−Removed: Certain factors may have a materially adverse effect on our business, financial condition, and results of operations, including the risk, factors, and uncertainties described under this Part I, Item 1A, and elsewhere in this Annual Report.
−Removed: This is not an exhaustive list, and there are other factors that may be applicable to our business that are not currently known to us or that we currently do not believe are material.
−Removed: Any of these risks could have an adverse effect on our business, financial condition, operating results, or prospects, which could cause the trading price of our common stock to decline, and you could lose part or all of your investment.
−Removed: You should carefully consider the risks, factors, and uncertainties described below, together with the other information contained in this Annual Report, as well as the risk, factors, uncertainties, and other information we disclose in other filings we make with the SEC before making an investment decision regarding our securities.
−Removed: Risk Factor Summary
−Removed: Below is a summary of the principal factors that make an investment in our common stock speculative or risky.
−Removed: This summary does not address all of the risks we face.
−Removed: Additional discussion of the risks summarized in this risk factor summary, and other risks that we face, can be found below and should be carefully considered, together with other information included in this Annual Report.
+Added: Described below are certain risks to our business and the industry in which we operate.
+Added: You should carefully consider the risks described below, together with the financial and other information contained in this Annual Report and in our other public disclosures.
+Added: If any of the following risks actually occurs, our business, financial condition, results of operations, cash flows and prospects could be materially and adversely affected.
+Added: As a result, our future results could differ materially from historical results and from guidance we may provide regarding our expectations of our future financial performance, and the trading price of our common stock could decline.
+Added: Risk Factors Summary
+Added: The following is a summary of the principal factors that make an investment in our securities speculative or risky, all of which are more fully described below in this section.
+Added: This summary should be read in conjunction with the full description of “Risk Factors” in this section and should not be relied upon as an exhaustive summary of the material risks facing our business.
+Added: In addition to the following summary and the information in this section, you should consider the other information contained in this Annual Report before investing in our securities.
Risks Related to Our Business
−Removed: • Bitcoin prices are very volatile and this may affect our ability to effectively manage growth plans and our profitability;
−Removed: • If we fail to grow our hash rate, we may be unable to compete, and our results of operations could suffer.
−Removed: • Fluctuations in the price of bitcoin may significantly influence the market price of our bitcoin holdings and therefore the price of our common stock;
−Removed: • Further significant disruptions in the crypto asset markets, such as those experienced in the second half of 2022, may cause further material impairment of the value and use of our mining rigs;
−Removed: • Political or economic crises may motivate large-scale sales of digital assets, which could result in a reduction in some or all digital assets’ values and adversely affect an investment in our securities;
−Removed: • Bitcoin is subject to halving and as such the reward for successfully solving a block will halve several times in the future and its value may not adjust to compensate us for the reduction in the rewards we receive from our mining efforts, which could cause us to cease our mining operations altogether and investors could suffer a complete loss of their investment;
−Removed: • Security threats to our business could result in a loss of our digital assets, or damage to our reputation and brand, each of which could adversely affect an investment in our securities;
−Removed: • The limited rights of legal recourse against us, and our lack of insurance protection exposes us and our stockholders to the risk of loss of our digital assets for which no person is liable;
−Removed: • We rely on third-party hosting, and as such, our operations could be adversely affected by the actions or inactions of such third-parties.
−Removed: Additionally, third-party hosting, among other things, often requires us to give the hosting company a first lien on the mining rigs installed on the site and creates business risk for us.
−Removed: • We have identified material weaknesses in our internal control over financial reporting and may identify additional material weaknesses in the future or otherwise fail to maintain an effective system of internal controls, which may result in material misstatements of our financial statements or cause us to fail to meet periodic reporting obligations;
−Removed: • We have unresolved Staff comments which could result in restated financial statements.
+Added: • Bitcoin price volatility may affect our ability to effectively manage our growth plans and profitability;
+Added: • Regulatory, commercial, and technical uncertainties may influence bitcoin prices;
+Added: • Failure to increase our hashrate may reduce our competitiveness and negatively impact our financial performance;
+Added: • Our HODL strategy exposes us to market volatility and liquidity risks;
+Added: • Significant disruptions in the cryptocurrency markets, like those in late 2022, could materially impair the value of our mining rigs, and prolonged low bitcoin prices could force us to idle mining rigs;
+Added: • The adoption and long-term viability of digital asset networks is uncertain, and a decline in their growth or acceptance could negatively impact our business and the value of our stock;
+Added: • We face risks related to technological obsolescence, vulnerability of the global supply chain for cryptocurrency hardware, potential trade restrictions and difficulty in obtaining new hardware, which may have a material adverse effect on our business;
+Added: • We may experience liquidity constraints and need additional capital, which may not be available to us on favorable terms, or at all;
+Added: • Our bitcoin lending arrangements expose us to risks of borrower default, operational failures and cybersecurity threats;
+Added: political and economic environment could materially impact our business operations and financial performance, and uncertainty surrounding the potential legal, regulatory and policy changes by the new U.S.
+Added: presidential administration may directly affect us and the global economy;
+Added: • We have engaged in, and may continue to engage in, strategic acquisitions and other transactions that could disrupt our business, dilute our stockholders, strain our financial resources and harm our operating results;
+Added: • Geopolitical and economic crises could lead to increased uncertainty, large-scale selloffs of digital assets and a decline in bitcoin’s value, negatively impacting our business and stock price;
+Added: • The lack of legal recourse and insurance for our digital assets increases the risk of total loss in the event of theft or destruction.
Risks Related to Governmental Regulation and Enforcement
−Removed: • Regulatory changes or actions may restrict the use of bitcoins or the operation of the Bitcoin network in a manner that adversely affects an investment in our securities;
−Removed: • Due to the unregulated nature and lack of transparency surrounding the operations of many bitcoin trading venues, they may experience fraud, security failures or operational problems, which may adversely affect the value of our bitcoin;
−Removed: • If regulatory changes or interpretations require the regulation of bitcoins under the Securities Act and the Investment Company Act of 1940, as amended (the “Investment Act”) by the SEC, we may be required to register and comply with such regulations.
−Removed: To the extent we decide to continue operations, the required registrations and regulatory compliance steps may result in extraordinary, non-recurring expenses to us.
−Removed: We may also decide to cease certain operations.
−Removed: Any disruption of our operations in response to the changed regulatory circumstances may be at a time that is disadvantageous to investors.
−Removed: This would likely have a material adverse effect on us and investors may lose their investment;
−Removed: • Changing environmental regulation and public energy policy may expose our business to new risks.
+Added: • The rapidly evolving and uncertain regulatory landscape for cryptocurrencies exposes us to legal risks, compliance costs, and potential business disruptions;
+Added: • The unregulated nature and lack of transparency of many bitcoin trading venues may expose us to fraud, security failures, and operational risks, potentially harming the value of our bitcoin holdings;
+Added: • If bitcoin is classified as a security, we may be subject to extensive regulation, which could result in significant costs or force us to cease certain operations;
+Added: • Our bitcoin holdings could subject us to regulatory scrutiny and potential restrictions on future transactions;
+Added: • Operating in foreign jurisdictions exposes us to political, legal, and regulatory risks that could negatively impact our financial condition ;
+Added: • Target energy regulations and taxes could increase our costs and adversely affect our business .
Risks Related to Our Common Stock
−Removed: • Our stock price is volatile;
−Removed: • Because there has been limited precedent set for financial accounting of bitcoin and other cryptocurrency assets, the determination that we have made for how to account for cryptocurrency assets transactions may be subject to change.
+Added: • Our stock price is volatile and subject to significant fluctuations;
+Added: • Our ongoing at-the-market stock issuances contribute to stockholder dilution and may intensify due to our HODL strategy;
+Added: • The issuance, conversion, or exercise of convertible notes and other convertible securities, options, and warrants will dilute our stockholders’ ownership;
+Added: • Uncertainty in accounting standards for bitcoin and other cryptocurrencies may lead to financial restatements and business disruptions.
Risks Related to Our Business
−Removed: Bitcoin prices are highly volatile, which may affect our ability to effectively manage growth plans and our profitability.
−Removed: The price of bitcoin is extremely volatile and in fiscal 2023 the price range of bitcoin was between approximately $16,600 and $42,300.
−Removed: The cost to mine a bitcoin is independent of the then current price of bitcoin, so when prices are low, the cost per coin to mine may consume much of our available cash, which means that there is less capital with which to invest in future company growth.
−Removed: Similarly, when prices are low, our profitability is decreased on a dollar-for-dollar basis correlated to the then price of bitcoin.
−Removed: Given the volatility of bitcoin, these factors render us unable to accurately predict in advance what our growth plans may be and accurately forecast any revenue and profitability projections for any reporting period.
−Removed: The price of bitcoin may be influenced by regulatory, commercial, and technical factors that are highly uncertain.
−Removed: Bitcoin and other digital assets are relatively novel and are subject to various risks and uncertainties that may adversely impact their price.
−Removed: For example, the application of securities laws and other regulations to such assets is unclear in certain respects, and it is possible that regulators in the United States or foreign countries may create new regulations or interpret laws in a manner that adversely affects the price of bitcoin.
−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 could depend on the following:
−Removed: • public familiarity with digital assets;
−Removed: • ease of buying and accessing bitcoin;
−Removed: • institutional demand for bitcoin as an investment asset;
−Removed: • consumer demand for bitcoin as a means of payment;
−Removed: • 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” who validate bitcoin transactions, inadequate mining fees to incentivize validating of bitcoin transactions, “hard forks” of the Bitcoin blockchain, and advances in 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 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: Fluctuations in the price of bitcoin may significantly influence the market price of our bitcoin holdings and therefore, the price of our common stock.
−Removed: To the extent investors view the value of our common stock as linked to the value or change in the value of our bitcoin, fluctuations in the price of bitcoin may significantly influence the market price of our common stock.
−Removed: If we fail to grow our hash rate, we may be unable to compete, and our results of operations could suffer.
−Removed: Generally, a bitcoin miner’s chance of solving a block on the Bitcoin blockchain and earning a bitcoin reward is a function of the miner’s hash rate (i.e., the amount of computing power devoted to supporting the Bitcoin blockchain), relative to the global network hash rate.
−Removed: As greater adoption of Bitcoin occurs, we expect the demand for Bitcoin will increase further, drawing more mining companies into the industry and thereby increasing the global network hash rate.
−Removed: As new and more powerful miners are deployed, the global network hash rate will continue to increase, meaning a miner’s chance of earning bitcoin rewards will decline unless it deploys additional hash rate at pace with the industry.
−Removed: Accordingly, to maintain our chances of earning new bitcoin rewards and remaining competitive in our industry, we must seek to continually add new miners to grow our hash rate at pace with the growth in the Bitcoin global network hash rate.
−Removed: However, as demand has increased and scarcity in the supply of new miners has resulted, the price of new
−Removed: miners has increased sharply, and we expect this process to continue in the future as demand for bitcoin increases.
−Removed: Therefore, if the price of bitcoin is not sufficiently high to allow us to fund our hash rate growth through new miner acquisitions and if we are otherwise unable to access additional capital to acquire these miners, our hash rate may stagnate and we may fall behind our competitors.
−Removed: If this happens, our chances of earning new bitcoin rewards would decline and, as such, our results of operations and financial condition may suffer.
−Removed: Further significant disruptions in the crypto asset markets, such as those experienced in the second half of 2022, may cause further material impairment of the value and use of our mining rigs.
−Removed: During the fourth quarter of 2022, the per coin price of bitcoin reached a low of approximately $15,500 from a high of almost $21,500 earlier in the quarter.
−Removed: This decrease in the price of bitcoin, combined with general market sentiment caused in large part by the collapse of FTX Trading Ltd.
−Removed: (“FTX”) in November 2022 and various bitcoin company-related bankruptcies and restructurings, led to a material decline in the fair value of our mining rigs and deposits for future mining rig purchases during that period.
−Removed: As a result, we recorded an impairment charge of $332.9 million on these assets during the quarter ended December 31, 2022, although operations were unaffected and continued throughout the period.
−Removed: Any future decrease in the value of bitcoin could cause us to record additional impairments in the value of our current and future assets.
−Removed: In addition, if bitcoin prices dropped to levels below that experienced in 2022 and held at those levels for a significant period of time, it could impact our profitability such that we would possibly need to consider whether it would be prudent to leave certain of our mining rigs idle until the price of bitcoin recovered.
−Removed: Theoretically, there is a minimum bitcoin price that is so low that we would be incentivized to cease our mining operations, particularly where our operating costs exceed our revenues.
−Removed: However, this is a complex projection involving multiple ever-changing, dynamic variables.
−Removed: We have multiple mining sites and hosting partners, all with different hosting prices, electricity prices, and contract structures.
−Removed: These costs would need to be compared to the current revenue being produced by our mining rigs.
−Removed: Geopolitical or economic crises may create increased uncertainty and price changes, or motivate large-scale sales of digital assets, which could result in a reduction in some or all digital assets’ values and adversely affect an investment in our securities.
−Removed: As an alternative to fiat currencies that are backed by central governments, digital assets such as bitcoin, which are relatively new, are subject to supply and demand forces based upon the desirability of an alternative, decentralized means of buying and selling goods and services.
−Removed: It is unclear how such supply and demand will be impacted by geopolitical events.
−Removed: Nevertheless, geopolitical or economic crises may motivate large-scale acquisitions or sales of digital assets either globally or locally.
−Removed: Large-scale sales of digital assets would result in a reduction in their value and could adversely affect an investment in our securities.
−Removed: In addition, we are subject to price volatility and uncertainty due to geopolitical crises and economic downturns.
−Removed: Such geopolitical crises and global economic downturns may be a result of invasion, or possible invasion, by one nation of another, leading to increased inflation and supply chain volatility.
−Removed: Such crises, as well as inflation, will likely continue to have an effect on our ability to do business in a cost-effective manner.
−Removed: The sale of our digital assets to pay expenses at a time of low digital asset prices could adversely affect an investment in our securities.
−Removed: We may sell our digital assets to pay expenses on an as-needed basis, irrespective of then-current prices.
−Removed: Consequently, our digital assets may be sold at a time when the prices on the respective digital asset exchange market are low, which could adversely affect an investment in our securities.
−Removed: The development and acceptance of digital asset networks and other digital assets, which represent a new and rapidly changing industry, are subject to a variety of factors that are difficult to evaluate.
−Removed: The slowing or stopping of the development or acceptance of digital asset systems may adversely affect an investment in our securities.
−Removed: Digital assets such as bitcoin, that may be used, among other things, to buy and sell goods and services are a new and rapidly evolving industry.
−Removed: The growth of the digital asset industry in general, and the digital asset networks of bitcoin in particular, are highly uncertain.
−Removed: The factors affecting the further development of the digital asset industry, as well as the digital asset networks, include:
−Removed: • continued worldwide growth in the adoption and use of bitcoins and other digital assets;
−Removed: • government and quasi-government regulation of bitcoins and other digital assets and their use, or restrictions on or regulation of access to and operation of the digital asset network or similar digital assets systems;
−Removed: • the maintenance and development of the open-source software protocol of the Bitcoin network;
−Removed: • changes in consumer demographics and public tastes and preferences;
−Removed: • the availability and popularity of other forms or methods of buying and selling goods and services, including new means of using fiat currencies;
−Removed: • general economic conditions and the regulatory environment relating to digital assets;
−Removed: • the impact of regulators focusing on digital assets and digital securities and the costs associated with such regulatory oversight;
−Removed: • a decline in the popularity or acceptance of the digital asset networks of bitcoin, or similar digital asset systems, could adversely affect an investment in our securities.
−Removed: The open-source structure of the Bitcoin network protocol means the contributors to the protocol are generally not directly compensated for their contributions in maintaining and developing the protocol.
−Removed: A failure to properly monitor and upgrade the protocol could damage the Bitcoin network and an investment in our securities.
+Added: Bitcoin price volatility may affect our ability to effectively manage our growth plans and profitability.
+Added: The market price of bitcoin is extremely volatile, and in fiscal 2024 the price range of bitcoin was between approximately $39,000 and $106,000.
+Added: The cost to mine a bitcoin is independent of the then current price of bitcoin, so when bitcoin prices are low, the cost per coin to mine may consume much of our available cash, limiting our ability to invest in expansion, upgrade mining equipment and infrastructure or fund other strategic initiatives.
+Added: Additionally, because our revenue is primarily derived from mining bitcoin, our profitability fluctuates in direct correlation with bitcoin price movements.
+Added: A decrease in bitcoin’s price results in a corresponding decrease in the value of the bitcoin we mine, reducing our revenues and profitability on a dollar-for-dollar basis.
+Added: Given the volatility of bitcoin prices, we are unable to accurately predict our future growth trajectory or reliably forecast our revenue and profitability for any given reporting period.
+Added: Our ability to expand our operations depends on our assumptions regarding bitcoin’s future price.
+Added: If those assumptions are incorrect, and bitcoin prices fail to reach or sustain levels
+Added: high enough to justify our capital expenditures, we may be unable to generate sufficient revenue to maintain profitability or execute our growth strategy, which could materially and adversely impact our business, financial condition and results of operations.
+Added: Regulatory, commercial and technical uncertainties may influence bitcoin prices.
+Added: The market price of bitcoin is subject to numerous uncertainties, including evolving regulatory frameworks, commercial adoption trends and technical risks, any of which could negatively impact its value.
+Added: Regulatory treatment of digital assets remains uncertain in various jurisdictions, and new regulations, enforcement actions, or interpretations by governmental authorities could diminish bitcoin’s appeal, restrict its use or otherwise depress its market price.
+Added: Beyond regulation, bitcoin’s price is influenced by factors such as:
+Added: • public perception and media coverage of bitcoin and digital assets;
+Added: • accessibility and convenience of purchasing, holding and transacting with bitcoin;
+Added: • institutional demand for bitcoin as an asset class;
+Added: • consumer adoption of bitcoin for everyday transactions;
+Added: • emergence of competing digital assets with potentially superior functionality, scalability or regulatory compliance.
+Added: Even if bitcoin adoption increases in the short term, there is no guarantee that this growth will be sustained.
+Added: Since bitcoin exists solely as digital records on the Bitcoin blockchain, its value is also susceptible to technical risks, including:
+Added: • a decrease in miner incentives due to declining block rewards and transaction fees;
+Added: • security vulnerabilities, such as potential network attacks or software exploits;
+Added: • forks or changes to the Bitcoin protocol that may split the network or cause instability;
+Added: • 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.
+Added: Additionally, bitcoin’s liquidity could be adversely affected if financial institutions, payment processors or market makers withdraw their support for bitcoin-related services due to regulatory pressure, reputational concerns or operational risks.
+Added: If any of these risks materialize, they could negatively impact bitcoin’s market price, which, in turn, would adversely affect our business and financial condition.
+Added: Failure to increase our hashrate may reduce our competitiveness and negatively impact our financial performance.
+Added: Our ability to earn bitcoin rewards is directly proportional to our mining power, or hashrate, relative to the total hashrate of the Bitcoin network.
+Added: As more miners enter the network and deploy more powerful mining equipment, the global hashrate increases, making it more difficult to successfully mine bitcoin.
+Added: To remain competitive, we must continuously invest in expanding our hashrate by acquiring new, more efficient mining hardware.
+Added: However, as demand for mining equipment grows, the cost of acquiring and deploying new miners increases, which could limit our ability to scale.
+Added: If we are unable to access capital to acquire additional miners, our hashrate may stagnate and we may fall behind our competitors.
+Added: If we fail to increase our hashrate at a pace that keeps up with network difficulty growth, our share of total bitcoin mining rewards will decline, reducing our revenue and negatively impacting our financial performance.
+Added: Our HODL strategy exposes us to market volatility and liquidity risks.
+Added: In the third quarter of 2024, we adopted a HODL strategy whereby we retain all bitcoin mined in our operations or purchased in the open market, rather than selling bitcoin to generate revenue.
+Added: In the second half of 2024, we raised approximately $2.2 billion, primarily through the issuance of the 2024 Convertible Notes, to acquire bitcoin as part of our HODL strategy.
+Added: As a result, our financial condition is highly dependent on the market price of bitcoin, which historically has been volatile and subject to fluctuations due to regulatory developments, macroeconomic conditions,
+Added: technological advancements, security incidents, market speculation and adoption trends.
+Added: If the price of bitcoin declines significantly or remains low for an extended period, the value of our holdings could decrease materially, affecting our balance sheet and liquidity.
+Added: Since we do not generate significant revenue from other business activities, a prolonged downturn in bitcoin’s price could make it difficult to cover operational expenses, service debt or fund strategic initiatives.
+Added: Additionally, if we need to sell bitcoin to meet financial obligations, we could face liquidity constraints, unfavorable market conditions or regulatory restrictions that limit our ability to do so.
+Added: Any of these factors could adversely affect our financial stability and business prospects.
+Added: While we believe our HODL strategy will create long-term value, there is no guarantee that it will generate the returns we expect or that we will be able to meet our obligations under outstanding convertible notes without negatively impacting our financial condition.
+Added: Significant disruptions in the cryptocurrency markets, like those in late 2022, could materially impair the value of our mining rigs, and prolonged low bitcoin prices could force us to idle mining rigs.
+Added: Major disruptions in the cryptocurrency market, such as those in late 2022, could significantly impact the value of our mining equipment.
+Added: In the fourth quarter of 2022, bitcoin’s price fell from nearly $21,500 to a low of approximately $15,500.
+Added: This decline, combined with negative market sentiment following the collapse of FTX Trading Ltd.
+Added: in November 2022 and the bankruptcies and restructurings of multiple digital asset companies, caused a material decline in the fair value of our mining rigs and deposits for future mining rig purchases.
+Added: As a result, we recorded a $332.9 million impairment charge for the quarter ended December 31, 2022.
+Added: Similar market downturns in the future could force us to record further impairments on our current and future assets, which could negatively impact our financial condition.
+Added: Our ability to operate profitably depends heavily on bitcoin prices.
+Added: If bitcoin’s price drops and remains low for an extended period, we may have to consider whether it is financially viable to continue operating certain mining rigs until prices recover.
+Added: There is a theoretical minimum bitcoin price below which bitcoin mining becomes uneconomical, particularly when operating costs exceed mining revenue.
+Added: However, determining this threshold is complex due to the constantly changing variables involved.
+Added: We operate multiple mining sites with different hosting and electricity costs, each governed by separate contract structures.
+Added: If market conditions make mining unprofitable across multiple sites, we may need to shut down or scale back operations, which could reduce our revenues and negatively impact our financial performance.
+Added: The adoption and long-term viability of digital asset networks is uncertain, and a decline in their growth or acceptance could negatively impact our business and the value of our stock.
+Added: Bitcoin and other digital assets are part of a new and rapidly evolving industry.
+Added: The long-term growth and viability of digital assets depend on multiple factors, including:
+Added: • continued global adoption and usage of bitcoin and other digital assets;
+Added: • government regulations that impact digital asset transactions and network operations;
+Added: • the development and maintenance of Bitcoin’s open-source software protocol;
+Added: • shifting consumer demographics, preferences and payment habits;
+Added: • the availability and popularity of alternative payment methods, including improved fiat currency solutions;
+Added: • economic conditions and the regulatory environment for digital assets;
+Added: • regulatory scrutiny and associated compliance costs.
+Added: If bitcoin adoption stagnates or declines, demand for bitcoin could weaken, which could negatively affect our business.
+Added: A prolonged lack of growth in bitcoin adoption could reduce market confidence, leading to lower trading volumes and diminished liquidity.
+Added: Additionally, bitcoin’s price volatility undermines its role as a medium of exchange, as retailers are less likely to accept it as a form of payment.
+Added: Marketplace acceptance of bitcoin as a medium of exchange and payment method may remain low.
+Added: The relative lack of acceptance of bitcoin in the retail and commercial marketplace, or a reduction of such use, limits the ability of end users to use bitcoin to pay for goods and services.
+Added: Further, as block rewards decrease, higher transaction fees may be required to incentivize miners, potentially reducing bitcoin adoption and value.
+Added: In order to incentivize miners to continue to contribute processing power to any digital asset network, such network may either formally or informally transition from a set reward to transaction fees earned upon solving for a block.
+Added: This transition could be accomplished either by miners independently electing to
+Added: record in the blocks they solve only those transactions that include payment of a transaction fee or by the digital asset network adopting software upgrades that require the payment of a minimum transaction fee for all transactions.
+Added: If transaction fees paid for digital asset transactions become too high, the marketplace may be reluctant to accept digital assets as a means of payment and existing users may be motivated to switch from one digital asset to another digital asset or back to fiat currency.
+Added: A decline in bitcoin transactions and adoption could reduce demand, negatively impacting bitcoin’s price and affecting the value of our bitcoin holdings.
+Added: We face risks related to technological obsolescence, vulnerability of the global supply chain for cryptocurrency hardware, potential trade restrictions and difficulty in obtaining new hardware, which may have a material adverse effect on our business.
+Added: Bitcoin mining hardware experiences wear and tear over time, requiring periodic repairs or replacement to maintain efficiency.
+Added: Additionally, as mining technology evolves, we must invest in newer, more efficient mining equipment to remain competitive, which requires significant capital expenditures.
+Added: Further, we have faced complications related to the import of mining equipment in the past and may face such complications in the future.
+Added: The global supply of miners is unpredictable and presently heavily dependent on manufacturers based in China.
+Added: Geopolitical matters, including the relationship between the United States and other countries and trade restrictions and tariffs (or the threat of trade restrictions or tariffs), may impact our ability to import miners or other equipment necessary for our operations.
+Added: Restrictions or bans on mining equipment from China, whether due to trade restrictions, national security concerns or geopolitical tensions, could disrupt our supply chain, increase equipment costs and delay our growth plans.
+Added: In addition, officials of the U.S.
+Added: Customs and Border Protection agency (“CBP”) have broad discretion regarding products imported into the United States, and the CBP has on occasion detained or seized imported miners and other equipment necessary to the operation of our miners, which has resulted in significant costs to us.
+Added: If our imported mining equipment is detained or seized in the future, we may not be able to obtain adequate replacement parts for our existing miners and other equipment or obtain additional miners and other equipment from manufacturers on a timely basis or at all, which could have a material adverse effect on our results of operations and financial condition.
+Added: We may experience liquidity constraints and need additional capital, which may not be available to us on favorable terms, or at all.
+Added: Liquidity risk is the possibility that we will be unable to meet our financial obligations as they come due.
+Added: To manage this risk, we use a planning and budgeting process to estimate the funds needed for ongoing operations and growth initiatives.
+Added: In 2024, we settled our obligations using cash, cash equivalents and net proceeds from our offerings of the 2024 Convertible Notes and stock sales pursuant to our at-the-market offerings.
+Added: Additionally, in October 2024, we secured a $200.0 million line of credit through master lending agreements with a consortium of lenders.
+Added: This line of credit requires digital asset collateral, but since these agreements are uncommitted, we cannot guarantee access to funds on commercially reasonable terms or at all.
+Added: Further, if bitcoin’s price drops significantly, we may face margin calls on our borrowings, requiring us to post additional collateral or risk liquidation of collateralized bitcoin.
+Added: We expect that we will need to raise additional capital to expand our operations, pursue our growth strategy and respond to competitive pressures or unanticipated working capital requirements.
+Added: We may seek but fail to obtain additional debt or equity financing on favorable terms, if at all, which could impair our growth and adversely affect our existing operations.
+Added: Raising capital through equity financing could dilute existing stockholders and reduce the value of their investment.
+Added: Debt financing, on the other hand, could impose restrictive terms, prioritize creditors over stockholders or require us to maintain liquidity levels or financial ratios that may not align with our business needs or be in the best interest of our stockholders.
+Added: Our bitcoin lending arrangements expose us to risks of borrower default, operational failures and cybersecurity threats.
+Added: From time to time, we generate income through bitcoin lending, which carries significant risks.
+Added: The volatility of bitcoin increases the likelihood that borrowers may default due to market downturns, liquidity crises, fraud or other financial distress.
+Added: Because our bitcoin lending arrangements are unsecured, they rank below secured debt in a
+Added: borrower’s capital structure.
+Added: If a borrower becomes insolvent, we may be unable to recover the loaned bitcoin, leading to substantial financial losses.
+Added: Additionally, digital asset lending platforms are vulnerable to operational and cybersecurity risks.
+Added: Technical failures, software bugs or system outages could disrupt lending activities, delay transactions or result in inaccurate record-keeping.
+Added: Cybersecurity threats, including hacking, phishing and other malicious attacks, pose further risks, potentially leading to the loss, theft or misappropriation of our loaned bitcoin.
+Added: A successful cyberattack or security breach could materially and adversely impact our financial position, reputation and ability to conduct future lending activities.
+Added: political and economic environment could materially impact our business operations and financial performance, and uncertainty surrounding the potential legal, regulatory and policy changes by the new U.S.
+Added: presidential administration may directly affect us and the global economy.
+Added: Changes in U.S.
+Added: political leadership and economic policies may create uncertainty that materially affects our business and financial performance.
+Added: Shifts in legal, regulatory, and trade policies, particularly under a new presidential administration, could disrupt our operations and long-term strategy.
+Added: For example, if the U.S.
+Added: government establishes a strategic bitcoin reserve, large-scale purchases could create price volatility or artificial price suppression, making our mining operations less profitable.
+Added: Conversely, slow or no action in creating such a reserve could limit institutional adoption and negatively impact bitcoin’s value, which could also harm our financial condition.
+Added: Additionally, increased government influence over the Bitcoin network could affect mining difficulty, transaction processing, and other technical aspects, further impacting our business.
+Added: We also face risks from trade policy changes, including tariffs and restrictions on imports of mining equipment.
+Added: The current administration has imposed, and may continue to impose, tariffs on imports from key manufacturing regions, increasing costs and disrupting supply chains.
+Added: The scope and timing of potential policy changes remain uncertain, making it difficult to plan for or mitigate these risks.
+Added: Any such changes could materially and adversely affect our business, financial condition, and results of operations.
+Added: We have engaged in, and may continue to engage in, strategic acquisitions and other transactions that could disrupt our business, dilute our stockholders, strain our financial resources and harm our operating results.
+Added: As part of our growth strategy, we have pursued strategic transactions, including acquiring companies, miners and data centers.
+Added: In the future, we may seek additional opportunities to expand our mining operations, including purchasing miners, data centers and other facilities, potentially from companies in financial distress.
+Added: Our ability to grow through acquisitions depends on several factors, including the availability of suitable opportunities at acceptable costs, our ability to compete effectively to attract those opportunities and access to financing.
+Added: Acquisitions may require us to issue common stock, thereby diluting existing stockholders, or take on liabilities from acquired businesses.
+Added: They may also result in recording goodwill and intangible assets that require regular impairment testing, which could lead to periodic write-downs.
+Added: Additionally, acquisitions often involve significant costs, including integration expenses, restructuring charges and potential litigation risks.
+Added: Even when successful, acquisitions and expansions may take considerable time to deliver anticipated benefits, if at all.
+Added: Integrating new businesses, technologies, and personnel can be complex and may divert management’s attention from daily operations.
+Added: We may also face liabilities related to a target company’s past operations.
+Added: Entering new markets where we have little experience could pose additional challenges, particularly if competitors have stronger market positions.
+Added: Furthermore, we may struggle to generate sufficient revenue to justify acquisition costs, and the integration process could disrupt relationships with employees, suppliers and other stakeholders.
+Added: Further, we may not be able to pursue our current acquisition strategy in the future.
+Added: Beyond bitcoin mining and related acquisitions, we have explored, and may continue to explore, opportunities in adjacent or complementary businesses as market conditions allow.
+Added: These ventures may carry similar risks, including operational and financial challenges, and there is no guarantee they will provide the expected benefits in a timely manner, if at all.
+Added: Geopolitical and economic crises could lead to increased uncertainty, large-scale selloffs of digital assets and a decline in bitcoin’s value, negatively impacting our business and stock price.
+Added: Bitcoin is an alternative to fiat currencies that are backed by central governments, but its value is highly dependent on supply and demand.
+Added: It is unclear how global geopolitical and economic crises will affect the adoption and valuation of digital assets.
+Added: However, such crises may lead to large-scale acquisitions or sales of digital assets, causing significant price volatility.
+Added: A large-scale selloff of bitcoin could decrease its value, directly affecting our business and the price of our common stock.
+Added: Additionally, broader macroeconomic instability, inflation and regulatory uncertainty could impact our ability to conduct business efficiently and profitably.
+Added: A significant decline in bitcoin’s value due to economic or geopolitical factors could negatively affect our financial condition.
+Added: The lack of legal recourse and insurance for our digital assets increases the risk of total loss in the event of theft or destruction.
+Added: Our digital assets are not insured against theft, loss or destruction.
+Added: If an event occurs where we lose our digital assets, whether due to cyberattacks, fraud or other malicious activities, we may not have any viable legal recourse or ability to recover the lost assets.
+Added: Unlike funds held in insured banking institutions, our digital assets are not protected by the Federal Deposit Insurance Corporation or the Securities Investor Protection Corporation.
+Added: If our digital assets are lost under circumstances that render another party liable, there is no guarantee that the responsible party will have the financial resources to compensate us.
+Added: As a result, we and our stockholders could face significant financial losses.
+Added: The open-source structure of the Bitcoin network exposes us to risks related to software development, security vulnerabilities and potential disruptions.
Digital asset networks are open-source projects and, although there is an influential group of leaders in, for example, the Bitcoin network community known as the “Core Developers,” there is no official developer or group of developers that formally controls the Bitcoin network.
As an open-source project, Bitcoin is not represented by an official organization or authority.
−Removed: The Bitcoin network protocol is not sold and contributors are generally not compensated for maintaining and updating the Bitcoin network protocol.
−Removed: The lack of guaranteed financial incentive for contributors to maintain or develop the Bitcoin network and the lack of guaranteed resources to adequately address emerging issues with the Bitcoin network may reduce incentives to address the issues adequately or in a timely manner.
−Removed: Changes to a digital asset network in which we are directing our mining efforts may adversely affect an investment in our securities.
−Removed: The acceptance of digital asset network software patches or upgrades by a significant, but not overwhelming, percentage of the users and miners in any digital asset network could result in a “fork” in the respective blockchain, resulting in the operation of two separate networks until such time as the forked blockchains are merged.
−Removed: The temporary or permanent existence of forked blockchains could adversely impact an investment in our securities.
−Removed: Due to Bitcoin’s open-source project, any individual can download the Bitcoin network software and make any desired modifications, which are proposed to users and miners on the Bitcoin network through software downloads and upgrades, and typically posted to the Bitcoin development forum on GitHub.com.
+Added: The Bitcoin network protocol is not sold, and contributors generally are not compensated for maintaining and updating the Bitcoin network protocol.
+Added: Without guaranteed financial incentives, there may be insufficient resources to address emerging issues, upgrade security or implement necessary improvements in a timely manner.
+Added: If the Bitcoin network’s software is not properly maintained or developed, it could become vulnerable to security threats, operational inefficiencies and reduced trust, all of which could negatively impact bitcoin’s long-term viability and our business.
+Added: Bitcoin network forks, where the blockchain splits into two separate networks, could cause disruptions and negatively impact our business.
+Added: Since the Bitcoin network is an open-source project, any individual can download the Bitcoin network software and make any desired modifications, which are proposed to users and miners on the Bitcoin network through software downloads and upgrades and typically posted to the Bitcoin development forum on GitHub.com.
A substantial majority of miners and Bitcoin users must consent to those software modifications by downloading the altered software or upgrade that implements the changes.
−Removed: If not, the changes do not become a part of the Bitcoin network.
−Removed: Since the Bitcoin network’s inception, changes to the Bitcoin network have been accepted by the vast majority of users and miners, ensuring that the Bitcoin network remains a coherent economic system.
−Removed: However, a developer or group of developers could potentially propose a modification to the Bitcoin network that is not accepted by a vast majority of miners and users, but that is nonetheless accepted by a substantial population of participants in the Bitcoin network.
−Removed: In such a case, and if the modification is material and/or not backwards compatible with the prior version of Bitcoin network software, a fork in the blockchain could develop and two separate Bitcoin networks could result with one running the pre-modification software program and the other running the modified version (i.e., a second “Bitcoin” network).
−Removed: Such a fork in the blockchain is typically addressed by community-led efforts to merge the forked blockchains, and several prior forks have been so merged.
−Removed: This kind of split in the Bitcoin network could materially and adversely impact an investment in our securities and harm the sustainability of the Bitcoin network’s economy.
−Removed: As the number of digital assets awarded for solving a block in the blockchain decreases, the incentive for miners to continue to contribute processing power to the respective digital asset network will transition from a set reward to transaction fees.
−Removed: Either the requirement from miners of higher transaction fees in exchange for recording transactions in the blockchain or a software upgrade that automatically charges fees for all transactions may decrease demand for digital assets and prevent the expansion of the digital asset networks to retail merchants and
−Removed: commercial businesses, resulting in a reduction in the price of digital assets that could adversely impact an investment in our securities.
−Removed: In order to incentivize miners to continue to contribute processing power to any digital asset network, such network may either formally or informally transition from a set reward to transaction fees earned upon solving for a block.
−Removed: This transition could be accomplished either by miners independently electing to record in the blocks they solve only those transactions that include payment of a transaction fee or by the digital asset network adopting software upgrades that require the payment of a minimum transaction fee for all transactions.
−Removed: If transaction fees paid for digital asset transactions become too high, the marketplace may be reluctant to accept digital assets as a means of payment and existing users may be motivated to switch from one digital asset to another digital asset or back to fiat currency.
−Removed: Decreased use and demand for bitcoins that we have accumulated may adversely affect its value and may adversely impact an investment in it.
−Removed: To the extent that any miners cease to record transactions in solved blocks, transactions that do not include the payment of a transaction fee will not be recorded on the blockchain until a block is solved by a miner who does not require the payment of transaction fees.
−Removed: Any widespread delays in the recording of transactions could result in a loss of confidence in that digital asset network, which could adversely impact an investment in our securities.
−Removed: To the extent that any miners cease to record transaction in solved blocks, such transactions will not be recorded on the blockchain.
+Added: Otherwise, the changes do not become a part of the Bitcoin network.
+Added: Since the Bitcoin network’s inception, changes to the network have been accepted by the vast majority of users and miners, ensuring that the network remains a coherent economic system.
+Added: However, a developer or group of developers could propose a modification to the Bitcoin network that is not accepted by a vast majority of miners and users, but that is nonetheless accepted by a substantial population of participants in the Bitcoin network.
+Added: In such a case, and if the modification is material or not compatible with the prior version of Bitcoin network software, a fork in the blockchain could develop and two separate Bitcoin networks could result with one running the pre-modification software program and the other running the modified version (i.e., a second “Bitcoin” network).
+Added: Historically, the Bitcoin community has worked to merge forked blockchains, but a prolonged or unresolved split could create confusion, disrupt the network and affect bitcoin’s stability.
+Added: A fork could decrease confidence in bitcoin, negatively impacting its price and, in turn, our business and stock value.
+Added: Widespread delays in the recording of transactions could erode confidence in the Bitcoin network and negatively impact our business.
+Added: To the extent that any miners cease to record transactions in solved blocks, such transactions will not be recorded on the Bitcoin blockchain, until a block is solved by a miner who does not require the payment of transaction fees.
Currently, there are no known incentives for miners to actively not record transactions in solved blocks.
−Removed: However, to the extent that any such incentives arise (e.g., a collective movement among miners or one or more mining pools forcing bitcoin users to pay transaction fees as a substitute for or in addition to the award of new bitcoins upon the solving of a block), actions of miners solving a significant number of blocks could delay the recording and confirmation of transactions on the blockchain.
−Removed: Any systemic delays in the recording and confirmation of transactions on the blockchain could result in greater exposure to double-spending transactions and a loss of confidence in certain or all digital asset networks, which could adversely impact an investment in our securities.
−Removed: If a malicious actor or botnet obtains control in excess of 50% of the processing power active on any digital asset network, including the Bitcoin network, it is possible that such actor or botnet could manipulate the blockchain in a manner that adversely affects an investment in our securities.
−Removed: If a malicious actor or botnet (a volunteer or hacked collection of computers controlled by networked software coordinating the actions of the computers) obtains a majority of the processing power dedicated to mining on any digital asset network, it may be able to alter the blockchain by constructing alternate blocks if it is able to solve for such blocks faster than the remainder of the miners on the blockchain can add valid blocks.
−Removed: Within the alternate blocks, the malicious actor or botnet could control, exclude or modify the ordering of transaction.
−Removed: However, it could not generate new digital assets or transactions using such control.
−Removed: Using alternate blocks, the malicious actor or botnet could “double-spend” its own digital assets (i.e., spend the same digital assets in more than one transaction) and prevent the confirmation of other users’ transactions for so long as it maintains control.
−Removed: To the extent that such malicious actor or botnet does not yield its majority control of the processing power or the digital asset community does not reject the fraudulent blocks as malicious, reversing any changes made to the blockchain may not be possible.
−Removed: Such changes could adversely affect an investment in our securities.
−Removed: The approach towards and possible crossing of the 50% threshold indicates a greater risk that a single mining pool could exert authority over the validation of digital asset transactions.
−Removed: To the extent that the digital assets ecosystems do not act to ensure greater decentralization of digital asset mining processing power, the feasibility of a malicious actor obtaining in excess of 50% of the processing power on any digital asset network (e.g., through control of a large mining pool or through hacking such a mining pool) will increase, which may adversely impact an investment in our securities.
−Removed: Bitcoin is subject to halving, and as such the reward for successfully solving a block will halve several times in the future and its value may not adjust to compensate us for the reduction in the rewards we receive from our mining efforts, which could cause us to cease our mining operations altogether and investors could suffer a complete loss of their investment.
−Removed: Halving is a process designed to control the overall supply and reduce the risk of inflation in digital assets using a Proof-of-Work consensus algorithm.
−Removed: In an event referred to as bitcoin “halving,” the bitcoin reward for mining any block is cut in half.
−Removed: For example, the mining reward for bitcoin declined from 12.5 to 6.25 bitcoin on May 11, 2020.
−Removed: This process is scheduled to occur once every 210,000 blocks.
−Removed: It is estimated that bitcoin will next halve in April 2024 and then approximately every four years thereafter, until the total amount of bitcoin rewards issued reaches 21.0 million, and the theoretical supply of new Bitcoin is exhausted, which is expected to occur around 2140.
−Removed: Once 21.0 million bitcoin are generated, the network will stop producing more.
−Removed: Currently, there are more than 19.0 million bitcoin in circulation.
−Removed: While bitcoin prices have had a history of price fluctuations around halving events, there is no
−Removed: guarantee that any such price change will be favorable or would compensate for the reduction in mining reward.
−Removed: If a corresponding and proportionate increase in the price of bitcoin does not follow these anticipated halving events, the revenue from our mining operations would decrease, and we may not have an adequate incentive to continue mining and may cease mining operations altogether, which may adversely affect an investment in our securities and investors could suffer a complete loss of their investment.
−Removed: Furthermore, such reductions in bitcoin rewards for uncovering blocks may result in a reduction in the aggregate hash rate of the bitcoin network as the incentive for miners decreases.
−Removed: Miners ceasing operations would reduce the collective processing power on the network, which would adversely affect the confirmation process for transactions and make the bitcoin network more vulnerable to malicious actors or botnets obtaining control in excess of 50% of the processing power active on the blockchain.
−Removed: Such events may adversely affect our activities and an investment in our securities.
−Removed: To the extent that the profit margins of digital asset mining operations are not high, operators of digital asset mining operations are more likely to immediately sell their digital assets earned by mining in the digital asset exchange market, resulting in a reduction in the price of digital assets that could adversely impact an investment in our securities.
−Removed: Over the past two years, digital asset mining operations have evolved from individual users mining with computer processors, graphics processing units and first-generation mining rigs.
−Removed: Currently, new processing power brought onto the digital asset networks is predominantly added by “professionalized” mining operations.
−Removed: Professionalized mining operations may use proprietary hardware or sophisticated machines.
+Added: However, to the extent that any such incentives arise (e.g., a collective movement among miners or one or more mining pools forcing blockchain users to pay transaction fees as a substitute for or in addition to the award of new bitcoin upon the solving of a block), actions of miners solving a significant number of blocks could delay the recording and confirmation of transactions on the blockchain.
+Added: Widespread delays could increase the risk of “double-spending” (i.e., spending the same digital assets in more than one transaction), reduce trust in the network, and negatively impact bitcoin’s adoption and price.
+Added: This could, in turn, affect the value of our bitcoin holdings and our financial performance.
+Added: Our reliance on third-party mining pools for a portion of our mining revenue exposes us to operational and financial risks.
+Added: While we rely largely on our internal mining pool, we additionally rely on external open-access mining pools to receive certain mining rewards and fees from the Bitcoin network.
+Added: External pools have the sole discretion to modify the terms of our agreement at any time, and, therefore, our future rights and relationship with such pools may change.
+Added: In general, mining pools allow miners to combine their computing and processing power, increasing their chances of solving a block and getting rewarded by the Bitcoin network.
+Added: The rewards are distributed by the pool operator proportionally to our contribution to the pool’s overall mining power.
+Added: Should any external pool’s operator systems suffer downtime due to cyber-attacks, software failures or operational issues, our ability to mine and receive revenue would be negatively impacted.
+Added: Furthermore, while we receive daily reports from the external pools detailing the total processing power provided to the pool and the proportion of that total processing power we provided to determine the distribution of rewards to us, we are dependent on the accuracy of each such pool’s recordkeeping.
+Added: We have minimal recourse against external pool operators if we determine the proportion of the reward paid out to us by the mining pool operator is incorrect, aside from leaving the pools.
+Added: If we cannot consistently obtain accurate proportionate rewards, our business and financial performance could suffer.
+Added: A 51% attack on the Bitcoin network could undermine security and market confidence.
+Added: The security of the Bitcoin network relies on its decentralized nature, which makes it difficult for any single entity to control a majority of the network’s mining power.
+Added: However, if a malicious actor or coordinated group were to gain control of more than 50% of the total hashrate, a scenario known as a “51% attack,” they could theoretically manipulate the network by:
+Added: • reversing previously confirmed transactions, enabling double-spending of bitcoin;
+Added: • preventing new transactions from being confirmed, effectively halting the network;
+Added: • excluding or modifying transactions, undermining the trustworthiness of the blockchain.
+Added: A 51% attack could occur through several mechanisms, including large-scale mining operations, through which a single entity invests in expansive mining facilities with enough computing power to control the majority of the network;
+Added: mining pool dominance, in which mining pool becomes so large that it collectively controls more than 50% of the network’s hashrate;
+Added: or botnet-based attacks, in which botnets (volunteers or hacked collections of computers controlled by networked software coordinating the actions of the computers) are used to hijack computing resources and direct them toward mining, effectively amassing enough power to launch an attack.
+Added: If a 51% attack were successfully executed, it could lead to a loss of confidence in bitcoin’s security and reliability, causing its price to drop significantly.
+Added: Such an event could also prompt regulatory restrictions on cryptocurrency mining and trading, further exacerbating the negative impact on our business.
+Added: Even if a 51% attack does not occur, the mere perception that such an attack is possible could damage bitcoin’s credibility and discourage institutional adoption.
+Added: Given our dependence on bitcoin mining, any loss of trust in the
+Added: security of the Bitcoin network could materially and adversely affect our business, financial condition and results of operations.
+Added: The scheduled reduction of bitcoin mining rewards due to halving events may decrease our revenue and could force us to cease mining operations.
+Added: Bitcoin undergoes a process known as “halving,” which reduces the reward miners receive for successfully mining a block.
+Added: This process is designed to control the total supply of bitcoin and occurs approximately every four years.
+Added: The most recent halving in April 2024 reduced mining rewards from 6.25 to 3.125 bitcoin per block, with the next halving expected in April 2028.
+Added: Halvings are expected to continue until the total bitcoin supply reaches 21,000,000 bitcoin, projected around the year 2140.
+Added: Bitcoin prices have fluctuated around past halving events, and there is no guarantee that future halvings will result in price increases sufficient to offset reduced mining rewards.
+Added: If bitcoin prices do not increase proportionately, our mining revenue may decline, potentially making continued operations financially unsustainable.
+Added: If we reduce or cease mining, our business would be materially harmed, and investors could suffer a complete loss of their investment.
+Added: Further, reduced bitcoin mining incentives due to halving events may weaken network security and adversely affect our operations.
+Added: Lower mining rewards could lead to a decrease in the hashrate securing the Bitcoin network if miners shut down operations due to reduced profitability.
+Added: A lower hashrate could slow transaction confirmations and make the network more susceptible to malicious actors gaining control of 50% or more of the total processing power, increasing the risk of fraudulent transactions.
+Added: Any weakening of Bitcoin network security could negatively impact our operations and harm investor confidence in our securities.
+Added: High operating costs and the need for professionalized mining operations may lead to downward pressure on bitcoin prices.
+Added: Over the past three years, digital asset mining operations have evolved from individual users mining with computer processors, graphics processing units and first-generation mining rigs.
+Added: New processing power brought onto the digital asset networks is predominantly added by professionalized mining operations, which may use proprietary hardware or sophisticated machines.
Professionalized mining operations require:
−Removed: • the investment of significant capital for the acquisition of such hardware;
−Removed: • the leasing of operating space (often in data centers or warehousing facilities);
−Removed: • incurring of electricity costs;
−Removed: • the employment of technicians to operate the mining farms.
−Removed: As a result, professionalized mining operations are of a greater scale than prior miners and have more defined, regular expenses and liabilities.
−Removed: These regular expenses and liabilities require professionalized mining operations to more immediately sell digital assets earned from mining operations on the digital asset exchange market.
−Removed: To the contrary, it is believed that past individual miners were more likely to hold mined digital assets for more extended periods.
−Removed: The immediate selling of newly mined digital assets greatly increases the supply of digital assets on the digital asset exchange market, creating downward pressure on the price of each digital asset.
−Removed: The extent to which the value of digital assets mined by a professionalized mining operation exceeds the allocable capital and operating costs determines the profit margin of such operation.
−Removed: A professionalized mining operation may be more likely to sell a higher percentage of its newly mined digital assets rapidly if it is operating at a low profit margin—and it may partially or completely stop operations if its profit margin is negative.
−Removed: In a low profit margin environment, a higher percentage could be sold into the digital asset exchange market more rapidly, potentially reducing digital asset prices.
−Removed: Lower digital asset prices may result in further tightening of profit margins, particularly for professionalized mining operations with higher costs and more limited capital reserves, creating a network effect that may further reduce the price of digital assets until mining operations with higher operating costs become unprofitable and remove mining power from the respective digital asset network.
−Removed: The network effect of reduced profit margins resulting in greater sales of newly mined digital assets could result in a reduction in the price of digital assets that could adversely impact an investment in our securities.
−Removed: Our reliance on immersion-cooling exposes us to additional risks.
−Removed: Our business is also active in Bitcoin-related projects related to the technological development of immersion-cooling, an emerging technology in bitcoin mining, which is not in wide-spread use in the bitcoin mining industry, and has yet to be deployed in large scale.
−Removed: As such, there is a risk we may not succeed in developing or deploying immersion-cooling at such a large scale to achieve sufficient cooling performance.
−Removed: Our bitcoin miners that utilize immersion-cooling technology do not primarily rely on the use of water.
−Removed: All Bitcoin mining infrastructure, including immersion-cooling and air-cooling, is an evolving study.
−Removed: Cooling of bitcoin miners in general is a risk to achieving full potential from our hash rate.
−Removed: The loss or destruction of a private key required to access a digital asset may be irreversible.
−Removed: Our loss of access to our private keys or a data loss relating to our digital assets could adversely affect an investment in our securities.
+Added: • significant capital investment tin specialized hardware;
+Added: • leasing operating space (often in data centers or warehousing facilities);
+Added: • substantial electricity consumption;
+Added: • employing technicians to operate the mining sites.
+Added: Unlike past individual miners who may have held mined bitcoin for extended periods, professionalized mining operations typically sell newly mined bitcoin immediately to cover ongoing expenses.
+Added: If mining profitability declines, professional miners may sell even more bitcoin into the market, increasing supply and potentially driving down bitcoin prices.
+Added: If this price decline is significant, it could further reduce mining profitability, leading to additional sell-offs and a negative feedback loop that could harm our business and adversely affect an investment in our securities.
+Added: Our increasing reliance on immersion-cooling technology exposes us to operational and regulatory risks.
+Added: We are expanding our use of immersion-cooling technology for bitcoin mining, particularly at our Granbury, Texas facility.
+Added: Immersion-cooling is an emerging, relatively untested technology at scale within the bitcoin mining industry, and we may face challenges in achieving the expected cooling performance.
+Added: If we fail to optimize our immersion-cooling systems, our mining efficiency and profitability may suffer.
+Added: In addition, regulation of certain perfluoroalkyl and polyfluoroalkyl substances, collectively known as “PFAS,” may affect our operations.
+Added: Governments in the United States and internationally have increased their focus on and regulation of PFAS which are present in some coolants used in our immersion-cooling systems.
+Added: Developments in global chemical regulatory trends (including relating to PFAS) could lead to additional compliance costs, potential litigation, or operational disruptions, all of which could adversely affect our operations and financial condition.
+Added: Loss of access to our private keys or data could result in a permanent loss of our digital assets.
Digital assets are controllable only by the possessor of both the unique public key and private key relating to the local or online digital wallet which hold the digital assets.
We are required by the operators of digital asset networks to publish the public key relating to a digital wallet in use once we first verify a spending transaction from that digital wallet and broadcast such information into the respective network.
−Removed: We safeguard the private keys relating to our digital assets by relying on three custody providers, including New York Digital Investment Group LLC’s (“NYDIG”), relying on 100% cold-storage custody solutions held in purpose-built physically-secure environments based on established, industry best practices to safeguard digital assets from theft, loss, destruction or other issues relating to hackers and technological attack.
−Removed: To the extent a private key is lost, destroyed or otherwise compromised and no backup of the private key is accessible, we will be unable to access the digital assets and the private key will not be capable of being restored by the respective digital asset network.
+Added: We safeguard the private keys relating to our digital assets by relying on four custody providers, including New York Digital Investment Group LLC (“NYDIG”).
+Added: To the extent a private key is lost, destroyed or otherwise compromised and no backup of the private key is accessible, we would be unable to access the digital assets and the private key would not be capable of being restored by the respective digital asset network.
Any loss of private keys relating to digital wallets used to store our digital assets could adversely affect an investment in our securities.
−Removed: Security threats to our business could result in, a loss of our digital assets, or damage to our reputation and our brand, each of which could adversely affect an investment in our securities.
−Removed: Security breaches, computer malware and computer hacking attacks have been a prevalent concern in the digital asset exchange markets.
−Removed: A security breach caused by hacking, could include, but is not limited to:
−Removed: • efforts to gain unauthorized access to information or systems;
−Removed: • efforts to cause intentional malfunctions or loss or corruption of data, software, hardware or other computer equipment;
−Removed: • the inadvertent transmission of computer viruses.
−Removed: A security breach by hacking could harm our operations or result in loss of our digital assets.
−Removed: Any breach of our and our partners’ infrastructure could result in reputational harm and erode the trust of our partners and stockholders, which could adversely affect an investment in our securities.
−Removed: Furthermore, as our assets grow, we may become a more appealing target for security threats such as hackers and malware.
−Removed: We rely on third-party custody providers’ 100% cold-storage custody solutions held in a purpose-built physically secure environments based on established, industry best practices to safeguard digital assets from theft, loss, destruction or other issues relating to hackers and technological attack.
+Added: Cybersecurity threats, including hacking and malware, could result in loss of digital assets, reputational damage, and business disruptions.
+Added: The digital asset industry is a frequent target for cyberattacks, including:
+Added: • unauthorized access to systems and data;
+Added: • intentional corruption, destruction, or loss of digital assets;
+Added: • social engineering attacks targeting employees
+Added: A successful cybersecurity breach could result in the theft or loss of our bitcoin holdings, disruptions to our mining operations and significant reputational harm.
+Added: As our digital asset holdings grow, we may become a more attractive target for cybercriminals, further increasing our risk exposure.
+Added: We rely on third-party custody providers’ solutions to safeguard digital assets from theft, loss, destruction or other issues relating to cyberattacks.
Notwithstanding the safeguards implemented to protect our assets, the third-party security systems may not be impenetrable or free from defect, and any loss due to a security breach, software defect or event outside of our control will be borne by us.
−Removed: The security system and operational infrastructure may be breached due to the actions of outside parties, error or malfeasance of an employee, or otherwise, and, as a result, an unauthorized party may obtain access to our private keys, data or bitcoins.
−Removed: Additionally, outside parties may attempt to fraudulently induce our employees to disclose sensitive information in order to gain access to our infrastructure.
−Removed: Despite our efforts, we may be unable to anticipate these techniques or implement adequate preventative measures since the hacking techniques used are often not recognized until launched against a target.
−Removed: If an actual or perceived breach of our security system occurs, the market perception of the effectiveness of our controls could be harmed, which could adversely affect an investment in our securities.
−Removed: Further, in the event of a security breach, we may be subject to litigation forced to cease operations, or suffer a reduction in assets, the occurrence of each of which could adversely affect an investment in our securities.
−Removed: Our ability to adopt technology in response to changing security needs or trends and our reliance on, third-party custody providers, poses a challenge to the safekeeping of our digital assets.
−Removed: The history of digital asset exchanges has shown that exchanges and large holders of digital assets must adapt to technological change in order to secure and safeguard their digital assets.
−Removed: We rely on third-party custody providers’ 100% cold-storage custody solutions held in a purpose-built physically secure environment based on established, industry best practices to safeguard digital assets from theft, loss, destruction or other issues relating to hackers and technological attack.
−Removed: We believe we may become a more appealing target of security threats as the size of our bitcoin holdings grow.
−Removed: To the extent that we, or any of our third-party custody providers, are unable to identify, mitigate or stop new security threats, our digital assets may be subject to theft, loss, destruction or other attack, which could adversely affect an
−Removed: investment in our securities.
−Removed: To the extent that our third-party custody providers are no longer able to safeguard our assets due to the current banking crisis, we would be at risk of loss if safeguarding protocols fail.
−Removed: Digital asset transactions are irrevocable and stolen or incorrectly transferred digital assets may be irretrievable.
−Removed: As a result, any incorrectly executed digital asset transactions could adversely affect an investment in our securities.
+Added: Our systems and operational infrastructure may be breached due to the actions of outside parties, error or malfeasance of an employee or otherwise, and, as a result, an unauthorized party may obtain access to our private keys, data or digital assets.
+Added: Additionally, outside parties may attempt to fraudulently induce our employees to disclose sensitive information in order to gain access to our systems or infrastructure.
+Added: Despite our efforts, we may be unable to anticipate security breaches, including cyberattacks, or implement adequate preventative measures since the hacking techniques used often are not recognized until launched against a target.
+Added: If an actual or perceived breach of our security systems occurs, the market perception of the effectiveness of our controls could be harmed, which could adversely affect an investment in our securities.
+Added: Further, in the event of a security breach, we may suffer damage to our key systems and experience interruption in our services, loss of ability to control or operate our equipment or loss of critical data that could interrupt our operations.
+Added: Such potential consequences of a security breach may adversely impact our reputation and brand and expose us to increased risks of governmental and regulatory investigation and enforcement actions, private litigation and other liability, any of which could adversely affect our business.
+Added: The irreversibility of digital asset transactions exposes us to risks of theft, loss and human error, which could negatively impact our business.
Digital asset transactions are not, from an administrative perspective, reversible without the consent and active participation of the recipient of the transaction or, in theory, control or consent of a majority of the processing power on that digital asset network.
Once a transaction has been verified and recorded in a block that is added to the blockchain, an incorrect transfer of digital assets or a theft of digital assets generally will not be reversible, and we may not be capable of seeking compensation for any such transfer or theft.
−Removed: Although we regularly transfer digital assets to or from vendors, consultants, services providers, it is possible that, through computer or human error, or through theft or criminal action, such assets could be transferred in incorrect amounts or to unauthorized third parties.
−Removed: To the extent we are unable to seek a corrective transaction to identify the third party which has received our digital assets through error or theft, we will be unable to revert or otherwise recover the impacted digital assets, and any such loss could adversely affect an investment in our securities.
−Removed: The limited rights of legal recourse against us, and our lack of insurance protection expose us and our stockholders to the risk of loss of our digital assets for which no person is liable.
−Removed: Our digital assets are not insured.
−Removed: If our digital assets are lost, stolen or destroyed under circumstances rendering a party liable to us, the responsible party may not have the financial resources sufficient to satisfy our claim.
−Removed: For example, as to a particular event of loss, the only source of recovery for us might be limited to the extent identifiable, other responsible third parties (e.g., a thief or terrorist), any of which may not have the financial resources (including liability insurance coverage) to satisfy a valid claim.
−Removed: Furthermore, bitcoin is not subject to Federal Deposit Insurance Corporation (“FDIC”) or Securities Investor Protection Corporation protection, which is the protection afforded to depositors at banking institutions.
−Removed: Therefore, a loss may be suffered with respect to our digital assets for which no recourse is available, which could adversely affect our operations and, consequently, an investment in our securities.
−Removed: If we or our third-party service providers experience a security breach or cyberattack and unauthorized parties obtain access to our bitcoin, we may lose some or all of our bitcoin and our financial condition and results of operations could be materially adversely affected.
−Removed: Security breaches and cyberattacks are of particular concern with respect to our bitcoin.
−Removed: Bitcoin and other blockchain-based digital assets have been, and may in the future be, subject to security breaches, cyberattacks, or other malicious activities.
−Removed: A successful security breach or cyberattack could result in a partial or total loss of our bitcoin in a manner that may not be covered by insurance or indemnity provisions of the custody agreement with a custodian who holds our bitcoin.
−Removed: Such a loss could have a material adverse effect on our financial condition and results of operations.
−Removed: We rely on third-party hosting, and as such, our operations could be adversely affected by the actions or inactions of such third-parties.
−Removed: Additionally, third-party hosting, among other things, often requires us to give the hosting company, a first lien on the mining rigs installed on the site and creates business risk for us.
−Removed: We do not self-host our mining rigs and rely upon third-party hosting facilities to power our mining rigs.
−Removed: Our third-party hosting operators host approximately 193,000 of our bitcoin miners or 23.91 of our operational hash rate capacity.
−Removed: Our operations and ability to mine bitcoin could be adversely affected if operators we rely on to operate our bitcoin miners experience general incompetence in performing their duties, experience financial difficulties or bankruptcy, or otherwise cannot operate our bitcoin miners in accordance with their contractual obligations.
−Removed: We are dependent upon the financial viability of our third-party hosting operators, and in 2022, several large publicly traded hosting companies met severe financial issues, including bankruptcies.
−Removed: For example, our largest hosting partner, Compute North, filed for bankruptcy in 2022, and as a result, we recorded an impairment charge in the amount of $55.7 million.
−Removed: Currently, about 90% of our third-party hosting is operated by APLD and Hut 8.
−Removed: As a result, our operations are highly dependent on these third-parties and could be adversely affected by the actions or inactions of our third-party hosting operators.
−Removed: Furthermore, in most hosting contracts, there is a requirement that the miner agrees to permit the hosting company to place a lien on the actual mining machines being hosted.
−Removed: If the hosting company files for bankruptcy, it may take
−Removed: months for the liens to be lifted, while the bankruptcy court and parties litigate these contracts and resolves issues as to ownership of assets and related areas.
−Removed: In these contracts, we are often required to make significant deposits against future mining fees.
−Removed: If the hosting party utilizes the deposits, we could risk loss of the deposits and be left with an unsecured claim in the bankruptcy.
−Removed: Lastly, as the bankruptcy process includes an automatic stay in favor of the debtor company, until the stay is lifted or a bankruptcy plan approved, we may not be able to move our mining rigs to a different location, even if the debtor rejects our hosting contract.
−Removed: Intellectual property rights claims may adversely affect the operation of some or all digital asset networks.
−Removed: Third parties may assert intellectual property claims relating to the holding and transfer of digital assets and their source code.
−Removed: Regardless of the merit of any intellectual property or other legal action, any threatened action that reduces confidence in some or all digital asset networks’ long-term viability or the ability of end-users to hold and transfer digital assets may adversely affect an investment in our securities.
−Removed: Additionally, a meritorious intellectual property claim could prevent us and other end-users from accessing some or all digital asset networks or holding or transferring our digital assets.
−Removed: As a result, an intellectual property claim against us or other large digital asset network participants could adversely affect an investment in our securities.
+Added: Although we regularly transfer digital assets to or from vendors, consultants and services providers, it is possible that, through computer or human error, or through theft or criminal action, such assets could be transferred in incorrect amounts or to unauthorized third parties.
+Added: To the extent we are unable to seek a corrective transaction to identify the third party which has received our digital assets through error or theft, we will be unable to revert or otherwise recover the impacted digital assets, and any such loss could adversely affect our business, results of operations and financial condition.
+Added: Our reliance on third-party hosting providers for bitcoin mining operations exposes us to financial and operational risks.
+Added: We rely on third-party hosting providers to power a portion of our mining rigs.
+Added: If these providers experience financial difficulties, including bankruptcy, or fail to meet their contractual obligations, our ability to mine bitcoin could be significantly impacted.
+Added: In 2022, our largest hosting provider, Compute North, filed for bankruptcy, resulting in a $55.7 million impairment charge for our company.
+Added: Hosting contracts often include provisions that allow hosting providers to place liens on our mining equipment, which could delay or prevent us from reclaiming our assets in the event of a provider’s bankruptcy.
+Added: Additionally, significant deposits made to hosting providers may be at risk if those funds are used for the provider’s operations or are otherwise inaccessible due to bankruptcy proceedings.
+Added: These factors introduce uncertainty and financial risk that could materially impact our business.
+Added: Intellectual property disputes related to digital asset technology could threaten our ability to operate.
+Added: The legal landscape for digital assets remains uncertain, and third parties may assert intellectual property claims related to blockchain technology, digital asset transactions or source code.
+Added: Any litigation, regardless of its merit, could create uncertainty about the long-term viability of digital asset networks and reduce investor confidence in our business.
+Added: If a court upholds an intellectual property claim, we and other market participants could be restricted from accessing certain digital asset networks or conducting transactions, which could materially impact our business, results of operations and financial condition.
Variability in intellectual property laws may adversely affect our intellectual property position.
−Removed: Intellectual property laws, and patent laws and regulations in particular, have been subject to significant variability either through administrative or legislative changes to such laws or regulations or changes or differences in judicial interpretation, and it is expected that such variability will continue to occur.
+Added: Intellectual property laws, and patent laws and regulations in particular, have been subject to significant variability either through administrative or legislative changes to such laws or regulations or changes or differences in judicial interpretation, and we expect that such variability will continue to occur.
Additionally, intellectual property laws and regulations differ among states and countries.
1 unchanged sentence
Accordingly, we cannot predict the scope of patents that may be granted to us, the extent to which we will be able to enforce our patents against third parties or the extent to which third parties may be able to enforce their patents against us.
−Removed: We may seek to internally develop additional new inventions and intellectual property, which would take time and be costly.
−Removed: Moreover, the failure to obtain or maintain intellectual property rights for such inventions would lead to the loss of our investments in such activities.
−Removed: We may in the future seek to engage in commercial business ventures or seek internal development of new inventions or intellectual property.
−Removed: These activities would require significant amounts of financial, managerial and other resources and would take time to achieve.
−Removed: Such activities could also distract our management team from our present business initiatives, which could have a material and adverse effect on our business.
−Removed: There is also the risk that such initiatives may not yield any viable new business or revenue, inventions or technology, which would lead to a loss of investment in such activities.
−Removed: In addition, even if we are able to internally develop new inventions, in order for those inventions to be viable and to compete effectively, we would need to develop and maintain a proprietary position with respect to such inventions and intellectual property.
−Removed: However, there are significant risks associated with any such intellectual property we may develop principally including the following:
−Removed: • patent applications we may file may not result in issued patents or may take longer than we expect to result in issued patents;
−Removed: • we may be subject to interference proceedings;
−Removed: • we may be subject to opposition proceedings in the United States or foreign countries;
−Removed: • any patents that are issued to us may not provide meaningful protection;
−Removed: • we may not be able to develop additional proprietary technologies that are patentable;
−Removed: • other companies may challenge patents issued to us;
−Removed: • other companies may have independently developed and/or patented (or may in the future independently develop and patent) similar or alternative technologies, or duplicate our technologies;
−Removed: • other companies may design around technologies we have developed;
−Removed: • enforcement of our patents would be complex, uncertain and very expensive.
−Removed: We cannot be certain that patents, once issued, will provide us with adequate protection from competing products.
−Removed: For example, issued patents may be circumvented or challenged, declared invalid or unenforceable or narrowed in scope.
−Removed: In addition, since publication of discoveries in scientific or patent literature often lags behind actual discoveries, we cannot be certain that we will be the first to make our additional new inventions or to file patent applications covering those inventions.
−Removed: It is also possible that others may have or may obtain issued patents that could prevent us from commercializing our products or require us to obtain licenses requiring the payment of significant fees or royalties in order to enable us to conduct our business.
−Removed: As to those patents that we may acquire, our continued rights will depend on meeting any obligations to the seller and we may be unable to do so.
−Removed: Our failure to obtain or maintain intellectual property rights for our inventions would lead to the loss of our investments in such activities, which would have a material adverse effect on our securities.
−Removed: Moreover, patent application delays could cause delays in recognizing revenue from our internally generated patents and could cause us to miss opportunities to license patents before other competing technologies are developed or introduced into the market.
−Removed: We are not actively pursuing any commercialization opportunities or internally generated patents.
+Added: Developing and protecting new inventions and intellectual property is costly, time-consuming and uncertain.
+Added: Our pursuit to develop new inventions or intellectual property requires significant financial, managerial and other resources.
+Added: There is no guarantee that these efforts will result in valuable intellectual property or generate revenue.
+Added: Even if we develop new technologies, securing and maintaining a proprietary position presents additional risks, including:
+Added: • delays or failures in obtaining patents;
+Added: • patent challenges, including interference and opposition proceedings;
+Added: • competitors developing similar or alternative technologies;
+Added: • complexity, cost, and uncertainty of patent enforcement.
+Added: Even issued patents may not provide meaningful protection, as they can be circumvented, challenged, invalidated or narrowed in scope.
+Added: Additionally, if others have already patented similar technologies, we may need to obtain costly licenses or be restricted from commercializing certain products.
+Added: Patent application delays could also impact our ability to generate revenue from internally developed patents and may cause us to miss market opportunities.
Our future success depends on our ability to expand our organization to match the growth of our activities .
As our operations grow, the administrative demands and scaling demands upon us will grow, and our success will depend upon our ability to meet those demands.
−Removed: Both Marathon and each of our subsidiaries require certain financial, managerial and other resources, which could create challenges to our ability to successfully manage our subsidiaries and operations and impact our ability to assure compliance with our policies, practices and procedures.
−Removed: These demands include, but are not limited to, increased executive, accounting, management, legal services, staff support and general office services.
−Removed: We may need to hire additional qualified personnel to meet these demands, the cost and quality of which is dependent in part upon market factors outside of our control.
+Added: MARA and our subsidiaries require certain financial, managerial and other resources, which could create challenges to our ability to successfully manage our subsidiaries and operations and impact our ability to assure compliance with our policies, practices and procedures.
+Added: These demands include, but are not limited to, increased executive, technical, operations, accounting, legal, staff support and general office services.
+Added: We may need to hire additional qualified personnel, including contractors, to meet these demands, the cost and quality of which is dependent in part upon market factors outside of our control.
Further, we will need to effectively manage the training and growth of our staff to maintain an efficient and effective workforce, and our failure to do so could adversely affect our business and operating results.
−Removed: Currently, we have limited personnel in our organization to meet our organizational and administrative demands.
−Removed: We are highly dependent on the continued services of our small team of executives.
−Removed: We are dependent upon the efforts and services of our small executive team.
−Removed: While we have a preliminary plan for succession of certain key executive, the loss of any one of our key executives could have an adverse effect on our operations.
−Removed: We have engaged in, and in the future may engage in, strategic acquisitions and other arrangements that could disrupt our business, cause dilution to our stockholders, reduce our financial resources and harm our operating results.
−Removed: We have previously engaged in strategic transactions, including acquisitions of companies, miners, and bitcoin mining sites, such as our recent business acquisitions of two currently operational Bitcoin mining sites, totaling 390 megawatts of capacity, located in Granbury, Texas and Kearney, Nebraska, and, as part of our growth strategy, in the future, we may seek additional opportunities to grow our mining operations, including through purchases of miners, data centers and other facilities from other operating companies, including companies in financial distress.
−Removed: Our ability to grow through future acquisitions will depend on the availability of, and our ability to identify, suitable acquisition and investment opportunities at an acceptable cost, our ability to compete effectively to attract those opportunities and the availability of financing to complete acquisitions.
−Removed: Future acquisitions may require us to issue common stock that would dilute our current stockholders’ percentage ownership, assume or otherwise be subject to liabilities of an acquired company, record goodwill and non-amortizable intangible assets that will be subject to impairment testing on a regular basis and potential periodic impairment charges, incur amortization expenses related to certain intangible assets, incur large acquisition and integration costs, immediate write-offs, and restructuring and other related expenses and become subject to litigation.
−Removed: The benefits of an acquisition or our expansion into may also take considerable time to develop, and we cannot be certain that any particular acquisition will produce the intended benefits in a timely manner or to the extent anticipated or at all.
−Removed: We may experience difficulties integrating the operations, technologies and personnel of an acquired company or be subjected to liability for the target’s pre-acquisition activities or operations as a successor in interest.
−Removed: Such integration may divert management’s attention from normal daily operations of our business.
−Removed: Future acquisitions may also expose us to potential risks, including risks associated with entering markets in which we have no or limited prior experience, especially when competitors in such markets have stronger market positions, the possibility of insufficient revenues to offset the expenses we incur in connection with an acquisition and the potential loss of, or harm to, our relationships with employees and suppliers as a result of integration of new businesses.
−Removed: Additionally, we may be unable to pursue our current acquisition strategy in the future.
−Removed: In addition to mining and holding bitcoin, and such related acquisitions, we have explored, and we may in the future explore, opportunities to become more involved in businesses that expand or supplement those directly related to the self-mining of bitcoin as favorable market conditions and opportunities arise.
−Removed: We cannot be certain that such opportunities will produce the intended benefits in a timely manner or to the extent anticipated or at all.
−Removed: These opportunities could also expose us to similar risks associated with our strategic acquisitions, as discussed above.
−Removed: Increased scrutiny and changing expectations from stockholders with respect to our environmental, social and governance (“ESG”) practices and the impacts of climate change may result in additional costs or risks.
−Removed: Companies across many industries are facing increasing scrutiny related to their ESG practices.
−Removed: Investor advocacy groups, certain institutional investors, investment funds and other influential investors are also increasingly focused on ESG practices and in recent years have placed increasing importance on the non-financial impacts of their investments.
−Removed: In May 2021, the SEC proposed rule changes that would require public companies to include certain climate-related disclosures in their periodic reports, including information about climate-related risks that are reasonably likely to have a material impact on their business, results of operations, or financial condition, and certain climate-related financial statement metrics in a note to their audited financial statements.
−Removed: The SEC noted that such rule changes were proposed in response to investor demands for consistent and comparable data on climate change.
−Removed: Furthermore, increased public awareness and concern regarding environmental risks, including global climate change, may result in increased public scrutiny of our business and our industry, and our management team may divert significant time and energy away from our operations and towards responding to such scrutiny and reassuring our employees.
−Removed: In addition, the physical risks of climate change may impact the availability and cost of materials and natural resources, sources and supplies of energy, and demand for bitcoin and other cryptocurrencies, and could increase our insurance and other operating costs, including, potentially, to repair damage incurred as a result of extreme weather events or to renovate or retrofit facilities to better withstand extreme weather events.
−Removed: If environmental laws or regulations or industry standards are either changed or adopted and impose significant operational restrictions and compliance requirements on our operations, or if our operations are disrupted due to physical impacts of climate change, our business, capital expenditures, results of operations, financial condition and competitive position could be negatively impacted.
−Removed: Our business could be harmed by prolonged power and internet outages, shortages, or capacity constraints.
−Removed: Our operations require a significant amount of electrical power and access to high-speed internet to be successful.
−Removed: If we are unable to secure sufficient electrical power, or if we lose internet access for a prolonged period, we may be required to reduce our operations or cease them altogether.
−Removed: If this occurs, our business and results of operations may be materially and adversely affected.
−Removed: We may have further restrictions on our liquidity due to unique risks which we could face in 2024.
−Removed: The risks to our liquidity outlook would include the following:
−Removed: • deteriorating macroeconomic conditions such as the impact of inflation and increased interest rates and the corresponding impact on our ability to borrow funds or refinance existing indebtedness;
−Removed: • additional challenges arising from catastrophic events (such the FTX collapse and multiple bankruptcies of bitcoin mining companies in 2022 and 2023) that would adversely affect the credibility of, and therefore investor confidence in, companies engaged in the digital assets space;
−Removed: • additional declines in bitcoin prices and/or production, and increases in electricity costs which could adversely impact both the value of our bitcoin holdings and our ongoing profitability;
−Removed: • further instability in the banking system and the possible collapse of more banking institutions which could put the liquidity and cash assets of third parties with which we do business such as miner hosting entities and suppliers and us, if we bank in the future with an institution which subsequently collapses.
−Removed: The termination of the $200.0 million in loan facilities with Silvergate Bank did not have a material impact on our operations or forecasts with regard to liquidity.
−Removed: The loans were fully collateralized by our holdings of bitcoin and as such, we were only permitted to borrow up to 65% of the value of the bitcoin held as collateral.
−Removed: Specific percentages and conditions are set forth in the section entitled “ Management’s Discussion and Analysis of Financial Condition and Results of Operations ” under the caption, Bitcoin held as collateral for loans (“Digital assets, restricted”).
−Removed: In response to the disruptions in the crypto markets and rising interest rates during the fourth quarter of 2022, we decided to move away from leverage and instead chose to rely on increased levels of cash and higher balances of unrestricted bitcoin holdings, which as of January 2023, we are now selling periodically as a means of generating cash for our operations.
−Removed: By selling bitcoin outright, we can realize 100% of the then value of our bitcoin when addressing liquidity needs.
−Removed: Refer to the disclosure under the caption “ Liquidity and Capital Resources Outlook” in the section entitled (“ Management’s Discussion and Analysis of Financial Condition and Results of Operations ”) for further disclosure regarding our liquidity analysis.
−Removed: In measuring our prospective liquidity forecasts, we did not include loan availability given the loans were collateralized.
−Removed: In addition, we believe that with the consistently higher bitcoin mining levels which we have achieved, selling bitcoin is a more conservative and sustainable methodology for providing liquidity given current market conditions and interest rates.
−Removed: We believe that with the increased cash, access to our 2023 ATM and our intended 2024 ATM, as needed, our bitcoin holdings, and with periodic access to capital markets, we will have sufficient liquidity to fund operations and growth initiatives, including our investment in the ADGM Entity.
−Removed: In response to the closure of Signature Bank, we moved all of our cash to other FDIC insured institutions and did not suffer any loss of funds from this event.
−Removed: In order to help mitigate and avoid concentration risk with a single bank, we have diversified our cash holdings and now maintain cash management relationships at four commercial banking institutions.
−Removed: In addition, as a result of the current elevated risk of possible insolvency of banks, we have implemented a policy of purchasing short-term U.S.
−Removed: treasury bills as an additional means of risk mitigation for periods when our cash balances are higher than our near-term anticipated and planned operating cash flow needs.
−Removed: We have identified material weaknesses in our internal control over financial reporting and may identify additional material weaknesses in the future or otherwise fail to maintain an effective system of internal controls, which may result in material misstatements of our financial statements or cause us to fail to meet periodic reporting obligations.
−Removed: We are required to comply with certain provisions of Section 404 of the Sarbanes-Oxley Act.
−Removed: Section 404 requires that we document and test our internal control over financial reporting and issue management’s assessment of our internal control over financial reporting.
−Removed: We assessed the effectiveness of our internal controls over financial reporting as of December 31, 2023.
−Removed: In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control — Integrated Framework.
−Removed: A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
−Removed: Based on our assessment, as of December 31, 2023, we concluded that our internal control over financial reporting contained material weaknesses.
−Removed: To remediate these material weaknesses, our management has been implementing and continues to implement measures designed to ensure that control deficiencies contributing to the material weakness are remediated, such that these controls are designed, implemented, and operating effectively.
−Removed: We believe that these actions will remediate such material weaknesses.
−Removed: However, the remediation cannot be deemed successful until the applicable controls operate for a sufficient period of time and our management has concluded, through testing, that these controls are operating effectively.
−Removed: If we fail to comply with the requirements of Section 404 of the Sarbanes-Oxley Act, there may be materially adverse effects as to the accuracy and timeliness of the filing of our annual and quarterly reports, and it could cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our common stock.
−Removed: In addition, a material weakness in the effectiveness of our internal control over financial reporting could result in an increased chance of fraud and the loss of customers, reduce our ability to obtain financing and require additional expenditures to comply with these requirements, each of which could have a material adverse effect on our business, results of operations and financial condition.
−Removed: We have unresolved Staff comments.
−Removed: As stated in Item 1B of this Annual Report, we have unresolved Staff comments.
−Removed: For example, the Staff commented on our revenue recognition policy in our capacity as a pool operator and as a pool participant, with specific attention on our previous net recognition of revenue as an operator of a pool.
−Removed: In our restated financial results, we have revised our revenue to include gross revenue earned as a pool operator with any amounts remitted to third-party pool participants as cost of revenue.
−Removed: The Staff further commented on our accounting convention to recognize our noncash (bitcoin) revenue using fair value that is not at contract inception.
−Removed: We have evaluated the difference between our current accounting policy and fair value at contract inception and have determined that any differences in revenue are not material for all periods stated.
−Removed: We also received Staff comments relating to impairment of bitcoin, accounting for investment fund, statements of comprehensive income (loss) presentation, embedded leases in hosting and power
−Removed: arrangements, investments, risk factors, and bitcoin as collateral.
−Removed: While we have restated our financial statements based on comments received to date and determinations reached with our auditors, these comments remain unresolved and are subject to further review and comment by the Staff.
−Removed: While we believe we have addressed all of the Staff’s concerns, until the Staff has completed its review, we have no assurance that unresolved comments, or additional comments from the Staff, will not result in the need for additional restatements of our previously issued financial statements.
−Removed: While we do not believe this is a likely result, if this were the case, we could be subject to a further restatement, which could result in loss of investor confidence in the accuracy and completeness of our financial reports, an adverse effect on the price of our common stock, and we could become subject to private litigation or to investigations or enforcement actions by the SEC or other regulatory authorities, all of which could require our expenditure of additional financial and management resources and could have a material adverse effect on our business, financial condition and results of operations and our ability to raise capital.
+Added: We are highly dependent on the continued service of our executive team.
+Added: We depend upon the efforts, experience, diligence, skill and network of business contacts of our senior management team, and our success will depend on their continued service.
+Added: The departure of any of our executive officers or key personnel could have a material adverse effect on our business and results of operations.
+Added: Prolonged power and internet outages, shortages or capacity constraints could harm our business.
+Added: Our mining operations rely on a significant amount of electricity and high-speed internet access.
+Added: The success of any current or future mining site depends on securing sufficient, cost-effective power.
+Added: We operate across a mix of fully owned campuses, leased properties, and active hosting agreements, each with unique power arrangements.
+Added: If we are unable to obtain adequate electricity or experience prolonged internet outages, we may be forced to scale back or shut down operations.
+Added: Geopolitical events, including the war in Ukraine and high inflation, have driven up global energy prices.
+Added: If power costs continue to rise, our ability to mine bitcoin profitably could be severely impacted.
+Added: At times of high energy prices or shortages, we may voluntarily reduce power consumption or be required to do so under agreements with utility providers.
+Added: In some cases, utilities or government entities may restrict or prohibit electricity use for mining operations, further limiting our ability to generate bitcoin.
+Added: As we expand to new sites, competition for locations with affordable power could intensify.
+Added: Any limitations on power access could materially and adversely affect our business, financial performance and future growth.
+Added: Noise generated by our mining operations poses regulatory, legal, operational and reputational risks.
+Added: Our mining operations involve the use of a large number of high-powered miners and cooling systems that generate substantial noise.
+Added: This noise poses risks to our business, including community complaints, reputational damage, litigation risk, regulatory risk, operational constraints, increased costs and opposition to expansion.
+Added: These risks could lead to fines or penalties imposed by local governments, requirements to implement costly noise mitigation measures, restrictions on our operating hours, reduction of scale of our operations, stricter noise controls regulations on our operations, potential shutdown of data centers that cannot meet local noise regulations, damages resulting from lawsuits and difficulty obtaining necessary permits and approvals for expanding existing data centers or establishing new site operations.
+Added: These risks may negatively affect our financial condition and results of operations.
Risks Related to Governmental Regulation and Enforcement
−Removed: Regulatory changes or actions may restrict the use of bitcoins or the operation of the Bitcoin network in a manner that adversely affects an investment in our securities.
−Removed: Until recently, little or no regulatory attention has been directed toward bitcoin and the Bitcoin network by U.S.
−Removed: federal and state governments, foreign governments and self-regulatory agencies.
−Removed: As bitcoin has grown in popularity and in market size, the Federal Reserve Board, U.S.
−Removed: Congress and certain U.S.
−Removed: agencies (e.g., the CFTC, the SEC, FinCEN and the Federal Bureau of Investigation) have begun to examine the operations of the Bitcoin network, bitcoin users and the bitcoin exchange market.
−Removed: Digital assets currently face an uncertain regulatory landscape in not only the United States but also in many foreign jurisdictions such as the European Union, China and Russia.
−Removed: While certain governments such as Germany, where the Ministry of Finance has declared bitcoin to be “ Rechnungseinheiten ” (a form of private money that is recognized as a unit of account, but not recognized in the same manner as fiat currency), have issued guidance as to how to treat bitcoin, most regulatory bodies have not yet issued official statements regarding intention to regulate or determinations on regulation of bitcoin, the Bitcoin network and bitcoin users.
−Removed: The effect of any future regulatory change on us, bitcoins, or other digital assets is impossible to predict, but such change could be substantial and adverse to us and could adversely affect an investment in our securities.
−Removed: Furthermore, one or more countries such as China and Russia may take regulatory actions in the future that severely restricts the right to acquire, own, hold, sell or use digital assets or to exchange digital assets for fiat currency.
−Removed: Such an action may also result in the restriction of ownership, holding or trading in the Company’s securities.
−Removed: Due to the unregulated nature and lack of transparency surrounding the operations of many bitcoin trading venues, they may experience fraud, security failures or operational problems, which may adversely affect the value of our bitcoin.
−Removed: Bitcoin trading venues are relatively new and, in some cases, unregulated.
−Removed: Furthermore, there are many bitcoin trading venues which 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.
−Removed: Negative perception, a lack of stability in the broader bitcoin markets and the closure or temporary shutdown of bitcoin trading venues due to fraud, business failure, hackers or malware, or government-mandated regulation may reduce confidence in bitcoin and result in greater volatility in the prices of bitcoin.
−Removed: To the extent investors view our common stock as linked to the value of our bitcoin holdings, such a negative perception of bitcoin trading venues could have a material adverse effect on the market value of our common stock.
−Removed: If regulatory changes or interpretations require the regulation of bitcoins under the Securities Act and Investment Company Act by the SEC, we may be required to register and comply with such regulations.
−Removed: To the extent that we decide to continue operations, the required registrations and regulatory compliance steps may result in extraordinary, non-recurring expenses to us.
−Removed: We may also decide to cease certain operations.
−Removed: Any disruption of our operations in response to the changed regulatory circumstances may be at a time that is disadvantageous to investors.
−Removed: This would likely have a material adverse effect on us and investors may lose their investment.
−Removed: Current and future legislation and the SEC rulemaking and other regulatory developments, including interpretations released by a regulatory authority, may impact the manner in which bitcoins are treated for classification and clearing purposes.
−Removed: The SEC’s July 25, 2017 Report expressed its view that digital assets may be securities depending on the facts and circumstances.
−Removed: As of the date of this Annual Report, the Company is not aware of any rules that have been proposed to regulate bitcoins as securities.
−Removed: We cannot be certain as to how future regulatory
−Removed: developments will impact the treatment of bitcoins under the law.
−Removed: Such additional registrations may result in extraordinary, non-recurring expenses, thereby materially and adversely impacting an investment in our common stock.
−Removed: If we determine not to comply with such additional regulatory and registration requirements, we may seek to cease certain of our operations.
−Removed: Any such action may adversely affect an investment in our securities.
−Removed: To the extent that digital assets including bitcoins and other digital assets we own or may own are deemed by the SEC to fall within the definition of a security, we may be required to register and comply with additional regulation under the Investment Act, including additional periodic reporting and disclosure standards and requirements and our registration as an investment company.
−Removed: Additionally, although we are not engaged in the business of investing, reinvesting, or trading in securities, and we do not hold ourselves out as being engaged in those activities, we could inadvertently be deemed an investment company under the Investment Act.
−Removed: If we inadvertently are deemed an investment company and cannot rely on one of the exclusions under the Investment Act, then we would be required to register with the SEC.
−Removed: Furthermore, one or more states may conclude bitcoins and other digital assets we own or may own are a security under state securities laws which would require registration under state laws including merit review laws which would adversely impact us since we would likely not comply.
−Removed: As stated earlier in this Annual Report, some states including California define the term “investment contract” more strictly than the SEC.
−Removed: Such additional registrations, whether from regulatory developments or an inadvertent classification as an investment company, may result in extraordinary, non-recurring expenses for us, thereby materially and adversely impacting an investment in our securities.
−Removed: If we determine not to comply with such additional regulatory and registration requirements, we may seek to cease all or certain parts of our operations.
−Removed: Any such action would likely adversely affect an investment in our securities and investors may suffer a complete loss of their investment.
−Removed: Our bitcoin holdings could subject us to regulatory scrutiny.
−Removed: Several bitcoin investment vehicles have attempted to list their shares on a U.S.
−Removed: national securities exchange to permit them to function in the manner of an ETF with continuous share creation and redemption at NAV.
−Removed: To date, the SEC has declined to approve any such listing, citing concerns over the surveillance of trading in markets for the underlying bitcoin as well as concerns about fraud and manipulation in bitcoin trading markets.
−Removed: Even though we do not function in the manner of an ETF, nor do we offer continuous share creation and redemption at NAV, it is possible that we could nevertheless face regulatory scrutiny from the SEC, as a company with securities traded on Nasdaq.
−Removed: In addition, as digital assets, including bitcoin, have grown in popularity and market size, there has been increasing focus on the extent to which digital assets can be used to launder the proceeds of illegal activities or fund criminal or terrorist activities, or entities subject to sanctions regimes.
−Removed: While we continue to 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 further transactions or dealings in bitcoin may be restricted or prohibited.
−Removed: If regulatory changes or interpretations of our activities require us to register as a money services business (“MSB”) under the regulations promulgated by FinCEN under the authority of the U.S.
−Removed: Bank Secrecy Act, we may be required to register and comply with such regulations.
−Removed: If regulatory changes or interpretations of our activities require the licensing or other registrations as a money transmitter (or equivalent designation) under state law in any state in which we operate, we may be required to seek licensure or otherwise register and comply with such state law.
−Removed: In the event of any such requirement, to the extent we decide to continue, the required registrations, licensure and regulatory compliance steps may result in extraordinary, non-recurring expenses to us.
−Removed: We may also decide to cease our operations.
−Removed: Any termination of certain of our operations in response to the changed regulatory circumstances may be at a time that is disadvantageous to investors.
−Removed: To the extent that any of our activities cause us to be deemed an MSB, we may be required to comply with FinCEN regulations, including those that would mandate us to implement anti-money laundering programs, make certain reports to FinCEN and maintain certain records.
−Removed: To the extent that our activities cause us to be deemed a “money transmitter” (“MT”) or equivalent designation, under state law in any state in which we operate, we may be required to seek a license or otherwise register with a state regulator and comply with state regulations that may include the implementation of anti-money laundering programs, maintenance of certain records and other operational requirements.
−Removed: Currently, the NYSDFS has finalized its “BitLicense” framework for businesses that conduct “virtual currency business activity,” the Conference of State
−Removed: Bank Supervisors has proposed a model form of state level “virtual currency” regulation and additional state regulators including those from California, Idaho, Virginia, Kansas, Texas, South Dakota and Washington have made public statements indicating that virtual currency businesses may be required to seek licenses as money transmitters.
−Removed: In July 2016, North Carolina updated the law to define “virtual currency” and the activities that trigger licensure in a business-friendly approach that encourages companies to use virtual currency and blockchain technology.
−Removed: Specifically, the North Carolina law does not require miners or software providers to obtain a license for multi-signature software, smart contract platforms, smart property, colored coins and non-hosted, non-custodial wallets.
−Removed: Starting January 1, 2016, New Hampshire requires anyone who exchanges a digital asset for another currency must become a licensed and bonded money transmitter.
−Removed: In numerous other states, including Connecticut and New Jersey, legislation is being proposed or has been introduced regarding the treatment of bitcoin and other digital assets.
−Removed: We will continue to monitor for developments in such legislation, guidance or regulations.
−Removed: Such additional federal or state regulatory obligations may cause us to incur extraordinary expenses, possibly affecting an investment our securities in a material and adverse manner.
−Removed: Furthermore, we and our service providers may not be capable of complying with certain federal or state regulatory obligations applicable to MSBs and MTs.
−Removed: If we are deemed to be subject to such obligations, and determine not to comply with such additional regulatory and registration requirements, we may act to dissolve and liquidate.
−Removed: Any such action may adversely affect an investment in our securities or result in a complete loss for our investors.
−Removed: Current interpretations require the regulation of bitcoins under the CEA by the CFTC, we may be required to register and comply with such regulations.
−Removed: To the extent that we decide to continue operations, the required registrations and regulatory compliance steps may result in extraordinary, non-recurring expenses to us.
−Removed: We may also decide to cease certain operations.
−Removed: Any disruption of our operations in response to the changed regulatory circumstances may be at a time that is disadvantageous to investors.
−Removed: Current and future legislation, CFTC and other regulatory developments, including interpretations released by a regulatory authority, may impact the manner in which bitcoins are treated for classification and clearing purposes.
−Removed: In particular, bitcoin derivatives are not excluded from the definition of “commodity future” by the CFTC.
−Removed: We cannot be certain as to how future regulatory developments will impact the treatment of bitcoins under the law.
−Removed: Bitcoins have been deemed to fall within the definition of a commodity, and we may be required to register and comply with additional regulations under the CEA, including additional periodic reports and disclosure standards and requirements.
−Removed: Moreover, we may be required to register as a commodity pool operator and to register the Company as a commodity pool with the CFTC through the National Futures Association.
−Removed: Such additional registrations may result in extraordinary, non-recurring expenses, thereby materially and adversely impacting an investment in our securities.
−Removed: If we determine not to comply with such additional regulatory and registration requirements, we may seek to cease certain aspects of our operations.
−Removed: Any such action may adversely affect an investment in our securities.
−Removed: If federal or state legislatures or agencies initiate or release tax determinations that change the classification of bitcoins as property for tax purposes (in the context of when such bitcoins are held as an investment), such determination could have a negative tax consequence on us or our stockholders.
−Removed: Current IRS guidance indicates that digital assets such as bitcoin should be treated and taxed as property, and that transactions involving the payment of bitcoin for goods and services should be treated as barter transactions.
−Removed: While this treatment creates a potential tax reporting requirement for any circumstance where the ownership of a bitcoin passes from one person to another, usually by means of bitcoin transactions (including off-blockchain transactions), it preserves the right to apply capital gains treatment to those transactions which may adversely affect an investment in our securities.
−Removed: Our interactions with the bitcoin network may expose us to specially designated nationals (“SDN”) or blocked persons or cause us to violate provisions of law that did not contemplate distributed ledger technology.
+Added: The rapidly evolving and uncertain regulatory landscape for cryptocurrencies exposes us to legal risks, compliance costs, and potential business disruptions.
+Added: Our business operates within a complex and evolving regulatory framework that includes a wide range of federal, state, and international laws, rules, and policies.
+Added: These include regulations governing financial services, securities, commodities, money transmission, consumer lending, privacy, cybersecurity, taxation, anti-bribery, sanctions, anti-money laundering, and other areas.
+Added: Many of these laws were enacted before the rise of cryptocurrencies and blockchain technology, creating uncertainty in their interpretation and application.
+Added: Regulatory bodies, including the SEC, CFTC, federal energy regulators, and other financial oversight agencies, frequently modify and reinterpret existing rules, leading to inconsistencies across jurisdictions.
+Added: As a result, we must exercise judgment in determining how certain laws apply to our operations, and regulators may not always agree with our interpretations.
+Added: If we are found to be in violation of any applicable laws, we could face significant fines, license revocations, product or service restrictions, reputational damage, and other regulatory consequences that could materially impact our business.
+Added: Additionally, failures of major cryptocurrency trading platforms and lenders, such as FTX, Celsius, Voyager, and Three Arrows Capital, have intensified calls for stricter oversight of the crypto economy.
+Added: In response, legislative and regulatory bodies in the U.S.
+Added: and abroad are actively considering new regulations that could affect our operations.
+Added: Increased scrutiny and regulatory actions may subject us to audits, examinations, investigations, and enforcement proceedings that could disrupt our business and increase compliance costs
+Added: Given the unpredictable nature of cryptocurrency regulation and enforcement, any adverse regulatory developments, whether through new laws, changing interpretations, or enforcement actions, could negatively impact our reputation, business operations, financial condition, and ability to offer competitive products and services.
+Added: The unregulated nature and lack of transparency of many bitcoin trading venues may expose us to fraud, security failures, and operational risks, potentially harming the value of our bitcoin holdings.
+Added: Bitcoin trading venues are relatively new and, in some cases, operate with minimal regulation.
+Added: Many exchanges do not provide the public with significant information about their ownership, management, corporate practices, or regulatory compliance.
+Added: As a result, confidence in bitcoin trading venues could decline, especially if prominent exchanges suffer fraud, business failures, cyberattacks, or government-imposed restrictions.
+Added: A lack of stability in the broader bitcoin market or the closure of key trading venues could lead to increased price volatility.
+Added: If investors view our common stock as linked to our bitcoin holdings, these market disruptions could negatively impact the market value of our stock.
+Added: If bitcoin is classified as a security, we may be subject to extensive regulation, which could result in significant costs or force us to cease certain operations.
+Added: Regulatory changes or interpretations that classify bitcoin as a security under the Securities Act of 1933, as amended (the “Securities Act”) or Investment Company Act of 1940, as amended (the “Investment Company Act”), could require us to register and comply with additional regulations.
+Added: Compliance with these requirements could impose extraordinary, non-recurring expenses on our business.
+Added: If the costs and regulatory burdens become too great, we may be forced to modify or cease certain operations, which could be detrimental to our investors.
+Added: The SEC has previously indicated that certain digital assets may be considered securities depending on their structure and use.
+Added: While no formal regulations have been proposed to classify bitcoin as a security, future developments could change its legal status, requiring us to comply with securities laws.
+Added: If we fail to do so, we may be forced to discontinue some or all of our business activities, negatively impacting investments in our securities.
+Added: If the SEC or other regulators determine that bitcoin or other digital assets we hold qualify as securities, we may be required to register as an investment company under the Investment Company Act.
+Added: This classification would subject us to additional periodic reporting, disclosure requirements, and regulatory compliance obligations, significantly increasing our operational costs.
+Added: Although we do not currently engage in investing, reinvesting, or trading securities, and we do not hold ourselves out as an investment company, we could inadvertently be deemed one under the Investment Company Act.
+Added: If we are unable to rely on an exclusion, we would be required to register with the SEC, which could impose additional financial and regulatory burdens.
+Added: Furthermore, state regulators may conclude that the digital assets we hold are securities under state laws, requiring us to comply with state-specific securities regulations.
+Added: States like California have stricter definitions of “investment contracts” than the SEC, increasing the risk of additional regulatory scrutiny.
+Added: Any additional registration requirements, whether due to regulatory developments or an inadvertent classification as an investment company, could result in extraordinary compliance costs and adversely impact an investment in our securities.
+Added: If we determine that compliance is too costly, we may seek to cease certain or all operations, which could lead to significant investment losses for our shareholders.
+Added: Our bitcoin holdings could subject us to regulatory scrutiny and potential restrictions on future transactions.
+Added: Regulators are increasingly focused on the use of digital assets in illicit activities, such as money laundering and sanctions violations.
+Added: We maintain policies designed to comply with anti-money laundering and sanctions laws and acquire bitcoin only from regulated entities.
+Added: However, if we are found to have unknowingly purchased bitcoin from bad actors or sanctioned individuals, we could face regulatory proceedings, and our ability to engage in future bitcoin transactions may be restricted or prohibited.
+Added: Operating in foreign jurisdictions exposes us to political, legal, and regulatory risks that could negatively impact our financial condition.
+Added: Expanding our business internationally subjects us to the political, legal, and fiscal instability of different countries.
+Added: Governments may enact policies that disrupt our operations, such as forced divestment, expropriation of assets, contract cancellations, additional taxes, or regulatory changes that increase our compliance burden.
+Added: These actions could have a material adverse effect on our earnings, cash flow, and financial stability.
+Added: Additionally, political and social factors may lead to unpredictable judicial rulings that adversely affect our business.
+Added: Some governments have unilaterally amended or canceled existing agreements, failed to honor contractual commitments, or intervened in disputes between private parties.
+Added: In some cases, conflicting legal obligations in different jurisdictions could expose us to potential civil or criminal sanctions.
+Added: These risks, whether occurring individually or in combination, could negatively impact our financial performance and increase our exposure to regulatory investigations, litigation, and financial penalties.
+Added: Target energy regulations and taxes could increase our costs and adversely affect our business.
+Added: Bitcoin mining requires significant energy consumption, and our operations could be negatively impacted by government regulations or taxes specifically targeting energy usage in digital asset mining.
+Added: Federal, state or local authorities may impose restrictions on energy consumption, mandate the use of renewable energy sources or implement higher electricity rates for mining operations, increasing our operating costs.
+Added: Additionally, governments may introduce taxes on energy usage or carbon emissions that disproportionately affect bitcoin miners, further reducing our profitability.
+Added: If regulatory or tax burdens make mining economically unviable in certain jurisdictions, we may be forced to relocate operations, secure alternative power sources at higher costs or scale back our mining activities, all of which could materially and adversely affect our business, financial condition, and results of operations.
+Added: Changes in regulatory interpretations could require us to register as a money services business or money transmitter, leading to increased compliance costs or operational shutdowns.
+Added: If regulatory changes or interpretations require us to register as a money services business with FinCEN under the U.S.
+Added: Bank Secrecy Act, or as a money transmitter under state laws, we may be subject to extensive regulatory requirements, resulting in significant compliance costs and operational burdens.
+Added: In such a case, we may incur extraordinary expenses to meet these requirements or, alternatively, may determine that continued operations are not viable.
+Added: If we decide to cease certain operations in response to new regulatory obligations, such actions could occur at a time that is unfavorable to investors.
+Added: Multiple states have implemented or proposed regulatory frameworks for digital asset businesses.
+Added: Compliance with such state-specific regulations may increase costs or impact our business operations.
+Added: Furthermore, if we or our service providers are unable to comply with evolving federal or state regulations, we may be forced to dissolve or liquidate certain operations, which could materially impact our investors.
+Added: The classification of bitcoin as a commodity could subject us to additional CFTC regulation, resulting in significant compliance costs or the cessation of certain operations.
+Added: Under current interpretations, bitcoin is classified as a commodity under the Commodity Exchange Act and is subject to regulation by the CFTC.
+Added: If our activities require CFTC registration, we may be required to comply with extensive regulatory obligations, which could result in significant costs and operational disruptions.
+Added: Additionally, current and future legislative or regulatory developments, including new CFTC interpretations, could further impact how bitcoin and bitcoin derivatives are classified and traded.
+Added: If bitcoin is further regulated as a commodity, we may be required to register as a commodity pool operator and register the Company as a commodity pool with the CFTC through the National Futures Association.
+Added: Compliance with these additional regulatory requirements could result in substantial, non-recurring expenses, adversely affecting an investment in our securities.
+Added: If we determine not to comply with such regulations, we may be forced to cease certain operations, which could negatively impact our investors.
+Added: Changes in tax laws or IRS guidance regarding bitcoin’s classification could negatively impact our business and stockholders.
+Added: If federal or state tax authorities change bitcoin’s classification from property to another category, such as currency or financial asset, the resulting tax implications could negatively affect us and our stockholders.
+Added: Currently, the IRS treats bitcoin as property, which allows for capital gains treatment but also imposes certain tax reporting requirements, particularly for transactions classified as barter exchanges.
+Added: Any changes in tax treatment could materially impact the financial and operational aspects of our business and adversely affect an investment in our securities.
+Added: Our interactions with the Bitcoin network may expose us to transactions with sanctioned individuals, leading to regulatory penalties and reputational harm.
The Office of Financial Assets Control (“OFAC”) of the U.S.
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Further, we may be subject to investigation, administrative or court proceedings, and civil or criminal monetary fines and penalties as a result of any regulatory enforcement actions, all of which could harm our reputation and affect the value of our common stock.
−Removed: Changing environmental regulation and public energy policy may expose our business to new risks.
−Removed: Our bitcoin mining operations require a substantial amount of power and can only be successful, and ultimately profitable, if the costs we incur, including for electricity, are lower than the revenue we generate from our operations.
−Removed: As a result, any mine we establish can only be successful if we can obtain sufficient electrical power for that mine on a cost-effective basis, and our establishment of new mines requires us to find locations where that is the case.
−Removed: For instance, our plans and strategic initiatives for expansion are based, in part, on our understanding of current environmental and energy regulations, policies and initiatives enacted by federal and state regulators.
−Removed: If new regulations are imposed, or if existing regulations are modified, the assumptions we made underlying our plans and strategic initiatives may be inaccurate, and we may incur additional costs to adapt our planned business, if we are able to adapt at all, to such regulations.
−Removed: In addition, there continues to be a lack of consistent climate legislation, which creates economic and regulatory uncertainty for our business because the bitcoin mining industry, with its high energy demand, may become a target for future environmental and energy regulation.
−Removed: New legislation and increased regulation regarding climate change could impose significant costs on us and our suppliers, including costs related to increased energy requirements, capital equipment, environmental monitoring and reporting, and other costs to comply with such regulations.
−Removed: Further, any future climate change regulations could also negatively impact our ability to compete with companies situated in areas not subject to such limitations.
−Removed: For example, some bitcoin miners operating primarily in the State of Texas have recently received a mandatory survey from the U.S.
−Removed: Energy Information Administration (the “EIA”), seeking extensive information regarding our facilities’ use of electricity, and certain information regarding operations.
−Removed: It is possible that mandatory surveys such as this will be used by the EIA to generate negative reports regarding the bitcoin mining industry’s use of power and other resources, which could spur additional negative public sentiment and adverse legislative and regulatory action against us or the Bitcoin mining industry as a whole.
−Removed: Surveys and other regulatory actions could increase our cost of operations or otherwise make it more difficult for us to operate are our current locations.
−Removed: Given the political significance and uncertainty around the impact of climate change and how it should be addressed, we cannot predict how legislation and regulation will affect our financial condition and results of operations.
−Removed: Further, even without such regulation, increased awareness and any adverse publicity in the global marketplace about potential impacts on climate change by us or other companies in our industry could harm our reputation.
−Removed: Any of the foregoing could result in a material adverse effect on our business and financial condition.
−Removed: We have commenced doing business overseas, and different countries have differing degrees of political, legal and fiscal stability.
−Removed: This exposes us to a wide range of political developments that could result in changes to contractual terms, laws and regulations.
−Removed: In addition, we, and our joint arrangements and associates, face the risk of litigation and disputes worldwide.
−Removed: Developments in politics, laws and regulations can and do affect our operations.
−Removed: Potential impacts include:
−Removed: • forced divestment of assets;
−Removed: • expropriation of property;
−Removed: • cancellation or forced renegotiation of contract rights;
−Removed: • additional taxes including windfall taxes;
−Removed: • restrictions on deductions and retroactive tax claims;
−Removed: • antitrust claims;
−Removed: • changes to trade compliance regulations;
−Removed: • price controls;
−Removed: • local content requirements;
−Removed: • foreign exchange controls;
−Removed: • changes to environmental regulations;
−Removed: • changes to regulatory interpretations and enforcement;
−Removed: • changes to disclosure requirements.
−Removed: Any of these, individually or in aggregate, could have a material adverse effect on our earnings, cash flows and financial condition.
−Removed: From time to time, social and political factors play a role in unprecedented and unanticipated judicial outcomes that could adversely affect our business.
−Removed: Non-compliance with policies and regulations could result in regulatory investigations, litigation and, ultimately, sanctions.
−Removed: Certain governments and regulatory bodies have, in our opinion, exceeded their constitutional authority by:
−Removed: • attempting unilaterally to amend or cancel existing agreements or arrangements;
−Removed: • failing to honor existing contractual commitments;
−Removed: • seeking to adjudicate disputes between private litigants.
−Removed: Additionally, certain governments have adopted laws and regulations that could potentially force us to violate other countries’ laws and regulations, therefore potentially subjecting us to both criminal and civil sanctions.
−Removed: Such developments and outcomes could have a material adverse effect on our earnings, cash flows and financial condition.
−Removed: We are subject to an extensive, highly evolving and uncertain regulatory and business landscape and any adverse changes to, or our failure to comply with, any laws and regulations, and adverse business reactions from counterparties could adversely affect our brand, reputation, business, operating results, and financial condition.
−Removed: Our business is subject to:
−Removed: • extensive laws;
−Removed: • rules, regulations;
−Removed: • determinations;
−Removed: • directives;
−Removed: • legal and regulatory interpretations and guidance;
−Removed: • counterparty risk in the markets in which we operate.
−Removed: Counterparty risk in the markets in which we operate includes:
−Removed: • regulatory aspects from financial services;
−Removed: • federal energy and other regulators;
−Removed: • credit, crypto asset custody;
−Removed: • exchange, and transfer;
−Removed: • cross-border and domestic money and crypto asset transmission;
−Removed: • consumer and commercial lending;
−Removed: • foreign currency exchange;
−Removed: • data governance;
−Removed: • data protection;
−Removed: • cybersecurity;
−Removed: • fraud detection;
−Removed: • antitrust and competition;
−Removed: • bankruptcy;
−Removed: • anti-bribery;
−Removed: • economic and trade sanctions;
−Removed: • anti-money laundering, and counter-terrorist financing;
−Removed: • the same regulatory risks applicable to counterparties which are most notably hosting businesses;
−Removed: • the recent economic issues and bankruptcies befalling some in this industry.
−Removed: Many of these legal and regulatory regimes were adopted prior to the advent of the internet, mobile technologies, crypto assets, and related technologies.
−Removed: As a result, some applicable laws and regulations do not contemplate or address unique issues associated with the crypto economy, are subject to significant uncertainty, and vary widely across U.S.
−Removed: federal, state, and local and international jurisdictions.
−Removed: These legal and regulatory regimes, including the laws, rules, and regulations thereunder, evolve frequently and may be modified, interpreted, and applied in an inconsistent manner from one jurisdiction to another, and may conflict with one another.
−Removed: Moreover, the complexity and evolving nature of our business and the significant uncertainty surrounding the regulation of the crypto economy requires us to exercise our judgment as to whether certain laws, rules, and regulations apply to us, and it is possible that governmental bodies and regulators may disagree with our conclusions.
−Removed: To the extent we have not complied with such laws, rules, and regulations, we could be subject to significant fines, revocation of licenses, limitations on our products and services, reputational harm, and other regulatory consequences, each of which may be significant and could adversely affect our business, operating results, and financial condition.
−Removed: Additionally, various governmental and regulatory bodies, including legislative and executive bodies, in the United States and in other countries may adopt new laws and regulations, the direction and timing of which may be influenced by changes in the governing administrations and major events in the crypto economy.
−Removed: For example, following the failure of several prominent crypto trading venues and lending platforms, such as FTX, Celsius Networks, Voyager and Three Arrows Capital in 2022 (even though these do not directly affect our business), the
−Removed: Congress expressed the need for both greater federal oversight of the crypto economy and comprehensive cryptocurrency legislation.
−Removed: In the near future, various governmental and regulatory bodies, including in the United States, may introduce new policies, laws, and regulations relating to crypto assets, the crypto economy, and crypto asset platforms.
−Removed: The failures of risk management and other control functions at other companies that played a role in these events could accelerate an existing regulatory trend toward stricter oversight of crypto asset platforms and the crypto economy.
−Removed: Due to our business activities, we may be subject to ongoing examinations, oversight, and reviews and currently are, and expect to be, subject to investigations and inquiries, by U.S.
−Removed: federal and state regulators, many of which have broad discretion to audit and examine our business.
−Removed: Moreover, new laws, regulations, or interpretations may result in additional litigation, regulatory investigations, and enforcement or other actions, including preventing or delaying it from offering certain products or services offered by our competitors or could impact how we offer such products and services.
−Removed: Adverse changes to, or our failure to comply with, any laws and regulations have had, and may continue to have, an adverse effect on our reputation, brand, business, operating results, and financial condition.
+Added: Changing environmental regulations and public energy policies could increase our costs and threaten our bitcoin mining operations.
+Added: Bitcoin mining requires substantial energy consumption, and our ability to operate profitably depends on securing electricity at competitive rates.
+Added: Our strategic expansion plans rely on assumptions about current energy regulations and policies.
+Added: If new environmental or energy regulations are enacted, or if existing ones change, we may face increased costs or operational limitations that could impact our business model.
+Added: The lack of consistent climate legislation creates uncertainty for our industry, and bitcoin mining’s high energy usage makes it a potential target for future regulations.
+Added: New laws could impose higher energy costs, require additional capital investments, mandate environmental monitoring, or impose other compliance burdens.
+Added: Additionally, bitcoin miners in Texas have recently been required to disclose extensive information about their
+Added: energy usage to the U.S.
+Added: Energy Information Administration, which could lead to negative public perception and further regulatory scrutiny.
+Added: The ongoing debate over climate change policies adds further uncertainty to our financial outlook.
+Added: Even without regulatory changes, negative publicity regarding bitcoin mining’s environmental impact could damage our reputation and affect our financial condition.
+Added: Increased scrutiny and changing expectations from stockholders with respect to our environmental, social and governance (“ESG”) practices and the impacts of climate change may result in additional costs or risks.
+Added: Companies across many industries are facing increasing scrutiny related to their ESG practices.
+Added: Investor advocacy groups, certain institutional investors, investment funds and other influential investors are also increasingly focused on ESG practices and in recent years have placed increasing importance on the non-financial impacts of their investments.
+Added: Conversely, so-called “anti-ESG” and “anti-DEI” sentiment has also gained momentum across the United States, with several state and federal authorities having enacted or proposed “anti-ESG” policies or legislation, issued executive orders and legal opinions and engaged in related investigations and litigation.
+Added: If our policies or practices are viewed as being in contradiction of such “anti-ESG” or “anti-DEI” policies, legislation executive orders or legal opinions, our reputation may be harmed and our business or financial condition may be adversely affected.
+Added: The SEC adopted a rule that requires climate disclosures in periodic and other filings with the SEC covering fiscal years beginning in 2025, which rule has been stayed pending the completion of a judicial review.
+Added: To comply with this SEC rule, if the rule goes into effect in its current form, we will be required to establish additional internal controls, engage additional consultants and incur additional costs related to evaluating, managing and reporting on our environmental impact and climate-related risks and opportunities.
+Added: If we fail to implement sufficient oversight or accurately capture and disclose on environmental matters, our reputation, business, operating results and financial condition may be materially adversely affected.
+Added: Furthermore, increased public awareness and concern regarding environmental risks, including global climate change, may result in increased public scrutiny of our business and our industry, and our management team may divert significant time and energy away from our operations and towards responding to such scrutiny.
+Added: In addition, the physical risks of climate change may impact the availability and cost of materials and natural resources, sources and supplies of energy, and demand for bitcoin and other cryptocurrencies, and could increase our insurance and other operating costs, including, potentially, to repair damage incurred as a result of extreme weather events or to renovate or retrofit facilities to better withstand extreme weather events.
+Added: If environmental laws or regulations or industry standards are either changed or adopted and impose significant operational restrictions and compliance requirements on our operations, or if our operations are disrupted due to physical impacts of climate change, our business, capital expenditures, results of operations, financial condition and competitive position could be negatively impacted.
Risks Relating to Our Common Stock
−Removed: Our stock price is volatile.
−Removed: The market price of our common stock is likely to be highly volatile and could fluctuate widely in price in response to various factors, many of which are beyond our control, including the following:
−Removed: • changes in our industry including changes which adversely affect bitcoin and other digital assets;
−Removed: • changes in bitcoin pricing;
+Added: Our stock price is volatile and subject to significant fluctuations.
+Added: The market price of our common stock is highly volatile and may fluctuate widely due to factors beyond our control, including:
+Added: • changes in our industry, particularly those affecting bitcoin and other digital assets;
+Added: • variability in bitcoin pricing;
• competitive pricing pressures;
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• sales of our common stock;
−Removed: • our ability to execute our business plan;
+Added: • our ability to execute our business plan effectively;
• operating results that fall below expectations;
−Removed: • loss of any strategic relationship;
+Added: • loss of strategic relationships;
• regulatory developments;
−Removed: • economic and other external factors.
−Removed: In addition, the securities markets have from time to time experienced significant price and volume fluctuations that are unrelated to the operating performance of particular companies.
−Removed: These market fluctuations may also materially and adversely affect the market price of our common stock.
−Removed: Exercise or conversion of warrants and other convertible securities, along with new issuances of our common stock, will dilute our stockholder’s percentage of ownership.
−Removed: We have issued convertible securities, options and warrants to purchase shares of our common stock to our officers, directors, consultants and certain stockholders.
−Removed: In the future, we may grant additional options, warrants and convertible securities.
−Removed: The exercise, conversion or exchange of options, warrants or convertible securities, including for other securities, will dilute the percentage ownership of our stockholders.
−Removed: The dilutive effect of the exercise or conversion of these securities may adversely affect our ability to obtain additional capital.
−Removed: The holders of these securities may be expected to exercise or convert such options, warrants and convertible securities at a time when it would be able to obtain additional equity capital on terms more favorable than such securities or when our common stock is trading at a price higher than the exercise or conversion price of the securities.
−Removed: The exercise or conversion of outstanding warrants, options and convertible securities will have a dilutive effect on the securities held by our
−Removed: stockholders.
−Removed: We have in the past, and may in the future, exchange outstanding securities for other securities on terms that are dilutive to the securities held by other stockholders not participating in such exchange.
−Removed: Additionally, our stockholders have experienced dilution through the issuance of our common stock under the 2022 ATM and the 2023 ATM, and in the event we sell any shares of our common stock under the 2024 ATM, our stockholders will continue to experience dilution.
−Removed: Because there has been limited precedent set for financial accounting of bitcoin and other cryptocurrency assets, the determination that we have made for how to account for cryptocurrency assets transactions may be subject to change.
−Removed: Because there has been limited precedent set for the financial accounting of cryptocurrencies and related revenue recognition, it is unclear how companies may in the future be required to account for cryptocurrency transactions and assets and related revenue recognition.
−Removed: A change in regulatory or financial accounting standards could result in the necessity to change our accounting methods and restate our financial statements.
−Removed: Such a restatement could adversely affect the accounting for our newly mined cryptocurrency rewards and more generally negatively impact our business, prospects, financial condition and results of operations.
−Removed: Such circumstances would have a material adverse effect on our ability to continue as a going concern or to pursue our new strategy at all, which would have a material adverse effect on our business, prospects or operations as well as and potentially the value of any cryptocurrencies we hold or expect to acquire for our own account and harm our investors.
−Removed: We have never paid nor do we expect in the near future to pay cash dividends.
−Removed: We have never paid cash dividends on our capital stock and do not anticipate paying any cash dividends on our common stock for the foreseeable future.
−Removed: While it is possible that we may declare a dividend after a large settlement, investors should not rely on such a possibility, nor should they rely on an investment in our securities if they require income generated from dividends paid on our capital stock.
−Removed: Any income derived from our common stock would only come from rise in the market price of our common stock, which is uncertain and unpredictable.
−Removed: Offers or availability for sale of a substantial number of shares of our common stock may cause the price of our common stock to decline.
−Removed: If our stockholders sell substantial amounts of our common stock in the public market upon the expiration of any statutory holding period or lockup agreements, under Rule 144, or issued upon the exercise of outstanding warrants or other convertible securities, it could create a circumstance commonly referred to as an “overhang” and in anticipation of which the market price of our common stock could fall.
−Removed: The existence of an overhang, whether or not sales have occurred or are occurring, also could make more difficult our ability to raise additional financing through the sale of equity or equity-related securities in the future at a time and price that it deems reasonable or appropriate.
−Removed: The shares of our restricted common stock will be freely tradable upon the earlier of:
−Removed: (i) effectiveness of a registration statement covering such shares;
−Removed: (ii) the date on which such shares may be sold without registration pursuant to Rule 144 (or other applicable exemption) under the Securities Act of 1933.
+Added: • broader economic and external factors.
+Added: Additionally, securities markets have historically experienced substantial price and volume fluctuations unrelated to specific companies' performance.
+Added: Such market fluctuations could materially and adversely affect the market price of our common stock.
+Added: Our ongoing at-the-market stock issuances contribute to stockholder dilution and may intensify due to our HODL strategy.
+Added: Our at-the-market (“ATM”) offerings have contributed to dilution, and if we continue selling shares through future ATM offerings, stockholders will experience further dilution.
+Added: Additionally, our strategy of holding bitcoin on our balance sheet may necessitate increased stock issuances through ATM offerings to fund operations, exacerbating dilution concerns.
+Added: Investors should be aware that continued stock issuances may negatively impact the value of their holdings.
+Added: The issuance, conversion, or exercise of convertible notes and other convertible securities, options, and warrants will dilute our stockholders' ownership.
+Added: We have issued, and may continue to issue, convertible securities, options, and warrants to officers, directors, consultants, and certain stockholders.
+Added: Additionally, we have issued convertible notes to certain institutional investors in private offerings.
+Added: The exercise, conversion, or exchange of these instruments, including for other securities, will dilute existing stockholders’ ownership percentages.
+Added: This dilution may negatively impact our ability to obtain additional capital.
+Added: Holders of these securities may choose to exercise or convert them at times when we could otherwise secure equity capital on more favorable terms or when our common stock is trading above the exercise or conversion price.
+Added: Uncertainty in accounting standards for bitcoin and other cryptocurrencies may lead to financial restatements and business disruptions.
+Added: Limited precedent exists for the financial accounting of bitcoin and other cryptocurrency assets.
+Added: Future changes in regulatory or accounting standards could require us to alter our accounting practices and restate financial statements, potentially affecting how we account for newly mined cryptocurrency rewards.
+Added: Such changes could materially and adversely impact our business, financial condition, and operating results.
+Added: A restatement may also raise concerns about our ability to continue as a going concern, negatively affecting investor confidence and the value of cryptocurrencies we hold or acquire.
+Added: The sale or availability of a substantial number of shares of our common stock may negatively impact our stock price.
+Added: If a significant number of our stockholders sell shares in the public market following the expiration of statutory holding periods or lock-up agreements, under Rule 144, or after the exercise of outstanding warrants or convertible securities, it could create an “overhang” effect.
+Added: This anticipated sell-off could depress our stock price, regardless of actual sales activity.
+Added: The presence of an overhang may also hinder our ability to raise additional capital through equity or equity-related securities on favorable terms.
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.