Item 1A. Risk Factors
ITEM 1A. RISK FACTORS
Other than the additional risk factors herein, we are not aware of any material changes to the risk factors set forth under the caption “Risk Factors” in Part I, Item 1A of our Annual Report, which are incorporated herein by reference. The risks described in our Annual Report are not the only ones we face. Additional risks that we currently do not know about or that we currently believe to be immaterial may also impair our business, financial condition, operating results, liquidity and future prospects.
Our bitcoin lending arrangements expose us to risks of nonrepayment by borrowers, operational failures and cybersecurity threats, and a material portion of our bitcoin holdings is subject to these risks.
We generate income through bitcoin lending arrangements. As of September 30, 2025, approximately 10,377 bitcoin were loaned to third parties under such arrangements, representing a material portion of our total bitcoin holdings. Lending bitcoin involves risk of default, particularly in a highly volatile market. Borrowers may fail to repay their loans due to market downturns, fraud or other financial challenges. As our bitcoin loans are unsecured, they would rank subordinate to a borrower’s secured loans if the borrower becomes insolvent. Accordingly, we may be unable to recover part or all of the loaned bitcoin, which could result in substantial financial losses.
Additionally, digital asset lending platforms are vulnerable to operational and cybersecurity risks. Technical failures, software bugs or system outages could disrupt lending activities, cause transaction errors or result in inaccurate record-keeping. Cybersecurity threats, including hacking, phishing, social engineering and other malicious attacks, pose further risks, potentially leading to the loss, theft or misappropriation of our loaned bitcoin. A successful cyberattack or security breach involving our loaned bitcoin could materially and adversely impact our financial position, reputation and ability to conduct future lending activities.
Our use of a separately managed account to actively manage a portion of our bitcoin holdings exposes us to significant risks, including market losses, loss of control, counterparty failure and the potential loss of part or all of our investment.
As of September 30, 2025, we held approximately 1,903 bitcoin in a separately managed account with a third-party manager that exercises discretionary authority to actively trade the bitcoin. This structure exposes us to numerous risks beyond those associated with passive holding, including losses resulting from poor investment decisions, trading errors, leverage, concentration or unfavorable market movements.
We do not control the day-to-day management of the account, and we may have limited visibility into the specific strategies, counterparties, or risk exposures involved. The third-party manager or custodian may suffer from operational failures, cybersecurity incidents, mismanagement, fraud or insolvency, any of which could impair our ability to recover some or all of the bitcoin held in the account.
In the event of a material adverse event affecting the manager, custodian or the trading strategy, we could lose a significant portion, or the entirety, of our investment in the account. Such a loss could materially and adversely affect our business, financial condition and results of operations.
Targeted energy or property regulations and taxes could increase our costs and adversely affect our business.
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. Federal, state or local
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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. Additionally, governments may introduce taxes on energy usage or carbon emissions that disproportionately affect Bitcoin miners, further reducing our profitability. 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 Bitcoin mining activities, all of which could materially and adversely affect our business, financial condition, and results of operations.
Moreover, our Bitcoin mining operations may be negatively impacted by new land use and property laws, regulations or taxes enacted by state or local governments. Governmental authorities have and may continue to pursue and implement legislation and regulation that seeks to limit greenhouse gas emissions and noise generated by our facilities, which could adversely affect our ability to source electricity or mine bitcoin in a potentially material manner. For example, residents of Hood County, Texas, have proposed to incorporate the land housing our Granbury, Texas Bitcoin mining facility. If the land surrounding our Granbury, Texas facility is incorporated, the newly formed municipality could impose additional restrictions and taxes on our operations. New legislation and regulation in other jurisdictions housing our operations could also negatively impact the profitability of our power generation and Bitcoin mining facilities, which could adversely impact on our business, financial condition and results of operations.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
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