
−Removed: and Binance Holdings Ltd.;
−Removed: (iii) additional filings for bankruptcy protection or bankruptcy proceedings of major digital asset industry participants, such as the bankruptcy proceeding of FTX Trading and its affiliates;
−Removed: (iv) the actual or perceived environmental impact of Bitcoin and related activities, including environmental concerns raised by private individuals, governmental and non-governmental organizations, and other actors related to the energy resources consumed in the Bitcoin mining process;
−Removed: and (v) activities relating to other cryptocurrencies, including “meme coins”;
−Removed: ● changes in consumer preferences and the perceived value or prospects of Bitcoin;
−Removed: ● the recent increase in the number of other companies pursuing a Bitcoin treasury strategy, the abandonment of the strategy by such other companies, the failure by such other companies to satisfy their debt or other financial obligations, market concerns as to the viability or creditworthiness of such other companies, the loss or disposition of substantial Bitcoin by such other companies, regulatory or legal judgments or actions against such other companies due to their adoption of a Bitcoin treasury strategy, or any other similar actions or negative outcomes impacting such other companies, whether due to any of the various risk factors described herein or for any other reason;
−Removed: ● competition from other digital assets that exhibit better speed, security, scalability, or energy efficiency, that feature other more favored characteristics, that are backed or held in large amounts by governments, including the U.S.
−Removed: government, or reserves of fiat currencies, or that represent ownership or security interests in physical assets;
−Removed: ● a decrease in the price of other digital assets, including stablecoins, or the crash or unavailability of stablecoins that are used as a medium of exchange for Bitcoin purchase and sale transactions, such as the crash of the stablecoin Terra USD in 2022, to the extent the decrease in the price of such other digital assets or the unavailability of such stablecoins may cause a decrease in the price of Bitcoin or adversely affect investor confidence in digital assets generally;
−Removed: ● the identification of Satoshi Nakamoto, the pseudonymous person or persons who developed Bitcoin, or the transfer of substantial amounts of Bitcoin from bitcoin wallets attributed to Mr.
−Removed: Nakamoto or other “whales” that hold significant amounts of Bitcoin;
−Removed: ● developments relating to the Bitcoin protocol, including (i) changes to the Bitcoin protocol that impact its security, speed, scalability, usability, or value, such as changes to the cryptographic security protocol underpinning the Bitcoin blockchain, changes to the maximum number of Bitcoin outstanding, changes to the mutability of transactions, changes relating to the size of blockchain blocks, and changes to the amount of data that may be embedded into the Bitcoin blockchain, and similar changes, (ii) failures to make upgrades to the Bitcoin protocol to adapt to security, technological, legal or other challenges, and (iii) changes to the Bitcoin protocol that introduce software bugs, security risks or other elements that adversely affect Bitcoin;
−Removed: ● disruptions, failures, unavailability, or interruptions in service of trading venues for Bitcoin, such as, for example, the announcement by the digital asset exchange FTX Trading that it would freeze withdrawals and transfers from its accounts and subsequent filing for bankruptcy protection and the SEC enforcement action brought against Binance Holdings Ltd., which initially sought to freeze all of its assets during the pendency of the enforcement action (which has since been dismissed);
−Removed: ● the filing for bankruptcy protection by, liquidation of, or market concerns about the financial viability of digital asset custodians, trading venues, lending platforms, investment funds, or other digital asset industry participants, such as the filing for bankruptcy protection by digital asset trading venues FTX Trading and BlockFi and digital asset lending platforms Celsius Network and Voyager Digital Holdings in 2022, the ordered liquidation of the digital asset investment fund Three Arrows Capital in 2022, the announced liquidation of Silvergate Bank in 2023, the government-mandated closure and sale of Signature Bank in 2023, the placement of Prime Trust, LLC into receivership following a cease-and-desist order issued by the Nevada Department of Business and Industry in 2023, and the exit of Binance Holdings Ltd.
−Removed: from the U.S.
−Removed: market as part of its settlement with the DOJ and other federal regulatory agencies;
−Removed: ● regulatory, legislative, enforcement and judicial actions that adversely affect the price, ownership, transferability, trading volumes, legality or public perception of Bitcoin, or that adversely affect the operations of or otherwise prevent digital asset custodians, trading venues, lending platforms or other digital assets industry participants from operating in a manner that allows them to continue to deliver services to the digital assets industry;
−Removed: ● further reductions in mining rewards of Bitcoin, including block reward halving events, which are programmed events that occur after a specific period of time that reduce the block reward earned by “miners” who validate Bitcoin transactions, or increases in the costs associated with Bitcoin mining, including increases in electricity costs and hardware and software used in mining, that may cause a decline in support for the Bitcoin network;
−Removed: ● transaction congestion and fees associated with processing transactions on the Bitcoin network;
−Removed: ● macroeconomic changes, such as changes in the level of interest rates and inflation, fiscal and monetary policies of governments, trade restrictions, and fiat currency devaluations;
−Removed: ● developments in mathematics or technology, including in digital computing, algebraic geometry and quantum computing, that could result in the cryptography used by the Bitcoin blockchain becoming insecure or ineffective;
−Removed: ● changes in national and international economic and political conditions, including, without limitation, the adverse impact attributable to the economic and political instability caused by the current conflict between Russia and Ukraine and the economic sanctions adopted in response to the conflict, and the potential broadening of the Israel-Hamas conflict to other countries in the Middle East, as well as expectations regarding changes to the regulatory environment, including for the U.S.
−Removed: digital asset industry.
−Removed: Our historical financial statements prior to adoption of our Bitcoin treasury strategy do not reflect the potential variability in earnings that we have experienced and may experience in the future relating to our Bitcoin holdings.
−Removed: We adopted our Bitcoin treasury strategy in December 2024.
−Removed: Accordingly, our historical financial statements prior thereto do not reflect the potential variability in earnings that we have experienced and may experience in the future from holding or selling significant amounts of Bitcoin.
−Removed: The price of Bitcoin has historically been subject to dramatic price fluctuations and is highly volatile.
−Removed: We determine the fair value of our Bitcoin based on quoted (unadjusted) prices on the Coinbase exchange, and following our early adoption of ASU 2023-08 we measure our Bitcoin holdings at fair value in our balance sheet recognize gains and losses from changes in the fair value of our Bitcoin in net income each reporting period, which has created and may continue create significant volatility in our reported earnings and decrease the carrying value of our digital assets, which in turn could have a material adverse effect on the market price of our common stock.
−Removed: Conversely, any sale of Bitcoin at prices above our carrying value for such assets creates a gain for financial reporting purposes even if we would otherwise incur an economic or tax loss with respect to such transaction, which also may result in significant volatility in our reported earnings.
−Removed: Due in particular to the volatility in the price of Bitcoin, our adoption of ASU 2023-08 has increased the volatility of our financial results and it could significantly affect the carrying value of our Bitcoin on our balance sheet.
−Removed: In the first quarter of 2025, a decrease in the price of Bitcoin resulted in a $9.75 million decrease in the fair value of our Bitcoin holdings, whereas in the second quarter of 2025, an increase in the price of Bitcoin resulted in an $7.62 million increase in the fair value of our Bitcoin holdings.
−Removed: As of June 30, 2025, we held 928.28 Bitcoins, which we acquired 910.99 Bitcoins for $90.90 million, inclusive of fees and expenses, and mined 17.29 Bitcoins at a value of $1.69 million, with an aggregate value of $99.49 million due to increase in their fair value of $7.62 million, and $20.57 million in cash, compared to 217.18 Bitcoins with an aggregate fair value of $20.28 million and having $29.83 million in cash as of December 31, 2024.
−Removed: Because we intend to purchase and mine additional Bitcoin in future periods and increase our overall holdings of Bitcoin, we expect that the proportion of our total assets represented by our Bitcoin holdings will increase in the future.
−Removed: As a result, volatility in our earnings since adoption of our Bitcoin treasury strategy and ASU 2023-08 may be significantly more than what we experienced in prior periods.
−Removed: The availability of spot Bitcoin ETPs may adversely affect the market price of our common stock.
−Removed: Although Bitcoin and other digital assets have experienced a surge of investor attention since Bitcoin was invented in 2008, until recently investors in the United States had limited means to gain direct exposure to Bitcoin through traditional investment channels, and instead generally were only able to hold Bitcoin through “hosted” wallets provided by digital asset service providers or through “unhosted” wallets that expose the investor to risks associated with loss or hacking of their private keys.
−Removed: Given the relative novelty of digital assets, general lack of familiarity with the processes needed to hold Bitcoin directly, as well as the potential reluctance of financial planners and advisers to recommend direct Bitcoin holdings to their retail customers because of the manner in which such holdings are custodied, some investors have sought exposure to Bitcoin through investment vehicles that hold Bitcoin and issue shares representing fractional undivided interests in their underlying Bitcoin holdings.
−Removed: These vehicles, which were previously offered only to “accredited investors” on a private placement basis, have in the past traded at substantial premiums to net asset value, or NAV, possibly due to the relative scarcity of traditional investment vehicles providing investment exposure to Bitcoin.
−Removed: On January 10, 2024, the SEC approved the listing and trading of spot Bitcoin ETPs, the shares of which can be sold in public offerings and are traded on U.S.
−Removed: national securities exchanges.
−Removed: The approved ETPs commenced trading directly to the public on January 11, 2024, with a trading volume of approximately $4.6 billion on the first trading day.
−Removed: To the extent investors view our common stock as providing exposure to Bitcoin, it is possible that the value of our common stock may also have included a premium over the value of our Bitcoin due to the prior scarcity of traditional investment vehicles providing investment exposure to Bitcoin, and that the value declined due to investors now having a greater range of options to gain exposure to Bitcoin and investors choosing to gain such exposure through ETPs rather than our common stock.
−Removed: Although we are an operating company providing technology solutions, and we believe we offer a different value proposition than a passive Bitcoin investment vehicle such as a spot Bitcoin ETP, investors may nevertheless view our common stock as an alternative to an investment in an ETP, and choose to purchase shares of a spot Bitcoin ETP instead of our common stock.
−Removed: They may do so for a variety of reasons, including if they believe that ETPs offer a “pure play” exposure to Bitcoin that is generally not subject to federal income tax at the entity level as we are, or the other risk factors applicable to an operating business, such as ours.
−Removed: Additionally, unlike spot Bitcoin ETPs, we (i) do not seek for our shares of common stock to track the value of the underlying Bitcoin we hold before payment of expenses and liabilities, (ii) do not benefit from various exemptions and relief under the Securities Exchange Act of 1934, as amended, or the Exchange Act, including Regulation M, and other securities laws, which enable spot Bitcoin ETPs to continuously align the value of their shares to the price of the underlying Bitcoin they hold through share creation and redemption, (iii) are a Delaware corporation rather than a statutory trust, and do not operate pursuant to a trust agreement that would require us to pursue one or more stated investment objectives, and (iv) are not required to provide daily transparency as to our Bitcoin holdings or our daily NAV.
−Removed: Furthermore, recommendations by broker-dealers to buy, hold, or sell complex products and non-traditional ETPs, or an investment strategy involving such products, may be subject to additional or heightened scrutiny that would not be applicable to broker-dealers making recommendations with respect to our common stock.
−Removed: Based on how we are viewed in the market relative to ETPs, and other vehicles that offer economic exposure to Bitcoin, such as Bitcoin futures ETFs and leveraged Bitcoin futures ETFs, any premium or discount in our common stock relative to the value of our Bitcoin holdings may increase or decrease in different market conditions.
−Removed: As a result of the foregoing factors, availability of spot Bitcoin ETPs on U.S.
−Removed: national securities exchanges could have a material adverse effect on the market price of our common stock.
−Removed: Our Bitcoin treasury strategy subjects us to enhanced regulatory oversight.
−Removed: As noted elsewhere in these Risk Factors, several spot Bitcoin ETPs have received approval from the SEC to list their shares on a U.S.
−Removed: national securities exchange with continuous share creation and redemption at NAV.
−Removed: Even though we are not, and do not function in the manner of, a spot Bitcoin ETP, it is possible that we nevertheless could face regulatory scrutiny from the SEC or other federal or state agencies due to our Bitcoin holdings.
−Removed: In addition, there has been increasing focus on the extent to which digital assets can be used to launder the proceeds of illegal activities, fund criminal or terrorist activities, or circumvent sanctions regimes, including those sanctions imposed in response to the ongoing conflict between Russia and Ukraine.
−Removed: While we have implemented and maintain policies and procedures reasonably designed to promote compliance with applicable anti-money laundering and sanctions laws and regulations and take care to only acquire our Bitcoin through entities subject to anti-money laundering regulation and related compliance rules in the United States, if we are found to have purchased any of our Bitcoin from bad actors that have used Bitcoin to launder money or persons subject to sanctions, we may be subject to regulatory proceedings and any further transactions or dealings in Bitcoin by us may be restricted or prohibited.
−Removed: We may consider issuing debt or other financial instruments that may be collateralized by our Bitcoin holdings.
−Removed: For example, we entered into a Master Loan Agreement with Coinbase Credit, Inc., a Delaware corporation, and Coinbase, Inc., a Delaware corporation, acting in its principal capacity and as agent for each of its affiliates, for a for a multiple-draw term facility, under which the Company borrowed $8.0 million in cash, secured by a first-priority security interest at collateral-coverage ratio of about 156.25% of the outstanding principal amount, or 166 BTC.
−Removed: We may also consider pursuing strategies to create income streams or otherwise generate funds using our Bitcoin holdings.
−Removed: These types of Bitcoin-related transactions are the subject of enhanced regulatory oversight.
−Removed: These and any other Bitcoin-related transactions we may enter into, beyond simply acquiring and holding Bitcoin, may subject us to additional regulatory compliance requirements and scrutiny, including under federal and state money services regulations, money transmitter licensing requirements and various commodity and securities laws and regulations.
−Removed: Additional laws, guidance and policies may be issued by domestic and foreign regulators following the filing for Chapter 11 bankruptcy protection by FTX Trading, one of the world’s largest cryptocurrency exchanges, in November 2022.
−Removed: and foreign regulators have also increased enforcement activity thereafter, and regulatory requirements continue to evolve in response to FTX Trading’s collapse as well as changes in government policies regarding cryptocurrencies.
−Removed: Changes in the regulatory environment, including changing interpretations and the implementation of new or varying regulatory requirements by the government or any new legislation affecting Bitcoin, as well as enforcement actions involving or impacting our trading venues, counterparties and custodians, may impose significant costs or significantly limit our ability to hold and transact in Bitcoin.
−Removed: In addition, private actors that are wary of Bitcoin or the regulatory concerns associated with Bitcoin may in the future take further actions that may have an adverse effect on our business or the market price of our common stock.
−Removed: Due to the currently unregulated nature and lack of transparency surrounding the operations of many Bitcoin trading venues, Bitcoin trading venues may experience greater fraud, security failures or regulatory or operational problems than trading venues for more established asset classes, which may result in a loss of confidence in Bitcoin trading venues and adversely affect the value of our Bitcoin.
−Removed: Bitcoin trading venues are relatively new (compared to stock exchanges) and, in many cases, currently unregulated.
−Removed: Even if regulated, such venues may not be complying with such regulations.
−Removed: Furthermore, there are many Bitcoin trading venues that do not provide the public with significant information regarding their ownership structure, management teams, corporate practices and regulatory compliance.
−Removed: As a result, the marketplace may lose confidence in Bitcoin trading venues, including prominent exchanges that handle a significant volume of Bitcoin trading and/or are subject to regulatory oversight, in the event one or more Bitcoin trading venues cease or pause for a prolonged period the trading of Bitcoin or other digital assets, or experience fraud, significant volumes of withdrawal, security failures or operational problems.
−Removed: In 2019 there were reports claiming that 80-95% of Bitcoin trading volume on trading venues was false or non-economic in nature, with specific focus on currently unregulated exchanges located outside of the United States.
−Removed: The SEC also alleged as part of its June 2023, complaint that Binance Holdings Ltd.
−Removed: committed strategic and targeted “wash trading” through its affiliates to artificially inflate the volume of certain digital assets traded on its exchange.
−Removed: Such reports and allegations may indicate that the Bitcoin market is significantly smaller than expected and that the United States makes up a significantly larger percentage of the Bitcoin market than is commonly understood.
−Removed: Any actual or perceived false trading in the Bitcoin market, and any other fraudulent or manipulative acts and practices, could adversely affect the value of our Bitcoin.
−Removed: Negative perception, a lack of stability in the broader Bitcoin markets and the closure, temporary shutdown or operational disruption of Bitcoin trading venues, lending institutions, institutional investors, institutional miners, custodians, or other major participants in the Bitcoin ecosystem, due to fraud, business failure, cybersecurity events, government-mandated regulation, bankruptcy, or for any other reason, may result in a decline in confidence in Bitcoin and the broader Bitcoin ecosystem and greater volatility in the price of Bitcoin.
−Removed: For example, in 2022, each of Celsius Network, Voyager Digital, Three Arrows Capital, FTX Trading, and BlockFi filed for bankruptcy, following which the market prices of Bitcoin and other digital assets significantly declined.
−Removed: In addition, in June 2023, the SEC announced enforcement actions against Coinbase, Inc., and Binance Holdings Ltd., two providers of large trading venues for digital assets, which similarly was followed by a decrease in the market price of Bitcoin and other digital assets.
−Removed: These were followed in November 2023, by an SEC enforcement action against Kraken, another large trading venue for digital assets.
−Removed: Although these SEC enforcement actions were eventually dismissed, additional enforcement actions could be pursued in the future as regulatory priorities evolve.
−Removed: As the price of our common stock is affected by the value of our Bitcoin holdings, the failure of a major participant in the Bitcoin ecosystem could have a material adverse effect on the market price of our common stock.
−Removed: The concentration of our Bitcoin holdings enhances the risks inherent in our Bitcoin treasury strategy.
−Removed: As of June 30, 2025, we held an aggregate 928.28 Bitcoins, which we acquired for $90.90 million, inclusive of fees and expenses, and mined 17.29 Bitcoins at a value of $1.69 million, and we intend to purchase and mine additional Bitcoin and increase our overall holdings of Bitcoin in the future.
−Removed: The concentration of our Bitcoin holdings limits the risk mitigation that we could take advantage of by purchasing a more diversified portfolio of treasury assets, and the absence of diversification enhances the risks inherent in our Bitcoin acquisition strategy.
−Removed: Any future significant declines in the price of Bitcoin would have a more pronounced impact on our financial condition than if we used our cash to purchase a more diverse portfolio of assets.
−Removed: The emergence or growth of other digital assets, including those with significant private or public sector backing, could have a negative impact on the price of Bitcoin and adversely affect our financial condition and results of operations.
−Removed: As a result of our Bitcoin treasury strategy, the majority of our cash is now concentrated in our Bitcoin holdings.
−Removed: Accordingly, the emergence or growth of digital assets other than Bitcoin may have a material adverse effect on our financial condition.
−Removed: While Bitcoin is the largest digital asset by market capitalization as of the date of this quarterly report on Form 10-Q, there are numerous alternative digital assets and many entities, including the U.S.
−Removed: government, consortiums and financial institutions, are researching and investing resources into private or permissioned blockchain platforms or digital assets that do not use proof-of-work mining like the Bitcoin network.
−Removed: For example, in late 2022, the Ethereum network transitioned to a “proof-of-stake” mechanism for validating transactions that requires significantly less computing power than proof-of-work mining.
−Removed: The Ethereum network has completed another major update since then and may undertake additional updates in the future.
−Removed: If the mechanisms for validating transactions in Ethereum and other alternative digital assets are perceived as superior to proof-of-work mining, those digital assets could gain market share relative to Bitcoin.
−Removed: Other alternative digital assets that compete with Bitcoin in certain ways include “stablecoins,” which are designed to maintain a constant price related to or based on some other asset or traditional currency because of, for instance, their issuers’ promise to hold high-quality liquid assets (such as U.S.
−Removed: dollar deposits and short-term U.S.
−Removed: treasury securities) equal to the total value of stablecoins in circulation.
−Removed: In June 2025, the U.S.
−Removed: Senate passed the “GENIUS Act”, which would establish a federal framework for “payment stablecoins,” treating them as payment systems, not securities, and mandating fiat-backed reserves, monthly disclosures, anti-money laundering safeguards, and similar measures.
−Removed: Stablecoins have grown rapidly as an alternative to Bitcoin and other digital assets as a medium of exchange and store of value, particularly on digital asset trading platforms, and their use as an alternative to Bitcoin could expand further if the GENIUS Act is signed into law.
−Removed: As of the date of this quarterly report on Form 10-Q, two of the seven largest digital assets by market capitalization are U.S.
−Removed: dollar-backed stablecoins.
−Removed: Additionally, central banks in some countries have started to introduce digital forms of legal tender.
−Removed: For example, China’s central bank digital currency or CBDC project was made available to consumers in January 2022, and governments including the European Union and Israel have been discussing the potential creation of new CBDCs.
−Removed: Whether or not they incorporate blockchain or similar technology, CBDCs, as legal tender in the issuing jurisdiction, could also compete with, or replace, Bitcoin and other digital assets as a medium of exchange or store of value.
−Removed: As a result, the emergence or growth of these or other digital assets could cause the market price of Bitcoin to decrease, which could have a material adverse effect on our financial condition, and operating results.
−Removed: Our Bitcoin holdings are less liquid than our existing cash and cash equivalents and may not be able to serve as a source of liquidity for us to the same extent as cash and cash equivalents.
−Removed: Historically, the Bitcoin markets have been characterized by significant volatility in price, limited liquidity and trading volumes compared to sovereign currencies markets, relative anonymity, a developing regulatory landscape, potential susceptibility to market abuse and manipulation, compliance and internal control failures at exchanges, and various other risks inherent in its entirely electronic, virtual form and decentralized network.
−Removed: During times of market instability, we may not be able to sell our Bitcoin at favorable prices or at all.
−Removed: For example, a number of Bitcoin trading venues temporarily halted deposits and withdrawals in 2022.
−Removed: As a result, our Bitcoin holdings may not be able to serve as a source of liquidity for us to the same extent as cash and cash equivalents.
−Removed: Further, the Bitcoin that we hold with our custodian does not enjoy the same protections as are available to cash or securities deposited with or transacted by institutions subject to regulation by the Federal Deposit Insurance Corporation, or FDIC, or the Securities Investor Protection Corporation.
−Removed: Additionally, we may be unable to enter into term loans or other capital raising transactions collateralized by our unencumbered Bitcoin or otherwise generate funds using our Bitcoin holdings, including in particular during times of market instability or when the price of Bitcoin has declined significantly.
−Removed: If we are unable to sell our Bitcoin, enter into additional capital raising transactions using Bitcoin as collateral, or otherwise generate funds using our Bitcoin holdings, or if we are forced to sell our Bitcoin at a significant loss, in order to meet our working capital requirements, our business and financial condition could be negatively impacted.
−Removed: If we or our third-party service providers experience a security breach or cyberattack and unauthorized parties obtain access to our Bitcoin, or if our private keys are lost or destroyed, or other similar circumstances or events occur, we may lose some or all of our Bitcoin and our financial condition and results of operations could be materially adversely affected.
−Removed: Substantially all of the Bitcoin we own is held in a custody account at a U.S.-based institutional-grade digital asset custodian.
−Removed: Security breaches and cyberattacks are of particular concern with respect to our Bitcoin.
−Removed: Bitcoin and other blockchain-based cryptocurrencies and the entities that provide services to participants in the Bitcoin ecosystem have been, and may in the future be, subject to security breaches, cyberattacks, or other malicious activities.
−Removed: For example, in October 2021 it was reported that hackers exploited a flaw in the account recovery process and stole from the accounts of at least 6,000 customers of the Coinbase exchange, although the flaw was subsequently fixed and Coinbase reimbursed affected customers.
−Removed: Similarly, in November 2022, hackers exploited weaknesses in the security architecture of the FTX Trading digital asset exchange and reportedly stole over $400 million in digital assets from customers.
−Removed: In 2025, Coinbase reported that criminals bribed certain of its non-U.S.
−Removed: employees to steal customer data to use in social engineering attacks.
−Removed: A successful security breach or cyberattack could result in:
−Removed: ● a partial or total loss of our Bitcoin in a manner that may not be covered by insurance or the liability provisions of the custody agreements with the custodians who hold our Bitcoin;
−Removed: ● harm to our reputation and brand;
−Removed: ● improper disclosure of data and violations of applicable data privacy and other laws;
−Removed: ● significant regulatory scrutiny, investigations, fines, penalties, and other legal, regulatory, contractual and financial exposure.
−Removed: Further, any actual or perceived data security breach or cybersecurity attack directed at other companies with digital assets or companies that operate digital asset networks, regardless of whether we are directly impacted, could lead to a general loss of confidence in the broader Bitcoin blockchain ecosystem or in the use of the Bitcoin network to conduct financial transactions, which could negatively impact us.
−Removed: Attacks upon systems across a variety of industries, including industries related to Bitcoin, are increasing in frequency, persistence, and sophistication, and, in many cases, are being conducted by sophisticated, well-funded and organized groups and individuals, including state actors.
−Removed: The techniques used to obtain unauthorized, improper or illegal access to systems and information (including personal data and digital assets), disable or degrade services, or sabotage systems are constantly evolving, may be difficult to detect quickly, and often are not recognized or detected until after they have been launched against a target.
−Removed: These attacks may occur on our systems or those of our third-party service providers or partners.
−Removed: We may experience breaches of our security measures due to human error, malfeasance, insider threats, system errors or vulnerabilities or other irregularities.
−Removed: In particular, we expect that unauthorized parties will attempt to gain access to our systems and facilities, as well as those of our partners and third-party service providers, through various means, such as hacking, social engineering, phishing and fraud.
−Removed: Threats can come from a variety of sources, including criminal hackers, hacktivists, state-sponsored intrusions, industrial espionage, and insiders.
−Removed: In addition, certain types of attacks could harm us even if our systems are left undisturbed.
−Removed: For example, certain threats are designed to remain dormant or undetectable, sometimes for extended periods of time, or until launched against a target and we may not be able to implement adequate preventative measures.
−Removed: Further, there has been an increase in such activities due to the increase in work-from-home arrangements.
−Removed: The risk of cyberattacks could also be increased by cyberwarfare in connection with the ongoing Russia-Ukraine and Israel-Hamas conflicts, or other future conflicts, including potential proliferation of malware into systems unrelated to such conflicts.
−Removed: Any future breach of our operations or those of others in the Bitcoin industry, including third-party services on which we rely, could materially and adversely affect our financial condition and results of operations.
−Removed: We face risks relating to the custody of our Bitcoin, including the loss or destruction of private keys required to access our Bitcoin and cyberattacks or other data loss relating to our Bitcoin.
−Removed: We hold our Bitcoin with regulated custodians that have duties to safeguard our private keys.
−Removed: Our custodial services contracts do not restrict our ability to reallocate our Bitcoin among our custodians, and our Bitcoin holdings may be concentrated with a single custodian from time to time.
−Removed: If there is a decrease in the availability of digital asset custodians that we believe can safely custody our Bitcoin, for example, due to regulatory developments or enforcement actions that cause custodians to discontinue or limit their services in the United States, we may need to enter into agreements that are less favorable than our current agreements or take other measures to custody our Bitcoin, and our ability to seek a greater degree of diversification in the use of custodial services would be materially adversely affected.
−Removed: In addition, holding our Bitcoin with regulated custodians could affect the availability of receiving digital assets that may result from “forks” of the Bitcoin blockchain if our custodians are unable to support or otherwise provide us with such digital assets, thereby reducing the amount of digital assets we may hold as a result.
−Removed: While our custodians carry insurance policies to cover losses for commercial crimes, cyber and cold storage, the policy limits vary per provider and would be shared among all of their customers, and subject to various limitations and exclusions (such as if a loss arises due to our failure to protect our login credentials and devices).
−Removed: The insurance that covers losses of our Bitcoin holdings may cover only a small fraction of the value of the entirety of our Bitcoin holdings, and there can be no guarantee that such insurance will be maintained as part of the custodial services we have or that such coverage will cover losses with respect to our Bitcoin.
−Removed: Moreover, our use of custodians exposes us to the risk that the Bitcoin our custodians hold on our behalf could be subject to insolvency proceedings and we could be treated as a general unsecured creditor of the custodian, inhibiting our ability to exercise ownership rights with respect to such Bitcoin.
−Removed: Any loss associated with such insolvency proceedings is unlikely to be covered by any insurance coverage we maintain related to our Bitcoin.
−Removed: Bitcoin is controllable only by the possessor of both the unique public key and private key(s) relating to the local or online digital wallet in which the Bitcoin is held.
−Removed: While the Bitcoin blockchain ledger requires a public key relating to a digital wallet to be published when used in a transaction, private keys must be safeguarded and kept private in order to prevent a third party from accessing the Bitcoin held in such wallet.
−Removed: To the extent the private key(s) for a digital wallet are lost, destroyed, or otherwise compromised and no backup of the private key(s) is accessible, neither we nor our custodians will be able to access the Bitcoin held in the related digital wallet.
−Removed: Furthermore, we cannot provide assurance that our digital wallets, nor the digital wallets of our custodians held on our behalf, will not be compromised as a result of a cyberattack.
−Removed: The Bitcoin and blockchain ledger, as well as other digital assets and blockchain technologies, have been, and may in the future be, subject to security breaches, cyberattacks, or other malicious activities.
−Removed: Regulatory change reclassifying Bitcoin as a security could lead to our classification as an “investment company” under the 1940 Act and could adversely affect the market price of Bitcoin and the market price of our common stock.
−Removed: Under Sections 3(a)(1)(A) and (C) of the 1940 Act, a company generally will be deemed to be an “investment company” for purposes of the 1940 Act if (1) it is, or holds itself out as being, engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting or trading in securities or (2) it engages, or proposes to engage, in the business of investing, reinvesting, owning, holding or trading in securities and it owns or proposes to acquire investment securities having a value exceeding 40% of the value of its total assets (exclusive of U.S.
−Removed: government securities and cash items) on a consolidated basis.
−Removed: We do not believe that we are an “investment company,” as such term is defined in the 1940 Act, and are not registered as an “investment company” under the 1940 Act as of the date of this quarterly report on Form 10-Q.
−Removed: While senior SEC officials have stated their view that Bitcoin is not a “security” for purposes of the federal securities laws, a contrary determination by the SEC could lead to our classification as an “investment company” under the 1940 Act, if the portion of our assets consists of investments in Bitcoin exceeds 40% safe harbor limits prescribed in the 1940 Act, which would subject us to significant additional regulatory controls that could have a material adverse effect on our business and operations and may also require us to change the manner in which we conduct our business.
−Removed: We monitor our assets and income for compliance under the 1940 Act and seek to conduct our business activities in a manner such that we do not fall within its definitions of “investment company” or that we qualify under one of the exemptions or exclusions provided by the 1940 Act and corresponding SEC regulations.
−Removed: If Bitcoin is determined to constitute a security for purposes of the federal securities laws, we would take steps to reduce the percentage of Bitcoin that constitute investment assets under the 1940 Act.
−Removed: These steps may include, among others, selling Bitcoin that we might otherwise hold for the long term and deploying our cash in non-investment assets, and we may be forced to sell our Bitcoin at unattractive prices.
−Removed: We may also seek to acquire additional non-investment assets to maintain compliance with the 1940 Act, and we may need to incur debt, issue additional equity or enter into other financing arrangements that are not otherwise attractive to our business.
−Removed: Any of these actions could have a material adverse effect on our results of operations and financial condition.
−Removed: Moreover, we can make no assurance that we would successfully be able to take the necessary steps to avoid being deemed to be an investment company in accordance with the safe harbor.
−Removed: If we were unsuccessful, and if Bitcoin is determined to constitute a security for purposes of the federal securities laws, then we would have to register as an investment company, and the additional regulatory restrictions imposed by 1940 Act could adversely affect the market price of Bitcoin and in turn adversely affect the market price of our common stock.
−Removed: We may be subject to regulatory developments related to crypto assets and crypto asset markets, which could adversely affect our business, financial condition, and results of operations.
−Removed: As Bitcoin and other digital assets are relatively novel and the application of state and federal securities laws and other laws and regulations to digital assets is unclear in certain respects, it is possible that regulators in the United States or foreign countries may interpret or apply existing laws and regulations in a manner that adversely affects the price of Bitcoin.
−Removed: federal government, states, regulatory agencies, and foreign countries may also enact new laws and regulations, or pursue regulatory, legislative, enforcement or judicial actions, that could materially impact the price of Bitcoin or the ability of individuals or institutions such as us to own or transfer Bitcoin.
−Removed: See “—Bitcoin and other digital assets are novel assets, and are subject to significant legal, commercial, regulatory and technical uncertainty” elsewhere in these Risk Factors.
−Removed: If Bitcoin is determined to constitute a security for purposes of the federal securities laws, the additional regulatory restrictions imposed by such a determination could adversely affect the market price of Bitcoin and in turn adversely affect the market price of our common stock.
−Removed: See “—Regulatory change reclassifying Bitcoin as a security could lead to our classification as an “investment company” under the 1940 Act, and could adversely affect the market price of Bitcoin and the market price of our common stock” elsewhere in these Risk Factors.
−Removed: Moreover, the risks of us engaging in a Bitcoin treasury strategy have created, and could continue to create, complications due to the lack of experience that third parties have with companies engaging in such a strategy, such as increased costs of director and officer liability insurance or the potential inability to obtain such coverage on acceptable terms in the future.
−Removed: Our Bitcoin treasury strategy exposes us to risk of non-performance by counterparties.
−Removed: Our Bitcoin treasury strategy exposes us to the risk of non-performance by counterparties, whether contractual or otherwise.
−Removed: Risk of non-performance includes inability or refusal of a counterparty to perform because of a deterioration in the counterparty’s financial condition and liquidity or for any other reason.
−Removed: For example, our execution partners, custodians, or other counterparties might fail to perform in accordance with the terms of our agreements with them, which could result in a loss of Bitcoin, a loss of the opportunity to generate funds, or other losses.
−Removed: Our primary counterparty risk with respect to our Bitcoin is custodian performance obligations under the various custody arrangements we have entered into.
−Removed: A series of recent high-profile bankruptcies, closures, liquidations, regulatory enforcement actions and other events relating to companies operating in the digital asset industry, the closure or liquidation of certain financial institutions that provided lending and other services to the digital assets industry, SEC enforcement actions against other providers, or placement into receivership or civil fraud lawsuit against digital asset industry participants have highlighted the perceived and actual counterparty risk applicable to digital asset ownership and trading.
−Removed: Although these bankruptcies, closures and liquidations have not adversely impacted our Bitcoin (which was only recently acquired), legal precedent created in these bankruptcy and other proceedings may increase the risk of future rulings adverse to our interests in the event one or more of our custodians becomes a debtor in a bankruptcy case or is the subject of other liquidation, insolvency or similar proceedings.
−Removed: While our custodians are subject to regulatory regimes intended to protect customers in the event of a custodial bankruptcy, receivership or similar insolvency proceeding, no assurance can be provided that our custodially-held Bitcoin will not become part of the custodian’s insolvency estate if one or more of our custodians enters bankruptcy, receivership or similar insolvency proceedings.
−Removed: Additionally, if we pursue any strategies to create income streams or otherwise generate funds using our Bitcoin holdings, we would become subject to additional counterparty risks.
−Removed: Although no such strategies are contemplated at this time, we will need to carefully evaluate market conditions, including price volatility as well as service provider terms and market reputations and performance, among others, prior to implementing any such strategy, all of which could effect our ability to successfully implement and execute on any such future strategy.
−Removed: These risks, along with any significant non-performance by counterparties, including in particular the custodians with which we custody substantially all of our Bitcoin, could have a material adverse effect on our business, prospects, financial condition, and operating results.
−Removed: Our custodially-held Bitcoin may become part of the custodian’s insolvency estate if one or more of our custodians enters bankruptcy, receivership or similar insolvency proceedings.
−Removed: If our custodially-held Bitcoin are considered to be the property of our custodians’ estates in the event that any such custodians were to enter bankruptcy, receivership or similar insolvency proceedings, we could be treated as a general unsecured creditor of such custodians, inhibiting our ability to exercise ownership rights with respect to such Bitcoin and this may ultimately result in the loss of the value related to some or all of such Bitcoin.
−Removed: A series of recent high-profile bankruptcies, closures, liquidations, regulatory enforcement actions and other events relating to companies operating in the digital asset industry, including the filings for bankruptcy protection by Three Arrows Capital, Celsius Network, Voyager Digital, FTX Trading and Genesis Global Capital, the closure or liquidation of certain financial institutions that provided lending and other services to the digital assets industry, including Signature Bank and Silvergate Bank, SEC enforcement actions against Coinbase, Inc.
−Removed: and Binance Holdings Ltd.
−Removed: (each ultimately dismissed), the placement of Prime Trust, LLC into receivership following a cease-and-desist order issued by Nevada’s Department of Business and Industry, and the filing and subsequent settlement of a civil fraud lawsuit by the New York Attorney General against Genesis Global Capital, its parent company Digital Currency Group, Inc., and former partner Gemini Trust Company, have highlighted the counterparty risks applicable to owning and transacting in digital assets.
−Removed: Although these bankruptcies, closures, liquidations and other events have not resulted in any loss or misappropriation of our Bitcoin, nor have such events adversely impacted our access to our Bitcoin, they have, in the short-term, likely negatively impacted the adoption rate and use of Bitcoin.
−Removed: Additional bankruptcies, closures, liquidations, regulatory enforcement actions or other events involving participants in the digital assets industry in the future may further negatively impact the adoption rate, price, and use of Bitcoin, limit the availability to us of financing collateralized by Bitcoin, or create or expose additional counterparty risks.
−Removed: Any loss associated with such insolvency proceedings is unlikely to be covered by any insurance coverage we maintain related to our Bitcoin.
−Removed: Even if we are able to prevent our Bitcoin from being considered the property of a custodian’s bankruptcy estate as part of an insolvency proceeding, it is possible that we would still be delayed or may otherwise experience difficulty in accessing our Bitcoin held by the affected custodian during the pendency of the insolvency proceedings.
−Removed: Any such outcome could have a material adverse effect on our financial condition and the market price of our common stock.
−Removed: A temporary or permanent blockchain “fork” to Bitcoin or other crypto assets could adversely affect our business.
−Removed: Blockchain protocols, including Bitcoin, are open source.
−Removed: Any user can download the software, modify it, and then propose that Bitcoin or other blockchain protocols users and miners adopt the modification.
−Removed: When a modification is introduced and a substantial majority of users and miners consent to the modification, the change is implemented and the Bitcoin or other blockchain protocol networks, as applicable, remain uninterrupted.
−Removed: However, if less than a substantial majority of users and miners consent to the proposed modification, and the modification is not compatible with the software prior to its modification, the consequence would be what is known as a “fork”, i.e., “split” of the impacted blockchain protocol network and respective blockchain, with one prong running the pre-modified software and the other running the modified software.
−Removed: The effect of such a fork would be the existence of two parallel versions of the Bitcoin or other blockchain protocol network, as applicable, running simultaneously, but with each split network’s crypto asset lacking interchangeability.
−Removed: A “hard fork” – where there is disagreement among the users about the rules of the network – can have a significant negative impact on value of the crypto asset.
−Removed: The Bitcoin has been subject to “forks” that resulted in the creation of new networks, including Bitcoin cash ABC, Bitcoin cash SV, Bitcoin diamond, Bitcoin gold and others.
−Removed: Some of these forks have caused fragmentation among platforms as to the correct naming convention for forked crypto assets.
−Removed: Due to the lack of a central registry or rulemaking body, no single entity has the ability to dictate the nomenclature of forked crypto assets, causing disagreements and a lack of uniformity among platforms on the nomenclature of forked crypto assets, and which results in further confusion to customers as to the nature of assets they hold on platforms, and which can negatively impact the value of the crypto assets.
−Removed: In addition, several of these forks were contentious and as a result, participants in certain communities may harbor ill will towards other communities.
−Removed: As a result, certain community members may take actions that adversely impact the use, adoption, and price of Bitcoin, or any of their forked alternatives.
−Removed: Furthermore, hard forks can lead to new security concerns.
−Removed: For instance, when the Ethereum and Ethereum Classic networks split in July 2016, replay attacks, in which transactions from one network were rebroadcast on the other network to achieve “double-spending,” plagued platforms that traded Ethereum through at least October 2016, resulting in significant losses to some crypto asset platforms.
−Removed: Similar replay attacks occurred in connection with the Bitcoin cash and Bitcoin cash SV network split in November 2018.
−Removed: Another possible result of a hard fork is an inherent decrease in the level of security due to the splitting of some mining power across networks, making it easier for a malicious actor to exceed 50% of the mining power of that network, thereby making crypto assets that rely on proof-of-work more susceptible to attack, as has occurred with Ethereum Classic.
−Removed: We intend to recognize forked and airdropped assets consistent with our custodians.
−Removed: We may not immediately or ever have the ability to withdraw a forked or airdropped Bitcoin by virtue of Bitcoin that we hold with our custodians.
−Removed: Future forks may occur at any time.
−Removed: A fork can lead to a disruption of networks and our information technology systems, cybersecurity attacks, replay attacks, or security weaknesses, any of which can further lead to temporary or even permanent loss of our and our assets.
−Removed: The due diligence procedures conducted by us and our liquidity provider to mitigate transaction risk may fail to prevent transactions with a sanctioned entity.
−Removed: We execute trades through our U.S.-based liquidity providers, and rely on these third parties to implement controls and procedures to mitigate the risk of transacting with sanctioned entities.
−Removed: While we expect our third party service providers to conduct their business in compliance with applicable laws and regulations and in accordance with our contractual arrangements, there is no guarantee that they will do so.
−Removed: Accordingly, we are exposed to risk that our due diligence procedures may fail.
−Removed: If we are found to have transacted in Bitcoin with bad actors that have used Bitcoin to launder money or with persons subject to sanctions, we may be subject to regulatory proceedings and any further transactions or dealings in Bitcoin by us may be restricted or prohibited.
−Removed: We rely entirely on third-party mining service providers and pool operators, and any failure by those counterparties could prevent us from maintaining our mining operations and receiving our estimated digital asset rewards.
−Removed: Under our lease agreements, third parties own, house, power, and maintain all our leased miners, and our role is limited to supplying the contractual computing power that the operator directs to the mining pools of our choice.
−Removed: We therefore have no physical possession of the machines, no direct visibility into uptime or energy-cost management and only limited contractual remedies if the operator experiences hardware failures, cyber-incidents, regulatory shutdowns, curtailments, or insolvency.
−Removed: Should the operator misallocate hashrate, under-report our fractional share of daily block rewards, or alter pool-reward formulas, our revenue could decline sharply while our fixed lease payments continue.
−Removed: Because we do not control the equipment, we may be unable to redeploy, repossess, or remarket the rigs, leaving us fully exposed to the operator’s performance and creditworthiness.
−Removed: Any material disruption or dispute with this third party would materially and adversely affect our financial condition.
−Removed: Because substantial portions of our lease commitments are paid in advance of the respective term, if our daily fractional share of block rewards falls below expectations or the value of the mining rewards substantially decreases, we may not achieve profitability or could suffer substantial losses.
−Removed: We pre-pay or commit to short-term and long-term lease fees that are recorded as cost of revenue, even though the Bitcoin awards we receive fluctuate daily.
−Removed: Our entitlement is calculated each 24-hour period as a fraction of the total blocks the entire Bitcoin network is expected, and not guaranteed, to generate.
−Removed: If the network produces fewer blocks than forecast, our operator’s pool misses solved blocks, or if network difficulty rises more swiftly than anticipated, our realized Bitcoin revenue may fall short of the expected return while lease obligations remain fixed.
−Removed: In such cases the cumulative Bitcoin earned over the lease term may be unable to offset the cash we have expended, forcing us to recognize operating losses and constraining our liquidity.
−Removed: We receive non-cash consideration that is subject to daily fair-value remeasurement, creating significant earnings volatility and potential liquidity mismatches.
−Removed: We recognize revenue each day at the fair value, in U.S.
−Removed: dollars, of the Bitcoin awarded by the pool operator, and we subsequently mark our digital-asset inventory to fair value at every reporting date, recording unrealized gains or losses in the statement of operations.
−Removed: Bitcoin’s market price can be highly volatile;
−Removed: a sharp decline after the award date can convert recently recognized revenue into an accounting loss and erode shareholders’ equity, while a rapid price increase may inflate GAAP income without generating the cash needed to satisfy fixed lease and operating expenses.
−Removed: Because lease costs are largely fixed and paid in cash, any liquidity shortfalls could require us to liquidate treasury holdings at unfavorable prices, and materially and adversely affect our financial condition.
−Removed: Bitcoin network difficulty, hashrate growth, and our lack of owned equipment may render the hashrate output of our leased miners uncompetitive.
−Removed: A miner’s share of block rewards is proportional to its hashrate relative to the global network hashrate.
−Removed: Network difficulty automatically rises when aggregate hashrate increases, often following periods of elevated Bitcoin prices or the release of more efficient mining models.
−Removed: If global hashrate grows faster than the incremental hashrate we are able to secure under existing or future leases, our percentage of daily rewards will contract.
−Removed: Unlike miners that own their rigs and can swiftly liquidate and reinvest, we are bound by fixed-term leases that restrict our ability to swap in newer models, scale capacity, or relocate hardware to cheaper power markets.
−Removed: Should the price of Bitcoin stagnate or fall while difficulty rises, the revenue generated by our leased fleet may drop below the all-in lease and power costs, forcing us to mine at a loss or idle equipment while continuing to pay the lease.
−Removed: Moreover, accurately forecasting future difficulty is inherently uncertain;
−Removed: unexpected spikes could prevent us from recovering our lease commitments and erode our competitive position.
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
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